Value vs. Cost of Home Remodeling Projects


Value vs. Cost of Home Remodeling Projects

With the real estate market heating up, many people who had placed listing their home on hold, are now looking at once again listing it for sale.  Never the less, the market is still somewhat slow and anything you can do to make your home more marketable is a good idea.  You do need to keep in mind the cost vs. the value and how it will add or subtract from your selling price.

One of the things you want to keep in mind is that the optimizing of space in a home will not only attract buyers, but will usually give the sellers more bang for the buck.  Although very few projects will return 100% of expenditure, many will allow the seller to sell the house more quickly, and that has a lot of value in and of itself.

The report looks at the estimated cost and expected resale return of 35 midrange and upscale remodeling projects in 80 markets. The estimated costs and returns were derived from a survey of more than 3,000 REALTORS® conducted last summer. As in past years, REALTORS® picked exterior projects to recoup the most at resale. Among those, new fiber-cement siding was expected to provide the highest return, recouping an estimated 78 percent of the $13,461 cost.

An attic bedroom addition costing $50,148 was expected to recoup 72.5 percent of the cost nationally—inching up 0.3 percent from the 2010–11 report. The minor kitchen remodel also fared well, returning an estimated 72.1 percent of the nearly $20,000 job cost.

Here are the top 6 Returns based on value vs. cost:

Siding Replacement (upscale) – fiber-cement
Job Cost: $13,461
Resale Value: $10,493
Cost Recouped: 78%

Entry Door Replacement – steel
Job Cost: $1,238
Resale Value: $903
Cost Recouped: 73%

Attic Bedroom Addition
Job Cost: $50,148
Resale Value: $36,346
Cost Recouped: 72.5%

Kitchen: Minor Remodel
Job Cost: $19,588
Resale Value: $14,120
Cost Recouped: 72.1%

Garage Door Replacement
Job Cost: $1,512
Resale Value: $1,087
Cost Recouped: 71.9%

Garage Door Replacement (upscale)
Job Cost: $2,994
Resale Value: $2,129
Cost Recouped: 71.1%

It is important to note that the value gained will depend largely on the condition of the current item.  For example:  if a kitchen is in good condition, remodeling the kitchen will most likely not give you a significant return.  On the other hand, if it is in dire need of replacement the value will be greater.

If you are thinking of buying or selling, meet with a professional real estate agent who can provide you with the facts you need. And remember, real estate is a very local matter, don’t get discouraged by the news you hear on the news.

As always, if I can help with any of your real estate needs, or to answer any questions you may have, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com

Roland

 

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Follow Up To BofA Borrowers in Foreclosure May Get Rent-Back Option


Follow Up To BofA Borrowers in Foreclosure May Get Rent-Back Option

I received quite a few emails and comments regarding the BofA Rent-Back option blog I posted this morning.  Overall, the comments seemed to convey that they were impressed that Bank of America was doing something  rather than just kicking folks out of their house.

Several people asked me what REALTORS thought of the idea.  I certainly cannot answer for other people, but I will try to give you my overall view.

First of all, let me preface it by saying that the housing bubble was a disaster that was caused by many, many things going wrong.  It would be misguided to imply that the banks were at fault, or the buyers bought too expensive of homes, or the cheap credit is to blame.  Believe me when I say there is enough blame to go around.  If I had to sum it up I would I would say that it was caused in large part by greed on many different levels and a belief that there was no end to the boom.

But we are past that point of finding fault, at least in this blog,  and we need to focus on what will get the housing market back to a more robust level.

It is important to note that the Rent-Back option is a pilot program and may not go anywhere, but I surmise that it will be successful, at least in the short term.  The program is only scheduled to be for three years.   If it gives time for the owners/tenants to be able to make a smooth transition to a new home, or to eventually buy back the home, it may be a good move.

There are very few details that have come out about the program and there are many, many unanswered questions.  Such as; BofA said they would be renting the property back at or below market value.  I don’t know what the value they will be using will be, will it be the market value of selling the home now, or the “value” of the mortgage they hold on their books.  Market value to me is what the home will sell for in this market.  What spin BofA has placed on the definition is any body’s guess.

As a professional real estate agent, I have to believe that the program is worth looking into, and may help to stabilize some of the hardest hit areas.

On the other hand, corporate greed is much to blame for the real estate mess, and I am concerned that BofA has ulterior motives that are not in the best interest of the soon-to-be-tenants.  Again, without knowing the details of the plan, it will be difficult to properly asses the program.

I also received questions regarding how landlords view the “competition”.  I would be very interested to hear from readers regarding the landlord perspective.

In any event, I think this will help to stabilize many of the hardest hit markets and help with the continuation of the real estate rebound.

Remember, real estate is a very local matter.  If you are thinking of buying or selling, I urge you to talk to a real estate professional who can give you the facts you need to make an informed decision.

