WE need to downsize. My Spouse/Partner says, ‘No Way’. HELP! (Part 5 of 5)

If you’re just jumping into this Blog series, I encourage you to go back and read Parts 1-4.  I’ve been sharing about my experiences as a residential Realtor® working with the Over-55 homeowner.   In this capacity I often work with couples who are not in agreement on the need or desire to move to safer or smaller living spaces. Today we are going to talk about Reason #6. I have saved it for last because it is the #1 problem homeowners have when made the decision to downsize: getting rid of stuff.

 

We are a culture of stuff.  We have all sorts of events and celebrations to bring stuff into our homes: birthdays, Christmas, Hanukkah, anniversaries, housewarmings, etc.  We have only one ritual (that I can think of) for getting rid of stuff: garage or tag sales.  The result is that after years in a home, our decision to downsize may not be OUR decision: it is often dictated by our willingness and ability to get rid of stuff. For many homeowners this is perceived as an impossible task or, at every least, not on the top of a “to do” list and therefore suffers death by procrastination.

 

6) Unwillingness to give up stuff.  This point of resistance is extremely difficult because you may be in a situation where stuff does rule your decision.   Getting rid of personal items, furniture, and other detritus of our lives after decades in a home is hard, time consuming, expensive, and physically exhausting. This is true if there is no emotional attachment to the items.  If there is an emotional inability to get rid of things the move will be virtually impossible and requires professional intervention.  I won’t deal with that in this blog.

 

I have found that generally an over-55 homeowner has the capacity to clear a home, but that ability diminishes as one ages.

 

Age 50-60: Most homeowners have the mental and physical ability to make and execute the decisions involved in clearing their homes.

Age 60-70: Health and physical limitations begin to inhibit the ability to remove things or cognitive issues cloud the ability to make decisions.

Age 70+: The ability to clear a house is often not possible without third party help.

 

The first thing I ask you to fully grasp is this: Someone must do it.  If not you, it will be your adult kids, friends, or other family members.  Do you want to pass the burden to them?  Do you want them to be in your personal items and making decisions for you?  Clearing a home is a tremendous amount of work and expense.  I have had adult children tell me that getting rid of Mom and Dad’s stuff took a huge toll on their lives.  In addition to the physical burden of doing it, the task strained marriages, finances and relationships, permanently divided siblings, and delayed or squashed the ability to grieve the loss of a parent.

 

“Claire” told me that 3 years after clearing her dad’s home she was still angry at him for putting the burden on her. Prior to his death she and her brother had begged their father to deal with his “stuff”.  They offered their help and assistance, but he refused.  The settling of the estate and getting rid of her dad’s household items took 18 months of weekends, evenings, and holidays. It kept Claire and her husband from going on vacations and even put off having their first child because she knew she had to get this task off her agenda before she could be a mom.  Only recently did she begin talking with her brother.  The task had put so much strain on that relationship that she thought the estrangement was permanent.  Do you want that for your family?

 

Experts have said that it takes one week of full-time clearing of a home for every year you have lived in the home.  I think that estimate is optimistic unless one hires professional help.  Most of my clients have said it took them months, even a year or longer to be ready to move to a smaller space. Hiring a third-party organizer is very helpful and expedites the process.  Be prepared to spend $10,000 or more to clear a traditional 4 BR 2.5 bath home, more if there is stuff in a basement or garage.

 

Finally, recognize that if you don’t make the decision to clear your home and downsize, the decision will be made for you.  Age is not a respecter of our timetables or desires.  There will come a day when a medical emergency or even death takes this decision out of your hands and puts the task on others.  Be proactive and in control of that path by getting started now.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Kathy has written a resource for Central Ohio homeowners who wish to get rid of stuff.  Find Kathy’s book “Got Stuff Get Help” at our website www.DownSizeColumbus.com  Thinking of Buyer or selling a home?  Find Kathy and her team at www.OurOhioHome.com

WE need to downsize. My Spouse/Partner says, ‘No Way’. HELP! (Part 4 of 5)

If you’re just jumping into this Blog series, I encourage you to go back and read Parts 1-3.  I’ve been sharing about my experiences as a residential Realtor® working with the Over-55 homeowner.  No matter how much we love a cherished home, age and health catches often force a decision to consider downsizing.  Relationship problems arise when the recognition of a need to slow down and “move down” the housing ladder is not reached at the same time by two partners.

