Ready to Sell Your House? 3 Keys to Success.

Ready to Sell Your House?Are you getting ready to sell your house?

There are several reasons why you might be thinking about taking that step:

Your family’s needs have outgrown your current home or you may need to relocate due to work or family reasons.

Or perhaps you are at a point in your life where you want to go down in size and simplify your home maintenance.

In a previous blog post I discussed the 3 questions you must answer to determine if you are ready to buy a home.

Today I want to look at the 3 keys to success when you decide it is time to sell your house: information gathering, getting the house ready, and being patient with the process.

1. Information Gathering

One of the first things you should do is to get professional help in the form of a real estate agent.

You want to work with a person that you can trust, that knows your area well, and that will give you objective information about the prospects of selling your home.

When we decided to move from Round Rock, TX to Frisco, TX almost 4 years ago, we met with an agent and this is what we discussed:

What do we have to do to get the House Ready?

At that time, we had owned the house for about 14 years. We asked the agent to do a walk through of the house and make recommendations on what we needed to do.

You want to make the house appealing to potential buyers. You have to put yourself in the mindset of a buyer.

Here are some examples of the actions he recommended:

  • Fresh coat of paint for both the interior and exterior of the home. Unfortunately, I had not done anything in that space in all that time. A mistake I hope not to repeat in the future.
  • Replace some of the light fixtures. In 14 years the preferred styles had changed quite a bit and we needed to give the home a fresh look.
  • Make some minor repairs to the back porch and also on our fence. We also replaced the carpet in the entire house for the 1st time and even spent a little money on adding a kitchen back splash.
  • Eliminate the clutter. When you live in your house for a long time, you tend to accumulate lots of stuff. As you get ready to show your house to prospective buyers, you may want to take an opportunity to sell or donate unused items.

Remember, this list of recommendations will be specific to your home and your situation. You will have to decide what makes sense to you.

Sale Price for Comparable Homes

This is what it is normally referred to as “comps”. You need to have an idea of what homes are selling for in your area at this time.

This will greatly inform you when it is time to put a sale price for your home. You want this price to be realistic with what the market dictates.

The market will tell you the truth about the worth of your home in spite of what you think the home is really worth.

Average Days on the Market

This is what is normally referred to as the “DOM” metric. It will tell you on average how long it is taking for homes to sell in your area.

This will give you an idea of how long the sale process might be in your case. Remember that no matter what the national or even state news might say, real estate is a local proposition.

The sale of your home has more to do with local factors than with any national numbers in the real estate market.

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2. Getting the House Ready

This was of course the fun part. Once we decided to sell our home and were armed with information, it was time to create a plan for the required renovations.

Now you know me. I am a Project Manager by trade and a natural nerd. So I created a simple spreadsheet for a budget and a timeline for the projects we had to complete before putting our home on the market.

First we had to decide on our budget for the required renovations. You know we don’t borrow money, so we had to assign a total amount for the renovation consistent with our savings.

We also had to decide on which projects we wanted to do ourselves and for which projects we wanted to use professionals.

For example the painting and carpet replacement we outsourced. Cleaning and minor repairs/replacements we did ourselves.

In terms of the timeline, we discussed with some of our providers what order made sense. We put down the new carpet down first and then we had the house painted (it makes sense, trust me).

Once we selected the timeline and budget for our projects, we were able to target a date for putting the house on the market.

And then it was time for doing the work. It was a lot of work and lot of items to manage but we were extremely pleased with the results.

We even got to enjoy some of those changes for a while. The lesson is that home renovations should be an ongoing task consistent with your budget and needs.

It is definitely easier and more cost effective to renovate as you live in the house vs. doing it all at once. Again, lesson learned!

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3. Being Patient with the Process

This is both very important but also very difficult.

Hopefully you are not in a situation where you have to sell your house due to a financial hardship or other critical situation.

When you are in a “must sell” situation you make different decisions because the main driver is how quick you need to sell the house.

But in a situation where you can afford to wait, patience is your best friend. When we decided to sell our home, the main driver was being closer to family.

In our case, we did not need to sell our home so we could afford to wait for the best possible offer and then make the move.

Remember also, that once you put the home on the market, you will need to keep it ready for visits from prospective buyers at all times.

Your real estate agent might give you a call at any time saying he has someone that wants to look at the house within the hour. Sometimes, you will even have less time than that.

Get yourself in a position where you can do that with minimal disruptions, but expect the disruptions. You will need to be patient, because this will happen multiple times.

