Our garage hasn’t been this clean and organized since we moved into our house! Since we’re debating selling our house my wife is on a de-cluttering mission so we spent the whole weekend cleaning out our garage.

Organization Saves Money

One thing I was reminded of as we worked is how you can save money by staying organized.  Over the years we’ve bought duplicates of the same item since we didn’t know that we already had one.  Of course, it can also save you time since you don’t have to waste effort searching through your garage for something you need.

Donation Records

I made several trips to the Salvation Army with car loads of items to donate. I kept a list of all the items that we donated, a description, the number of items, and their value.  I also got out my Flip video camera and filmed them to help me remember come tax time what we donated.

Buying What You Need

Getting rid of all those things was a good reminder to only buy what we need.  Why spend our hard earned money on something we might be getting rid of in a few years?  Cleaning out the garage and hauling away loads of stuff made me want to never buy anything again : )

Keeping What You Have

Of course one question that’s an ongoing struggle is how long do you keep things that you think you might need in the future. I’m in the “keep everything” and my wife is in the “get rid of everything” camp so we clashed all weekend about what to keep and what to get rid of.  What’s your take, how do you decide whether or how long to keep something that you “might” need at some point in the future?

After several nights of weighing the pros and cons of buying a house one thing we realized is that we simply didn’t have enough information to make a good decision.  We haven’t been in the real estate market for years now so we don’t really know what our house will sell for or what we should expect to pay for the kind of home we’re looking for.

We’ve started doing some research and talking with our friends in the industry, realtors and appraisers, about the market and about our house. We also decided to start looking at a few homes to get a feel for various neighborhoods and price ranges.

Last time we were house hunting we had no house of our own to sell and no kids so it was a different experience. We spent yesterday afternoon trying to see a few houses and learned a thing or to about house hunting as parents.

Screen Houses Thoroughly Online

We don’t have a lot of free time so we have to be pickier about the houses we look at.  In the past, if we saw a house online that had a few things we weren’t crazy about we might check it out anyway just to see if we liked it. We had time to visit them so there was nothing to lose if we checked out a few houses that didn’t meet our criteira.

Now we can only see so many in a day so we’re only going to look at a house if it meets all of our major criteria.

Leave the Family Behind

After dragging our kids out of their beds from their naps and lugging them around all afternoon we quickly realized that the initial stages of house hunting were not going to be a family affair.

We could move much faster if there was only one of us driving to see homes.  Not only could we cover more ground in a shorter amount of time, the kids didn’t want to be cooped up in their car seats driving around all day.

From now on, one of us will check out a house that we’re interested in.  If we find any in our “scouting” that look good, then we corral the kids and bore them to death with a house visit.

Have a Quick Trigger

If you’re in the middle of checking out a house and you find something that’s a deal breaker, don’t be afraid to bail immediately.  Time is limited and there are more potential homes out there, waiting for you to find them.

We’re generally pretty polite so typically we would feel bad cutting a realtor’s tour short and saying adios.  Plus in the past we might have decided to keep looking around just to see if the rest of the place was awesome and might make up for the major shortcoming.

However, now our time for visiting homes is precious so if we’re in one and see something that is a red flag, we’re out the door.

Make Backup Plans

At the first house we were standing in the rain, car seats in hand, on the front door step of a home that we were scheduled to visit.  The glass storm door was locked and no one was coming to answer it.  The real estate agent was very apologetic but that didn’t do us much good.

We were all dressed up with no place to go.  We had interrupted the kids naps, driven out to this area, and now knew nothing else to look at. Luckily we called some friends in the area and they pointed us to some homes for sale that we could checkout.

From now on we will have a few backups in place around the area of the houses we’re scheduled to see. In case you haven’t noticed a trend, our lessons learned had to do with seeing more of the right houses more quickly.  Having a few alternate houses in mind helps to keep from wasting your time when a house appointment falls through.

