Should I Renovate My Home or Sell It?

August 13, 2012 By Leave a Comment

One of the most popular question I get these days is “Should I renovate my home or sell it.” Everyone’s situation is different so everyone comes to a different conclusion. It’s a loaded question because it involves many variables and a big undertaking whatever you choose.

Speak to your real estate broker about your options. First, here are the questions you can ask yourself to come a bit closer to what’s best for you.

Is my home in my ideal current location?

If you are living in a neighborhood you love and in which you want to stay, that’s one point on the side of renovation. But what if you always really wanted to live on the other side of town, or a different town altogether? With very low mortgage rates, the timing is perfect to consider an area that seemed a bit out of reach some years ago.

No matter what you do to your current house, it will stay put, you will have the same view out the windows, same noise from the road, same cherry tree in the yard.

To what extent do I have to renovate this house to be ideal?

Is a bathroom renovation and kitchen update enough or are you ready to strip the house to the studs and put in dormers? If you considering an extensive renovation, I hope you like a project. If you are not easily annoyed by people working power tools in your home at 7AM, by all means, learn more about renovating.

What would my return on investment be on the renovation?

The cost of the renovation will be key to figuring out the financial cost and benefit of moving versus renovating. If you spend money on a renovation with only a 50% return if you should sell the home, then the outlay is a waste. For example, in a 1800 square foot Colonial a $35,000 renovation on kitchen and bath can add $50,000 to the property’s value. A $90,000 renovation on the same kitchen and bath may only be worth an added $65,000. It depends on the house, the location, and the renovation.

What will I be able to afford if I sell and buy a new home?

If you can add $100,000 to the price you get for your home, you may surprise at what you can afford! Actually, you may be completely discouraged. Obviously, it depends on the market and where you are looking to move. Learn the value of your home, get a pre-approval, and spend some time at open houses to learn if what you can spend brings you closer to your ideal.

What do I want to do?

This may seem like an obvious question but it amazes me how many people don’t ask themselves what they really want. Much of my work as a real estate agent is to uncover the true needs and desires of clients, because they are not sure.

If you love the idea of renovating and staying where you are, then the financial consideration are secondary. If you are ready to move and feel you want to be elsewhere, then focus on finding something better, rather than wasting time with a renovation that will leave you dissatisfied.

The variables to consider when asking yourself if to move or renovate are both financial and emotional. The key is to find the balance where one does not so outweigh the other you will be left with remorse. Your first step is to get all the facts: you home’s value, its value once renovated, and what homes are available in your price range.

Contact me if you have any questions about any of these issues, and we’ll put together a plan that works around your true needs and wants.

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How Landlords Save the World

January 18, 2012 By Leave a Comment

The title of this entry is over-the-top, I admit, but I am just here to stick up for the landlords out there who are trying to do some good. The word “landlord” in itself has some negativity associated with it, and the use of “lord” in this context is distasteful in our American sensibility. In media, landlords are portrayed as misers ready to make a buck on the poor and take advantage of families.

Please!

Let me tell you about the landlords, the real estate investors, I know.

First and foremost, there is a commitment to maintain the property and keeping the tenant happy and comfortable, even with the high occupancy rate and the increasing rents. I am not suggesting any altruism here, but it is cheaper to keep than replace tenants. It only makes sense that tenants stay for a long-run, and take care of the property, as it is their home. Fostering that environment is essential for positive tenant-landlord relations, which is the relationship you want in between any consumer and supplier.

A rental property is a huge financial commitment and a landlord idiot enough to not take care of it and ensure it’s livability is ill suited for the job.

Yes, there are many terrible landlords out there. The worse of them are the ones who neglect their properties, fail to keep up with safety codes, and don’t treat their tenants with the respect they deserve. Just like in any occupation, in any aspect of humanity, there are some bad apples.