Finally, do not get frustrated with how long the process is taking or how many views the house has seen. If you picked a good real estate agent, trust his process to market your home. He is your ally.

In our case we had less than 5 home visits but we sold our house in 30 days (to a cash buyer!).

In the end, thanks to information gathering, a careful plan to get the house ready, and patience with the process we achieved our goals.

What other keys to success have you found in the process of selling a house?

Ready To Buy a House? 3 Questions To Ask Yourself.

Ready To Buy a House? 3 Questions To Ask Yourself.The “American Dream” that we are all encouraged to chase includes the purchase of your own home.

With mortgage interests rates still reasonably low, it seems like a great opportunity and you might be thinking that this is the right time for you to buy a house.

Of course, I believe that everyone should strive to reach the goal of home ownership.

As you consider this major decision here are a 3 questions to ask yourself to determine if the time to buy a house for you is now.

1. Are you on firm financial ground?

  • Are you completely debt free (credit cards, medical bills, student loans, car loans, etc.)?
  • Do you have an emergency fund of 3-6 months of expenses (preferably 6 months)?
  • Are you saving for retirement (15% of your annual household income) and for college expenses?

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2. Can you really afford to purchase a home?

  • Could you make the home purchase with a 15 year mortgage at a fixed interest rate?
    • Avoid mortgage loans with adjustable interest rates and balloon payments.
    • Remember, there is a large difference in interest paid between a 15 year loan and a 30 year loan over the life cycle of the mortgage.
  • Have you saved up for a down payment of between 15% and 20%? With a 20% down payment you will avoid paying for Private Mortgage Insurance (PMI) which protects the lender in case of default on the mortgage.
  • Will your monthly mortgage payment (taxes and insurance included) be equal or less than 25% (or 1/4) of your monthly take home pay? A mortgage payment that takes too much of your monthly take home pay will put a lot of strain on your budget.

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3. What are your purchasing goals?

  • Have you made your list of “must have” elements vs. those which are “nice to have”? For example:
    • Do you need 4 bedrooms or could you be all right with 3?
    • What about bathrooms: is it 2 or 2.5?
    • What is more important to you: size or location?
    • What about the quality of the school district?
    • Make a list and evaluate the potential houses against that list.
  • Do you have to buy the first one you see?
    • Take your time when looking and guard against “house fever”.
    • For my first home purchase in 1996, I looked at around 25 houses.
    • For our second home purchase, my wife and I looked at 20 different homes.
    • There is no need to rush the decision on this investment which will be one of our largest purchases of your life.
  • Who is helping you?
    • It is a very big decision so you should seek professional help.
    • Secure the services of a good realtor that knows the area and has sold many houses and helped many buyers.
    • Interview 2 or 3 before you make the selection.

“Prepare your work outside; get everything ready for yourself in the field, and after that build your house.”
Proverbs 24:27 (ESV)

As a Man Thinketh… What Do the Voices in Your Head Say About Managing Money?

Voices in Your Head about Managing MoneyDo you ever talk to yourself? Do you hear voices in your head? I know I do.

No, I am not crazy. But I do believe that we all have “voices in our head” that influence our path of action in any area of our lives.

Sometimes there is a voice speaks from our childhood, what we heard from parents or teachers about what we could do or should do.

Perhaps the voice of a spouse or a significant other who can either help to build up or tear down our self-worth.

Or it could be the voice of a supervisor which influences what we think about ourselves and our value in the market place.

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What about Managing Money?

When it comes to managing money, we also have many voices in our head.

The voices of the news shows which speak to the current state of the economy and whether or not the American Dream is still alive.

Or the voice of the politician who thinks government is the answer to all of our economic problems.

Or the voice of a friend or relative which believes winning with money is just a dream and that you are better off by playing the lottery and hoping to win it.

After all, someone has to win. Right?

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Carefully Filter What You Hear

In terms of how you and I can be successful in managing money, it only matters what we believe is true about our particular situation.

It is not about what the media thinks, what politicians think, or even what your relatives and friends think. Neither one of them pays your bills.

Neither one of them is in charge of your economy. You are in charge.

Even the advice you receive by reading this blog matters very little if you don’t take action on it.

It only matters what you believe to be true, because your success is ultimately determined by what you believe.

