With Terry Story, 27-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
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Words matter when you’re selling your home. Using the right words and phrases will make a difference in how long your home is on the market and what the sales price will be.
Terry Story, our resident real estate expert, tells us that Core Logic researched this idea and listed the impact certain words had on the process.
- Fenced in backyard: This conveys a place of privacy and security for children and pets, and so is viewed as a positive.
- Open concept, natural light, open kitchen: These words are used to describe a sense of space which appeals to most home seekers
- Gourmet kitchen, ceramic tile, granite counter tops: Gourmet kitchen may imply that the price of the house is too high to compensate for the owners having put in an expensive kitchen—also too few people even cook today. Interestingly, both ceramic tile and granite are now passe—the new magic word is quartz. So all negatives here.
- Golf course lot: The negative here is that it often implies a country club community requiring membership fees.
For Terry’s “Ask A Real Estate Pro” segment, we were asked the question:
“We bought a home two years ago with an FHA loan and an interest rate of 4 1/2%. As part of our monthly mortgage, we’re paying mortgage insurance. I’ve been receiving offers in the mail to refinance at a better interest rate to lower our payments. Is this something that we should do?”
Terry’s answer: “If you put down less than 20%, this insurance protects the lender from you going into default or foreclosure. It runs about $150 a month. So if you can put down 20%, you’ll save in the long run.”
Regarding refinancing, if you plan on moving in 2 or 3 years, you do not want to refinance. If you have close to 80% equity in this house, “then it would be wise to go ahead and convert to a conventional loan. By doing so, you’re going to probably save closer to $250 a month based on the average loan amount at 3 1/2%, plus the savings of that mortgage insurance that you’re no longer having to pay. Keep in mind, to refinance, it’s not free. There are costs associated with that.”
Another question posed to Terry concerned condo rules which were being ignored by multiple owners. “By ignoring the rules for a long period of time, the association has lost the rights to enforce them. The board would need to call a meeting, properly pass a new resolution, and then inform the owners that all the new violations will be addressed.”
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent Terry Story. Terry is a 27-year veteran with Coldwell Banker located in Boca Raton. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: This was really interesting. As we were talking before the show, you provided me with a listing of the correct words to use when you’re selling your home, how to frame the sale of the house, what words to use, what words not to use. Tell us about that.
Terry Story: Sure. This is actually researchers from Core Logic looked at a million single-family transactions to determine this, to give you an idea of how much research went into it. What they decided was the biggest impact words. First one, “fenced backyard.”
Steve Pomeranz: “Fenced back yard” is the most important word you can put in. Fenced back yard.
Terry Story: “Open concept,” “natural light,” and “open kitchen.”
Steve Pomeranz: When you use those words, what does it tend to do? How do you benefit from using those words?
Terry Story: What they’re saying is it tends to reduce the days on the market. Typically, the shorter time that the house is on the market the higher price you’re ultimately going to get. Even if you don’t have a fenced backyard … No, don’t do that. Then go fence your back yard.
Steve Pomeranz: Fence it in, right.
Terry Story: I think the idea behind that, the fenced backyard, you’re like, “Well, why fenced backyard? Not everybody has a dog and needs a fenced backyard.” I think it’s the idea of privacy.
Steve Pomeranz: Yeah, I would agree.
Terry Story: I think people are big into privacy.
Steve Pomeranz: “Open concept” means spatial? It gives you a sense of spatial?
Terry Story: Spatial.
Steve Pomeranz: “Natural light” does the same thing.
Terry Story: Right.
Steve Pomeranz: “Updated kitchen” is very important. What would be the phrases that would slow down sales or make them stay on the market longer?
Terry Story: They claim “golf course.”
Steve Pomeranz: Oh, boy.
Terry Story: Yeah, I know. In Florida we have tons of homes backing up to golf courses. “Gourmet kitchen,” “ceramic tile,” and “granite counter tops.” Interestingly enough, a lot of people don’t want to back up to golf courses anymore. That seems to be a little bit a negative. It may also immediately make them believe without reading the description that this is a country club community and they’re not interested in being associated with a country club. Obviously there are homes that back up to golf courses that aren’t in country clubs.
“Gourmet kitchen.” The reason why “gourmet kitchen” can be a negative, it may imply—and depending on the price of the home—a gourmet kitchen, automatically expensive. The house is priced too high because they put an overpriced kitchen in a $400,000 home.