As always, if I can help you with any of your real estate needs, or simply to answer any questions you may have, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland

 

 

 

 

BofA Borrowers in Foreclosure May Get Rent-Back Option


BofA Borrowers in Foreclosure May Get Rent-Back Option

Bank of America announced this week that it will make an offer to a select group of its borrowers who face foreclosure: You can stay in the property, but you’ll have to rent it instead.

The bank’s pilot program, known as Mortgage to Lease, will launch in New York, Nevada, and Arizona, and be offered to about 1,000 of the bank’s borrowers.

For home owners who participate, they will still have to relinquish the title of their property. In return, Bank of America will forgive their mortgage debt and allow them to rent the home for up to three years. The rental payments for the home will be at — or below market rates — and the payments will be less than what the borrower paid in monthly mortgage payments.  The bank, which will then have title to the property, would eventually resell the homes to investors.

“If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market,” says Ron Sturzenegger, Bank of America Legacy Asset Servicing executive, about the pilot program.

As always, if I can help with any of your real estate needs, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland

Partial Source: “Bank of America Tests Rental Program as Alternative to Foreclosure,” The New York Times (March 22, 2012)

Staging Your Home To Sell


Staging Your Home To Sell 

 If you have been following this blog for the last few months, you will know that I have been talking about the upswing in the real estate market.  The market has taken a decisive turn around and by all indications is making a rebound.  It’s not a wild uptick, but a slow, and constant rebound.

If you are thinking about selling your home, or if your home has been on the market for an extended period of time, you should consider staging your home to make it more appealing to potential buyers.  The difficult part about “staging” a home is to eliminate the emotional connection sellers have with the home and to try to visualize the home as a buyer would see it.

Buying and selling a home is undoubtedly one of the largest financial transactions most people make.  It is important to utilize the skills of experts to maximize the benefit of selling your home.  If you are selling a home, I encourage hiring a staging professional who can come into your home and make recommendations on how best to present your home.  It can range from clearing clutter on your counters to bringing in furniture to make your home look more inviting and spacious.

It is critically important for home sellers to be able to let go of the emotions of their home and to present it in the best possible light.  I remember showing a home to some buyers that I represented.  The MLS listing has an agents note including indicating that there was a dog in the house but that he was friendly and would be in his crate.

The moment we walked in the door – and probably quite a while before hand – that dog was barking and growling as if to take our legs off.  I have no doubt that if that dog got out, I would not be here today writing this blog.  What was a perfectly friendly dog to the owners was an instant turnoff to the potential buyers.

The goal of staging your home is to make your potential buyers feel comfortable and invited.  We want them to feel like they could live there, and not feel like they would be living in someone else’s house.  There are several basic tips to help give the best presentation.

  1. The first one is curb appeal.  Obviously you only get one chance to make a first impression and buyers are looking hard at the house as we drive up.  That first impression can be a make or break moment.  The lawn should be cut regularly with all the trimming done.  Grass blown off the sidewalks and driveways.  If the house is vacant or you will be on vacation while the house is on the market, make sure you have arrangements for a responsible person to take care of the yard.

If you have over grown bushes, especially close to the house, trim them back or get them out of there.  Some seasonal flowers and mulch add much to the yard.

It’s also a good idea to power wash the gutters, driveway, patio, sidewalk if necessary.  Again it gives the impression of neat and clean and well maintained.

I am also a stickler for burn out light bulbs both inside and out – light bulbs may not sell a house, but a burned out light bulb can be a turn off to a potential buyer.

 

2.   The second issue to address is clutter.  This is where a professional stager can be a   big plus.  After living with numerous things on the counters for umpteen years it is not going to look normal to hide all that stuff, yet that is exactly what needs to be done.  Family pictures should also be taken down and replaced with more neutral photos or wall decorations.  The simpler it is the better.

One area that is many times over looked is the closets.  Most of us have far too many clothes cramped into the closets and one of the things that buyers are looking for are “spacious closets.”  Regardless of how spacious your closets are; if they are jam packed with clothes, they will not look “spacious.”

If necessary, rent a climate controlled storage facility for a few months and move any unnecessary items in to it to give your home the look and feel of spaciousness.

Other areas that need to be addressed for clutter are the garage and basement.  If you are not going to be using it for a few months, take it to the storage facility.

3.   Another area that is often over looked is the odors that may be present in the house.  Some real estate agents may encourage you to burn scented candles in your home.  I discourage that for several reasons.  The first is that many people are either allergic or sensitive to those candles and would not give a good impression.  The second is that what smells pleasant to you may not be so pleasant to someone else.  And the last reason is that it also gives the impression that you are trying to mask an underlying odor.  My advice is to go clean and neutral in the odor department.

Cooking odors can linger in a home for a long time.  If you are cooking with strong spices or other strong scents, try to neutralize the scent.

If you have pets, be sure they are clean and not contributing to the odor in the house.   I remember showing a house to a young couple after reviewing the MLS data sheet.  The house looked like a good option, but one whiff of the cat litter box sent both buyers and myself running – never to return.

Keep the odors clean and neutral.