So, ask yourself these questions and consider your answers:

  • Do you think it is impossible to live on a budget? Or do you think if someone showed you how, you could do it?
  • Do you believe that you will always have a car payment? Or do you think it is possible to save and pay cash for your next car?
  • Do you believe credit cards are a way of life, or do you believe that it is possible to live without relying on plastic?
  • Do you believe you should focus on building your credit score, or do you believe that you should focus on building wealth?

How are you doing so far?

  • Do you believe in spending all the money that comes in, or do you believe that you should save for a rainy day?
  • Do you believe that you could really plan and save for retirement, or are you resigned to live on Social Security and Medicare?
  • Do you believe that the only way to go through college is with student loans, or do you think that scholarships, work, and savings are a better option to cover the expenses?
  • Do you believe is up to the government to help you and fix all of your problems, or do you believe that it is up to you to lead your household by doing what it takes to get control of your financial situation?
  • Do you believe is up to someone else to help those in need, or do you believe that as you improve your financial situation you can then truly give and help others?

In the end, it is all about what you believe. Your beliefs will determine your actions.

So, what are the voices in your head saying about managing money?

“Finally, brethren, whatever is true, whatever is honorable, whatever is right, whatever is pure, whatever is lovely, whatever is of good repute, if there is any excellence and if anything worthy of praise, dwell on these things.”
Philippians 4:8 (NASB)

10 Reasons for Getting You Finances in Order

10 Reasons for Getting Your Finances in OrderEvery New Year, one of the most popular resolutions people make is to finally work on getting their finances in order.

Unfortunately like many other good resolutions we make, lots of people fail to follow through on their good intentions.

But I believe that when we have the right motivation for completing a task, we will be more successful.

What’s Driving You?

Any great endeavor has to be begin with answering a short but profound question: why?

Let me give you an example. As you may have read on the blog, I set some goals for weight loss this year.

That has involved eating healthier and exercising more. Now, I know of course making better choices with food and moving more is good for you.

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But that’s not enough of a “why” for me. Just having an intellectual grasp of the facts, did not cause me to do anything about it.

What got me going? What was my reason for taking action earlier this year?

Simple: I got a little scared about my health. As I get older, I know if I don’t deal with my weight issues it could mean a lot of health problems sooner than later.

That was the reason that caused me to take action because I have many things I want to do. I want to serve the Lord for as long as I can.

I want to be there for my wife for as long as I can. I want to be around my family for a long time.

What About Your Money?

When you think about your money, most people know that spending less and saving more is good for you.

Most people know that is better to live debt-free is better than being burdened by all kinds of debt.

But intellectual agreement is not enough. You need to find your “why” for getting your finances in order.

You need to find the motivation, the right reasons for you.

When you have the “why”, you will be willing to deal with the “what” and the “how”.

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10 Reasons for Getting Your Finances in Order

So let me give you something to think about. You may want to work on getting your finances in order because:

  1. You are sick and tired of living paycheck to paycheck.
  2. You don’t want to keep use credit cards or other borrowed money to cover emergencies any longer.
  3. You are stressed out about the amount of money you owe and you want to be free of the shackles of debt.
  4. You and your spouse constantly fight about of money and you are afraid your marriage won’t survive much longer.
  5. You want your kids to learn to handle money better than you and have a legacy of sound financial management.
  6. You want to go into your golden years with a home that is free and clear of any debt.
  7. You love your job but you want to have the option of leaving on your terms when you are ready for your next stage in life.
  8. You want to retire with dignity, without having to depend on the government or anyone else to take care of you.
  9. You want to be an extravagant giver to your church and/or to cause that matters to you. You want to be in a position to help others.
  10. You want to take care of your family now and even after you are no longer here.

Some of the reasons on this list may resonate with you. But I am sure you can find others.

Whatever, your reasons may be find them today.

Once you do, I can help you with the “what” and the “how” for getting your finances in order.

Question: What’s your main reason for wanting to get your finances in order?

Book Review: 5 Key Lessons from “How the Mighty Fall”

Book Review:  5 Key Lessons from "How the Mighty Fall"I recently finished reading “How the Mighty Fall” by bestselling author Jim Collins.

In this book Jim covers what makes companies that were once great decline and fall.

Through careful study of the companies, their decisions, and their results he identifies five stages of decline.

He also shows us that it is possible to reverse course and for those companies to go from decline to greatness again.

As the book says, “As long as we never get entirely knocked out of the game, hope always remains.

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As I went through the book I kept thinking that these stages of decline and their key lessons apply not only to companies and organizations, but also they could apply to individuals. In other words, you and me.

