Misguided house makeover

house makeover
House Makeover (Infographic by Allianz Australia Home Insurance allianz.com.au)

Do you really need to spend money to make money?  Deciding what renovations and updates to make prior to your home sale can be tormenting.  It’s easy enough to say that your home needs a facelift; but, the repairs, updates, and painting costs money – and usually lots of it.  The suggestion of making renovations and updates to your home before you sell is everywhere, it’s on TV, the internet, and magazines.  And if you ask friends and real estate agents, they will also give you a list of “must do’s.”  Regardless of how you decide to do a house makeover before the sale, chances are that you’re not doing it right.

There is no doubt that many home buyers are looking for a turn-key home.  If your home is not “out of the box brand new,” you probably need to freshen it up, as well as make some repairs and updates.  But before you embark on the house makeover by making those renovations, you need to ask yourself two important questions: “How much money can I realistically allot for a makeover?” and “How much am I expecting to net from my home sale?

Does a house makeover really get you top dollar? Spending money on renovations will certainly make the home sell faster, but not necessarily make you more money.  And there is no guarantee that the house makeover renovations you make are to home buyers’ tastes.  So if you’re goal is to get top dollar, don’t look at the sale price.  Instead keep your eye on your estimated net (the amount you’re left with after the sale minus total renovation costs).

Of course, the best way to maintain your home’s value is to perform regular maintenance.  It would certainly make the home prep easier too!  But the reality is that many home owners defer maintenance until they feel it’s absolutely necessary.  Deferring maintenance can actually cost more in repairs down the line, and lower your home sale price.  Spending money to correct all the years of neglected repairs and updates prior to the home sale won’t necessarily get you top dollar.

Not all buyers are looking for renovated homes.  One of Stephen B. Billings conclusions in his recent research (Hedonic Amenity Valuation and Housing Renovations; Real Estate Economics; Fall 2015, 43:652-82) was that during the past “healthy” housing market, there was a balance between renovated and non-renovated homes that sold.  However, he also found there was an increase in renovated home sales during the housing downturn of 2007.

Selling your home “as-is” would certainly decrease your sale price, but could net you the same or even more if weighed against extensive renovations of the house makeover.  Consider that you would only recoup a fraction of the cost of a minor kitchen and bathroom remodel; which averages about $20,122 and $17,908 respectively (according to 2016 Cost vs Value Report; remodeling.hw.net).

Concentrate on the basics of decluttering first. Decluttering can make your home look different and feel larger.  Decluttering can set the stage for fo you decide on renovations, and maybe even home staging.

If you decide on freshening up your home before the sale, start with the basics.  Focus on deferred maintenance, and make necessary repairs.  Consider a fresh coat of paint, and maybe new carpets.  Wood floors don’t necessarily have to be replaced or sanded; flooring professionals use state of the art processes to “renew” wood floors.

If you decide on a house makeover, focus first on making repairs and freshening your home. Work out a budget and get several quotes from licensed contractors.  Don’t automatically go for the cheapest quote, even if you’re on a tight budget.  Focus on quality, even if it means limiting the scope of work.  Poor workmanship can sabotage your home sale by making your home look shabby and in need of additional repairs and updates.

Copyright © Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Home selling don’ts

home selling don'ts
Do’s and Don’ts of preparing a home for sale (from realestatestagingassociation.com)

When preparing for a home sale, the devil is in the detail.  You probably already know about the “do’s,” de-cluttering, curb-appeal, staging, and making necessary repairs.  But here are a few home selling “don’ts” that often trap home sellers into making mistakes:

Home selling is not about you. Don’t make a statement.  Now is not the time to be bold with renovations and staging; but rather stay focused on getting your home sold.  Stay away from trendy features, and bold designs.  Although bright and dramatic colors seem tempting, stick with neutral color schemes.  Besides making rooms feel awkward, making a statement with trendy fixtures and bold colors may turn off home buyers.  Bold style statements make home buyers fixate on the style, rather the space and potential of each room.

Home selling is not about being cheap. Don’t hire a contractor because they are the cheapest.  When it comes to home repair, the idiom “you get what you pay for” typically holds true.  Home buyers have a discerning eye and can spot poor workmanship.  Don’t be tempted to hire the unlicensed handyman to save a few dollars either; you and the future buyers won’t have recourse if there is a problem with the repair.  Don’t also be talked into a cheap renovation that is meant to appear as a luxury amenity.  Poor workmanship, sloppy installation, and/or inferior materials will turn away many home buyers.

Home selling is not about being amateur. Don’t assume all house painters are alike.  A good paint job can make a room look terrific and create positive emotions; while a poor paint job makes a room appear shabby and unstylish.  And even though you may be tempted to save a few dollars, don’t paint your home on your own – hire a professional.  The amateur paint job appears sloppy and has the telltale uneven edges, painted over light switches and receptacle covers, and painted shut windows.