 

In my previous Blogs I offered suggestions for countering resistance points #1-4. Today we are going to look at #5.

 

5) Fear of the unknown: I don’t want to give up what I know for a future I don’t know.  As we age change becomes more difficult.  We know our streets.  We know our mail delivery person. We greet Larry at the deli in our grocery store.  We know and trust our neighbors.   Starting over is hard and not a welcome task for many.

 

This challenge is tackled by turning and “unknown” into a “known.”  Fear is often based in lack of knowledge.  I recommend visiting some of the communities under consideration.  If you are considering retirement communities attend a ‘lunch and learn’ or tour the community.  Ask to speak to a resident who faced the same challenges.  The staff at these centers understand the fear you face and are ready to answer questions.  If you are considering a purchase of a smaller, single-family home, patio home, or condo contact a good Realtor® who has knowledge of the differences in these kinds of housing and what they offer you.  I have often introduced the “nervous new-bies” to my clients who already live in a community under consideration.  This firsthand, empathetic knowledge is often the best source for answering questions and calming concerns.

 

Finally, understand and remember that you have “changed” through seasons of your entire life.  The transitions from grade school to high school to college to marriage to children to empty nest…on and on.  You survived, adapted, and, for most, thrived.  This transition can be the same.  While tinged with some sadness and reluctance, this last ‘chapter’ can be one filled with great new memories, friends, and traditions.

 

Next week’s blog will look at how to combat resistance point #6 Unwillingness to give up stuff.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com

WE need to downsize. My Spouse/Partner says, ‘No Way’. HELP! (Part 3 of 5)

If you’re just jumping into this Blog series, I encourage you to go back and read Parts 1 and 2.  I’ve been sharing about my experiences as a residential Realtor® working with the Over-55 homeowner.  It is not uncommon that in a household of two, one of the two is not eager to leave a well-loved home.  Despite the encouragement of adult children, doctors, and other friends who have already walked the “downsize road,” there is still reluctance or even defiance.

 

In my last Blog I offered suggestions for countering resistance points 1 & 2 as noted in the first Blog on this topic.  Today we are going to look at #’s 3 & 4.

 

3) My home is my castle: fear of living somewhere owned by someone else and living by someone else’s rules.   This is a tough one because unless you choose to move to a smaller, safer single-family home (which, for some, is an option) it’s true.  If you choose to move to a condo or patio home community, there will be strict rules governing the use and enjoyment of the outside of your home. If you move to a retirement center, you will have virtually no control of your living environment.  You can decorate and make the interior of your apartment like your home, but you don’t own it. There may be restrictions to what you can do or what you can or cannot bring into the space.  You often can’t control noise and hall-neighbors. Even dining times and schedules can be dictated.  You may or may not still have the freedom to drive your own vehicle depending on your health and ability.

 

The way to look at this challenge is the trade-off’s: I don’t control the exterior living areas around my new home, but I also don’t have to pull out the snow blower in December.  You can’t control noise and hall-neighbors, but you HAVE noise and neighbors: new friends and freedom from isolation you may have felt in your home.  You must go to the dining hall during times dictated, but delicious and nutritious food is planned, shopped for, and prepared for you, taking this expense and chore ‘off your plate.’

 

Many times, these communities offer recreation and opportunities to engage in hobbies that were not available to you in your home.  Your independence can be channeled into a myriad of choices: how do I want to spend the new free hours I have every day.

 

4) Fear of giving up traditions that revolve around a loved home.  This one is easy.  The traditions are loved because the people they involve, not the room in which they occur.  Traditions can be recreated in a new space.  Often, I’ve been told by downsizers that they love the new traditions that develop because Mom and Dad gave space for adult kids to become the orchestrators of holidays and events.  Sit back and enjoy.   You’ve earned it.

