How Much Home Can Your Lifestyle Afford?

If you're considering purchasing a home, you've likely already considered how much you have available for a down payment, what an ideal mortgage payment would be, and how much home you can actually afford based on your monthly income. But what about your lifestyle? Have you considered how much wiggle room you need to leave in your home budget to enjoy life? Here are six life factors to consider when buying a home:

1. Travel

Travel is an important goal for many people. Think about the travel goals you have for yourself:

Where do you want to go?

What do you want to see?

How long are your ideal trips?

How much money would you need on an annual basis to make your travel goals possible?

Is this already factored into your budget or will you need to cut back on travel to fund your monthly mortgage payment and home expenses?

There are no right or wrong answers, but it's important to reflect on your priorities.

2. Green Thumb?

Do you love gardening, being outside, and all things landscaping? If you purchase a home with a lawn and don't enjoy the upkeep, you could be looking at an extra $100 or more a month for professional landscape maintenance. Are you willing to skip the lawn in favor of hardscaping to reduce costs?

Bottom line: Factor hobbies and services into your monthly budget to see if the numbers still work out in the black.

3. Pool Time

How dreamy would it be to buy a home with a pool!? Before the dream becomes reality, add up the costs of pool maintenance and servicing, energy, and insurance (along with liability if you have small children) and you may be better off heading to the neighborhood swimming hole. 

Pools can be a lot of fun, but they come with a lot of work. Factor time and money into your future plans when buying a home with this special feature and, once again, ask yourself if the numbers add up to support your other financial goals.

4. Children 

If you're buying a home and plan to start a family in the next few years, don't just consider the amount of mortgage you can afford under your current expenses. Factor in daycare costs and then determine what your cash flow will look like. You may have to adjust the amount of home you're looking to purchase.

5. Entertainment

Chances are you enjoy dining out, going to concerts and sporting events, and seeing movies. If you need to rein in these activities to make room for your mortgage, home expenses, and savings, aim to strike a balance that won't leave you feeling restless.

After all, you're likely choosing a 30-year mortgage, and three decades is a long time to feel deprived. If necessary, reduce the amount of home you purchase so you can enjoy yourself in the ways that are important to you. 

6. Retirement

If you're in your 20s, you should try to save 10% of your income; in your 30s, you should be saving 15%. If you need to cut back on your retirement savings to make a home purchase work, think hard about when you'll be able to get back to your ideal contribution levels and how much you may be losing out on during that time. 

Although home ownership can help build long-term wealth, it's important to also maintain retirement savings for future security.

6 Tips for Choosing the Best Offer for Your Home

Have a plan for reviewing purchase offers so you don't let the best slip through your fingers.

You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers.



1. Understand the process. 
All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

2. Set baselines.
Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a pre-qualified or cash buyer.

3. Create an offer review process.
If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

4. Don’t take offers personally.
Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

5. Review every term.
Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures -- such as appliances, furniture, or window treatments -- to be included in the sale that you plan to take with you?

Is the amount of earnest money the buyer proposes to deposit toward the down payment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.

Have the buyers attach a pre-qualification or pre-approval letter, which means they have already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can't get a mortgage, and they'll take their earnest money back, too. Are you comfortable with that uncertainty?

Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?

With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

6. Be creative.
If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.

Buyers pay premium for move-in-ready homes

First impressions are lasting. Home buyers and real estate agents remember what they see, not what you say your home will look like after you reduce the clutter, paint, and replace outdated floor coverings and light fixtures.

Most people don't have the ability to visualize how a home will look spruced up. If you show your home to prospective buyers or their agents before it's ready to show, you could lose out on a possible offer because they're turned off by the lack of appeal. It's often difficult to get someone back for a second look after you've made improvements.

One couple who'd been looking for a home that was big enough for their family heard that one of the largest homes in the neighborhood was coming on the market. They contacted the sellers and asked if they could look at the house before it went on the market. If they liked it, they could save the sellers the expense of preparing the house for sale.

The sellers agreed. The prospective buyers looked at the house but turned it down. They couldn't see past the dated décor.

The house went on the market months later. The interior was painted in decorator colors; old carpet was removed and the hardwood floors underneath were refinished; the overgrown yard was pruned and a new lawn was installed; and all the seller's belongings were moved out and the house was staged.

The house looked fabulous. It received multiple offers and sold for well above the asking price. Ironically, the couple who had seen the house before it was fixed up and passed on the opportunity were encouraged by a friend who attended the open house to take another look.

They did and ended up making an offer in competition. Unfortunately, another buyer made a better offer. The couple who first saw it lost out on an opportunity because they couldn't visualize the property's potential. This worked to the sellers' advantage because they netted much more on the sale than they would have if they'd sold it to the first buyers for the list price.

HOUSE HUNTING TIP: Many sellers resist the notion of fixing their house up for someone else. Although it's not a good idea to make major renovations just before selling a home, cost-effective cosmetic improvements can make your home more salable and could increase the amount you recoup when you sell.

Most sellers find the decluttering process tedious. The bonus of weeding out what you no longer want or need is that you don't have to pay to move these items. And, you're making your home easier to sell.

Some agents don't want to take time to help sellers prepare their home for a more profitable sale even though buyers pay more for a home that's in move-in condition. Ask your real estate agent how much your home might sell for in both its "as is" condition and after making cosmetic improvements. If you decide to prepare your home for an advantageous sale, use an agent who will assist you with this by prioritizing what should be done and helping you find people to complete the work.

It's not always possible for sellers to cosmetically update their homes before selling. The trade-off will be a lower sale price.

THE CLOSING: Make sure if you are going to spruce up your home for sale that you don't show it before the work is done.