Home selling is not about guessing. Don’t assume your prepping will bring you a big return on your investment.  If you deferred regular maintenance, you may have to make repairs regardless of the return.  Likewise, if your home is outdated, you may consider making some updates to lure home buyers.  Before getting in too deep on a prepping project, have a budget in mind and do a cost benefit analysis.

Consider checking out this year’s Remodeling Magazine’s Cost vs. Value Report (costvsvalue.com) to find out what updates and renovations make sense and which ones can bring you the biggest returns.  Although most renovations won’t bring you a dollar-for-dollar return, they may add to the overall aesthetic and make your home more appealing.  However, some renovations may not only lose money but can also blemish your otherwise beautiful home.  For example, adding a backup generator may seem as if it is a much needed amenity, however, the report indicated that for the Washington DC region, you would only recoup about 57.5% of the cost.  And it is possible that the home buyer will remove it because of it was poorly installed and too noisy.

The purpose of preparing your home before a sale is to not only to compel home buyers to make a top-dollar offer on your home, but to also get it sold quickly.  Consider planning out how you will prepare your home. Do the research.  Don’t fall into the traps that ensnare many home sellers because it can cost you. You may not only have to correct poor workmanship, but your negotiated sale price may be lower than expected.

Copyright © Dan Krell

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Selling your home is always about the price

From forsalebyowner.com

Pricing a home for a sale is not always easy. There is an abundance of empirical research that has confirmed the many variables that affect sales price. Some influences are manageable and some are not. The top factors to consider when pricing your home to sell include location, condition, features, and timing.

Your home’s physical location is one of the top factors that will affect its sale price. Although home prices vary from neighborhood to neighborhood, your home’s location within the neighborhood could also impact the sale price. Homes located on commuter routes typically sell for less because of the traffic and noise. Even homes located just off of the thoroughfare can be impacted by the perception of traffic and noise; the sale price could be lower than a similar home situated further away from the main road.

A home can sell for more when located close to neighborhood amenities; however, the price could drop if perceived too close. Neil Metz’s research (Effect of Distance to Schooling on Home Prices. The Review of Regional Studies 45.2 (2015):151-171.) indicated that homes located close to schools tend to sell for more. However, the opposite was found with homes within 1,000 feet from schools; the home sale price decreased as the distance from the school closed in from 1,000 feet (probably due to congestion and noise). This effect is typically true for other neighborhood amenities such as shopping areas.

home repairRepairing and upgrading your home prior to listing can increase the sale price. In contrast, deferred maintenance can not only deter home buyers – it could attract low offers; especially if the home has been on the market for a lengthy period. Many home buyers are looking for a “turn-key” home, where they don’t have to be concerned about immediate maintenance; while some are willing to put in the time and effort to personalize a home. If you’re making updates to your home, consider that the quality and installation of upgrades can impacts price as well; cheap fixtures and sloppy workmanship can have a similar affect as deferred maintenance.

Your home’s amenities can also impact the sale price. For example, features such as a finished basement or deck can be appealing and add value. Even green amenities can impact sales price. Research conducted by Cadena and Thomson (An Empirical Assessment of the Value of Green in Residential Real Estate. The Appraisal Journal 83.1 (Winter 2015): 32-40.) concluded that homes that were designated “green” increased sale price by 1%, while certified green homes increased sale price about 2%; however, energy efficient features increased sales price by about 6%!

Finally, your sales price can be affected by the timing of the sale. Miller, Sah, Sklarz, and Pampulov (Is there seasonality in home prices-evidence from CBSAs. Journal of Housing Research, 22(1) (2013), 1-15) conducted a comprehensive study of home sales that occurred in 138 Core Based Statistical Areas (CBSAs are geographic population centers set by the Office of Management and Budget for use by Federal agencies in collecting, and publishing statistics) from February 2000 to April 2011. They concluded that monthly price changes can vary through the year; and homes that sell during summer months (April through September) typically sell for more than homes that sell during the winter (October through March). However, they point out that the seasonality effect could be due to weather; there is less price variance in areas with less temperature variation.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

The challenges of selling a home while divorcing

by Dan Krell
© 2011
DanKrell.com

Of the many challenges you might face while going through divorce, having to leave your home is not only emotionally disruptive, but has the potential to create short term havoc as well. Imagine not only having to pack and move your personal possessions, but also having to cater to strangers traipsing through your home on a regular basis.

Because selling a home during divorce can sometimes offers additional pitfalls, choosing the correct Realtor® as well as arranging a thorough home sale agreement with your ex-spouse may minimize the emotional stress and grief, as well as possibly avoiding additional conflict. As always, I need to remind you that I am not an attorney, and if you’re going through or thinking of separation/divorce, consult your attorney for legal counsel.