 

Next week’s blog will look at how to combat resistance points #5: Fear of the unknown.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com

Does my Realtor® make too much money? (2 of 2)

In last week’s blog I started the discussion about a Realtor’s® commission.  If you have interest, go back, and read Part 1.  This week I’m breaking down the difference between the check at the closing table and the income of a real estate agent.

 

I will give you statistics, then I will give you anecdotal reality: The median gross commission income of a part time Realtor® (10-30 hours per week) is $43,400.  The average gross income of a full time Realtor® (30-40 hours per week) is $87,550. The licensee devoting 40-60 hours+ per week is earning $145,000. * The gross commission is the number seen on the settlement statement.  (The one my client “wow-ed” over.)  But, this figure reflects the “whole pie” not the “piece” that the agent takes home as income.

 

The Agent works under the legal umbrella of a Broker.  The Broker provides the “B’s”:  brand, building, backing and, to varying degrees, mentoring, and training. Once that commission check leaves the closing table it goes to the Broker who takes 5%-50% of the total commission depending on the terms of the Agent’s contract with the Broker.  Out of the licensee’s side of the ‘split,’ is paid monthly fees for the office rental and/or services, technology, systems, and any marketing and ‘tools’ needed for the job.  Then, a responsible Realtor@ sets aside money for taxes, retirement, and future business investment. Because Realtors® are independent contractors health insurance is our responsibility. (In 2020, mine was approaching $2000 a month. My retired husband took a job at Costco purely for the health benefits.  Even if they paid him nothing, we gained $24,000 a year.)

 

Depending on the amount of the Agent’s split with the Broker and tax obligation, the average agent’s actual income is 36% of the initial 3% commission.  Using that average, let’s look at the actual income of a Realtor®. In Columbus the average sales price of a home is $275,000.  A 3% commission from that sale is $8250.00.  After the Agent pays the Broker, Office fees, and taxes the “take home” is approximately $3000.  The average agent has 10 transactions a year.  You do the math.   Therefore 87% of newly licensed Realtors® will be out of the business within five years. **

 

Can a Realtor® make a good living?  Absolutely. The top 10% of salespeople make well into 6-figures; the top 1% are earning 7-figures and retiring where the sun shines.  My work has compensated me well for 25 years, but make no mistake, it’s work.  7 days a week, often 10 hours a day.  It is self-employment at its best and worst.

 

Still, many Realtors® will tell you that we love our jobs.  We love the freedom of self-employment, the limitless potential of income, (to some degree) holding our financial destiny in our own hands.  We like having no boss but ourselves: often the toughest of task masters. We like waking up each morning with a plan: knowing that a text from a client will throw that plan to the side. We appreciate working in our home offices while the sun shines outside, knowing that if we feel like it, we can get leave that office to enjoy that sun.  We thrive on the energy of creating a business and working with colleagues. We like houses and design and love the love people put into their homes.

 

Finally, the best Realtors® will tell you the real “pay off” is the satisfaction with the knowledge that we guided a client to homeownership or their next step in life with expertise, sterling ethics, and determination to help them make a solid investment in their new home.  While it doesn’t show up on the settlement statement, knowing you earned the thanks, trust and lifetime loyalty of a client is gold.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com

 

  • The National Association of Realtors, 2020

** www.theclose.com February 18, 2021

Does my Realtor® make too much money? (1 of 2)

Many Realtors® have heard the comment made at the closing table.  The settlement statement is in the hands of the Buyer and the Seller.  On that statement is the disclosure of all the costs assigned to the Buyer and the Seller including sales commissions paid to the respective Brokerages. Someone says “Wow! I’m in the wrong business! You Realtors® make a lot of money!” This perception of easy wealth is what causes the ranks of  real estate licensees to swell when the market is good.  There are over 8,000 salespersons licensed with the Columbus Board of Realtors.  (That, by the way, is more than 4 times the number of homes we have on the market. )

 

As with any purchase by the consumer, what you pay is only “too much” if you don’t get equal or better value for what you have paid.  This includes the services of a real estate agent.  If you are hiring a licensee who exhibits little experience and the service, they provide is little more than a sign in the yard, photos with a smart phone, and entry in the MLS, you are likely overpaying.  If you hire an agent who doesn’t return phone calls or texts in a timely manner, you are paying too much. If your agent leaves your dining table and you don’t know a “plan of action” or clear knowledge and understanding of pricing, protocols, and processes of the sale – ask the agent to cut their commission.