For more on tenant-landlord rights in Massachusetts, go to http://www.mass.gov/ago/docs/consumer/landlordtenant073007.pdf

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Three Ways to Invest in Real Estate

January 11, 2012 By Leave a Comment

Investing in real estate can seem overwhelming and reserved for the very rich. In the current economic conditions and marketplace, it may even feel a bit too risky. But if you’ve ever thought real estate investing may be right for you, this is a great time to learn about your options and how it can be done by almost anyone.

Before we learn about our options, though, let me say that I believe real estate investing can be a long a cumbersome process if you are new to it. That is not a bad thing, and I think of a lengthy process as a series of checkpoints that will make me very sure of my decision at the end. But it does mean that you have to have a critical eye, some good research skills and an a greater-than-average supply of patience. If this sounds like you, then let’s review how you can get into the lucrative business of real estate investing.

Whatever your budget, real estate can be your investment vehicle.

1. All cash deal. If you have lots of cash, you may be able to find an investment property in your area and buy it without a mortgage. The advantage of this is that you will be a highly qualified buyer and you can probably secure a property for a bit of savings over a buyer who has to get a mortgage. Another advantage of a cash buyer is that her expenses are much lower, as there is no monthly mortgage payment. This enables her to be more flexible on the rent, giving her more options in choosing tenants.

The disadvantage of an all cash deal is that it is not taking advantage of very low mortgage rates. Borrowing is pretty cheap, and if all your cash is in one place, you can’t use it elsewhere. Leverage is a real estate investor’s friend.

2. Part cash, part mortgage. The down payment minimum is 20-30%, depending on various circumstances and your financial qualifications. My rule of thumb is that you should make money, or at least break even, with this kind of down payment. If you lose money on a monthly basis, the property is not worth the price, (at least not not for an investor). Your mortgage payments, any association fees and taxes should be covered by the rent.

The advantage here is that you’ll be taking advantage of the cheap borrowing costs, and you’ll own a property with an income without the whole cash outlay.

The disadvantage is, obviously, the cost of borrowing money and the higher cost due to your mortgage payment - same as the mortgage on your home.

3. Pool of investors with little cash. Gather a few friends and family, and pool your money together to buy one property. It can even be a small property at first, but at least get into the market. If ten friends get together with $15,000 each…you do the math. The advantage is that you are in the real estate market, getting a piece of the pie, however small. It is a start, or a great single investment you have. You can hire a real estate broker and an attorney to help maybe for a stake in the property instead of commission and fees.

The disadvantage is finding like-minded individuals and putting it all together in a legally binding agreement. To me, this is just a bit of leg-work, and not so much a disadvantage, but it does add to the complexity of the transaction.

Entering the real estate market as an investor is not simple at first, but once you are in, it gets easier and easier. If you’ve ever considered investing in real estate, this is a great time to get in. Just choose your strategy and do it!

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Top Three Reasons Why Property Investment Is King

January 4, 2012 By Leave a Comment

No one wants to hear this, but I’m saying it anyway. Real estate is the best long-term financial investment. Phew…that’s a relief.

With the real estate market in the dumps for several years now, it is not easy to get back into the pro-property mind-set. But, it is exactly at these times that you should be considering expanding your real estate portfolio.

One reason I know this is because while the real estate market is dragging in most of the country, it is dominated by the professional real estate investors. Don’t you want to learn a lesson or two from them?

The professional investor loves real estate above all other investments. There are three main reasons for this.

First, real estate investing can come in many forms, just like any other investments. There are small condos, multi-family buildings, commercial, residential, mixed use properties, different towns, neighborhoods, etc. For every budget, preference and style, there is an investment instrument.

Second, real estate has a certain tangible value that you just don’t see in other investments. Property investors love that there is an asset they can visit, fix and maintain. There is a satisfaction in knowing that you have some control and responsibility in the relative value of the property.

Third, although real estate is illiquid - meaning it takes relatively a lot of time and effort to sell it - it is a versatile investment. You can hold it, or resell it when the market turns your way. You can do extensive renovations and have a quick resell, or you can hold it with tenants for years to come. Whatever it is, you have options and you can make decisions based on the best scenarios for your needs and the market conditions.

