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March 13, 2018

Look at Your Home Through a Buyer’s Eyes: Making TheTo-Do List

Selling your home is one of the most tricky parts of owning a home, but it can be deceiving at first. There are always little projects that you meant to get to and didn’t, and things that probably weren’t perfect, but didn’t bother you enough to fix. You can’t possibly do everything to make your house like new before putting it on the market, but there’s a minimum level that most buyers will expect.  At least if you expect to get top dollar.

How many of those things left on your “to do” list absolutely need to become “to dones?”

Getting Ready to Sell

Before you get too serious about selling, it’s a good idea to have your Realtor over for a quick walk through. They can give you a punch list of items they believe should be updated, fixed or addressed in some other way before you sell your home. We also add staging to that list, so you have a room-by-room list of what to keep and what to pack in preparation for photographing your home and putting it's best foot forward.  You never know when the right buyer will walk through the door, so your house needs to be ready to go from the moment you put it on the market. This alone is often your biggest key to sales success.


That doesn’t mean you need to completely gut and remode, but you should make sure everything is in proper working order and ready for a new occupant. That can be a lot to wrap your head around. If you are already overwhelmed, start with the list below.


Entry & Living Room

The moment that door opens, and even before it does, your potential buyers are forming an opinion of your home. What the open door reveals needs to better pack a punch (or at the very last not leave them puzzled or unsure).

Make sure that the windows are sparkling clean to let in as much light as possible (ideally remove the screens and stash them in the garage or storage space), that all your light bulbs are working , the flooring is clean and in good shape, any tile grout is solid and the walls are flawless. A neutral color is always a good idea, Blues, light grays, beige and creams are also all good choices for paint colors.  If you need help choosing the right shade, we can help with that.


Dining Room

Your dining room should follow the same advice as your living room, with one exception. Since there’s probably some amount of eating that happens in this part of the house, you’ll want to check the flooring to ensure there’s no stains or spots under the table, or a noticeable spot where the dog likes to lie in wait for cherished crumbs.

If this area is carpeted, don't cover spots with a rug, this could be considered a “hidden, latent defect.” Basically, it means that you’re hiding damage from a potential buyer. And then what happens?  They start picking up rugs everywhere, looking for more spots.  That then becomes their focus, rather than all the great things about your house you've worked hard to highlight.  Bummer. 

Call a professional carpet cleaner or just own up to the flaw and discuss options for addressing this your agent should a buyer ask for the carpet to be replaced or cleaned before closing.  Planning ahead can avoid additional stress.



This is a busy room that is the most used room in the house. Check all the items on this list, one at a time:

 Appliances that are staying

• Are they functional?

• Do they have an attractive appearance?

• Do they match one another?

• Are they clean?


Kitchen sink area:

• Is the sink free of damage?

• Does it drain well?

• Does the disposal work?

• Does the sprayer work?

• Is the faucet leaking?


Counters, backsplash and cabinets:

• Do the counters have worn or burned spots?

• Are there grouted areas that are needing regrouted?

• Do the cabinet doors open and close properly?

• Is there water damage anywhere?

• Is everything clean and not tacky to touch?

• Do the cabinets have worn finish?


If there's damage or deferred repairs you can't fix before listing, make sure they are disclosed in the paperwork your Realtor provides.



Bedrooms are the next hardest spot to tackle, especially if you have kids. If you’re still living in  the house until you find a buyer, invest in some storage systems — they’ll pay off in the long run. Organize everything as best you can to give the rooms the appearance of more space, clean the windows, using solid colored bins so you can't see what's inside.  Install new lightbulbs, clean the carpets and come up with a plan to keep things need so it's not a stress bomb each time you get a showing request.  If anything can be moved out to a storage unit, do it now.  You'll be packing it anyway!  We have ideas for storage that can make things easier, so just ask.



Bathrooms are alot like kitchens, they have a lot of moving parts. That being said, they also pretty much have the same punch list. The only addition would be the shower or tub. Check the faucets and showerheads for leaks and make sure there’s no mold on your tub or shower surrounds. Clean that stuff within an inch of its life and if you can’t get rid of the stains, recaulk. It’s an easy way to make that tub or shower look like you’ve never even used it.

