What to expect from the 2021 housing market

Good riddance 2020!

As we ease into what will hopefully be a far better year for all of us, we notice that questions about what to expect from the 2021 housing market are increasing.

As in everything else we’ve experienced of late, there’s no simple answer to what the “new normal” real estate market will look like.

We like to get an overview of both the national and local economies before offering up our best guestimate. We also enjoy reading the various predictions doled out by economists near the end of one year and the beginning of the next.

In a nutshell, there are three forces currently at work in the real estate market:

  • Strong demand for homes
  • Not enough homes for sale
  • Low interest rates

Will these remain in 2021? Let’s take a look at what the experts say.

Demand for homes

Demand is driven by affordability. If interest rates remain low in the new year, strong demand from home buyers will most likely continue.

The unknown in the equation is whether and by how much home prices will rise in response to the strong demand.

Realtor.com®’s 2021 housing forecast predicts record-high prices will continue rising in 2021,” notes Clare Trapasso. This may just knock first-time home buyers and others on a budget out of the market.

She goes on to say that the forecasters say that price growth will slow because the tight inventory of homes for sale will ease. “…the double-digit price hikes seen this year aren’t expected to carry over into the new year,” she concludes.

Not enough homes for sale

Every month, the gap between the number of homes sold and the number of new listings widens. Unless more homeowners decide to sell, the experts at Homesnap, a real estate tech company, expect the available housing inventory to remain low.

For example, when compared to 2019, 2020 saw a 0.22% increase in new listings, “…while total sales increased 19.29%.” (housingwire.com)

It may sound trite, but now truly is the best time to sell your home.

Low interest rates

Will mortgage interest rates remain low? There isn’t a lot of agreement from the experts.

“Rates are going to stay low. Demand is going to stay high. And President-elect Joe Biden will offer a tax credit for first-time home buyers,” according to Jeff Lazerson, contributing columnist at the East Bay Times.

Trapasso, citing the realtor.com forecast, claims that “… mortgage rates will begin slowly going up toward the last half of 2021.” She goes on to say that although the hike is predicted to be small, it “… has the potential to price out some buyers or force others to purchase cheaper abodes in less desirable locations.”

Mark Fleming, at housingwire.com, notes that “… consensus forecasts estimate the 30-year, fixed mortgage rate will likely be 3% – with forecasts ranging from 2.8% to 3.3%.”

Getting ready to sell

As you can see, and as is typical, there is not a broad agreement on what we can expect from the real estate market in 2021.

Even if you’re merely considering selling your home, start getting it ready for the market. Do some basic repairs, start de-cluttering and storing items that you don’t routinely use. Consider painting the interior.

We’re happy to give you some tips on where to start, at no cost or obligation to use our services. Feel free to reach out to us. We’re happy to help.

9 House-hunting steps for the first-timer

Like any process, buying a home involves a series of steps. When the steps are taken in a logical order, the process moves quicker and it’s less confusing.

Take these steps out of order and you may run into trouble. It’s a bit like algebra: follow the PEMDAS formula and you’ll get the right answer. Mess with the formula and who knows what you’ll come up with?

1. Find out how much you can afford to spend on a home

It astounds me how many folks start looking at houses before they know how much they can spend on a home.

This involves more than the amount the lender has pre-approved. Find a mortgage payment that fits your budget and use that as a ceiling on price when you’re shopping for a home.

Finding a lender to help you determine how much you can afford every month getting you pre-approved for a mortgage is the first and most important step in the process.

2. Decide which features you want vs need

Once you’ve seen a lender and know for certain how much you can afford to spend on a home, it’s a good idea to make a list of items that you just can’t live without.

Add to the list the features that you can live without but it sure would be nice to have them. And, naturally, which features would be an absolute deal-breaker.

This list is important to share with your real estate agent and to keep with you when you house hunt.

3. Find a real estate agent

House hunting is just so much easier with a good real estate agent in your corner.