 

A good agent is like WAZE. (Or if you’re my age, TripTik.). It’s our job to know the road ahead of you and the best way to get there.  With the greatest respect to you as a homeowner or home buyer: your Agent should be in the driver’s seat.  And (very important) they should have earned your trust to allow them in the driver’s seat.  Your Realtor® is there to guide you to your purchase or sale destination with fore-knowledge of potholes, detours, options, and ‘accidents’ to avoid.  They should know the answers to your questions or know where to get the answers. They should be able to assure you what is “normal” to the transaction and when reactive intervention is necessary.

 

We are responsible for guiding you through a maze of legal documents, financial options, speculative futures, and trending pasts.  It is understanding people and houses, moods and finances, law and emotions. It is climbing steps and crawling dark spaces; it is driving on ice and parking in mud. It is doing everything right and being penalized for someone else’s wrong; it is being the best in the business and functionally unemployed when the economy is in a recession.  Your work is subject to the whim of a client’s loyalty and our nation’s economy.

 

But, back to the money.  Is it true? Is it easy money? Are we all wealthy? Next week I will break down that commission check you saw at the closing table.  How much of that check ends up in an agent’s bank account?  That’s next week’s blog.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com

WE need to downsize. My Spouse/Partner says, ‘No Way’. HELP! (Part 2 of 5)

Last week I wrote about the reluctant spouse.  One party in a household sees a need to downsize, the other does not.  The inability to agree causes great friction and pain in the relationship.

 

If you are the spouse who sees a need to downsize, what can you do?

 

I will start with the bad news first.  There are situations that do not resolve themselves.  There are times when the spouse who refuses to make a change never moves off their insistence on staying in place. In this case one of two things happen: the reluctant spouse dies in the home leaving the clearing, selling, and downsizing to others OR a crisis forces the move.  In other words, when Mr. Collins refuses to make the decision, the decision is made for Mr. Collins in the form of a crisis: medical, financial, or relationship. Or the decision is made by death which forces only the decision about moving, it doesn’t solve the myriad of decisions that go along with downsizing.  Those decisions are left to someone else.

 

The first recommendation I make is to identify the resistance points that keep your spouse from taking steps toward this needed transition.  Don’t minimize or dismiss the concerns, but rather look for creative solutions.  Let’s look back at the list from last week’s Blog:

 

  • The “I can do it.” excuse. What are the tasks that he or she can “still do?”  Mowing? Snow shoveling, cleaning gutters or toilets? Is it really that these chores are what he or she enjoys doing or is it an inability to admit that the efforts are getting more difficult or even dangerous?  What would your spouse enjoy doing instead of these things? Rather than couch the question in an assumption of inability: “You can’t do that anymore! It’s too dangerous!” Change the assumption: “Instead of spending time cleaning gutters, would you rather golf?”  Putting home maintenance and chores behind you clears more time for the “want-to-do’s, hobbies, and valued relationships.

 

  • Fear of giving up independence. This is a close cousin to the “I can do it” excuse.  In a culture where independence is prized and needing help is described as “a burden” this is a reasonable fear.   What does your loved one fear losing control of? Take a good look at residential downsizing options.  A close examination of living options will allow you to see that it is not necessary to give up independence to gain safety and ease of living.  A smaller, ranch-style single family home, condo or patio home gives you complete independence in an environment where the tasks most associated with safety risks or physical challenge are eliminated.  Most retirement communities have “Independent Living” options which give you complete autonomy of lifestyle while assisting with chores and daily needs. For many, this kind of assistance is welcome.