Of course you want to choose a listing agent with sharp real estate acumen. However, consider additional agent attributes such as facilitator, active listener, as well as being discreet. Most top real estate agents are good facilitators, being able to move a transaction from an offer to close; but in a divorce situation, the listing agent should not only address the buyers side in negotiation, the agent needs to be able to facilitate the transaction by bringing both ex-spouses together.

In what may seem to be a skill that is scarce these days, active listening is not only hearing what you may have to say but is demonstrating you are understood. Not unlike a counselor, the agent with active listening skills is able to recap a conversation and be able to actively address your concerns during the home sale.

To thwart unwanted lowball offers, the listing agent must be also be discreet. Home buyers may sometimes mistakenly equate a divorce related home sale with a distressed property, and subsequently present an offer that is below market pricing. Additionally, the listing agent must remember that they have a fiduciary responsibility when representing all the sellers of the property and not should not favor one side or attempt to cram offers through.

Having a thorough home sale agreement prior to listing is not always realistic, it’s not unusual for an agreement to be reached after the sale. However, giving consideration to other sale related issues in addition to disbursing the sale proceeds can facilitate a sale. To assist in making your transaction and transition smoother, consider the disbursement of escrow accounts, payment of left over bills, property damage and removal of your spouse’s possessions.

The mortgage and water bill escrows are sometimes forgotten during a divorce sale. When your mortgage is paid off, the mortgage company will refund any remainder of the escrow account that was used to pay your insurance and property tax. Additionally, the remainder of the escrow that is collected at settlement to pay the final water bill must be disbursed as well.

An ex-spouse’s personal property can sometimes linger, making the home appear cluttered and creating challenges to staging. Arranging to remove personal property prior to listing may assist in showing the home at its best. Additionally, agreements as how to handle escrow shortages and any property damage that occurs prior to settlement may also prevent potential closing issues and delays.

Although proactively arranging for all pitfalls in the divorce sale is not always realistic, consulting with your attorney can help you navigate through the obstacles.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 25, 2011. Using this article without permission is a violation of copyright laws. Copyright © 2011 Dan Krell.

Preparing an open house for welcome and unwelcome visitors

by Dan Krell
© 2011
DanKrell.com

In a time when home buyers and their agents are increasingly using online services to search for homes, some question the value of holding an open house. However, holding an open house provides the opportunity for both welcome and unwelcome visitors to experience what your home has to offer.

Of course, the wanted visitors include home buyers and their real estate agents. The National Association of Realtors® Profile of Home Buyers and Sellers 2010 (NAR, Washington, DC; Realtor.org) indicates that about 10% of home buyers in 2010 reported finding their home via an open house visit. And although the number of home buyers finding their home by means of visiting open houses has decreased from the 16% that reported in 2004, many home buyers reported that they use open houses as a means of information gathering. Of those home buyers who used the internet for their home search, 47% also visited open houses as an additional source of information.

Although preparing for an open house should not be too much work, since most of your preparation should have been completed prior to listing your home, time should be taken to offer your visitors a memorable home. No matter how much de-cluttering you have undertaken prior to listing your home, getting ready for an open house offers the opportunity to focus on the details.

Attention to the home’s curb appeal can make the difference between having home buyers driving by and having them stop to come inside. No amount of advertising can overcome a home with poor curb appeal; remember that your home’s exterior and yard is like the opening chapter of a story that should be engaging to home buyers.

When cleaning your home, look for trip hazards. Trip hazards can turn the promise of an open house into a potential disaster. Of course, visitors should be informed of home features that present trip hazards, such as irregular stairs and uneven floors. However, other trip hazards are sometimes created by the virtue of an open house: think twice before asking visitors to remove their shoes, as walking around in socks can be quite slippery on bare floors and stairs; new rugs should be secured so they do not slip from under your visitors’ feet.

Certainly cleaning and dusting the home is a given; but since home buyers often find strong odors a turn-off, consideration should be given to odors and their sources. Odors that emanate from such sources as pets, cooking, and even your cologne and perfumes can often linger throughout the day- and sometimes trigger an allergic reaction from a home buyer.

Now to the unwanted traffic: Besides cleaning your home, take precautions to protect your valuables and prescription medications. Every year there seems to be an outbreak of open house thievery somewhere in the country. Think twice before showing off your new flat screen or computer, or laying out the fine china for staging. Thieves can easily visit an open house to not only see what they can fit into their pockets, but to “take inventory” of your valuables for a later score when no one is home. And it’s not always jewelry and cash- some thieves look for prescription drugs that are easily pocketed during their visit.

Your Realtor® can assist you in making your open house successful; prepare equally for the welcome and unwelcomed guests.

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Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 18, 2011. Using this article without permission is a violation of copyright laws. Copyright © 2011 Dan Krell.