Not only does it save you time you would otherwise spend poring over websites full of listings, we typically know of homes that will be coming available long before the general public does.

Best of all, our services are free to you. Please add us to your list of agents to interview.

4. Look into neighborhoods

Before you look at even one home, decide on several neighborhoods in which you’d like to shop.

If you need help choosing, we’re happy to help. Home prices in each neighborhood, for instance, will help us whittle down the list.

If commute is a concern, choose neighborhoods close to public transportation or near highways.

Think about amenities you want in a neighborhood, such as parks, recreational facilities, walkability and proximity to schools.

Give us a copy of your “wants” list and we’ll help you determine which neighborhoods you can afford to live in and which meet your needs and desires.

5. Consider the buddy system

It’s always good to have two sets of eyes when shopping for the biggest purchase of your life.

If you’re married you have an automatic “buddy” to accompany you on home viewings. If you are single, find a buddy who is willing to house hunt with you.

Give your shopping buddy a copy of your wants and needs list so he or she can help keep you from becoming starry-eyed over a house that doesn’t fit your criteria.

Which brings us to step 6.

6. Plan to leave your emotions in the car

Buying a home can be an emotional process. After all, you’re spending a lot of money on it.

In the end, however, it’s a business transaction and if you approach it as such, the process will be much easier.

Remember as well that cosmetic issues are easy to fix. Don’t let them keep you from buying a home that is otherwise perfect for you.

7. Take notes

Note the address of each home you viewed that you were even slightly interested in and their good and bad features.

This will help jog your memory when you sit down later to weigh the pros and cons of each.

8. Do or don’t “sleep on it” before you decide on a home

While sleeping on a major decision is always a good idea, in a fast-moving real estate market you simply do not have that luxury.

In multiple offer situations, by the time you wake up from sleeping on the decision the home will be under contract with another buyer.

9. Don’t spend money

Many first-time homebuyers are so excited when their offer is accepted and the closing date is approaching that they decide to splurge on items for the home.

That’s a huge mistake

Lenders perform what is called a “soft pull” of your credit report shortly before closing. They do this to ensure that your financial picture is the same as when they agreed to lend you the money.

If you purchase big-ticket items on credit (such as new furniture or appliances), your debt-to-income ratio will change and you may find out, days before closing, that you no longer qualify for the mortgage.

Don’t switch jobs, don’t buy any expensive items on credit and pay your bills on time. Save the splurge for after closing.

I’m happy to answer any questions you have about the home buying process Feel free to contact me.

Finding the right real estate agent

Like the girl and her three bears in the 19th-century fairy tale, some real estate agents are too hot or too big, some too cold or too small, but there is one who is “just right” for you.

Your job, if you hope to be successful in your home purchase or sale, is to find that agent.

Now, determining the right “fit” with a real estate agent is highly subjective. What works for you may not work for your next-door neighbor.

Sure, asking friends, family and colleagues for a referral to an agent they’ve worked with successfully is still a good idea, but, again, their agent may not be the one for you.

Which is why you should interview more than one real estate agent

A California Association of Realtors Home Buyer’s Survey finds that 64 percent of homebuyers didn’t search for real estate agent rankings.

Shocking, isn’t it?

When you consider that big chunk of money you are about to invest or earn, wouldn’t it be wise to learn about others’ experiences with the agent you’re considering?

The truth is, too many real estate consumers spend more time reading amazon.com reviews for portable chargers for their smartphones than they do checking real estate agent reviews.

Of course one shouldn’t rely solely on online reviews. Too many agents game the system and too many of those review sites are happy to award five stars as long as the agent pays them what they’re asking.

Checking reviews is just one of the tasks involved in finding the right real estate agent.

Querying folks you know, performing a Google or Bing search of the agent’s name and reading agent reviews online are all important steps.

What is critical, however, is that you give yourself a “pool” of agents to narrow down until you’ve found the perfect fit. This means interviewing more than one real estate agent to help you buy a home.