Trust me, this needs to be a priority.  Buyers don't like dirty tubs and showers, even if their own is in worse condition.



There’s not a lot to do in the garage, but do make sure your door opener is functioning properly, that the wheels on the door are lubricated if it’s making a terrible sound when you open it or close it and that you’ve cleaned up as best as you can. If you don’t really use it, you can dress it up a lot by applying an epoxy coating to the floor. The kits run around $100 and, although they don’t add any value to your home, they’re pretty impressive and beat an old, stained concrete floor.


General Indoor List 

Overall, it’ll help a lot if you run around your house and make sure that all your lightbulbs are fresh, all the windows are cleaned, you remember to leave the blinds open during the day and that the paint makes each room feel bigger. The key is to bring in more light and then use lighter colors to keep it bouncing around the room. A new coat of white ceiling paint won’t hurt your efforts, either.  When decluttering, think "wall space."  I like to say that the more space I can see where the walls meet the floor, the emptier the room will be and the bigger it will look.

 Paint is great for a lot of reasons. It can seal in smells you might have never noticed, as well as giving the house the scent of fresh construction. That smell paints a picture for a buyer that says this house has been taken care of and they can trust that it’s in good shape.


General Outdoors 

When it comes to the landscape, keep the lawn mowed (likely more often than you are used to), trim plants around the house, clean up any projects that you started and never finished (this is a biggie). Landscapers and trash haulers can help a lot.  If you have metal lying around, it's likely you can find a metal scrap hauler who will gladly come and relieve you of those things. You’ll also want to check out your roof and gutters to make sure they’re in good shape because your potential buyers will be doing the same thing during their inspection.  Removing anything you know they might use to negotiate on price with ahead of time is the goal here. 

The first thing a buyer sees is the view from the street, make sure you run out there during the outdoor prep work to check your look. I even encourage my sellers to sit in the passenger seat and drive down their block, looking at each house and then their own to see how it stacks up.  This is what each buyer will be doint.  When you start to wonder if you should actually sell this amazing house at all, you’ve probably got the curb appeal knocked out.


When You Can’t Get It All Done

You don’t have an unlimited timeline, that’s pretty common.  But, your home should be ready to sell if you want to get top dollar. We often advise our selles to contact us at least three months before their target date if possible, as that allows plenty of time to knock down the list.  If it's too late for that, or if you can’t do the work, just call us and we'll help you prioritize with the timeline you have available.

Let's get started!


Visit our Facebook Staging page for more tips.

March 11, 2018

5 Hikes for People Who Hate Hiking

Gophers are popping out of snow drifts, a few early robins have been spotted.  There's a tentative sense that spring might possibly, hopefully be just around the corner.  A passing thought of hikes with the kids, the dog or just a friend crosses our mind.

 It sounds good, at least in theory.  But if your hiking shoes and backpack are covered in the dust of your last post-college trip to the desert many years ago, we've got some high-rewards, low effort options for you.  Southwestern Montana can be intimidating for those that aren't inclined to break the record for nights spent sleeping under the stars, or hitting the big wave spring runoff with your kayak.

 Here are some local, easy hikes for those who want to get back in time to have dinner at home and need to be able to get up and walk in a somewhat normal way the next morning:


 Bear Canyon Trail (image courtesy of Bozeman Chronicle)

1.  Bear Canyon:  Located just east of town off the Bear Canyon exit, take Bear Canyon south until it ends.  The complete Bear Canyon Trail is a 13 mile out and back trail located that features a lake and is rated as moderate, accessible from May until October without 4WD. Best to keep your dog on leash, as this area is frequented by bears, moose, foxes and other wildlife, including mountain bikers.  Also great for snowshoeing when the white stuff refuses to leave.


