Monthly Archives: September 2016

Renovate Your Home for Best Selling

Everyone selling a home wants to pad the profit margin and get top dollar for the property. Yet, buyers on the other end want to make sure they’re getting a deal. Fortunately, it’s possible to make both parties happy at the closing table. It all starts with an honest look at the house and careful evaluation of how well it matches up with the potential buyers’ expectations. With these renovation tips for getting the best selling value help sellers prepare their properties for a big sale.

Make the first impression memorable.

When it comes to real estate, first impressions count. In fact, many buyers decide within a few minutes whether they want to add a home to their short list of options or ignore it altogether. For this reason, spending a little time and money on the entryway pays off. The to-do list for this task should include the following:

Take down old spider webs.
Sweep the floors.
Add a coat of paint to faded floors.
Remove or replace broken furniture.
Repair broken doorbells.
Spruce up the area with potted plants, flowers, and throw rugs.

Install an awning or portico over the front door.
Homeowners who don’t have the time to clean themselves should hire a professional cleaning service to do this for a few hundred dollars. One final consideration for the entry area is replacing the existing door, especially if it shows signs of age like, is drafty, or doesn’t fit the house’s architectural style. This project has minimal costs and brings a 75 to 100 percent return on the investment.

Give the house room to grow.

In general, buyers still prefer houses with open floor plans that offer flexibility. According to Consumer Reports, millennials say this is the second-most important characteristic they look for in a home. To create this, sellers can remove non-structural walls like a partial divider between a kitchen and living room or replace a bulky kitchen island with a portable one that frees up room in the center of the kitchen. In small rooms, replace heavy drapes with shutters or blinds that create a streamlined look or install cabinetry or storage units to keep space-hogging clutter out of sight. Other ways to show off the flexibility of the floor plan include finishing the basement and converting the attic to an additional bedroom or office space.

Ceiling fan in V-roof

Today’s homebuyers also show interest in energy efficient homes, as they view them better for the environment and more cost-effective over time. Since houses lose considerable heated and cooled air through inefficient windows and doors, sellers can boost their home’s value by replacing aging ones with energy efficient models. Another option is to replace siding with newer material that is fade resistant and offers more insulation. One such product is fiber-cement siding. Although it costs more than vinyl siding, it offers an attractive look and excellent durability. Other energy-efficient remodels include:

Replace traditional light fixtures with LED lights.
Add solar panels to the roof.
Replace an aging air conditioner or heating system.
Install tubular skylights to bring in natural light.
Add or replace insulation in the walls and attic.
Homeowners who are not sure how energy efficient their homes are can hire a professional to evaluate the home. These individuals can also give tips for improving the energy efficient of the home.

Find the right floors.

Buyers inspect houses from top to bottom, and they do pay attention to the surface they’re walking on. Sellers need to replace broken tiles or damaged laminate flooring, scrub stains out of carpet, and spruce up natural hardwood. It’s also a good idea to get rid of mismatched floors or dated pieces made from vinyl or linoleum around the house. Updating the flooring doesn’t cost as much as other home renovation projects, and it makes a big difference in the look of the room. Natural hardwood and cork floors are popular with today’s buyers who want durable, yet eco-friendly floors. Flooring is also an important consideration for buyers who have concerns about allergens. Instead of carpeting, the prefer hard-surface floors like laminate or tile since they are easier to clean and do not harbor potentially dangerous allergens.

Give the heart of the home some character.

Kitchen remodels still rank at the top of the list of most desired home renovations, which should be no surprise since the kitchen is the busiest room inside. These renovations range from simple upgrades of fixtures and hardware to complete remodels, such as replacing the following:

Cabinet and drawer pulls
Appliances and sinks
Flooring
Cabinets or cabinet doors
Counter tops
Faucet

Stainless steel appliances remain popular with buyers who enjoy the sleek, modern look they bring to the room. Durable counter tops made from material like quartz and sustainable flooring like cork also score points with buyers.

Know More About Mortgage Rates Rise

mortgage rates increase over the next few years, home improvement activity is likely to increase with them. This may seem counter intuitive, but you can expect two somewhat opposing effects: one highly positive and one slightly negative.

Negative Effect

The negative effect will stem from an expected slowdown in the growth of home sales. When mortgage rates increase, we expect to see slower growth in the volume of homes being bought and sold. As an aside, in the immediate term, there can be an uptick in sales as people who were “on the fence” jump to buy before rates go significantly higher. But that effect does not persist for very long.

We would expect a negative effect on the rate of growth of home improvement spending to accompany a slowdown in sales volume growth. That said, 92 percent of home improvement spending — spending on projects such as kitchen and bathroom remodels — comes from people who are not moving. So, this drag on spending drives only a small fraction of the overall outlook for home improvement growth. And, it will be greatly outweighed by more powerful positive forces like home appreciation, consumer confidence and the sheer age of the housing stock, combined with the tailwind from years of deferred maintenance and improvement during 2008-2012.