Before you call even one agent, get clear on the type of person you want to work with. Think about personality, experience and professionalism because they all matter when you’ll be working so closely with a person to represent you during this life-altering purchase or sale.

The agent’s personality may not seem important, but consider that you’ll be spending a lot of time, possibly in the same car, with the agent.

Have you ever been forced into the same room with someone who you couldn’t wait to get away from? For whatever reason – a dour Dave or chatty Caroline, for instance – even a few minutes spent with them are far too many.

Once you’re clear on a good personality fit for your needs, consider if you want a solo agent or one who has a team. There are advantages and disadvantages to both.

Ask yourself how much time is too long to wait for the agent to return your emails, texts and phone calls.

Speaking of which, what is your preferred method of contact? There is a sad chart, published by a Realtor association, that illustrates the preferred versus actual contact method of homebuyers.

Agents actually did well using email to contact the nearly-half of buyers who prefer that method.

Only 17 percent of buyers surveyed wanted their agent to contact them by telephone, yet 53 percent of agents chose this method to keep in touch with the client – completely disregarding their clients’ wishes.

The statistics are nearly as bad for the 30 percent of clients who chose to be contacted by text message – only 6 percent of agents indulged them.

Responding quickly to your communications is an asset for an agent, but so is using your preferred method of contact. Consider asking agents during the interview process how they typically communicate with their home-buying clients.

The interview

Choosing which agents to interview is a snap when you have a list of questions to ask during your agent interviews.

Then, test each agent.

For instance, determine how long you are willing to wait for a call-back (or email or text) from an agent. Consider this scenario: It’s a fiery real estate market where homes in your price range are being snatched up just about as soon as they hit the market.

You see your dream home online and call your agent to get an appointment to view the home. Time is of the essence.

How long are you willing to wait for a response?

So long that you lose the home? Think in terms of minutes, not hours.

Call, text or email each agent you are considering hiring.  How quickly does she or he respond? If an agent takes a long time to respond when courting you, imagine how much worse it will be once you are already committed.

Your real estate agent will be at the helm of the purchase or sale of a huge investment. Keep your vetting standards high, strategically sift the wheat from the chaff and you’ll find the perfect one.

We hope to be among those you interview. Feel free to reach out to us.

Final Walk-Through Checklist

Although it bears an ominous-sounding name, the final walk-through is actually a blessing for homebuyers. It typically occurs in the days leading up to closing.

This is your final chance to inspect the home to ensure that it is in the same condition as when you agreed to purchase it, that the seller has completed all requested repairs, that all personal items included in the sale are, indeed, in place and that there is no new damage to the home.

This is not an opportunity to discover issues that you hadn’t seen during past visits.

Two tips to make sure the inspection goes off without a hitch:

  • Your real estate agent should remind the buyers’ agent to ensure that all the utilities remain on. Feel free to call your agent to determine if this was done.
  • Bring along a smart phone or camera to document any issues.

Check Repairs

  • Have all requested repairs been made according to the purchase agreement? Tip: Bring along a professional to inspect the repairs.
  • Did the seller leave all permits, warranties and receipts for you?

Check Appliances and Major Systems

  • Start the dishwasher and allow it to complete the cycle while you check the rest of the home.
  • Switch on the driveway heater and allow it to warm up during your inspection.
  • Turn on the air conditioner and set the thermostat. Does the unit shut off when the room reaches that temperature?
  • Is the air conditioning unit pumping out cool air?
  • Turn on the heater and check the thermostat as you did with the air conditioning system.
  • Turn on ceiling fans and test the various speeds.
  • Turn on the hot water on all faucets. Does the water get hot?
  • Test the doorbell.
  • Test the alarm system.
  • Open and close the garage door using both the remote and the button on the wall in the garage.
  • Turn on all burners on the stove and check that the oven is functioning.
  • Test the microwave.
  • Does the gas fireplace work?
  • Flick the switch on the garbage disposer to ensure that it works.
  • Check all electric outlets to ensure they are getting power. Tip: Bring a small electrical appliance or desk lamp with you to test the home’s power outlets.
  • In California, check to make sure the water heater is properly strapped.

