Provided By Financially Fit
As potential homebuyers begin wading back into a battered real estate market, it's helpful to know how to evaluate properties, especially foreclosures and houses that may have stood abandoned. Is that fixer-upper really such a bargain?
Dwight Martin, a master homebuilder and the owner of DK Martin Custom Homes emphasizes hiring a home inspector, because whether the home is new or old not all problems can be spotted by the untrained eye — or even a relatively trained one. When his daughter bought a home, he inspected it but also called a friend, who requested the furnace number and the model. The house's furnace had been recalled due to a carbon monoxide issue. "That was something I never would have known so we had the seller test the furnace," says Martin.
"Often times the cost of the home inspection won't be as much as the benefit you'll get from the seller in fixing something they found. When people say, 'I can't afford an inspector,' what if he finds your furnace needs to be replaced?"
But before you even get an inspector involved, there can still be warning signs that a house is a questionable choice. If you see numerous "for sale" signs throughout one neighborhood, it's best to find out the reason for the mass exodus. Notice if the house smells either bad or too artificially good (this could be an indicator of an air freshener being used to cover up a moldy smell). Make an effort to notice those little things that could mean a lot, such as rodent droppings in the cabinets.
There's one former red flag that may no longer apply. Before, a house lingering a long time on the market was often considered a bad sign, but now it can just be a sign of the economic times.
Lack of Maintenance
Home inspector Reggie Marsten, owner of the D.C.-based REM Home Inspections says his number-one red flag is a lack of maintenance.
"When I first pull up to a home, even before I get out of my vehicle, I'm scanning the house for a sense of what I'm getting into. "I'm looking at the roof—what condition is it in? Is there vegetation growing in the gutters from not being cleaned, does the house need paint, is there damaged or missing trim and siding? Are the shrubs in front neatly trimmed or do they look wild, has the grass been cut? Chances are if the exterior of the house looks somewhat rundown and unkempt then the interior is also in the same condition."
Water Damage
"When I think of big problems in houses, I think of water, or too much moisture in the house," says Martin, adding that one indicator of that danger is when the ground around the house is sloped toward the house instead of away, which can lead to a flooded basement. He also cautions to make sure the bathrooms have adequate ventilation, and checking the attic or crawlspace to make sure there's no mold or mildew.
Regional Concerns
Martin, who builds homes in the Puget Sound region, notes that houses situated on water are more exposed to the weather and have different storage needs, and buyers there have to consider whether houses are raised high enough.
Other locations bring different key home features into play, and it's good to know regulations specific to your region. In areas that get extreme heat or cold temperatures, energy efficiency takes on more importance. If it's an older house, it might not be well insulated, and it may have single pane glass. Because of new technologies and energy codes, new homes are much better at keeping the heat in winter and keeping it out in summer.
Structurally, homes are being built much stronger, such as with seismic design and construction, notes Martin. "On the West Coast, we have very strict rules so the homes will hold up much better in earthquakes. In the Gulf States, they're much stronger for hurricanes."
House Age and Period-Specific Issues
There are positives and negatives for both new and old houses. Older homes might show quality craftsmanship on a more consistent basis, but might need to be adapted for today's lifestyles, such as installing modern sound systems or upgrading the kitchen to current preferences.
For Marsten, the age of a house can be his red flag number two. "Age itself is not a problem with a home if it's been maintained and upgraded. All components of a home have a life expectancy; 20 years for a standard asphalt shingle, 12 years for a hot water heater, 15 years for an air conditioner. If I'm in a house that's 22 years old and find the original roof, hot water heater, furnace and air conditioner and kitchen appliances then I have to inform my client that they will need to budget to replace all the components that are past life expectancy."
Homes built in different eras have different hidden potential dangers characteristic of their period, Marsten said. "In our quest to build houses quicker and cheaper over the years, products were used that didn't receive adequate testing, or at the time they were used the long term exposure ramifications weren't known.
He cites the following examples:
• Homes built in the early 1900s used lead water lines.
• Homes built from the 1920s until the 1970s utilized lead- and asbestos- containing products.
• Homes built in the 1960s to the present contain products that give off volatile gases (hurricane Katrina HUD trailers for example).
• Some homes that were built from the mid 1970s to the present utilized defective water lines that fail.
Avoid Raising Flags
Marsten advises that purchasers do as he does: "Just take a few minutes, stand across the street from the house their looking at and just scan the exterior looking at the roof, gutters, siding, trim and shrubbery looking for anything that doesn't look normal or out of place."
Compare the home to others in the area, he says. Does the home look better than the others, the same, or worse? Keep in mind everything that needs to be painted, repaired, adjusted, tweaked, or replaced has a dollar sign attached to it and those dollars can add up very quickly, Marsten says.
