Common Cents

Never was wisdom more needed than in this grim economy. Although some real estate maxims stand the test of time, others are being revised, revamped or even replaced in the wake of the tough real estate market.

Location, location, location. The ultimate conventional wisdom still stands. In the eyes of local real estate agents, where a home is located still trumps all else. “It’s still the No. 1 priority,” says Terry Donahue, president and owner of Prudential Absolute Realtors. “Location is key.” It’s also one of the easier, if not the easiest, decisions for buyers to make.

Don’t buy the most expensive house on the block. Still a sound policy, experts say. Unless money isn’t an issue, having a home value in the middle of the block or neighborhood is wise. “If houses are homogenous, not necessarily in style, but similar price range and amenities, that’s going to support the value of your home,” says Rick Murry, vice president of Shorewest Realtors. “If you’re the highest home in the neighborhood, then the other homes aren’t supporting your value.”

Don’t Overrehab. It won’t necessarily increase home value, Donahue says. Homeowners tend to overimprove homes in the wrong areas. “They do it like they like it, and that doesn’t always work,” she says, because the next buyers don’t like it. Even worse is overrehabbing your home into the most expensive on the block.

Get the cheapest home in the best school district possible. Buying your home in a good school district has two advantages: Not only will it help your children, but it also aids resale value. But the old adage advises buyers to look for the cheapest property in the best school district available, and that’s just not realistic, agents say. Don’t seek cheap; seek value. “You want to buy the home that provides you with the best value in the school district that you’ve chosen,” Murry says. Again, agents say, shoot for the middle.

Avoid bad foundations and flat roofs. In the past, houses with foundation problems and flat roofs were banished to the dark corners of the real estate universe. But those truisms are passé, experts say. Technology has improved, foundations can be repaired, and few local homes have flat roofs.

Don’t spend more than 40 percent of your annual income on mortgage payments. Such was the old rule of thumb. The new thinking says buyers should get preapproved by their lender, find out how much of a mortgage they qualify for, and then spend less than this. “Most people – even before we had this crash – never wanted to put that much money into their house,” Donahue says. The 40 percent guideline is still a reasonable rule of thumb, she says, “but you have to look at other things.” Every homeowner has a unique financial situation, and that should be taken into account in the kind of mortgage payment you take on. “More people go with the lending guidelines of around 30 percent of your monthly income … or below,” says Kristin Noll-Marsh, real estate consultant with First Weber Group and bestmilwaukeehomes.com.

Finally, to all these old and revised maxims, a new one can be added:
Stage your home and make it move-in ready. No, you don’t want to overrehab, but you do want to make sure the home has been given some nice surface-level amenities “If the house isn’t in, what we would call, pristine show condition, the buyers move on,” Donahue says. “There just isn’t the time in our society anymore to go in and fix it yourself.” That could mean adding a fresh coat of neutral-colored paint and getting oddball knickknacks out of view. It’s called staging, and it’s all the rage.

HGTV devotes shows to the concept, and area agents swear by it. “You’re not selling a house, you’re selling a lifestyle,” Noll-Marsh says. “If it’s not pretty, put it away. Put the toaster away. Clear off the countertops. Light a fire in the fireplace,” she adds, advocating the pared-down Pottery Barn look.

But if you’re the buyer, well, don’t let all that staging fool you. You shouldn’t spend your money based on surface-level amenities. After all, come closing, the previous owners are taking the comforter with them.