Is personal property included in the sale present and functioning?

  • Is the refrigerator cold? Does the freezer work?
  • Start the washing machine and allow it to cycle
  • Turn on the dryer and allow it to work long enough to determine that it gets warm
  • Check all lighting
  • Test window coverings
  • Check furnishings
  • Turn on the jets and the heater in the hot tub/spa.
  • Ensure that the play equipment or structures were left (if agreed to in the contract) and that they are in the same condition as when you made the offer to purchase the home.
  • Ensure that the seller left all the owner’s manuals for appliances and home systems (air conditioning, heating, fireplace units, alarm systems, etc.)

Windows, walls and doors

  • Are any windows cracked or broken?
  • Do the windows operate properly?
  • Do all windows have screens?
  • Are there rips, tears or other damage to the screens?
  • Do the doors open and close properly?
  • Are there any missing storm windows?
  • Check the walls from ceiling to floor for gouges, scrapes and other defects that weren’t there when you made the offer to purchase.


  • Do the windows have signs of mold?
  • Are there signs of mold or water damage under the kitchen sink?
  • Are there signs of mold or water damage in the bathroom?
  • Are there signs of mold or water damage around appliances, such as the refrigerator, washer/dryer and water heater?
  • Check the basement thoroughly for any signs of mold

Check the Home’s Exterior Features

  • Visually inspect the roof, shutters and siding on the home’s exterior. Are there any changes since you agreed to purchase the home?
  • Turn on the irrigation system and follow it around the yard to ensure there are no leaks.
  • Do all exterior lights function?
  • Did the driveway heater turn on and remain warm?
  • Test the lights and electrical outlets in the garage.
  • Shake the railings on decks, porches and stairs to make sure they don’t wobble.
  • Is all the landscaping intact?


  • Did the seller leave the remote-control devices for pool heater, ceiling fans, alarms, and garage doors?
  • Is the home clean? In most regions, homes should be left in “broom swept” condition and sellers must remove all garbage and personal property.
  • Before you leave the house: did you turn off the irrigation system, HVAC system and driveway, pool and spa heaters?
  • Has the seller left all the keys to every lock in the house, basement, garage and shed, as well as mailbox, pool, clubhouse and other miscellaneous keys if you purchased a condo.

Happy closing!

Winter brings out bargain hunters in the real estate market

Maybe it’s Black Friday, Small Business Saturday and Cyber Monday that leads shoppers to believe that winter, in its entirety, is bargain-shopping time.

It certainly opens the door to a season of frenzied buying and that penny-pinching spills over into the housing market as well.

The media doesn’t help, when every year we read stories of how much more money a homebuyer saves when buying in winter than any other time of the year.

The winter advantage for home sellers

If you’re like many homeowners thinking of selling in winter you’ve no doubt read the gloom and doom from the media and from real estate amateurs.

It’s true that fewer homes sell in winter than in spring. This makes sense when we consider that fewer homeowners list their homes in winter.

The brave homeowners who do decide to sell find less competition from other sellers and their home is more likely to sell than at any other time of the year.

Best of all?

Winter-sold homes sell for more money and they sell quicker

How can this be?

Homebuyers are more motivated in winter

Think about it: what would motivate someone to buy a house in the dead of winter, especially in areas with wicked weather?

Job transfers are high on the list of reasons, so if you live in an area that receives large influxes of transferees, winter is a brilliant time to sell.

Back to dealing with bargain hunters

So, how should you react when you, as a home seller, receive a ridiculously low offer on your home? First, be prepared that it probably will happen.

Your response to the offer, however, depends on several things, chief among them is the type of market we’re in at the time.

