Buyers tend to be very specific on the features they want in a house – number of bedrooms, bathroom, basement or no basement ,  garage or off-street parking, detached or townhouse, etc.

They are usually pretty sure on external factors like accessibility to public transportation and shopping.

But neighborhoods are way more complicated than those features and buyers are usually less specific in describing the perfect neighborhood. Most will say they want to be in a “good” neighborhood.

I say, “define low.” Are two car thefts okay? One breaking and entering? No homicides? Over what period of time?

That may seem a little extreme, but it points out that “good” and “low” are subjective – the question is “good” or “low” compared to what?

If you’re asking your real estate agent or your friends or even the local police for advice, you have to realize that their experiences are likely different from yours. What is good to me might be awful to you. I may be happy settling for less than you would be. Maybe this crime-ridden neighborhood is so much better than where I came from that it seems good to me, but would be unthinkable for you.

So ask objective questions. If you get an opinion, such as “oh that area has horrible crime problems”, ask what kind? I might be horrified by bike thefts and if you don’t ask me, you might assume I’m talking about homicides! So ask lots of questions. If I’m the only victim of a violent crime in the past year, you’ll get a very different story from me than from all the other residents who were not victims of violent crimes.

Here’s an idea – do you like where you live now? Go to the Factsheet on Census.gov and enter your current address.  (There is a list of additional resources at the bottom of this post.) Look at the average income per household, the average education per household, and so forth to get an idea of your current neighborhood demographics. Now look at your prospective neighborhood demographics.

If you come from a neighborhood of college graduates making an average of $100,000 per year, you might not be happy in a neighborhood of high school dropouts earning an average of $45,000 per year. 

The point isn’t for me to judge what makes a good neighborhood over a bad neighborhood; it’s just to add another tool to your arsenal of choosing a neighborhood you’ll like. Crime, income and education aren’t the be-all and end-all of neighborhood demographics, but it’s a start.

It may seem like a lot of work, but whether you’re spending $80,000 or $500,000 on a property, it’s a lot of money and it’s your money.

How to Evaluate Neighborhoods

HomesDataBase -- click on Explore Your Neighborhood
City Crime Rates and Comparisons
National Crime Prevention Council
RealtyTimes Crime Check
CIty-Data.com

(C) 2009 Susan Pruden.

I was previewing a listing recently -- really anticipating what I was about to see, based on the description of the property -- "turn-key condition" and "stunning" and so forth.

Well, you know what happened. I got inside and was really let down. There was spackle all over the walls, the windows and mirrors were dirty, it was dated and just kind of grubby.

This is sort of the norm -- we agents tend to put lipstick on the pig and then be surprised when the feedback is negative. I remember a buyer - years ago - saying with a sigh, "Well, let's go look at some more creampuffs!"

Here's the rub. When you have a really nice listing to market -- one that really is above average and a pleasure to see -- the superlatives have already been used up and made meaningless.

Well, I have one of those listings in Cheverly. It just wows everyone who takes the time to see the inside. It looks small from the sidewalk, but it isn't small at all. It's got loads more space than you would ever imagine, if you would just take the time to see it!

Turn key? You betcha. A cream puff? I think so. While it has been beautifully updated, it has the type of character that belongs in an older neighborhood - which is a nice change from some of the sterile re-habs that were thrown on the market in the past few years. The current owner put lots of love into this house and it shows.

How do you sort through all the puffery? Do you look for words and photos that match? Or do you just hope for the best when you're looking at homes? I'd like to hear from you.

By the way, if you click on the photo or the link above, you'll get all the information about this particular listing - I know you're just dyin' to take a peek! :)

(C) Susan Pruden.

The scenario is this -- you're a buyer and you're ready to look for a house. You've met with a lender, who has told you that you can get a loan for $350,000. You even have a lender letter that says you are pre-approved for that loan amount. Now you're ready to look for a house, right?

But lenders don't approve buyers for loan amounts, they really approve them for a monthly payment. Why is this so important to understand?  This is because there are things that can change -- two big ones, in fact. The first is the interest rate, which can change at any moment up until the time you lock your rate with the lender. The second is the property tax, which varies by house and neighborhood.

So, the lender says you are approved for a monthly payment of $2,550, assuming an interest rate of 5.75% and property taxes of $5000 per year (and you're putting down 20% to avoid that mortgage insurance). This works out to a loan amount of $350,000 -- with 20% down, that's a $437,500 house! Not bad! But let's assume that while you're looking for a house, the interest rates go up half a percent to 6.25%. Remember, you're still only qualified for a monthly payment of $2,550. The increase in interest rate translates to a loan amount of $331,700. 

That means that, with a 20% downpayment, you just went from looking at $437,500 house to a $414,600 house -- an $22,900 loss in buying power!

The same thing happens with changes in property taxes -- the property taxes are a huge factor in how much house you qualify for. I recently saw a lender letter approving a buyer for a house, but the taxes that the lender used were almost $4000 less per year than the houses we were looking at! It makes a huge difference.

So make sure you know what these numbers mean to you. If you're not sure, give me a call -- I can help you work out the numbers.

(C) Susan Pruden.

Yesterday I told the story of an offer that was contingent upon the buyer selling her house. The buyer didn't want to risk putting the condo on the market without a sure place to go.

The seller didn't want to take his house off the market unless the buyer made a good-faith effort to sell her condo.

The answer for the seller was easy, he rejected the offer.

But what's a buyer to do? The big fear, of course, is that the buyer will successfully sell their property and then have no place to go. The idea of having no place for the family to live is downright scary for most people.

While there is always risk in buying or selling a home, a good agent will minimize the risk to the buyer by inserting a contingency into any offers on that buyer's home. It makes the contract contingent upon the buyer finding a house to buy.

We call it a "house of choice" contingency. It's so standard, we even refer to it as "HOC". It goes as follows:

"The Contract is contingent until (Deadline) to allow Seller to enter into a contract of sale to purchase another home of Seller's election. This provision and the Contract will remain in full force and effect unless, prior to the Deadline, Seller, upon written notice to Buyer shall declare the Contract null and void."

Voila. If the buyer can't sell his old property by the deadline, he simply cancels the contract (or negotiates an extension on the Deadline) and ends up with nothing worse than a cleaner house and some inconvenience.

Once the buyer's house is under contract (with that contingency firmly in place), then a seller will take a serious look at any offers the buyer may write.

So, what's that sequence of events again?

1. 1) Homeowner puts his house on the market, noting that he will be inserting an HOC contingency (see? you're picking up the lingo already!)
2. 2) Homeowner accepts an offer on his house and then writes an offer on the house he wishes to buy, this time putting in a contingency that his old house must go to settlement before he can settle on the new house.
3. 3) Seller of new property feels secure in taking his house off the market, knowing that the buyer's house is already under contract and therefore the risks are greatly reduced.

It's not perfect, of course. Contracts fall apart for many reasons, but at least no one ends up homeless.

(C) Susan Pruden.