Drinking Horse Trail (image courtesy of MERCURYcsc on Pinterest)

2.  Drinking Horse:  Located across from the famed "M" trail, I love this trail for its wildflowers, and the fact that you can easily pick and choose how much to take on.  Super easy:  Just take the trail to the creek,  there's a few hills to get you going, but it's a short distance to the water and the cool bridge that crosses it.  Drinking Horse is a 2.1 mile loop trail located off Bridger Canyon just outside city limits.  The trail is rated as moderate, dog friending and great for people just getting started with hiking and looking for some elevation gain.  Note:  This one can get popular on weekends, so bring a leash if your pup is a wanderer or likes to chase wildlife.


3.  Palisades Falls:  A favorite place for ice climbing in winter, this is a great way to get a taste of Hyalite Reservoir without getting too serious about hiking and am amazing payoff.  It's a do-able .5 mile asphalt trail at 11% grade, with the trailhead starting at the Palisades Falls Picnic Area parking lot.  Good spot to take visitors to get a little taste of the Montana lifestyle with a great relaxing drive to the reservoir, and a little exercise to top it off.  Bring a leash for your dog.


West Boulder Meadows - Absaroka Range (image courtesy of MThikes.com)

4. West Boulder Meadows:  This is outside Livingston, south of Big Timber in the Absaroka Mountains (pronounced Ab-zor-kuhs by locals with the accent on the second syllable but leaving out the O all together). A great trail in excellent shape, it crosses private land at a point so take care.  Total elevation gain of the trail is 325 feet, with great views and meadows, fishing and photography opportunities.  Once you start the hike, the nearby noise disappears.  There are some ups and downs, but it's all doable.  Directions to trailhead:  Follow highway 298 south from Big Timber for approximately 17 miles. Turn right onto West Boulder Road & follow gravel road for 7 miles, bear left to stay on the West Boulder road. After 7 more miles you'll see the  parking at the end of the road. 



Red Lodge Creek Trail, early season (image courtesy of MThikes.com)

 5.  Red Lodge Creek Trail:  A great day trip from Livingston or Bozeman area, with a hike to boot.  This trail is used a lot by locals, and offers an easy view of a mature forest. The upper part is usually closed until summer, so this is a good early season hike in spring or fall.  If you have the craving to get into the mountains without all the gear (except what you'd normally take for unexpected weather) this one might fit the bill.  Three miles in will give you a wonderful prairie view.  Top it off with lunch at Bogart's or Red Lodge Pizza Co. and you've got yourself a great day.


From Red Lodge, head north on MT-78 at the traffic circle just before town. Drive on MT-78 for 12.7 miles, and then turn left onto Lower Luther Road.  2.4 miles down this gravel road, turn right at the intersection, onto Luther-Roscoe Road.  After another half mile, turn onto Upper Red Lodge Creek Road, which runs for 2.7 miles before entering the forest boundary.  Turn right to stay on Upper Red Lodge Creek Road, and follow the road to the trailhead (1.4 miles).


Off you go!  Don't forget to prepare for sudden changes in the weather of course.  But you knew that, you're in Montana!


Posted in Living in Montana
Feb. 12, 2018

4 Ways to Beat Montana Winter Blahs

Image courtesy of @gentlemanmodernImage courtesy of @gentlemanmodern

Not a skiier or snowboarder.  Those of you who are trying to wait out winter this year, how's that going for you?  I thought so.

Let's get to it, we need to get going.  Here are 4 great ways to pass the time in Bozeman this February:

1.  Take a class:  Learn to make bread at Owenhouse Ace Hardware  

2.  Visit a hot springs:  Chico and the boiling river are close enough to make an afternoon of it:  

3.  Dance Dirty (or watch some Dirty Dancing): Check it out here.

4.  Visit Yellowstone:  Take a private tour of Yellowstone: 


Pick one or set your calendar to do them all, and spring will be here before you know it!

Jan. 13, 2018

What is a FICO Score Anyway?

Another month, another rent payment that’s helping your landlord pay off the house or apartment where you’re living. Another month, another rent day spent pondering just how much equity you could have paid down on your own house by now. So, why not you? Why not now? Sure, buying a house can be complicated and intimidating, knowing some of the pieces of the puzzle goes a long way towards getting there.