Right now, we’re still in a seller’s market. This means, regardless of the amount of snow on the ground and ice on the driveway, you’re in the driver’s seat. Here are some of your options:

  • Entertain the low-ball offer by remaining firm on the price. In other words, counter the buyer’s offer stating that you want full price.
  • If you really need to sell the home sooner rather than later, counter the offer by lowering your price by a small amount.
  • Ignore the offer. We are in a seller’s market after all and there is still competition for homes in good shape and in desirable areas. If your home is in good condition and in an in-demand area, hang tight for a better offer.
  • If the buyer is requesting concessions, grant them but demand full price.
  • Accept the offer.

There are other ways to counter an offer to purchase as well, including countering the contract terms.

But, before you choose any of the responses, and depending on how long your home has been on the market, we may want to run a new check of the comparables to ensure that the market value hasn’t changed since you listed the home.

We’re happy to answer any questions you may have about selling your home in winter.

How to sell your home quickly and for top dollar

Nobody wants to be forever at the mercy of homebuyers that want to drop by after work, at dinner time, or on the weekends during family time.

Homeowners considering selling their homes also want and need to get the most amount of money possible.

So, what’s the trick to getting a home sold quickly and at the top of the market value range?

Actually, there are several things you as a homeowner can do to speed up the process and make your home irresistible to buyers. Here are the top three.


The main reason a home sits on the market, getting little interest from buyers, is price. One of the truths in real estate is that an overpriced home take longer to sell.

Some homeowners want to “test the market,” by entering it with  a house that is priced over market value. They feel they’ll get offers and can then negotiate.

It’s a huge mistake. Buyers’ real estate agents know, at least roughly, what each home in the market is work. They can also run a comparative market analysis to ensure that their buyer isn’t paying too much.

The truth is, no buyer is going to pay more for a home than what it is worth. And, no lender will approve a mortgage for such a home unless the buyer brings in additional cash.

Sadly, homes that languish on the market become stigmatized. Potential buyers assume there is something wrong with it and real estate agents wait for the seller to accept reality. Eventually, many of these homes end up selling for less than market value.

If you want to sell your home quickly, price it right from the minute it hits the market.


Dirty houses don’t sell for top dollar. Homes with deferred maintenance don’t either and both tend to sit on the market for longer than they should.

If you don’t have the time or the inclination to clean the house yourself, it is worth the money you’ll spend to hire professionals to do it for you.

But wait – cleaning isn’t enough. Remove all the clutter from the home, store oversized furniture and consider hiring a professional stager.

Staging the home can mean the difference between getting bombarded with low offers and receiving top dollar for the home.


Marketing is your real estate agent’s job so it’s important to look at several real estate agents’ marketing plans before hiring one of them to help you sell your home.

Find an agent whose list-price-to-sales-price ratio is close to 100 percent and one that provides you with a professional-looking listing presentation and a solid marketing plan.

Online marketing is especially important when trying to attract today’s buyers so ask the agents you interview about their online marketing techniques.

Once the home is listed, ask for a copy of the MLS listing. This is what other agents use when determining which homes to show their buying clients.

If the description of the house isn’t intriguing, if there are few photos, or if the photos are blurry or unattractive, ask your agent to redo them.

Finally, follow up on the agent’s marketing plan by checking in with him or her weekly to determine what’s being done to sell the home. Most professional agents are happy to share this information with their clients.

Homes that are priced right, clean and staged and marketed appropriately generally sell quickly and for top dollar.

Give us a call. We’d love to show you how we market homes for sale.


What you need to know about discrimination in mortgage lending

Despite what the media wants us to believe, the U.S. has come a long way since the days of the rampant and blatant discrimination in lending practices we witnessed in the 1930s.

Unfortunately, we still have a rather large patch of ground to cover.

According to a 2016 study published in the Journal of Urban Economics, mortgage loan discrimination often begins well before the acceptance or rejection of a loan application – often during the preliminary stages.