More importantly for the purpose of my financial coaching and of this blog, I believe these lessons can apply to our personal finances as well.

So here are the 5 stages of decline for companies that were once great, and the 5 key lessons from “How the Mighty Fall” that can be applied to our finances.

Stage 1: Hubris Born of Success

Hubris of course is another word for pride. In the book, Jim indicates that Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underling factors that created success in the first place.

How could we become arrogant in terms of our finances? I can think of a couple of ways.

First, we may have a great income. We either have a great steady job or maybe we are great at sales. We think we can always earn what we have always earned and even more.

Second, we spend and spend without regard to optimizing our purchases. We just think we can always catch-up with the next paycheck or the next big bonus, so it does not matter what we pay for something today.

We just simply think that we can’t fail because of what we have earned in the past.

“Pride goes before destruction, And a haughty spirit before stumbling.”
Proverbs 16:18

Stage 2: Undisciplined Pursuit of More

The pride of stage 1, leads right into Stage 2: “the Undisciplined Pursuit of More –more scale, more growth, more acclaim, more of whatever those in power see as ‘success’.

I believe the application to our money management is clear for this stage. We all battle with the disease of wanting more things.

We want the newer car model all the time, so we fall into the trap of car payments or worse car leases.

We get the raise at work and we just want to move up in house right away, stretching our budget to the maximum instead of using the extra money for saving more or paying down debt.

Speaking of debt, because we all want more and more things now, we use credit cards without control and we fall into more and more debt.

“A good name is to be more desired than great wealth, favor is better than silver and gold.”
Proverbs 22:1

Stage 3: Denial of Risk and Peril

In this stage, “leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data.

How can see this in our financial management? Well, perhaps we get into tons of credit card debt, but we are ok because we have a great FICO score and if we need to, we can always borrow more money.

It is also possible that even though we have no emergency savings, we feel ok because we have equity in our home. We could always get a home equity loan if we really needed to do it.

And what about not having the proper amount of insurance? Well, we’ll just take a chance that nothing bad is going to happen.

We can deceive ourselves into thinking everything is ok, even when we don’t have a firm financial foundation.

“A prudent man sees evil and hides himself, the naive proceed and pay the penalty.”
Proverbs 27:12

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Stage 4: Grasping for Salvation

By the time you reach stage 3, the signs of decline are clear. In stage 4, the companies respond “by lurching for a quick salvation”. In other words, they want the quick fix, the magic pill.

With our money it might look something like this. We think we if we can just consolidate all of the credit card debt into one single payment, we will be ok. So we just move the debt instead of paying it down.

We can’t afford to send the kids to college, so we take a home equity loan and put our home at risk or we further delay saving for retirement.

Of course, the ultimate quick fix these days seem to be to just give in and declare bankruptcy. Now, there may be situations where we are forced to go into bankruptcy due to medical bills, a failed business, or a large tax bill.

But bankruptcy is not a panacea to heal all of our financial problems. It is a major financial decision with long term implications. It is not a simple quick fix.

“The naive believes everything, but the sensible man considers his steps.”
Proverbs 14:15

Stage 5: Capitulation to Irrelevance or Death

In stage 5, “Accumulated setbacks and expensive false starts erode financial strength and individual spirit to such an extent that leaders abandon all hope of building a great future.

An interesting finding in the book for me was that “Organizations do not die from lack of earnings. They die from lack of cash.

And that’s the key lesson of this. When we really on debt, on a quick fix, a risky investment, a government program, we are simply building on quick sand instead of building on a firm foundation.

When we get to this stage, there is no more leverage, no more credit lines, and no more home equity loans. So what do we do? Is there no hope?

“Hope deferred makes the heart sick, but desire fulfilled is a tree of life.”
Proverbs 13:12

So what, is There No Hope? Hardly

There is always help and hope for your finances!

In his book Collins reminds us that some of these companies fought their way out of decline and back to greatness.

They did it by getting back to the disciplines and practices that made them great in the first place.

You too can get back on the path towards financial wellness. You too can learn the basics of personal finance management.

You can get on a budget, save for emergencies, and get out of and stay out of debt.

You can apply discipline, focus, and sacrifice to get you and your family a better financial destiny. You never, ever have to give in and capitulate.

“Failure is not so much a physical state as a state of mind; success is falling down, and getting up one more time, without end.”
Jim Collins (“How The Mighty Fall”)