 

Next week’s blog will look at how to combat more resistance points in a non-combative way.  Remember, there comes a point in life and aging where if you don’t make the decision, the decision is made for you.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com

WE need to downsize. My Spouse/Partner says, ‘No Way’. HELP! (Part 1 of 5)

As a Realtor® specializing in the over-55 homeowner, I am well equipped with knowledge and tools to prepare homeowners to move to a smaller home, to another state, or to a retirement community.  In the best of situations, I meet with a husband and wife unified in their commitment to sell the home and simplify their lives.  We discuss the sale of their home, the timing, and I provide resources to help them with this challenging transition.

 

However, it is quite common that there is a “driver” of the decision and a partner who is a reluctant passenger or, at worst unwilling to even get in the car.  The body language is clear: hands across the chest, a look of disinterest, a failure to engage in the conversation.  There are even times when the reluctant partner is in the home but does not come to the meeting of Realtor® and the inquiring spouse.   What is a spouse/partner to do?

 

The lack of engagement in the decision to downsize can be a simmering annoyance: Mr. Smith is ready to trade a snow shovel for a golf club and move south, Mrs. Smith doesn’t want to leave her quilting club.   It can also be dangerous.  Mr. Jones has fallen three times and is no longer able to safely navigate stairs but refuses to consider a move. Mrs. Cole struggles with dementia and is not taking her medications but becomes argumentative when the suggestion is made that she needs assistance.

 

In my experience the hesitation to downsize comes from several different places, but here are the ones I hear most often:

 

  • The “I can do it” excuse. This is the man or woman who refuses to believe or admit that he or she is any less capable than they were 20 years ago.  I can still mow the lawn.  I can still carry laundry from the basement.  I can still climb a ladder.
  • Fear of giving up independence. A close cousin to the “I can do it” excuse, this one says “I don’t want anyone having to take care of me, drive me, remind me, guide me, or tell me what to do.”   This is a reasonable fear especially in western culture where independence is prized, and age is equated with reduced capacity.
  • My home is my castle: fear of living somewhere owned by someone else and living by someone else’s rules.
  • Fear of giving up traditions that revolve around a loved home. Thanksgiving around the table in the dining room shared for 30 years is difficult to walk away from.
  • Fear of the unknown: I don’t want to give up what I know for a future that is, at best, different and, at worst, completely unknown.
  • Unwillingness to give up “stuff.” The reality of downsizing is that not all your “stuff” can go with you.

 

Next week’s blog will look at how to combat these arguments in a non-combative way.  The truth is, there comes a point in life and aging where if you don’t make the decision, the decision is made for you.

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com

Are Home Seller’s Greedy?

I recently followed a thread on social media.  A frustrated Buyer was complaining about her inability to purchase a home after making “great” offers on four houses.  The owners of these homes are “money hungry” and “greedy” she said. The writer went on to say the homeowners “don’t know what it’s like” and are “selfish” for not prioritizing the Buyer’s emotional investment in their home over their bottom line.

 

Wow. Where do I start?

 

As a Realtor® who lives, works, lists, and sells in this hyper-Seller’s market let’s separate fact from emotion.  First, there are greedy homeowners.  I have had to refrain my eye-rolling in front of homeowners who are disappointed that they “only” got list price on their home or “only” received 5 offers when their neighbor got 10.  I have had to tell a client “No” when they asked to go back for more when a Buyer has presented a spectacular offer.  However, I can attest that those homeowners are a fraction of my listing clients.

 

The truth is, the owner of the home you want is not an instigator of the auction-style method of home buying.  They did not scheme a scenario to require you to bid against an army of competitors.  The Seller does not demand that you bring thousands of dollars over appraised value for the privilege of buying their home. In short, the Seller is not the creator of this market.   The factors that put the homeowner in the position of holding the rose in the real estate version of The Bachelor are as complicated as Keynesian Economics and as simple as supply and demand.