"You can also tell when the owner let the house run down and then slapped a coat of paint on it to sell it, the, "lipstick on a pig" syndrome. Lack of maintenance can't be hidden."
"Well-built is an indication of professionalism and craftsmanship, unfortunately two traits that are rapidly disappearing with today's builders and replaced with speed and profit," says Marsten "I call it 'good bones' if the house has been constructed structurally sound, that is; square, plumb and level that's 75% of a well built house, the remaining 25% is maintenance."
To find the perfect home for you and your family call the professionals at 972-772-7000 or email us at rockwall@kw.com.
Showing posts with label financially fit. Show all posts
Showing posts with label financially fit. Show all posts
Monday, February 21, 2011
Friday, February 26, 2010
10 Ways to Increase the Value of Your Home
By Katie Adams
This article is part of a series related to being Financially Fit
In a dour housing market, wouldn't it be nice to know that your remodeling project would pay off when you went to sell the property? Remodeling Magazine evaluated the top remodeling projects, how the cost-to-value has changed since the housing market implosion, and which projects are still worth the investment. Using the magazine's "Cost Vs. Value Report for 2008-2009," let's look at some of the best projects you can undertake and recoup the majority of your cost.
Upscale Projects
Siding Replacement (fiber-cement or foam-backed vinyl). With the economic slump, home buyers aren't being dazzled by bells and whistles as much as they are improvements that will ensure lower repair and utility bills. Although replacing current siding with fiber-cement has lost value from 2007, it still nets an astonishing 87% ROI. If you prefer a foam-backed vinyl product replacement instead, you can still look to recoup 80% of your cost.
Window Replacement (vinyl or wood). Windows are not only an aesthetic feature. For most homeowners, they represent one of the easiest ways to lower home heating and cooling bills. By replacing your current windows with more efficient vinyl or wood ones, you can save on your utility bills, attract future home buyers and net a nearly 80% (vinyl) or 77% (wood) return on your investment.
Bathroom Remodel. Depending on the size and amenities of your desired bathroom, you could expect to pay over $50,000 to tear out walls, repair joists and wall studs, change structural elements and make major layout changes, such as switching a toilet and shower. However big the price tag, you can still expect to recoup nearly 71% of the cost (which would be $36,400 if you have a $50K bill) when you go to sell. This project increased its value since 2007, while its sister project – adding a complete bathroom – fell in value.
Major Kitchen Remodel. Kitchens are typically the most frequently used room in a home, so it makes sense that investing money here is going to pay off when it comes time to sell. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it's also one of the most profitable. Regardless of the size of your financial layout, you can expect to get a nearly 71% ROI.
Deck Addition (composite product). With families cutting their entertainment budgets, they're spending more time at home, so it makes sense that adding a deck (composite, not wood) is a good investment. You can plan on recouping 63% of your total job cost to boost your home's value by nearly $24,000 if you paid the average job cost of $37,000.
Mid-Range Projects
While all of the mid-range projects dropped in value versus cost since 2007, there are still numerous projects that will net you a significant ROI. Here are a few of the best bets for your money:
Deck Addition (wood). If your bank balance can't swing the higher price tag that comes with composite decking, you may still be able to afford a wood addition on to your home. While a wood deck would cost you, on average, in the neighborhood of $10,000, the resale value it will add to your home is more than $8,600 – an 81.8% return on your investment.
Siding Replacement (vinyl). Fiber-cement or foam-banked vinyl are often more preferable siding upgrades, but getting vinyl siding replacements instead is still a good choice. You can recoup nearly 81% of your cost which, if the job cost you more than $10,000, means you could add more than $8,200 to your home's value.
Minor Kitchen Remodel. With belt-tightening in style, people are turning to minor kitchen improvement projects instead of major overhauls. It turns out that that choice is not only frugal, but financially wise. While major kitchen remodeling jobs can still, on average, return a nice 70% ROI for homeowners, minor kitchen remodeling jobs net an even higher 79.5% return.
Attic Bedroom. Anytime you can add bedrooms, you're going to add to the overall value – and listed purchase price – to your home. If your attic's dimensions allow you to convert it to a bedroom, you may want to consider investing the money to do so. You'll add some sleeping space and net a nice 74% return when a new buyer puts your home under contract.
Basement Remodel. If you're fortunate enough to live in an area with a water table high enough to permit basements, you should think about squeezing all the value you can out of it. By remodeling and finishing a previously-unfinished basement you can expect to get nearly 73% of your investment returned with a higher list price, come time to sell.