For example, a 2016 study, published in the Journal of Urban Economics, showed that loan officers ignored emailed questions from African Americans 1.8 percent more often than those from white applicants, which is “equivalent to the effect of having a credit score that is 71 points lower.”

The truth is, despite landmark court decisions and studies, there is still discrimination in lending against Americans of color, in some parts of the country.

What is discrimination in lending?

When lenders violate one of two federal laws, the Fair Housing Act or the Equal Credit Opportunity Act (ECOA), they are guilty of discrimination.

The Fair Housing Act lists seven methods of discrimination that are illegal:

  • Familial status
  • Race
  • Color
  • Religion
  • Gender
  • National origin
  • Disability

Some Americans are exempt from the law. These include:

  • An owner who lives in a building with four units or less.
  • Any owner of three or fewer single-family homes who does not use the services of a licensed broker when a property is sold or rented.
  • Any dwelling owned or operated by private clubs or organizations to which one must be a member to live there.

The ECOA, on the other hand, is specific to those who offer credit. It forbids discrimination against not only the Fair Housing Acts protected classes but also on the basis of whether an applicant receives public assistance, marital status and age.

Lenders are free to ask you for some of this information, but only under certain circumstances and never are they allowed to ask your religion.

The laws apply to any lender who loans the money to a consumer to purchase, repair, build or improve a dwelling. It also applies to selling, renting, appraising and brokering real property.

The anti-discrimination laws must be applied equally to all mortgage applicants and the lending industry, more than others, is tasked with ensuring that their policies do not exclude or burden those in protected classes, according to the Federal Fair Lending And Credit Practices Manual.

How to protect yourself against mortgage discrimination

Many Americans are confused about their rights and the laws that protect these rights. Discrimination in lending practices, although sometimes blatant, can be evidenced in more subtle ways.

In fact, according to the FDIC, U.S. courts have indicated three types of proof of mortgage discrimination:

  • Overt discrimination
  • Disparate treatment – Described as “when a lender treats applicants differently based on one of the prohibited factors”
  • Disparate impact – “when a lender applies a practice uniformly to all applicants but the practice has a discriminatory effect on a prohibited basis and is not justified by business necessity”

The disparate treatment and disparate impact proofs are so subtle that you’ll need to know the warning signs. The Consumer Financial Protect Bureau has some tips for you:

  • The lender tries to discourage you from applying for a mortgage.
  • You notice different treatment in person than on the telephone or in emails.
  • You are qualified yet the lender rejects your application.
  • The lender doesn’t supply you with a reason for rejecting your application.
  • You are treated differently in person than on the phone.
  • The interest rate you are offered is higher than that for which you originally applied and you are certain you qualify for the lower rate.

Then, shop among several lenders. Not only will this help you find the best rates and terms, but any offer that is blatantly discriminatory will stand out among the others.

What to do if you think you’re a victim of mortgage discrimination

The first step to take if you feel you’ve been discriminated against is to bring it to the attention of the lender, claims Nikitra Bailey of the Center for Responsible Lending, at nerdwallet.com.

Then, start filing complaints. Your state’s attorney general should be notified and you can find out how to do that at naag.org.

Then, file complaints with the Consumer Financial Protection Bureau and with the U.S. Department of Housing and Urban Development.

Sure, it’s easy to take the best lending offer and ignore the lender who is discriminating. By filing a complaint, however, you are helping to protect others from illegal lending practices.

A few things to consider before purchasing waterfront property

If your dream is to live on the water, you’re not alone. Lake or riverfront living is the dream of many and, if you own a boat, it’s understandable that you want to buy a home with a place to keep your “baby.”

Let’s take a look at a few things to consider before shopping for waterfront property.

Do you need to shore up the shoreline?

Erosion is always a concern when water laps against land. Have the homeowners done anything to stabilize the shoreline, such as planting native vegetation, install riprap and retaining walls?