All of this assumes that you have sufficient funds for a down payment and that your expenses on the property are covered. The major drawback in investment real estate are the unavoidable expenses in maintaining it and the difficulty of selling it if you need the cash.

But this said, it may be time to consider an investment property, especially in such a critical time in the market. Opportunities and possibilities are present, and real estate investing can be a perfect fit for long-term financial goals.

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This Miscalculation Cost My Buyers a Home

June 6, 2011 By Leave a Comment

“Our offer was rejected,” I told my buyer, Janie, on the phone one evening after she and her finance Chris put in an offer for a small ranch they loved in one of the area neighborhoods.

“Are you kidding me? What? Aren’t they coming back with a counter offer, something?” She was so upset, and I was in as much disbelief as she was that it was a done deal. We lost out on the house they wanted and that was that. There was nothing I could do to change it.

The crazy thing was this was not 2005 when buyers were writing deposit checks and over-the-asking-price offers at the open house. This was 2010, when prices were spiraling down and getting a loan was like pulling teeth. Properties’ days on market were triple that of two year earlier so how come our offer was rejected? What home seller in their right mind would say no to highly qualified buyers?

A home seller with two other offers, one of which was for the asking price from buyers no less qualified.

This was my fault, I gave my buyers some bad advice. When we discussed the price we should offer, it didn’t occur to me there would be two other offers, and that the seller would not try to negotiate a bit. The seller’s listing broker said other offers were coming, but from past experiences with this broker, I had reason to doubt it. Besides, everything was just sitting there…housing inventory was at a high. I was representing buyers in a buyer’s market, we had the upper hand.

Wrong. It may have been a buyer’s market, but regardless of the real estate market conditions, the seller is the one who sets the asking price of his or her home and sometimes they set it low enough to attract buyers to the table the first day on market. My miscalculation was to look at the whole market and be influenced by all the news and depressing office chatter around me rather than focus solely on this specific property and how well it was priced compared with other like properties.

Had I done this I would have acknowledged that this was a hot property and not been so cynical.

It is hard to believe that there are hot properties, but it is up to your agent and you to recognize when you see one. The problem is that in a down market all homes look overpriced and in an up market, everything is hot. We’ve gone from one extreme to the other. But to make good decisions, focus on the specific neighborhood in which you want to buy and ignore national and even statewide statistics. They are meaningless noise in your quest.

As for Janie and Chris, they didn’t fire and referred their friends to me. We found a great home they loved just as much.

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Stop Wasting Time and Use This Checklist to Find the Right Home

May 18, 2011 By Leave a Comment

There are many variables making a home right for you. It is a big task making the right decision and ensuring all your needs are met. Although buyer’s remorse is relatively uncommon in homebuying, you want to do your due diligence to make sure you’ll be happy the day you move in, and the years that follow.

A home has many functions and purposes, and it is important to make a practical decision. But do not overlook the emotional role in all of this. If a home is purely practical but you are not excited about it, it may not be the right one for you. It is important to realize that you are unlikely to find a home that fits every single criteria and desire. Use a prioritized checklist to help you organize your thoughts.