Let's back up, to before you started looking online and got frustrated.  I it’s important to fill in some informational blanks. For example, do you know what a FICO score is or truly understand how it affects your ability to get a mortgage? A lot of first time homebuyers often need to do some work on their credit accounts, which isn't such a bad thing.  So, it’s a good idea to start looking into this stuff six months to a year before you bite the bullet and make a loan application.

We're gonna get as basic as it gets with the FICO score.

Fair Isaac Really Isn’t Judging You, Mostly.

Back in ancient times, the  1950s, getting credit was a whole different kind of thing. Rates and down payments or securities were high, terms were short and credit was not nearly as widespread as it is today. Then two fellows named Bill Fair and Earl Isaac came along. They believed that there had to be a better way to make business decisions using data and computer algorithms (a bit ahead of their time, eh?), successfully completing the first credit scoring system in 1958.

By 1970, the Fair Isaac Company was delivering scoring systems for bank credit cards, then in 1981, it developed the credit bureau risk score — similar to the one your bank will be using to determine if you’re going to get a mortgage. The secret proprietary algorithm has been updated throughout the years in a quest to develop the most accurate picture possible of potential borrowers based on their past behavior.

Your FICO score isn’t a judgement of your character, of your job or anything like that. A lot of people attach the two, so it's important to understand that point.  It’s simply a number that tells lenders how likely you are to be willing and able to pay back credit over the long run. If you’ve never had credit or not had much credit experience, expect your number to be lower simply because there’s no data on you. If you’ve had some credit, maybe a student loan or a car loan, and always paid on time, you’re probably golden.

A score of 620 is serviceable, a 650 is generally enough to get a mortgage.

What’s in a FICO Score?

A lot of people are confused about what exactly gets figured into a FICO score. FICO is just an algorithm, remember, so there’s nothing that it can calculate without being fed data. So, the score is based on the information from whatever credit bureau that you’re using to request a FICO score. Nothing else. Things like your on-time utility payments or car insurance, for example, don’t tend to report, so they won’t be added into the calculation.

When shopping for a pre-mortgage score, it’s best to look for a tri-merge report, or a product that gives you scores from all three bureaus: TransUnion, Experian and Equifax. This is exactly what your bank will do to qualify you. MyFICO.com offers this service and you’ll get scores directly from the horse’s mouth, but feel free to use whatever tool works for you. There are plenty of legit sources out there that can approximate your FICO score.

The main factors that influence that score are probably exactly what you’d expect. They’re bits and pieces that are telling about your credit usage and ability to repay. FICO’s own site lists these as the primary components and weights of an average borrower’s score:

Payment History (35 percent). If you don’t make your payments on time, the credit bureaus report that and FICO makes a note. Non-payments, late payments and the like don’t report until they’re 30 days past due, but it’s still good practice to pay on or before the due date. If you’ve had late pays in the past, just keep paying on time now. The more space you put between today and those late pays, the less they’ll affect you.

Amounts Owed (30 percent). Are your credit cards maxed out? … like, every month…? Well, this is something you need to get a handle on. This metric looks at not only how much you owe, but how much you owe in relation to how much credit you have. The magic number for utilization is a meager 30 percent. If you’re trying to establish credit, it can be a tricky thing to keep your usage under 30 percent, but above zero to prove you can maintain payments long term.

Length of Credit History (15 percent). The age of your credit accounts, as well as the average age is considered under this metric. FICO looks at both opened dates and the date of last utilization to figure out your risk here. To even be in the running for a bronze medal, you need an average credit line age of over two years, but people with extremely good credit scores may have credit histories of 25 years or more.

New Credit (10 percent). FICO wants to see if you’ve recently acquired a bunch of new credit, maybe in anticipation of charging everything up and fleeing to Canada. Experience has told them that suddenly opening several new accounts in a flurry means that you’re a big time risk for default.