Hidden Backyard Deal Breakers that are Lurking On Your Property

Every time a prospective home buyer walks onto your property, there are a few things that they will absolutely not put up with. These deal breakers can be anywhere in the home, but there is one area that we often forget about: the backyard.The backyard is very important to family life. After all, this is the place where children will enjoy their childhood and play in a safe and secured environment. Most home buyers prefer single-family dwellings solely because of the usable outdoor space! Take some time to focus on your backyard. After all, there are ways that you can update your backyard without spending money.

Pool in the Backyard

To many buyers, a pool can be seen as an expensive maintenance fee that they will have to pay for on top of the mortgage. Once they see a pool, they're going to start doing some calculations in their head thinking, "Now how much is this going to cost me?" Whether it's above or below ground, a pool can raise a flood of concerns over child safety.

Size of the Lot

The appraisal of your home is typically made in two elements, the lot size and the actual value of the physical home. That said, the size of your yard comes into play so you want to make sure that you spend a generous amount of time prepping your backyard for visitors. Getting rid of clutter and opening up the yard to make your lot feel larger will help you when it comes time to sell.

Pet Products

Hide dishes, play toys, and photos of your pets as this may make the buyer feel like the home is dirty, especially for a homeowner that doesn't like the idea of having pets inside the house. This will be a deal breaker if the buyer is allergic to cats and/or dogs.

Landscaping

With the price of water rising rapidly and droughts in California, grass isn't as appealing as it once was. When frugal buyers see grass, they see a sky-high water bill that will eventually lead to a dead yard and a new project to be undertaken. Think about landscaping trends like xeric landscaping, native plants, and artificial turf to make your home more appealing to all home buyers.

Leaving Backyard Photos Out of your Listing

This is a rookie mistake. If you leave out photos of your backyard, home buyers will think that you have something to hide. If you have a gorgeous yard, why wouldn't you want to showcase it in your listing? Are you hiding any skeletons in the closet?

Noisy Neighbors

Now this may be seen as something outside of your realm, but it may be worth a knock on the door to let your neighbors know that you will be showing your house at a given time. Rowdy neighbors can be an instant turn off to potential buyers. Make sure your neighbors' parties are held on a different day than your open house to give buyers a better peace of mind. After all, they will share a fence with these neighbors for an indefinite period of time.

So What Are Home Buyers Looking For?

A survey conducted by the National Association of Homebuilders found that new home buyers are looking for exterior lighting, lots of trees, a deck or patio, and a fenced in yard. Beyond the basics, an outdoor amenity that is rapidly gaining in popularity is the outdoor fireplace/fire pit, outdoor kitchens, and the outdoor living room.

Investing in the backyard can net you some of the highest returns. Knowing what real estate appraisers (and home buyers) are looking for will help you sell your property faster. That said, the exterior of your home is just as important as the interior of your home. Many people assume that the front and backyard aren't crucial to the buying process so they overlook these pitfalls. Make sure that your backyard does not have any hidden deal breakers that could steer away new bids!

4 Common Real Estate Deal Killers

Recently, the sellers of an architect-designed home in the hills above Oakland, Calif., received two offers in less than two weeks. They accepted the offer from the buyers who seemed most committed to buying the house.

In less than 12 hours, the buyers backed out. Although they had been looking for a home for months and thought they'd decided where they wanted to live, they had a change of heart -- not about the house, but about the location. Buyer's remorse is one reason transactions fail.

The enthusiasm that permeated the home-sale market when the federal tax credits were available has waned. Economic news has been mixed at best. This has led to an increased reticence on the part of some home buyers.

HOUSE HUNTING TIP: 

An easily avoidable reason why contracts fail is failure of sellers to disclose a significant defect in the property before the buyers make an offer. Some sellers resist having presale inspections done because they don't want buyers to know too much about what's wrong with their home until they fall in love with it.

This strategy might work for sellers in a hot market where prices are rising quickly. However, in today's market, buyers are diligent and cautious; falling in love takes a back seat to practicality.

In one case, sellers withheld a report that revealed significant foundation problems that could be fixed only at great expense. The buyers, who were buying at the top of their price range, were furious. 

They wouldn't have made an offer had they known about the foundation upfront, particularly since the seller was unwilling to correct the defect. They wasted time and money on their own inspections. The deal fell apart and the sellers had to put the house back on the market.

Often contacts are so loaded with conditions unacceptable to the sellers that they don't make it to first base.

One seller refused to respond to an offer because the price was very low, the offer was contingent on the sale of the buyers' home that was not yet on the market, and the buyers wanted the sellers to take their home off the market until the buyers found a buyer for their home.

Another culprit that can rattle a transaction, even one that's not full of unreasonable contingencies, are conditions pertaining to the buyers' financing. Well-qualified buyers were recently told by their lender that they had to increase their cash downpayment from 20 to 25 percent because of one late payment on their credit report.

The buyers had enough cash to increase their downpayment. But, when defects were pointed out during inspections, the buyers didn't have enough cash left to make the repairs. They asked the seller to credit them money at closing. The seller agreed and the sale closed. However, this could have blown the deal if the seller was unwilling or unable to pay for repairs.

Low appraisals also have been a factor in keeping transactions from closing. The situation has improved recently due to a lift in home-sale activity, however, following the expiration of the federal tax credit on April 30, the NATIONAL ASSOCIATION OF REALTORS® reported a decline in pending sales -- accepted offers that have not yet closed.. 

If pending sales continue to decline, this could have a negative impact on home prices, which could lead to more low appraisals. Lenders want appraisers to use comparable sales that occurred within the last three months. 

Keep in mind that the home-sale market is a local business. Although national trends and consumer confidence impact local markets, prices tend to hold up well for well-priced homes in high-demand, low-inventory neighborhoods.