Conclusion
If you have savings or access to reasonably-priced credit, it's worth it to consider home improvement projects that will produce the best return for your time and money. Make sure you work with a reputable, licensed contractor (to avoid costly errors or budget overruns), and before you undertake any project it's a good idea to check and see if it could significantly increase your property tax bill.
While it may still make sense in the long-run to undertake the project and add overall value to your home, you may need to make a few budgetary changes so that you don't get caught off-guard when the tax bill comes.
This article is part of a series related to being Financially Fit
In a dour housing market, wouldn't it be nice to know that your remodeling project would pay off when you went to sell the property? Remodeling Magazine evaluated the top remodeling projects, how the cost-to-value has changed since the housing market implosion, and which projects are still worth the investment. Using the magazine's "Cost Vs. Value Report for 2008-2009," let's look at some of the best projects you can undertake and recoup the majority of your cost.
Upscale Projects
Siding Replacement (fiber-cement or foam-backed vinyl). With the economic slump, home buyers aren't being dazzled by bells and whistles as much as they are improvements that will ensure lower repair and utility bills. Although replacing current siding with fiber-cement has lost value from 2007, it still nets an astonishing 87% ROI. If you prefer a foam-backed vinyl product replacement instead, you can still look to recoup 80% of your cost.
Window Replacement (vinyl or wood). Windows are not only an aesthetic feature. For most homeowners, they represent one of the easiest ways to lower home heating and cooling bills. By replacing your current windows with more efficient vinyl or wood ones, you can save on your utility bills, attract future home buyers and net a nearly 80% (vinyl) or 77% (wood) return on your investment.
Bathroom Remodel. Depending on the size and amenities of your desired bathroom, you could expect to pay over $50,000 to tear out walls, repair joists and wall studs, change structural elements and make major layout changes, such as switching a toilet and shower. However big the price tag, you can still expect to recoup nearly 71% of the cost (which would be $36,400 if you have a $50K bill) when you go to sell. This project increased its value since 2007, while its sister project – adding a complete bathroom – fell in value.
Major Kitchen Remodel. Kitchens are typically the most frequently used room in a home, so it makes sense that investing money here is going to pay off when it comes time to sell. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it's also one of the most profitable. Regardless of the size of your financial layout, you can expect to get a nearly 71% ROI.
Deck Addition (composite product). With families cutting their entertainment budgets, they're spending more time at home, so it makes sense that adding a deck (composite, not wood) is a good investment. You can plan on recouping 63% of your total job cost to boost your home's value by nearly $24,000 if you paid the average job cost of $37,000.
Mid-Range Projects
While all of the mid-range projects dropped in value versus cost since 2007, there are still numerous projects that will net you a significant ROI. Here are a few of the best bets for your money:
Deck Addition (wood). If your bank balance can't swing the higher price tag that comes with composite decking, you may still be able to afford a wood addition on to your home. While a wood deck would cost you, on average, in the neighborhood of $10,000, the resale value it will add to your home is more than $8,600 – an 81.8% return on your investment.
Siding Replacement (vinyl). Fiber-cement or foam-banked vinyl are often more preferable siding upgrades, but getting vinyl siding replacements instead is still a good choice. You can recoup nearly 81% of your cost which, if the job cost you more than $10,000, means you could add more than $8,200 to your home's value.
Minor Kitchen Remodel. With belt-tightening in style, people are turning to minor kitchen improvement projects instead of major overhauls. It turns out that that choice is not only frugal, but financially wise. While major kitchen remodeling jobs can still, on average, return a nice 70% ROI for homeowners, minor kitchen remodeling jobs net an even higher 79.5% return.
Attic Bedroom. Anytime you can add bedrooms, you're going to add to the overall value – and listed purchase price – to your home. If your attic's dimensions allow you to convert it to a bedroom, you may want to consider investing the money to do so. You'll add some sleeping space and net a nice 74% return when a new buyer puts your home under contract.
Basement Remodel. If you're fortunate enough to live in an area with a water table high enough to permit basements, you should think about squeezing all the value you can out of it. By remodeling and finishing a previously-unfinished basement you can expect to get nearly 73% of your investment returned with a higher list price, come time to sell.
Conclusion
If you have savings or access to reasonably-priced credit, it's worth it to consider home improvement projects that will produce the best return for your time and money. Make sure you work with a reputable, licensed contractor (to avoid costly errors or budget overruns), and before you undertake any project it's a good idea to check and see if it could significantly increase your property tax bill.
While it may still make sense in the long-run to undertake the project and add overall value to your home, you may need to make a few budgetary changes so that you don't get caught off-guard when the tax bill comes.
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