Credit Mix (10 percent). Did you know this was even part of it?  Do you only have store credit cards, or do you also have a car loan and a student loan? The better the variety in your credit history, generally the better risk you represent. Don’t run out and get a bunch of different loans just to see how it shakes out, but if you just have a car loan, it won’t hurt to get a small credit card through your bank just for emergencies.

Improving Your Credit for Beginners

Now that you know what the FICO algorithm considers when it calculates your score, you can use this information to improve your credit score before you apply for a mortgage. Be patient, though, it takes time to see these kinds of changes manifest.

Start by going to AnnualCreditReport.com and requesting your free credit reports (you’re entitled to a set of free credit reports from this site once a year). Check them thoroughly for errors of any sort. Dispute, dispute, dispute. Many credit files have some kind of errors on them.  Don't use the others, this is the only one approved by the US Government.

While the credit bureaus are working on your disputes, you can start to pay off any judgements that appear on your credit reports, as well as developing a plan to pay each and every future payment on time. If your checks come on a regular schedule, autopay isn’t a totally bad option, but if you’re part of the gig economy, of course, that’s probably not going to help.

With each payment, your credit will start to improve. Leave those credit cards alone. Just put one payment in front of the other, and before you know it, you’ll have beautiful credit. Super extraordinary stuff. There’s no real secret to it, it’s all just perseverance.

If you think you might need some help doing the research or coming up with a plan to take care of any credit issues you discover, there are some very reputable credit repair companies out there. We can refer you to some that our preferred lenders recommend, and some of our clients have used successfully.

Now that you’ve got your credit as good as it can get, ask your real estate agent (hi there!) to provide some lender referrals, and set up an appointment for a pre-qualification. This is where a lot of you stop.

Don't.  Again, not as scary as it seems.  Take a copy of your taxes for the last two years and your ID to help get the ball rolling. If that seems too intimidating, you can start with a casual phone call to discuss your situation.  Lenders are your friend, and we are all together as a team pulling for you!

This is part of what we'll be covering in our online course Six Months to Home.  All free, all self-paced.  Sign up here and let's get you home!

Dec. 20, 2017

3 Free Last-Minute Gifts

Out of money and time, but want...something to give?  Here are some free last-minute gift ideas for everyone on your list:


For the Astrologer:  The Astro Guide to Business.  What to focus on in the coming year, based on your zodiac sign!

Download here and you can also watch the accompanying webinar if you'd like.  This one is courtesy of @ittybiz.


For the Dog Lover:  Here are some indoor activities for you to do with your pup when the snow is too deep or too cold for them to hang outside.


For the Home Seller:  This one's from me.  If you (or someone you know) is planning on selling within the next six months, my y Level 1 Staging Servicegives them a step-by-step custom guide to decluttering and depersonalizing their home so it will sell faster and easier (promise).  With this offer, they receive this service at no charge when listing with us.  Here's the link.


Posted in giveaways
Oct. 16, 2017

Spend the Day in Livingston

Visit this quintessential western town and embrace the great restaurants, lively downtown and unique museums.


Gil's Goods:  Part of the historic Murray Hotel block, this is my favorite stop for lunch or an amazing wood-fired pizza.  Order at the counter and sit with the locals and visitors.  Their desserts are stellar also!

Neptune's Brewery: Livingston is a long way from the sea where Neptune dwelled, but we can dream can't we?  Try their mussels or salmon croquette paired with a libation from their beer menu.

Rib and Chop HouseThis regional chain never fails to impress, and while those of us in Bozeman wait patiently for one to open here, we will brave the pass in the worst weather to get to this restaurant.  A great lunch and dinner menu, great atmosphere and excellent service are worth the drive!

Where to go:

Visit the Depot:  Built in 1902, it was Northern Pacific Railroad's original access to Yellowstone until 1979, when passenger service to southern Montana was suspending.  It was donated to the City of Livingston in 1985 by Burlington Northern.  Shortly thereafter, an $800,000 restoration introduced the depot as a museum, providing historic exhibits and cultural programs for residents and visitors from around the world.

Yellowstone Gateway Museum: Built in 1907, formerly the North Side School, the museum was purchased by Park County and community members in 1977.  It houses more than 50,000 historical items, such as photographs, books, audio-visual materials and oral histories dating from over 12,000 years ago to present day.