1. Neighborhood: Deciding on what neighborhood you desire is tricky. You must consider your wants and needs. They vary by person. Do you have children and need to live within the boundaries of a specific school district? You might want a short commute, a neighborhood with historic homes, or homes that are near night life and restaurants.
2. Square footage: What size of home fits your needs? The average home in the United States is 2,195 square feet. Thirty years ago the average size was just 1,645. The trend has been for larger and larger homes, with special purpose spaces, such as exercise rooms, offices, studies, and media rooms. This trend is now receding.
3. Floorplan: Architectural styles offer a wide range of choices! Open floor plans might appeal to you, with their great flow for entertaining. Or you may have a more traditional aesthetic, preferring cozy rooms. Think about how you live your life and what style best fits your needs.
4. Finishes: There are different grades of homes. Take your kitchen, for example. You can find a wide range of beautiful laminate counters, just as you can find a wide range of beautiful granite ones. These choices dramatically affect price. Think carefully about what you want in your dream home. Do you want stone floors or will ceramic suffice? Are you looking for green building materials, such as zero-voc paint, bamboo floors, and recycled counters?
5. Amenities: Our homes extend past the borders of our property. We live in the parks, shopping, and restaurants that surround us. Be sure to think outside the “box” of your house when you buy.
6. Landscaping: A large yard can mean lots of entertaining potential, but it can also mean a lot of work. Be sure to consider your needs now and down the road when it comes to yard maintenance. Many buyers prefer a townhouse or condo as their “dream home”. These options afford buyers with much less responsibility when it comes to upkeep!

Be sure to discuss all of these topics with your real estate agent. They can help you decide on a happy compromise among the long list of choices. They’ll also help you know what items on your wish list you can get in your price range. Good luck on your dream home search!

Written by Carla Hill

What is your top location for your next home?

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Buy or Sell a Better House

May 17, 2011 By Leave a Comment

What’s in? Efficient, green, and useful.

What’s out? Big, fancy, and….well, frivolous. (I think they called in luxury in 2005).

No one wants to heat unused rooms, drafty windows, and poorly structured homes anymore. The economic downturn has made it difficult, and the trend of environmental consciousness has made it very uncool.

A few years ago, a new house would be revered for it’s open spaces, the media room, three full baths and extra bedrooms. A well-appointed living room was the center of every beautiful home and a three car garage the epitome of the good life.

But the economic and demographic trends make these homes outdated and hard to upkeep. Tight budgets have buyers on the lookout for energy efficient homes with useful rooms, the environmental trend is for sustainable production and little waste, and the demographics show that many homes are for only one or two individuals.

A new study released by the National Association of Home Builders points to what these trends mean for houses over time. “The New Home in 2015″ suggest home will be built 10% smaller. Expect “low-e” windows, engineered wood beams, joists, and trusses, water efficient features and whole-home Energy Star ratings.

As a seller, the trends of new homes is important to you because they tell you what buyers really want. Make some changes in your home to match these needs:

1. Increasing the efficiency of your home with new widows, better isolation, an efficient heating system, etc. Show the proof with your new energy bills.

2. Make the living room a useful space, and any other room that is not lived-in. For example, a rarely used bedroom can be staged as a den, study or library.

As a buyer, you know what you need but you also must consider resale value in the years ahead. If you plan to live in the home for less than 5 years, this is especially important:

1. Look for energy efficient homes

2. Don’t judge a home by it’s size, but by it’s utility and use.

3. Always choose a home you find beautiful and pleasant. You can make changes to it later.

Don’t forget that housing trends have a long cycle, so a new trend today won’t change so fast.

Have you make your house greener in any way? Comment below.

 

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Making the Best Decision when Choosing Your Home

May 11, 2011 By Leave a Comment

Being the largest (or one of the largest) investment you’ll make, buying a home comes with a lot of pressure. There are many elements to getting this decision right making the whole things seem overwhelming and confusing.

By breaking down choosing a home to the main variables and priorities, you can make it a little simpler and get some of the distracting voices out of your head.

Here is a review of the main characteristics you want to consider when you buy a home. Use these points to make your list of choices narrower and spend less time searching and looking and homes that won’t make you happy.

1. Location, location, location. The one things you will never be able to chance about your home is it’s location. There is not one thing more important than deciding where you want to live. In choosing the location of your home, think of both the practical elements and the more fun elements. For example, when considering a location’s practicality, think about commute, schools, home much home you can afford in this area for your money. The fun aspect is no less important so think of your proximity to places you love to go, whether it’s the park with your kids or the restaurants with your friends.