The first time home buyer tax credits in 2009 didn’t really interest us that much since we’ve owned our home for just under ten years now.  However, the latest version of the bill now includes a tax credit through 2010 for homeowners who have lived in the same place for five of the last eight years consecutively.

This new home buyer tax credit will give you a credit up to 10% of the cost of your new home, with a cap of $6500.  I’ve had a busy week and hadn’t given much thought to new bill yet until my wife called me up at work yesterday.

New House Fever

My wife’s been wanting to move into a new house for a few years now and has been contributing to a “moving fund”.  The issue is that she has her eye on a bigger house but I don’t want our house payments to increase any. The planner that she is, my wife opened a separate account and has been putting away money to fund an eventual purchase of a house upsizing.  Our family has grown since we bought our house and future plans project additional growth so we may need the space someday.

Based on home sales in our area and the estimated cost of a new home, she had in mind about how much she needed to put away before we could start looking at houses.  A tax credit of $6,500 would accelerate her schedule by almost a year so she was pretty excited when she heard about the new law.

Since the home buyer tax credit is a dollar for dollar reduction of taxes and is refundable, you could look at it as knocking $6,500 off the purchase price of a home we would buy.  We would still be short of the total figure she was trying to save up but the “free” $6,500 is rather enticing.

Home Purchase Timing

The latest version of the law says that we would need a contract on a house before May 1^st of next year and that the sale would have to close before July 1^st.  While Obama did extend the first time home buyers tax credit with this bill, the general consensus is that there won’t likely be another extension.

That means we’d have to find a house by May of 2010, which gives us about 6 months of searching, planning, and maneuvering our finances before we’d have to pull the trigger. According to the bill we could file an amended tax return for 2009, claiming the tax return for 2009 so we would potentially “see the money” sometime in 2010.

Are the Home Buyer Tax Credits Working?

In one night, our family went from talking about buying a house two years down the road to suddenly considering purchasing a home by next May so I’d say that the home buyer tax credits are having an impact.

Of course at this point it’s just talk so we don’t know if we’ll actually go through with it but my wife signed up for new home alerts from several real estate websites last night and we we spent about an hour talking through some of the details so momentum is building.

I’m not a big fan of moving, it takes time and money and the whole process of home searching and buying can be quite stressful.  Plus I really like where we live now so I’m not really jumping up and down about buying a new house.  But life has a way of shifting when you least expect it to.  Thanks a lot Obama for signing the bill and pulling the rug out from under me, you’re going to give me a ulcer : )

Heating & cooling your home isn’t cheap, especially when you add in furnance repair bills like the one we had last weekend.  We came home last Sunday afternoon and found that although our thermostat was turned to 65 and we could hear the furnace blower kick on, there was no hot air coming out of the vents.

Heating System

Our central heat system uses a heat pump to warm the house when the temperature is above a certain level and then a gas furnace kicks in as auxilary heat when the temperature outside gets too cold for the heat pump to keep up.

I opened up the furnace and could see that the gas burners weren’t lighting but didn’t see a pilot light anywhere.  Reading through the owners manual I discovered that some of the newer gas furnaces like ours have an igniter instead of a pilot light and they recommended having a professional diagnose it.

Furnance Repair

I knew it would be more expensive for a weekend call but it was pretty cold so I called up the evening and weekend number and scheduled an emergency repair visit.  It turned out our furnance igniter had gone bad but luckily for us he had a van full of furnace parts and had the one we needed.

The total furnace repair bill was $180. The service call was $120 since it was on a weekend, and the part was $60.

Furnance Maintenance

I questioned the furnace technician as he worked to see what I could do to prevent future $120 weekend service calls.  He said that other than regularly changing our furnance filter there wasn’t much else simple that I could do myself.  He did show me how he cleaned the burner and sensor with some steel wool and just cleaned the dust and dirt out of the furnace cabinet.

He said that although our Carrier furnance was pretty easy to disassemble compared to other brands like Trane, where you need special tools just to take apart the furnace, if I wasn’t familiar with the inner workings of our furnace that my best bet was to get it serviced once a year.