Positive Effect

Now for the positive effect. Many people who managed to secure a mortgage with a fixed rate in the 3 to 4 percent range will be somewhat reticent to sell and buy after rates get up near 5 percent. Such a move can have an outsized percentage impact on a homeowner’s monthly payment. Some of those people will decide it’s better to improve their existing homes than lose their low fixed rate. Think of it this way: Going from a 3.5 percent rate to a 5 percent rate means a 16 to 20 percent increase in the total monthly payment (depending upon assumptions regarding taxes and insurance). And that’s just making a lateral move from one $300,000 house to another $300,000 house. The prospect of such a significant monthly payment change may be enough to encourage people who don’t have to move, people considering relocating for a job, for example, to update, improve or even add on to their current homes instead of moving. Not to mention the fact they will also save the costs associated with selling their current homes. Of the two opposing effects, the positive effect—people choosing to stay in current homes as a result of rising mortgage rates—will outweigh the negative effect coming from a lower level of churn.

Looking Forward

The bigger question is this: Will home equity keep rising strongly, or will it slow down? It will certainly slow, partly because higher interest rates translate into lower asset values (including home values), all other factors held constant. My expectation, though, is that home equity will remain a strong-though-slightly-diminished tailwind for home improvement for the next several years. There are a lot of complicating moving parts in this equation, but the outlook for the home improvement industry growth is bright, even (or especially) with the prospect of higher mortgage rates around the corner.

Information About The Taming of the Resale

On homeowners’ minds: taming those overgrown plants, bugs, and pesky critters! In the third quarter of 2016, the nation’s homeowners increased their orders for services related to pest control, lawn care, and landscaping faster than they did for any other categories of home services.

New data from HomeAdvisor, which compare the third quarter of this year to the same quarter a year ago, also show that orders were up sharply for cleaning services, garage doors, pools, and painting. Many of the services relate to more people putting their home up for sale, which involves a lot of touch-up, clean-up, and necessary repairs.

The TOP FIVE geographic markets for growth in all home improvement services in the third quarter were:

Portland
Salt Lake City
Charlotte
Norfolk
Las Vegas

The top market in this list, Portland, Oregon, has been experiencing a boom in home improvement during the past three years. HomeAdvisor analyzes millions of data points each year encompassing its own customers’ service requests, and has observed strong increases in projects that boost a home’s value, commonly done before listing a house for sale. These tasks include: painting (which has risen in Portland at double the national rate), lawn care (up 71% faster than the nation), and paving (up 2.4X the national rate).

Another category that is growing rapidly in this market is the installation of landscaping for the yard or garden (growing 65% faster than in the nation as a whole). More and more Portland homeowners are now seeking the help of landscape designers to bolster the curb appeal of the home.

Service orders related to carpeting were up only modestly in the nation as a whole, but up much more sharply in Portland in the third quarter. Orders for pest control were up at the same rapid pace as the nation as a whole.

One of the “big ticket” items that Portland homeowners are undertaking is a kitchen remodel. Portland homeowners spend an average of $16,817 when remodeling a kitchen, according to HomeAdvisor’s nationwide survey, a figure that is about 15% lower than the average cost for the nation as a whole. The scope of a kitchen remodel varies widely, from a re-facing of the cabinets (what remodelers call a “face-lift”) to a complete remodel, which often involves the replacement of appliances, countertops, flooring, and cabinets.

Bathroom remodels in Portland, by comparison, average $9,956.

Roof repairImage Credit: Tinsley Roofings and replacements are another major job category, costing $7,480 in Portland for asphalt shingle roofs, and going much higher for upscale types of roofing. Repair orders for asphalt shingle roofing have grown faster than most other home improvement requests. Standard roof maintenance (meaning non-leak/non-emergency maintenance) was another one of those items that got deferred when the economy was just starting to get back on its feet, and that homeowners are starting to move forward on now.

Another category of home improvement that HomeAdvisor is watching in Portland is services related to garages, enclosures, and outbuildings. Activity in this category has grown twice as rapidly in Portland as in the nation as a whole. This may stem from the fact that high home prices are stimulating more people to transform their garage into living space, to accommodate their changing needs, and to get more value out of the property.

Home prices in Portland have risen to levels that are out of reach for many would-be first-time home buyers. First-time home buyers don’t have equity, and many of them are finding that the best strategy is to buy a fixer-upper and thereby accumulate “sweat equity.” By buying a home that needs work, first-timers can get into ownership at a number far lower than is typical, and by doing some of the repair work themselves, they can soften the financial burden of the fix-up. Young couples can make the house live-able, and then invest in projects to add to the luxury and beauty of the home over time, as their finances permit. This is an excellent approach for first-time home buyers, from the standpoint of lifestyle as well as equity-building.

Number-two ranked Salt Lake City saw also outsized increases in service requests related to lawns and landscaping and pest control, but also large increases in requests for assistance with heating and cooling, septic cleaning, and siding.

Number-three ranked Charlotte also saw exceptional growth in landscaping and lawn care, but was most notable for a large increase in disability services, growing at three times the national rate. Garage door service or replacement ranked extremely high as well, growing at triple the national rate (investments in garage doors can reap strong returns on investment at resale).