Steve Pomeranz: Also, people don’t cook as much as they used to, so they may think they’re paying for something they’re not really going to use.
Terry Story: Exactly. A gourmet kitchen, you would expect that in a luxury home. “Ceramic tile.” I guess ceramic tile is passé, so why mention it?
Steve Pomeranz: Yeah, I guess so.
Terry Story: “Granite counter tops.” The new buzzwords is quartz. It’s almost as if everybody now has granite counter tops, although that’s not really true, but it’s not as much of a buzzword as-
Steve Pomeranz: It’s not sexy.
Terry Story: It’s not sexy. It’s lost its sex appeal.
Steve Pomeranz: That’s right, exactly. Good. Those are important phrases to know and words to know. I have an Ask a Real Estate Pro question here. “We bought a home two years ago with an FHA loan and an interest rate of 4 1/2%. As part of our monthly mortgage, we’re paying mortgage insurance.” First of all, what is that? The writer has said, “I’ve been receiving offers in the mail to refinance at better interest rate to lower our payments. Is this something that we should do?”
Terry Story: Good question. First of all, when it comes to refinancing, there are a lot of ways you could answer this question. Mortgage insurance, what that is is if you have less than 20% in a home, you’re paying an additional fee to protect the lender from you going into default or foreclosure. That runs on average about $150 a month for the rest of the loan on an FHA loan. That’s a lot of money. That’s why if you can put down 20%, you save monthly.
In this particular case, you also have to consider how long you’re going to stay in the home. If you’re planning to move in the next two years, no, you would not want to consider refinancing. What’s going to be key is to look at this house and see how much equity you now have into it. If you’re at that 80% level, it would be wise to go ahead and convert to a conventional loan. By doing so, you’re going to probably save closer to $250 a month based on the average loan amount at 3 1/2%, plus the savings of that mortgage insurance that you’re no longer having to pay. Keep in mind, to refinance, it’s not free. There’s costs associated with that.
Steve Pomeranz: No, it’s expensive.
Terry Story: It is expensive. You need title insurance, bank fees, taxes. In order to consider doing this, you have to know that you’re going to want to remain in the house for quite a while.
Steve Pomeranz: Yeah. Actually, personal story, I just looked to refinance. I’ve got a 3 5/8% loan, which is a very good loan, but I was seeing some numbers around 3% for a 30-year loan and even a 15-year loan where it was a little bit under. I talked to a professional, and basically we did all the number crunching looking at all of the closing costs and everything, and I would really have to stay in the house for a pretty darn long time for me to start really realizing a benefit, so I stayed put.
Terry Story: Yeah.
Steve Pomeranz: That was his recommendation to me. If you don’t know what you’re going to do in the next 3 or 5 years, he wouldn’t do it, but if you’re going to stay there 10 years or longer, that would’ve been a great thing to do.
All right, new question here. This is a very interesting conundrum. “I bought a condo 21 years ago from a brand-new developer. At the closing I was given a rule book that restricted decorating and changing the landscaping around our front doors. Since then many residents, including past members of the board, have consistently ignored the rule, making each unit look uniquely their own. We now have a new president who insists on enforcing this “no decoration” rule. She says all plants and decorations not planted by the association must be removed. Can she do this?”
Terry Story: You shouldn’t have voted her in. No. By ignoring the rules for a long period of time, the association has lost the rights to enforce them. You just can’t all of a sudden decide, “Oh, now we’re going to enforce the rules, there’s a new president,” and they’ve been ignored for a long period of time. In order to correct this, Steve, the board would need to call a meeting, properly pass a new resolution, and then inform the owners that all the new violations will be addressed. There’s a lot involved in it.
You see this a lot, Steve, with pets, where there’s a rule, “no pets, no pets, no pets.” The next thing you know, there’s a cat, there’s a bird, there’s fish, there’s all different kinds of animals, iguanas, living in people’s homes. Once they’ve allowed that, they’ve waived their right to stop others from bringing dogs. They can’t enforce it if they’ve consistently ignored it.
Steve Pomeranz: I don’t know the name of the law or the name of the concept in law, but I can see that in terms of there’s something like the existing reality or the facts supersede the rules which are no longer being enforced. There must be I’m sure a legal term for that.
My guest as always is Terry Story. Terry is a 27-year veteran with Coldwell Banker located in sunny Boca Raton, Florida. It’s actually not too sunny today. She can be found at terrystory.com. Thanks, terry.
Terry Story: Thanks for having me, Steve.