He gave me a sheet with a breakdown of all the things they do in their furnace annual service.  Apparently they take apart the furnace and lubricate all the moving parts and go over the following components:

• Burner
• Heat Anticipator
• Heat Exchanger
• Safety Controls
• Air Filter

As part of the maintenance, they also check:

• Flue for proper drawing
• Temperature rise through furnace
• Fan and limit control
• Proper combustion
• Gas line & manifold pressure
• Pressure regulator
• Blower components

Since I don’t have much spare time, I’ll probably take advantage of their annual tune-up either this winter or next.  Hopefully that will ward off any future emergecy weekend repairs.

The costs of selling a house may not make or break your decision to sell whether you’re relocating, trading up, or buying a smaller home.  However, the costs can run into the thousands of dollars so they’re something you don’t want to overlook.  The first thing you need to consider if you are thinking about selling your house is why you want to sell it.

Unless you live in a cave, then you know it’s not a good time to maximize the amount of money you can make from the sale of your house. Are you looking to move up in size of house? Do you need to move for a job change? Or do you simply want a change of scenery? Make sure you are moving for the right reasons, because the sale of a house can be a costly endeavor.

Sales Agent Commissions (2% to 10% of the purchase price)

Depending on the value of the home, typically the seller ends of paying the selling agent’s commission and the buying agent’s commission. An agent can charge whatever they want for a sales commission, but typically 2% to 3% of the purchase price is normal. The agent may charge less for higher value homes and more for lower value homes.

By the way, if your agent brings in a buyer, you don’t save money, the agent just makes more commission. If a selling agent brings in the buyer as well, they charge a buyer’s agent commission as well as their selling agent commission.

Selling For Sale By Owner

If you choose to sell your home yourself, it’s not as tough as sales agents and brokers will make it out to be with the power of the internet. If you have a knack for utilizing the power of the web and you are willing to price your home at a reasonable price, you can sell it on your own. You will need to pay for some marketing efforts, but you can potentially save thousands of dollars selling on your own.

My wife and I found the buyer to our first home, a condo in Gainesville, FL, from a free ad on Craigslist. The problem that most for sell by owner (FSBO) sellers run into is that they price the property too high, and they don’t get any bites. You can use sites like Trulia and Zillow to help you find comps in your area to price your home correctly.

Property Inspection (typically $250 to $500)

Sometimes sellers will pay for an inspection as a concession to the buyer. It’s sometimes thrown in as a negotiation technique to sweeten the pot for the buyer. This is a nice gesture to pay for the inspection, especially if you are eager to sell the house quickly.

Home Repairs (varies)

Unless your home is pretty new, many property inspections turn up some issues that need to be resolved. You can choose to have the improvements made or sometimes the buyer  will agree to  do it themselves if you knock some money off the asking price.

Closing Costs ( about 1.5% to 2% of sale price)

The fees you pay for the lenders to handle all the paperwork when you hand over your house to the new owners aren’t cheap.  You can negotiate with the buyer on who pays the closing costs but in a “buyer’s market” you probably won’t have much success with that.

Moving Costs (varies)

After you sell your house, you obviously have to find somewhere new to live.  Be sure to factor in the cost of packing up and moving all your stuff and any days off of work you’ll need to move.  To help compete in a tough real estate market, we’ve actually heard of realtors who actually provide you one days use of a moving truck if you use them to sell your home.

We’ll cover some more financial considerations on selling your house in the days ahead. You can also read some of  the tips from our series on buying a home, with details on home inspection tips, split loans, down payments, interest rates, and mortgage pre approval.

The struggling economy has left many people facing the potential of foreclosure and has created a wave of scam artists that are taking advantage of the fears of desparate homeowners. The Federal Trade Commission is on a mission to help stop foreclosure rescue scams around the country.

Here is the FTC Chairman Jon Leibowitz’s warning about avoiding foreclosure scams:

“These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” FTC Chairman Jon Leibowitz said. “They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline. People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company.”