4.   The next area I would like to cover is repairs.  Without a doubt homeownership is all about repairs, it never ends.  But not having repairs in check tells the buyers that you are not up on things and they will immediately question what else might be wrong.

My suggestion to sellers is to hire a reputable home inspector to provide you with a list of everything noticeable.  You can use that as a “to-do” list to tackle the repairs.  You may need to keep your house off the market a little longer, but in the long run you will probably close quicker this way.

I also suggest that once you have the home inspection completed, let the buyers see it so they can see what was already done.

This is just a quick recap of what you can do to better prepare your home to sell.  There are many, many other things that can be done.  It is a great help to have an outside set of eyes looking at the home you may have lived in for ten years and no longer notice what needs to be repaired.  I believe that hiring a professional staging person, or at a minimum having your real estate agent go through these issues with you can go a long way in selling your home.

As always, if I can help you with any of your real estate needs, or simply to answer any questions you may have, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation


The Mortgage Forgiveness Debt Relief Act and Debt Cancellation 

There are many stories circulating about mortgage debt relief and whether or not the relief amount is taxable.  Below is information from the Internal Revenue Service web site regarding this matter.  Always consult a tax professional concerning your particular situation.

If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances.

When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

However, the Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.

It is always a good idea to talk to a professional regarding tax or real estate matters.

As always, if I can help you with any of your real estate needs, or simply to answer any questions you may have, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.

Roland

Two Main Reasons Real Estate Deals Fall Through


Note: A new service of the web site from which I post my blog now has the capability to identify the country of people who view my blog. Surprisingly, I receive readers from as far away as Dubai, with a significant number of readers from Europe. I appreciate everyone who views my blog and thank everyone for the great comments and for those who re-blog the site. As Wolf Blitzer, CNN Situation Room says, “Welcome to all my viewers from the United States, and around the world.”

Two Main Reasons Real Estate Deals Fall Through

According to REALTORS Magazine, REALTORS reported a significant increase in the number of real estate transactions that “fell through” before reaching the closing table in December of last year.

In December, 2010 approximately 9% of the deals fell through between the acceptance of the offer and the closing. In December 2011, REALTORS reported approximately 30% fell through. There are some reasons why this increase has taken place, but it is also important to note that many of these failed transactions could have been avoided.

It is also important to note that because a transaction failed to close does not mean that the buyers were unable to purchase another home. In many cases, the low interest rates and great prices on home resulted in many new home buyers jumping in to the market.

The number one reported reason for failed transactions was the home inspection. As a professional real estate professional, I always, and I mean always, recommend that buyers have a home inspection done by a reputable home inspector.

Even if you are buying new construction, it is critical that you have the home inspected. You would be amazed at the things that are found, even on new construction. The older the home, the more important it is to have it inspected.

That being said, there are many times when buyers get the home inspection report and they immediately want to back away from a transaction, or the buyers want the seller to fix ever last thing on the report. Home inspectors will always find things that need to be addressed, and it is up to the buyer and seller to come to a reasonable agreement as to what needs to be fixed and what the buyers can live with and take care of after closing.

My suggestion to sellers is to spend the money up front and have the home inspected. Fix as many of the reasonable items as possible and present the home inspection to potential buyers to show that you (the seller) is being proactive and that you have in fact fixed many of the issues. Even then, I still advise the buyers to have it re-inspected by their own, reputable home inspector.

One agent reported in the Chicago Tribune that there was some caulking missing around a vent and the buyer wanted the seller to fix it before closing. Apparently that was the last straw and the seller refused to add the caulking and the deal fell through. This is where a real estate agent can be a big asset by helping to negotiate and not let emotions get in the way.

The second reason for deals to fall through was the buyer was unable to obtain financing. Although the lenders have tightened the lending standards, agents should always require the buyers to be pre-approved prior to looking at property. This can go a long way in avoiding this situation.

Even though a buyer is pre-approved, it is not over until closing and things can always go wrong and the lender pulls the “approval.” One of the biggest reasons this occurs is that the buyers put in an offer on a house and have it accepted. The mortgage application is started and then the buyers go out and start buying furniture etc., that they think they need and run up additional credit card debt or deplete the savings that the mortgage company is looking at to qualify the buyers. With those changes in place, the buyers may no longer qualify for the loan.

There is another reason for real estate agents to have buyers pre-approved. Many times buyers will meet with an agent and explain that they want to look at houses in the $300,000 range only find out after showing several homes that the buyers will only qualify for a $225,000 home. Those homes that they look at in the $225,000 range will probably not compare to the homes in the $300,000 range and disappointment will abound.

It is a wise real estate agent that requires buyers to meet with a mortgage person and get a pre-approval before looking at homes.

Many of these problems can be avoided. If you are thinking of buying or selling, meet with a professional real estate agent who can provide you with the facts you need. And remember, real estate is a very local matter, don’t get discouraged by the news you hear on the news.

As always, if I can help with any of your real estate needs, or to answer any questions you may have, please don’t hesitate to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com

Roland