 

In short, there are way too many Buyers for far too few listings. The Central Ohio market should have 15,000 homes on the market to provide even supply and demand.  At this writing there are 1600 homes available.  Our housing market is a bakery with no bread on the shelf.  When a hot loaf comes available, there are 25 Buyers in line to purchase it.

 

A smart Realtor® advises the homeowner to price their home close to perceived appraised value.  Then the home is listed and the “for sale” sign on a new listing goes up.  The sign is synonymous to a red flag in front of the bulls of Pamplona.  As many as 40-50 Buyers are going to view the home in a period of less than 72 hours.  This results in a dozen or more willing to make an offer ~ all over list price. Virtually all of the homeowner hopefuls will waive the right to ask for repairs after a home inspection and    most will be willing to give the Seller some money over the appraised value.  Many will give the homeowner the right to live in the home after closing for up to 60 days at no charge.  That is a normal offer in this market.   So, if that is “all” the Buyer is doing, it’s not enough. The winning bid will offer to waive the home inspection altogether and give even more cash to the Seller in the form of even more money to cover the “appraisal gap” or to pay the Seller’s real estate fees.  Or both.

 

Who is driving this frenzy?  The greedy homeowner?  No.  In fact, the homeowner has done nothing but choose to sell their home, vacate for a few days for showings, and show up on Day 4 to view the offers.

 

What is driving this frenzy?  Low interest rates, the hope of home ownership, and Buyers willing to break all conventional rules to own their piece of the American Dream.

 

Who benefits from these factors?  The homeowner in 2021.  Not the greedy homeowner.  Not the selfish homeowner.  Just the homeowner who happens to need to sell in an economic environment that we will likely not see again in our lifetime.  And, the winning Buyer.  They carry a couch into their American Dream and (hopefully) never look back.  Did they pay too much?  That’s next week.

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com  Ready to sell? Contact us for a no-obligation analysis of the value of your home.

Are you ready to buy?

You’ve saved your down payment.  You’ve saved a little extra to stretch You’ve shined your credit score. You’ve gone online and found your dream home. You’ve chosen your Realtor®.   You are ready to buy a house.  Are you?

 

This housing market is not for the faint of heart.  You are facing a home sale market in which there are literally a hundred potential buyers for every home that comes on the market.  In the challenging market you face in Central Ohio it is not enough to be financially ready to buy a house. You must be temperamentally ready.  What does that mean?

 

Here are a few scenarios for which you must be ready to become a homeowner in a market where demand far exceeds supply.

 

  • Did it take you three weeks to buy a car? This may not be the market for you. This market demands quick decisions. Most homes will go into contract within hours of going on the market.  You may see a home at 10:00 a.m. and the listing agent gives a deadline of 6:00 p.m. to have offers in.  Unlike a ‘normal’ market there is rarely time for a second walk-through or second thoughts.

 

  • Are you able to handle the crowds? You likely will not have a ‘private showing’ on the home.  Depending on the demand for the home, the driveway may look like a parking lot, the home may be filled with other interested parties and the line out the door will look like a Honeybaked Ham® store on the day before Thanksgiving.  Frustrating? Absolutely. Reality? Absolutely.

 

  • Are you able to break all the rules you have learned about buying a home? Negotiate down off of list price? Won’t happen.  When a home is priced well negotiating starts at list price and goes up.  Home inspection important to you?  You may have the right to a home inspection (the more competitive Buyers waive that right) but you likely won’t have the right to ask for repairs.  Unwilling to pay over appraised value?  The Buyers who win waive the appraisal value and bring cash to closing.

 

  • Are you willing to compete for a home? In the first week a home is on the market it is not if you will compete with other potential homeowners, but how many you will compete with. If the home is overpriced, it will still be on the market in a week, and you may have an opportunity to purchase without competing with other.

 

  • Are you willing to move twice to get a home? You own a home.  You need to sell it to buy your next home.   This is a market where the competition demands a non-contingent offer.  The homeowner on the home you want does not have to take on the risk and time of you selling a home, and they generally won’t. You will need to move twice e., sell, move into temporary housing, and then purchase a home.