Head to Chico Hot Springs: Between Livingston and Yellowstone is historic Chico Hot Springs, offering dining, live entertainment, lodging and of course the two open-air mineral hot springs pools.  Open year round!  If you haven't hit the hot springs during a snowstorm you haven't lived!


Like what you see?  If you are considering Livingston for your next home purchase, check out the latest listings here.



Posted in Living in Montana
Sept. 24, 2017

Southwestern Montana Ski Season is Coming!

Ski season approaches!  Here are all of the opening dates for nearby resorts:

BRIDGER BOWL – 15795 Bridger Canyon Rd, Bozeman

BIG SKY RESORT – Big Sky, Montana

DISCOVERY SKI AREA – 180 Discovery Basin Rd, Anaconda

BLACKTAIL MOUNTAIN – 3990 Blacktail Rd, Lakeside, MT

GREAT DIVIDE – 7385 Belmont Dr, Marysville

  • skigd.com
  •  Great Divide is known for being the first ski area in Montana to open each year.
  • Oct 23… Snowmaking begins


  • losttrail.com
  • Opening Day – Snow Dependent (2016 was Dec. 8th)

MAVERICK MOUNTAIN – 1600 Maverick Mountain Rd, Polaris

Aug. 3, 2017

Where to Watch the August Total Eclipse in Montana

August 21st, it's coming! Though Montana isn't in the direct path, there are some places to view it in southwestern Montana.  We will be able to view 92% of the sun blocked by the moon during the eclipse. 93% in Billings  That's still pretty good!  

For Montanans, the best viewing time will be around 11:30 a.m the 21st. Just make sure to wear protective eye wear!

We have so much open space here, this is a great time to take the afternoon off and hike out to a great spot.  Here are a few:

Stone Creek Trailhead

Jackson Creek Trailhead

Johnson Canyon Trailhead

Natural Bridge Falls Picnic Area

Spanish Creek Picnic Area


For more spots, visit Receation.gov.



July 18, 2017

3 Reasons You Shouldn't Do For Sale By Owner

(Even in our hot market)*

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers 

Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 16% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the homes they actually purchased?

  • 51% on the internet
  • 34% from a Real Estate Agent
  • 8% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With 

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale by Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years. 

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent 

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional (hi there :) in your marketplace and see what they have to offer.  We'd love the chance to share how we can help you sell your home.






*originally published in Keeping Current Matters July 10, 2017

June 7, 2017

What’s Your Home Buying Power?


If you’re in the market for a new home or investment property, one of the first questions you’ll probably ask is, “What can we afford?” Many buyers become so caught up in how much they can afford that they don’t realize their total buying powerthat is, the total amount of purchasing potential they actually have.


Buying Power Defined

Your buying power is comprised of the total amount of money you have available each month for a mortgage payment. This means the money you have each month after fixed bills and expenses. Any money you’ve saved for a down payment, the proceeds from the sale of your current home, if applicable, and the amount of money you’re qualified to borrow all impact your buying power as well. When you take all of this into account, you may find you are able to purchase a larger home or a home in a more desirable neighborhood, or you might realize you should be looking for homes in a lower price range.


What About Housing Affordability?

Housing affordability is a metric used by real estate experts to assess whether or not the average family earning an average wage could qualify for a mortgage on the average home.1 Although this figure is essential to creating a comprehensive overview of the real estate market, it’s not a factor you should consider in your home search. What may be considered affordable to you based on your income and other factors may be different than what’s affordable to the average buyer.


Why Buying Power Matters

A common misunderstanding is that a home’s list price determines whether or not you can purchase it. Although it’s important to look at the price tag, it’s essential to consider what your monthly payment will be if you own the home. After all, the purchase price doesn’t include the housing-related expenses, such as annual property taxes, homeowner insurance, associated monthly fees and any maintenance or repairs. Figuring out the payment will prevent you from overestimating or underestimating your buying power. After all, you’ll live with your monthly payment, not the sales price.


