The first month of the year was named by the Romans after Janus, the god of beginnings. Janus had two faces – one on the front of his head and one on the back, so he could look forward into the New Year and backward into the old one at the same time.
In that spirit, I always like to think about the lessons I’ve learned from the passing year, and how I’ll apply those lessons in the coming one. I hesitate to call them “resolutions” as that practically dooms them to be broken, but anyway, here are 4 real estate resolutions you might consider for the New Year.
Resolution #1: Beef up your credit. 2009 could be aptly named “the year of tight credit.” Banks have not only made their lending standards much stricter, but they’ve tightened lending even for those with the best credit. To up your chances of having access to a loan at the best interest rate – whatever you might need it for in 2010 – take some steps early to improve your credit score:
- Make sure everything on your credit report is correct. You’re entitled to one free credit report every year; get it at www.annualreport.com. If you find a mistake, report it to the credit agency; the FTC has a template letter for disputing inaccuracies in your credit report at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.htm.
- If your score needs improving, the best way to do that is to pay all of your bills on time, every time. As you accumulate more “paid as agreed” notations and get farther away from late marks or delinquencies, your score will improve.
- If you need to cut yourself off from the plastic, by all means do it – but don’t actually close your accounts. Cut up your cards, put them in the freezer – whatever, but actually closing long-standing accounts can ding your credit score. Of course, if that’s the only way you can keep yourselves from buying on plastic what you can’t pay for in cash, then by all means do it.
Resolution #2: Get educated. Too many Phoenix homeowners got into trouble because they signed mortgage agreements that they didn’t really understand. Arizona real estate purchase contracts and mortgage agreements are complicated, so enlist the help of a professional to ensure that you understand completely what you’re signing before you put pen to paper.
Resolution #3: Separate emotional considerations from financial ones. Buying or selling Phoenix real estate or Scottsdale homes, for most of us, is the biggest financial transaction we’ll ever be involved in. But it’s also a highly emotional one. The other day I was talking about this to a friend up in New England, who owns a top-rated real estate agency there, and she said that even she made a bunch of mistakes last year when she put her home on the market by herself. “I turned away buyers with great offers because they didn’t like this or that in the home that I had worked so hard to build. I ended up leaving at least $50,000 on the table because I was too tied up emotionally with the home.”
While sellers who try to sell their homes themselves (I wrote about the value of a Phoenix real estate agent that last month) face a number of disadvantages, one of the biggest is that there’s no one to help them separate their emotions about the home they’re letting go of and the financial considerations, which are best left emotionless.
Resolution #4: Remember that hindsight is 20/20 and no one has a crystal ball. Ah, if we could only predict the future as easily as we mourn the decisions we “should” or “shouldn’t” have made in the past. I was talking to a client the other day, whose Phoenix home I have listed as a short sale, and she said that she feels so burned by homeownership (the value of her home, on the outskirts of Phoenix Arizona declined 70% from when she bought it) that she doesn’t know if she can bear buying a home again.
But while this client clearly got burned by an unprecedented drop in the Phoenix real estate market, that’s no reason not to buy again. Sure, in retrospect, we all wish that we foresaw the 30%+ price declines we has here in Phoenix real estate, but there was simply no precedent for those kinds of drops (save the Great Depression, but Arizona was still the Wild West back then).
Unfortunately, we don’t have a crystal ball that allows us to say with certainty that prices for Phoenix real estate and Scottsdale homes are on a permanent upward trajectory. I wish I could see the next downturn in real estate prices (they’re inevitable, you know – real estate is cyclical) but I can’t. All that said, home prices will in all likelihood not be this low again, probably ever, so buying now – even if it feels like a leap of faith – can be a very sound financial decision.
What are your New Year’s real estate resolutions? Click on the “comments” link below each post and join the conversation!
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Great article Bob! 2010 is going to be a big year for those people that focus on improving or protecting their credit and absorbing knowledge like a sponge. Keep up the interesting blogs.