It’s a sad article, it tells of people who paid companies a fee to stop foreclosure and then lost their homes because the company never had the intention or ability to help the homeowners.  As part of their campaign against the scams the FTC created the public awareness video below where they talk to homeowners who have faced foreclosure and had to deal with the decietful companies.

Buying a house is never easy and you’ll likely come across some snags during the process. One of the most common problems that can delay closing on a real estate deal is a home inspection full of problems.

Home Inspections

I recommend that everyone get a home inspection.  I thinks its always worth paying for since you want to know exactly what you are getting when you put your signature on a six figure deal.

Home inspections typically cost anywhere from $250 to $500. Most home inspectors can do a termite inspection as well, but they’ll charge a little extra for it. I also recommend inspecting for termites no matter where you are or what type of construction the house is.

If you personally know someone in the real estate business, ask them for a referral for a good, thorough home inspector. Another option is to check out Angies List reviews of local inspectors. There is a small fee for the service but here are some Angies List promo codes.

You must prepare yourself when the inspector comes back with his report. Remember that no house is perfect (even new construction), and some home inspectors take it upon themselves to talk you out of the deal. In a weird way, it’s their job to make you re-think what you are doing. Your job as the homeowner is to analyze what defects are minor and major. Here are some deal breakers:

• Foundational issues. Is the foundation sinking? Are the footings properly installed? How many cracks are in the foundation?
• Major termite damage. Unless the seller is willing to pay for the repairs, this damage is costly.
• Major plumbing or electrical issues that will cause walls and/or floors to be ripped open. Is the plumbing and electrical up to code?
• Roof issues. Is the roof older than the seller thought? Does it have more wear and tear than its age indicates? A new roof is a big expense for a new homeowner.
• Major mold growth. If you have over 100 square feet of mold growth in a particular area, or multiple rooms are affected, I would stay away from this property, unless you already planned on ripping out drywall.

You may get the inspection report back with a 100 red flags, but 95 of them might be minor stuff. Make sure you can filter out what is a deal breaker, and what can be fixed easily by you or the seller. Don’t let a home inspection ruin the deal unless there are major red flags like the ones specified above.

Tomorrow we’ll finish out the series on home buying by taking look at closing costs.  You might also want to check out the posts on mortgage pre approval, mortgage interest rates, down payments, and home equity lines of credit.

Angies List reviews of local contractors are written by consumers who share their positive and negative experiences on a range of home improvement services.  Angie’s List members submit ratings of contractors they’ve worked with; such as plumbers, electricians, painters, and roofers.

Angies List Trial

I first tried out Angies List when a co-worker let me login to his account and search for local painters in our area.  I had Angies List coupon codes but couldn’t find one that offered a free trial so he volunteered to let me test it out using his account.  My first step was to find painters simply by searching on the category “Painting – Exterior” and choosing painters in a 10 miles radius, as shown in the image below.  As you can see, the other search options are to look for a keyword or to search on a company’s name.

Contractor Ratings

There were 17 painters listed in the results, about half had good reviews.  Angies List has members use a rating scale of A-F; there were two F’s, one D, two C’s, four B’s, and 8 A’s.  Obviously the contractors with good ratings were the ones I wanted to research but first I was curious to see why some of them had been rated poorly.

A contractor’s overall score is made up of ratings on price, quality, responsiveness, punctuality, and professionalism.  Here’s the breakdown of one person who rated a local painter a C.  People also leave  comments explaining their ratings, this one was pretty brief but pretty much sums it up “PAINT JOB TOOK TWO WEEKS LONGER TO COMPLETE THAN ORIGINALLY PROMISED”. 

Some of the ones that rated the painter as F or D had much longer explanations.  That seemed to be the case of the majority of reviews, people that were satisfied left a brief summary but people that were unhappy went into great detail describing step by step what happened and why they were so angry.

Then I moved onto some of the companies that were rated for good service.  The interface on Angies List shows a snapshot of the latest customer reviews; the score, the date, and a blurb of the review, you can see an example below.