Once you have clarity on your buying power, you’ll be able to buy the home you want, instead of settling for a home because you feel it’s the only one you can afford. It will also prevent you from becoming “house poor,” a common term for someone who’s put all their money toward the down payment, leaving them nothing left over for fees outside of their monthly house payment. Both scenarios can negatively impact the lifestyle you want to live. Understanding your buying power can help you get the home you want without sacrificing the lifestyle you desire.


If you haven’t sold your current home yet, a Comparative Market Assessment (CMA) will give you a general idea of how much you may get for your home based on what other homes have sold for in your area. Contact our team for a FREE CMA!


Calculating Your Buying Power

You might be wondering, “How do I know what my buying power is?” Buying power is calculated by adding the money you’ve saved for a down payment and/or the money you made from selling your home (minus fees and mortgage payoff) to all of your sources of income and investments that could be used to make your monthly payment. Make sure to include your monthly pay, commissions or tips, dividends from investments, payments from rental properties or other monthly income you receive as well as the loan amount you’re willing to finance and qualify for.


Most lenders advised buyers to spend no more than 35 to 45 percent of their pretax income on housing, meaning all your income and sources of revenue prior to paying taxes. Make sure you factor in not only your mortgage payment, but also property tax and home insurance to the cost of housing.2 However, other financial experts advise spending no more than a very conservative 25 percent of your after-tax income on your housing expenses.2  Whether you plan to spend the average, play it conservative or split the difference is up to you. There are programs with different parameters, but this is a good general guide to start with.


Traditionally, mortgage lenders have targeted the ideal housing expense amount to be a ratio of 28 percent or less.3


However, these figures bring up an important point: you don’t have to spend all of your savings and available monthly income on a mortgage payment. It’s important to set money aside for regular home maintenance, unexpected repairs and monthly fees, such as a condominium or homeowners association fee. While the above ratios are commonly accepted, a lender will look at your total financial picture when they decide how much they’re willing to lend. It may be tempting to take out a large loan in order to purchase the home of your dreams, but keep in mind the less money you have to borrow, the stronger your buying power may be.


4 Things That Impact Buying Power

1. Credit score. A great score can help you lock into a lower interest rate.


2. Debt-to-income ratio. The lower the ratio, the better risk you may be to lenders as long as you have an established credit history.


3. Assets, including the documentation of where the money for the purchase is coming from and the mix of your investments.


4. Down payment. The more you’re able to put down, the less you will have to borrow. With a down payment of 20 percent or more, you won’t have to purchase private mortgage insurance (PMI) and you may also be able to negotiate a lower interest rate.


How to Save for a Down Payment

If you’re thinking of buying a home one day, one of the first steps to take is to start saving for a down payment. Here are some tips to make saving easier.


First-time buyers:

1. Set a savings goal. One way to figure out how much to save is to use the average sales price for homes that are similar to what you want and figure out your target down payment percentage. For example, if homes are selling for $200,000 in your area and you want to put 20 percent down, you’ll have to save $40,000. Set a goal to save that amount within a specific time frame; just keep in mind the longer you save, the more the average selling price will change. Although the majority of buyers saved for six months or less, 29 percent of all buyers (and 31 percent of first-time buyers) saved for more than two years for a down payment.4


2. Cut back on expenses. Review your monthly expenses and look for ways to save. Twenty-nine percent of buyers cut spending on non-essentials items and 22 percent cut spending on entertainment while they were saving for a home.4 Think about items you can live without or cut back on temporarily while you’re saving.


3. Look for ways to boost your income. Get a side job or sell items online or at a garage sale to increase your income in a short amount of time. Be sure to save any windfalls you get, including your annual income tax refund or work bonuses.


4.  Check out home-buying programs. Your state, county or local government may offer special programs, such as grants, for first-time buyers to use.