In the “Land of 10,000 Lakes,” the experts at the Minnesota Department of Natural Resources discourage both riprap and retaining walls. They do say, however, that sometimes these installations are necessary.

Will you need flood insurance?

Even if you live in a low-risk area, the pros at the Federal Emergency Management Administration (FEMA) suggest that you carry flood insurance.

“If you live in an area with low or moderate flood risk, you are 5 times more likely to experience flood than a fire in your home over the next 30 years,” they claim.

Because homeowners’ insurance doesn’t cover flood damage, if you live inside or in close proximity to an area with a high risk of flood, purchase flood insurance.

Flood insurance is required by law if you have a federally-regulated mortgage. To find out if you do, go online to MarketWatch.com and scroll to the paragraph that begins with “Now, for the Quiz Answer.”

Some states require those in high-risk areas to carry flood insurance as do most lenders.

To learn the risk of flood damage for your home, enter your address here, at FEMA.gov.

Ensure that your boat type and size is allowed

Most states with waterfront residential property impose restrictions on the types and sizes of watercraft allowed on the lakes and rivers. Check with the Department of Natural Resources (DNR) for restrictions.

Dock considerations

If the home you have your eye on doesn’t have a boat dock and you plan on installing one, you’ll need to determine what’s allowed in the area. What type? How big? These are all questions that either that the DNR and city officials can answer.

Living on the water is a dream for many homebuyers but it’s important to learn all you can about waterfront living before placing an offer to purchase.

Still haven’t found your dream home? Consider a fixer-upper

Have you made your wish list of all the things you crave in a new home?

If you have, you may wonder if there’s a home on earth that has all those features, at a price you can afford. Probably not, but in cases like this, it’s time to change the way you shop.

Start looking at ugly homes.

Surprised? Homes that need work, or “fixers” as they are called in the real estate industry, are the ideal choice for the picky homebuyer, and here’s why:

  • They are less expensive than homes in move-in condition.
  • There is typically less competition in the fixer market.
  • You can customize the home to fit your home-buying wish list.
  • You may be able to buy in a more expensive neighborhood, which will help boost the home’s value when it’s repaired.
  • Financing options are quite attractive.

“In some markets, buying a fixer can really be a game changer, bringing the typical single-family home into reach for a median-income household,” says Realtor.com’s Cicely Wedgeworth.

Shopping for a fixer

Shopping a fixer-upper house for sale may be challenging at first. Remember, these homes are typically not very attractive so you’ll need to learn how to look at them in a different light.

Forget trying to picture yourself living in the home now – picture instead what the home will be like when you’ve transformed it.

The most important aspect of fixer-upper shopping is to find a floor plan that most closely fits your needs without having to knock down too many walls.

While removing a non-load-bearing wall may cost between $2,000 and $3,000, ripping out a load-bearing wall costs $1,200 to $3,000 for a single-story home.

If the home you purchase has more than one story that price jumps to between $3,200 and $10,000, according to the folks at HomeAdvisor.com.

As you can see, the floor plan is key when looking at fixers.

Two professionals you simply must have on your side when shopping in the fixer market include a real estate agent to help you negotiate and a contractor, for obvious reasons.

Financing the fixer-upper

Once you decide on a home, unless you’ll be paying cash for it and for the rehab work you’ll need to get financing. Unlike in years past, today there are several attractive options.

Our favorite programs are the FHA 203(k) loan, the Freddie Mac Home Possible® mortgage and Fannie Mae’s HomeStyle® Renovation Mortgage. Although these programs have different qualification guidelines they all basically offer the same thing: They permit borrowers to wrap the rehab work into the financing for the home.

One loan covers both. With the FHA program you won’t need to start making mortgage payments until you actually move into the home.

This is a significant money and time saver. First, having just one loan means you’ll save on closing costs. With all three programs, the loan amount is typically based on the value of the property when the work is completed.

The process is complicated, we must warn you, but with the right contractor and real estate agent, buying a fixer-upper property may just be the best investment you’ve ever made.