Reading through the feedback made me realize that the best way to use Angies List is as a screening tool.

Every person’s experince is different and I shouldn’t choose or rule out a contractor based soley on one review.

For example, the D rating you see in the screenshot was given because someone called the company for a bid for work and never got a response.

Of course, if it was a trend and lots of people were reporting the same thing you might worry but a D rating from one person that didn’t get an estimate shouldn’t rule them out. Reading through the reviews kind of reminded me of the customers I worked with on eBay.  The majority of people are fair and resonable but occassionally you run into an irrational customer with unreasonable expectations that wants to tell the whole world how bad you are even if it was just based on a misunderstanding .

Angies List Signup

After testing out the service I decided it would be worth my money so I signed up for Angies List. It’s only a two step process, first you fill out the screen below that creates your account login and let’s them know what local market you’ll be searching for contractor reviews in.

Then you enter in the age of your home and your address.  At first I wondered why they needed my address but after reading through the site I saw as part of the membership you receive a monthly Angies List magazine with home improvement and remodeling tips so they need it to deliver the magazine. 

Membership Options

Although there is no free trial for Angies List just to test it out, they do have a monthly option that’s only $4.50. I probably would have gone with that option just to try out the site but since my co-worker let me mess around with it under his login I knew what the site was all about and felt like I’d get enough value out of a longer term. The annual option gives you a 35% discount so that was the best one for me. Plus, they offer a 110% money back guarantee for the annual option if you’re not satisfied with the service. Angies List does offer an even bigger discount for terms of two, three, or four years but I wasn’t sure if I’d need it for that long, we’ll see how much use we get out of it the first year.

 

They do charge a one time signup fee to become a member but there are promo codes for Angies List that will waive the fee for you.

Angies List Discounts

After I logged in and looked around some more I ran across another aspect that I had overlooked, a lot of the contractors offer a small discount if you mentioned you found them via Angies List. It wasn’t anything major, maybe 5-10% off your bill but I suppose if it’s a big job that could add up.

Another thing I hadn’t noticed was the Discounts and Perks section on the site that offers coupons for deals on a variety of items. A lot of them I wouldn’t use but there were a few like discounts on travel sites such as Orbitz, Delta, Holiday Inn, and Southwest that might be useful. Some of the discounts were pretty sizable, like the 50% off of a subscription to Experian’s Triple Advantage Credit Monitoring service or 50% off newspaper subscriptions. Another one that was interesting was the ability to buy discounted movie tickets for local theaters, the only bad thing is that they mail you the tickets so you’d have to plan that out in advance. Anyhow, the whole point of the site is to find good contractors but I guess they offer these discounts to help members make sure they get their money’s worth.

Angies List Review

Overall, it seems like a good screening service to help find contractors in your area that have a history of quality work and customer satisfaction. I don’t think Angies List would be useful for people that don’t live in or near big metropolitan areas. The real value of the service is getting feedback from other consumers on a variety of contractors in your area. If there aren’t enough people in your town that use the service then there wouldn’t be many reviews and a membership wouldn’t be as effective.

However, if you live in or around a larger city I think it can be a useful service. If you decide to try it out, just make sure you use a promo code so you can wave the signup fee.

Angies List founder, Angie Hicks, offered some tips recently on an ABC station on hiring a contractor to do work on your home.  According to polls taken by Angie’s List members, homeowners are spending more on home improvement than in recent years. A contractor interviewed on the news segment concurred that a lot of people are choosing to remodel their homes instead of buying or building new homes due to the tough real estate market.

Lower Prices for Home Improvement?

The same poll on Angies List indicated that due to the recession, a lot of members have found contractors dropping their prices by at least 10% in order to get the work. Despite the discounts, remodeling your house isn’t cheap so the advice Angie gives is that you typically need to stay in your home for a few years to recoup the cost of the job. She re-iterated the advice I’ve heard before that work on kitchens and bathrooms often brings the best return on investment.

To help with the cost of the job she suggests getting several estimates and negotiating with the contractors to see who can offer the best price.