5. Ask your family. Thirteen percent of all buyers, and 24 percent of first-time buyers, were given money from family or friends to use toward the down payment of their home.4


Repeat buyers:

More than 52 percent of repeat buyers used the proceeds from the sale of their primary residence toward the down payment on their next home.4 Similarly, 76 percent tapped into their savings accounts.4 If you’re thinking of buying another home, here are more ways to save more money, in addition to the tips listed above:


1. Rent a room. If you have an income flat (or mother-in-law unit) attached to your home, rent it out and channel the income into a high-interest savings account.


2. Make your money work for you. If you don’t plan to buy for at least five years, invest it and let the compound interest work for you. Discuss this option with your financial planner or broker to see if this is ideal for you and your goals.


3. Tap into your 401(k). If you have a 401(k) plan, you may be allowed to borrow a portion of it, the lessor of up to $50,000 or half of its value, for your down payment. Remember, it’s a loan so you’ll have to pay it back. If you leave or lose your job before you’ve repaid the loan, you’ll have between 60 to 90 days to repay the balance or face stiff taxes and penalties.


If you want to buy an investment property

Whether you’re buying a second home or a rental property, here are a couple tips to save for a down payment.


1. Tap into your equity. If you’ve paid off or paid down your mortgage on your primary home, you may be able to tap into your equity to purchase another property. Contact your lender to learn more about a HELOC or home equity loan.


2. Get a partner. Find a friend or relative who’s willing to purchase property with you. Typically, you’ll split the costs and profits equally. Just make sure to work with an attorney to create a partnership agreement to fit your situation.



Work Out Your Buying Potential

What’s your buying potential? Fill out this worksheet to get an estimate.


Housing Expense Ratio:

1. Monthly income before taxes


2. Multiply line 1 by 0.28

X 0.28

3. Monthly mortgage payment (PITI) should not exceed this amount

= $

4. Monthly income before taxes


5. Multiply line 4 by 0.36

X 0.36

6. Total monthly payments on all debts (including mortgage) should not exceed this amount

= $

7.  Subtract the total monthly payments on all outstanding debts (e.g., car loans, credit cards, student loans, etc.)

- $

8. The monthly mortgage payment should not exceed this amount


9. Look at line 3 and line 8. The lower figure is an estimate of the maximum mortgage payment in consideration of your income and debts.


10. Multiply line 9 by 0.80

X 0.80

11. This equals portion of your mortgage payment that is the principal and interest only


12. Use the table below to see the size of the loan you may be able to obtain with this monthly mortgage payment.


Source: Iowa State University Extension, What is your house-buying power?


Monthly Payment on 30-Year Fixed Rate Mortgage

Loan amount

































































Didn’t see your desired loan amount? Use the table below to estimate your monthly payment (principal and interest) per $1,000 of your loan. To figure out an estimated loan payment, multiply the factor by the number of thousands in the amount of your mortgage.


For example, if you intend to borrow $400,000, with a loan term of 30 years at 4% interest, multiply 4.77x 400 = $1908 per month.


Interest Rate

15-Year Term

30-Year Term


Monthly Payment

Monthly Payment






















Source: HSH.com http://www.hsh.com/mopaytable-print.html)


Don’t forget to factor in property taxes and insurance. These are often added to your principal and interest of your mortgage paymentthe money used to pay down the balance of your loan and the charge for borrowing the money. Since these numbers vary, contact your county assessor’s office for the current property tax rate and your insurer for a home insurance quote. Once you have these figures, divide each by 12 to estimate how much they’ll add to the above payment amounts.


Do you want a clearer picture of your buying power? Would you like to see what kind of homes you can get with your buying power? Give us a call!


Sources: 1. National Association of REALTORS https://www.nar.realtor/topics/housing-affordability-index/methodology

                2. Moneyunder30.com https://www.moneyunder30.com/percentage-income-mortgage-payments

                3. Credit.com https://www.credit.com/loans/mortgage-questions/how-to-determine-your-monthly-housing-budget/

                4. National Association of REALTORS, 2016 Profile of Home Buyers and Sellers

                5. Iowa State University Extension, What is your house-buying power? https://store.extension.iastate.edu/product/pm1460-pdf

                6. HSH.com http://www.hsh.com/mopaytable-print.html