 

  • Are you comfortable with the Seller living in your home after closing? In this market, you’ll get the keys when the Seller is ready to give you possession.  If the Seller needs the home for up to 60 days after closing, the winning Buyers will give it to them.  At no cost.

 

 

While there are exceptions to these realities, they are realities, and they are typical.  If this is not the home buying experience you are prepared for, you might be more comfortable to trade the Seller’s market (less money and perks’ on the sale end) for a more favorable Buyer’s market.

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com  Ready to sell? Contact us for a no-obligation analysis of the value of your home.

I don’t have a LOW credit score. I have NO credit score. Can I buy a house?

Let me start by saying that I’m a huge Dave Ramsey fan.  Dave Ramsey, founder of Ramsey Solutions and a get-out-of-debt guru, is all about staying debt-free and living a cash-only lifestyle.   I agree, debt-free is the way to go.  In a perfect world none of us would have debt.  But I live in a house buying world where debt, called a mortgage, is the only way the vast majority of buyers can purchase a home.

 

I recently had an experience with a client that made me want to sound warning bells.   John and Sarah (not their real names) sold their home in 2019.  They moved into an apartment while looking for their next home.  They had the proceeds from the sale of their home in the bank and one credit card in John’s name which carried a very low balance. They paid this credit card off every month.  While I don’t know if John and Sarah were Dave Ramsey fans, they could certainly be Dave Ramsey stars.  They could have called into his radio show (as many do) and yelled “WE ARE DEBT FREE!”  but could they still buy a house?

 

A couple of weeks ago they found “the” home and called their loan provider to update their preapproval status so that we could make an offer on the home.  They were shocked to find out that in the absence of any debt in her name, Sarah no longer existed in the credit reporting system.  The home they sold in 2019 was the only debt she had.  Sarah had no credit cards, no car loans, nothing in her name.  She worked and her income was necessary to purchase a home, but the lapse in having ANY credit had a devastating effect on their ability to buy Sarah didn’t have a LOW score, she had NO score. To the Consumer Finance Protection Bureau – the gods in the credit sky that disperse credit worthiness – Sarah was “credit invisible,” thus a higher risk to a mortgage provider.

 

According to Dave Ramsey, this is a good thing.  I pulled from his website: “Turns out that one of the wisest things you can do for yourself, and your family is lose your credit score. It means theres absolutely zero chance youre currently in debt or at risk of slipping into debt anytime in the near future.”  Ramsey does admit that you will be “less likely” to be able to purchase a home with no credit score unless you go to one of his endorsed mortgage providers.  He provides a link to one his loan buddies through which if I get my loan, I may get a house and Dave Ramsey gets paid.   Hear me on this:  re-read my first line.  I am a big Dave Ramsey fan.  Nothing illegal here, nothing even unethical.  He is a terrific entrepreneur who has found a way to make A LOT of money advising you how to keep yours.  But the truth is, having no credit score can make it much more difficult, and costly, to borrow money.

 

To borrow money, you must get the approval of a human underwriter or electronic underwriting system. Underwriting is the verification of your ability to borrow, approval of the loan, and authorization for dispersal of funds. Most banks/mortgage companies use electronic or “desktop” underwriting (DU).   No human sees the verification data until hours before closing.  DU will kick you out immediately because you do not have their primary determinant: a credit score.  With no credit score you must go to a mortgage company who still does their underwriting manually.  This means all parts of the approval process are still done by a person (think 1983) and your lack of credit can be explained.  The human underwriter will seek out other forms of payment history such as utility or phone bills, verification of rent or car payments.   This added effort has an added cost.  Expect to pay a slightly higher interest rate for what the bank believes to be higher risk.

 

The solution?  Sorry, Dave, but my advice is to keep at least one credit source in your name and responsibly use it.  Like John and Sarah: one credit card, paid off every month.  Debt may be a destructive force when mismanaged, but proof of  a past of well-managed debt is still the only way most loan providers trust you with money at premium rates to pay back in the future.

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com  Ready to sell? Contact us for a no-obligation analysis of the value of your home.