Quality of Work

Of course, it’s not all about the price, the quality of the work is just as important.  To find someone who will do a good job, Angie recommends using a contractor you found on a referral, whether through friends or family or via a service like Angies List.

I think this is one of her best pieces of advice.  We have a friend who got some really low price quotes from a contractor who came to her door offering to do some work.  Of course she was excited due to the low cost but to me it was a red flag to do some further investigation. 

If the price seems too good to be true it pays to dig deeper and find out the reason for good deal.  It could be that the contractor is really hurting for work, however, it could also be that they do a horrible job and can only compete on price. 

I know a guy that runs a local concrete business and he says about 30–40% of the work he does is fixing the mistakes of other contractors.

Common Sense Hiring Tips

The tips the news segment offered are pretty common sense.  Double check that the contractor is licensed and insured and ask for references of other work they’ve done. Before you pay any money or have them start on a job get a contract with all of the work spelled out. 

Another good reason to research a contractor, especially in a bad economy, is that you don’t want to have them start on a project and then have them go out of business on you part way through.  Apparently Angies List offers a service called ContractorCheck in partnership with Experian that allows it’s members to check the credit of businesses and contractors before hiring them.

When I researched joining the service I discovered you can use Angies List promo codes to save money on membership if you want to signup and try it out.  Right now you can use the promo code of HOMEWORK to save $20.

Adjustable rate mortgages may not be as popular as they were only a few short years ago but they can still be beneficial if you only need to borrow money for real estate for a relatively short time period.  Here’s a look at what adjustable rate mortgages are and who they can benefit.

Adjustable Rate Mortgages

The adjustable rate mortgage does exactly what its name implies. It adjusts the interest rate of the mortgage during the life of the loan. Many adjustable rate mortgages have a fixed rate period of 1, 3, 5, or 7 years, and then the interest rate adjusts to a specified rate index

These loans are often referred to using the format, a 3/1 or 5/1 ARM. This means that the interest rate is fixed for 3 or 5 years, and then it adjusts to an index rate, such as LIBOR, plus some margin amount added on by the lender.

During the fixed period, the loan acts like a fixed rate mortgage. It charges the initial interest rate agreed to in the mortgage note. Once the fixed rate period is over, the interest rate and the monthly payments due are re-calculated based on the index rate.

Most adjustable rate mortgages have caps in place which limit the scope of the potential rate changes.  These caps typically determine how often the interest rate for the mortgage is allowed to change and maximum amounts that the interest rate is allowed to reach over time.  For example, the caps may say that interest rate can only be adjusted every six months and can’t be adjusted by more than 1% a year.

Adjustable Rate Benefits

Although interest rates are historically low right now, in times when rates are higher, adjustable rate mortgages can offer advantages for shorter term loans. When rates are higher the introductory interest rate on ARMs are significantly lower than they would be on a fixed rate loan. For investors or consumers who only plan on owning a piece of real estate for a several year time frame an adjustable rate mortgage allows them to pay lower interest rates.

For example, if you move to a new town and know you’ll be moving back in few years there is no need to borrow the money to buy a home for a 30 year term.  Lenders charge more for 30 year loans to compensate for the additional risk they take on by lending you money for a longer term.

If you only need the money for a shorter time period, you can pay less in interest if you borrow it for a shorter period with an adjustable rate mortgage.

Adjustable Rate Cautions

During the 1990’s and early 2000’s, adjustable rate mortgages became popular for buyers with less than perfect credit or little capital. The lower inital interest rate was used as a means to help buyers qualify for more house than their income could support long term. 

Of course we’ve all seen what happened to the housing market and the economy when too many people tried to borrow more than they could afford. An adjustable rate mortgage can be a useful tool for lowering your interest payments if you’ll only own real estate for a short period of years.  However, if you use it simply to get lower initial monthly payments on a piece of property that you couldn’t afford at higher interest rates, the adjustable rate mortgage probably isn’t the best financing option for you.