One way I suggest you think of a location is the “drive home” test. If you like your drive home from work, it’s a good place. If you hate your drive home, well, start rethinking your strategy in picking where you want to live.

2. Size does matter. The average size of homes in the united states have increased by 33% over the past thirty years. Yet the number of people living in a home has shrunk on average. What best suits your needs? How many rooms and how much storage? When thinking about the size of your home, consider the future function of this home - is this a condo you’ll live in for a couple of years or will you raise a family? But you may want to consider something that is often overlooked….getting rid of some stuff!

We hate to admit how much stuff we have, but is your stuff worth the price of a bigger home the mortgage interest on that home. Maybe you need 3 rather than 4 bedrooms? Just a thought….

3. Floor plan. There are many things you’ll be able to change in a home, but some elements of a floor plan will not move so know what they are. If you are big on entertaining, go for more open spaces. For physical challengers, consider a one-floor home (like a ranch). Claustrophobes opt for open floor plans, agoraphobes look for small cozy rooms and nooks.

4. Finishing Touches. Learn the differences between the level of finishes, because sometimes some cheap stuff looks really good. There is nothing wrong with less expensive finishes but you shouldn’t pay a premium for them. If you want something very swanky, I suggest you either look for something that was just redone, or better yet, get something requiring an upgrade which you’ll do yourself. The downside of buying a home you’ll remodel is the time and money it requires. The benefit is that it will be the way your want it.

5. Land. A backyard is nice, but it requires work. A garden is very nice, but it requires more work. Think about this before you commit yourself to that gorgeous rolling three acre lot. Many people love working in their yard, make sure you are one of them. But land is not only important to a house, but also a condo. You should know if the land around the building is shared and how it is maintained. You may be able to find a condo with outdoor space in which you can garden, if that is something you like to do.

Prioritize your list of wants for each element, and know what you want and need so you don’t wast time. Instead, focus and find your dream home.

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Rethinking Houses - A Trend That Will Save You Money

May 9, 2011 By Leave a Comment

Between the slow economy and the overdue trend of greener living, priorities buyers when looking for a home are changing.

This is important information for you whether you are buying or selling. As a buyer, you need to consider both your needs, both current and future. But you also need to keep in mind the resale value of them home. If trends in home buying are changing, staying in line with those trends is important to maintaining your home’s desirability.

As a seller, being aware of what buyers want is key to getting the best price for your home. When your home is perceived as current, livable and answering the needs of many different buyers, your home’s value rises.

A recent report called “The New Home in 2015″ by the National Association of Home Builders (NAHB) indicates a trend towards more efficient home, which are smaller and greener. This is due, it seems, to the economic downturn which has tightened budgets and make efficiency and utility high priorities.

Here are some chances you can expect in homes in the coming years:

-Expect homes to be smaller. “The New Home in 2015″ report reveals that building professionals are moving towards smaller houses, and that new single-family homes would average 2,152 square feet, a 10% smaller home than built in 2010.

-Living rooms are out. Since few people use their formal living rooms, and manage most of their lives in family rooms, builders see little value in maintaining it. Why heat or cool and unused room? Instead expect separate parlor or study areas, or bigger family rooms.

-Fewer rooms. The fourth bedroom and third bathrooms are also often unused. The three car garage has proven too big for people’s budgets and there is little interest in frivolity these days.

-Greener homes. Look for whole home Energy Star ratings. Better use of materials and lower energy costs are a goal in new homes.

What does this all mean for you?

If you are a buyer, you want to look for some of these features in a home. Chances are it will compete better with the new houses and the trends in 2015 and beyond.

As a seller, you can make changes to your home that incorporate some of the values of the new home building trends. First, ensure that your home is making the best use of energy. This will be a big selling point. Next, populate your rooms and make them livable. Stage your house if necessary to show how rooms can be used. This way, a buyer won’t think about the energy an empty room will consume but the enjoyment that it will provide.

Even if you are not moving in the near future, find a way to make your home a big greener. This will save some money and make you even prouder of your home.

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