© Raoul Minsart/Masterfile
Today more than ever, it's the photos that sell a home, as buyers spend evenings and weekends on their couches poring over slide shows on iPads or laptops. We asked one of the nation's top visual-marketing experts for advice on evaluating listing photos so buyers can whittle down their list of must-sees.
In this installment of Buying Advice, we'll also check out the latest housing statistics and take a look at the much-maligned adjustable-rate mortgage: how it's changed and who might benefit from this type of loan.
Smarter online home shopping
It's easy to spend hours a week clicking through listing photos on real-estate portals or your local multiple listing service. But are you looking at the right things?
Brian Balduf, chairman of real-estate photography firm VHT, says most home shoppers will take two or three quick passes through a set of photos before they go out to see a home. But those buyers aren't examining the shots closely enough, and that could waste their time in the long run.
"They need to look at those photos again with a more critical eye," Balduf says. The photos can help prepare you, so you know which rooms to measure or where you need to worry about your larger furniture.
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Photos could also steer you away from visiting certain properties at all. Photos tend to be focused on what the seller or agent thinks are the best parts of the home. If there are only a few shots and those look tacky or dated, it's a pretty safe bet that the rest of the home is in even worse shape and you can cross it off your list, Balduf says.
"If this is their best foot forward, everything else is downhill from there," he says.
Worse still are listings that feature only a shot of the outside. This could signal a home that needs serious work, or even a bad case of hoarding.
"It's so simple to take photographs," Balduf says. "There's no excuse not to have six to eight photos of every property. If they are not there, you have to ask yourself, 'Why not?'"
Likewise, if the listing shots show overflowing ashtrays or junk stacked up on a bathroom counter or in one corner of the living room, you should question how well the home was taken care of. That photo probably shows the house at its cleanest. How bad was it at its worst?
But don't be distracted by elaborate staging, either. That pristine midcentury dining table may look great, but it won't come with the house. More important is the home's footprint and features.
Consider how the space is used, Balduf says, and don't fall in love with beautiful wide-angle shots.
- Is there enough room in the kitchen to sit down and eat a meal?
- Is there enough wall space in the living room for your TV, sofa, etc.?
- How does the size of the furniture in the home compare with yours? Some homes are staged with small furniture so they look larger.
- Does the layout of the home fit your lifestyle and daily routine?
- Can you see a view out of the windows in the listing photos?
- Does the house get much light? Is adequate lighting installed in the house?
- How do these pictures compare with satellite pictures available online from Bing or Google? Has anything been edited out or changed recently?
Also, it's worth noting that some vacant homes are virtually staged, meaning that agents insert images of furniture and artwork into listing photos to make a home seem more homey or to show how the space could be used. That should be noted on the listing, but sometimes it's not.
For a look at some of the best and worst in listing photos, you can check out VHT's blog, including this recent photo of one home's life-size Harry Potter cutout. Whaah? Other entries in the listing photo hall of shame can be found at badmlsphotos.com.
(Home horror stories: Buyers -- What is the scariest thing you have seen on a listing or at an open house? What scares you about buying a home? Let us know, either on Facebook or via email at msnrealestate@microsoft.com. We might publish them in a feature next month.)
Housing market snapshot: The market begins to come back
Existing-home sales rose 2.3% to 4.47 million in July from 4.37 million in June, and are now 10.4% above last July's pace, according to the National Association of Realtors. The national median price for existing homes climbed 9.4% in July from the same time a year earlier, the fifth consecutive increase. (Bing: What's the median home price near you?)
"Mortgage interest rates have been at record lows this year while rents have been rising at faster rates," said Lawrence Yun, the NAR's chief economist. "Combined, these factors are helping to unleash a pent-up demand."
However, he says, sales have been constrained by a short supply of starter homes, particularly in the West. He says the NAR is petitioning to expedite the release of government-owned foreclosed properties in markets where inventory is tight. Home sales in the West flattened as the median price climbed 24.5% from July of last year.
Those homes that are on the market in most places are moving quickly, says NAR President Moe Veissi, of Miami-based Veissi & Associates. "Fully one-third of homes purchased in July [nationally] were on the market for less than a month, and only 21% were on the market for six months or longer," he says.
The shortage of existing homes is helping homebuilders. New-home sales rose 3.6% in July to an annual rate of 372,000, from 360,000 in June, and were up 25.3% from last July, according to a Census Bureau report.
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Should you consider an adjustable-rate mortgage?
This is a common question from first-time homebuyers trying to make their payments more affordable.
An adjustable-rate mortgage, or ARM, can lower a buyer's monthly payments with a low initial interest rate, but this type of mortgage is not without some degree of uncertainty.
Most of the ARMs marketed today are so-called hybrid ARMs, with a fixed rate over an initial term — such as three, five, seven or 10 years — after which the rate adjusts annually with a markup based on Treasury securities, according to this primer from mortgage data firm HSH.
While big rate adjustments got many borrowers in trouble over the past decade, most of the new hybrid loans being offered come with rate caps, says Jeff Lamonte, Bank of America senior vice president. That limits what you can be charged under the terms of your contract.
"You don't have a situation of payment shock" with the caps and tighter underwriting, Lamonte says. However, HSH cautions that some of these caps don't come into play until after the initial adjustment, so it's important to fully understand the fine print on your loan.
Why would buyers take this risk when rates are so low already?
Typically, the initial rate on a five-year hybrid ARM is around a percentage point less than on the traditional 30-year fixed-rate loan. In HSH's most recent market-trends report, the average for 5/1 hybrid ARMs was 2.82%, while the average rate on a 30-year fixed-rate loan was 3.96%.
Who should consider one of these loans?
Lamonte says they're a good choice for first-time buyers who don't plan to stay in a house for more than five years, the length of the fixed-rate portion of the loan.
"For many buyers, the first home is a steppingstone," Lamonte says, while others know that a job in a certain area will end at a certain point. "How much do you think your life is going to change, and how much do you plan on it changing?"
Of course, the best plans can change, and fixed-rate mortgages are a bargain right now, but Lamonte says he thinks more buyers will begin considering hybrid ARMs, especially as home prices and interest rates begin inching upward.
We want to hear from you: As always, we welcome your questions. Submit them either in the comments section below or on Facebook, or email msnrealestate@microsoft.com. Brief questions have the best chance of being answered.
