Okay some of you all are reading the blog and starting to ask great questions. Today someone asked under the Ask Suzanne place in the blog, what they should do with 26 year old kitchen cabinets? Sounds easy doesn't it--- Get out the sledge hammer!
Well not necessarily.
You know how therapists always seem to answer your question with a question. What kind kind of real estate therapist would I be if I didn't ask a few back at you?
Here are the questions related to this follower's question.
1. Do you like the layout of your current kitchen? By this, I mean where the sink, stove and refrigerator are located.
2. Do you plan on expanding the size of your Kitchen? knocking down walls, etc.
3. Are the shelves and the boxes that make up your cabinets in good condition? For example, do the drawers all open easily and are the shelves not warped?
4. Are your existing cabinets pretty standard in size?
5. Do you have a lot of money?
I ask these things for these reasons. Good Cabinets cost a lot of money. If you have cabinets that are 26 years old, but were good quality cabinets when they were installed, they still function well, and you just want to update them and not considering moving the location of all the other things in the kitchen -- then I would consider you a good candidate for refacing rather than a Total Ditching. You could save yourself a ton of cash and a lot of time. It's amazing how far cabinet refacing has come over the years. People used to think cabinet refacing and fear someone was coming into their home with rolls of contact paper! Well my friends no more.
Then again older good quality cabinets may just be better built than anything else out there. If you want sliding trays in the cabinets they can be retrofitted. 90% of all new cabinets are not solid wood anyway. Most of the time the high end stuff only has solid wood doors and drawer faces. If you are spending $10000+ to get soft close drawers then that's a lot of money to spend not to hear a drawer close. Besides with the money you save just going the refacing route you could probably buy yourself all new appliances!
Now as any good therapist would say our 50 minutes are up!
Monday, February 1, 2010
Thursday, January 28, 2010
Kitchens and Baths
Age old question should you remodel you're kitchen and/or baths when you think you will sell your house in the next five years or less?
Time and time again the best return on remodelling investment has proven to be kitchens and baths. You can not expect to get all your money back but probably anywhere between 75-85%.
Then given that knowledge how should you upgrade your kitchen and bath? Does one take precedent over the other if you only have so much to spend? If so which one?
Okay, If you have $30,000-$50,000. Do the kitchen first. It's the heart of most homes. It's where everyone hangs out when there is a party. If you only have $10,000 - $15,000 do the baths. You probably can't get alot done in a kitchen for that amount. By all means get whatever project you chosee to do finshed first. It's really hard to sell your home with a bunch of half finshed projects.
Depending on the style of your home the type of remodel you do should be one that stands the test of time.
Think back to the 1960's, pink and grey were the king and queen of decorating colors. In the 70's it was avocado green, harvest gold and chocolate. How do they stand the test of time? Not so good.The same thing will happen to granite countertops and stainless steel appliances. Take the long view of your remodelling projects as long as you enjoy the look.
Time and time again the best return on remodelling investment has proven to be kitchens and baths. You can not expect to get all your money back but probably anywhere between 75-85%.
Then given that knowledge how should you upgrade your kitchen and bath? Does one take precedent over the other if you only have so much to spend? If so which one?
Okay, If you have $30,000-$50,000. Do the kitchen first. It's the heart of most homes. It's where everyone hangs out when there is a party. If you only have $10,000 - $15,000 do the baths. You probably can't get alot done in a kitchen for that amount. By all means get whatever project you chosee to do finshed first. It's really hard to sell your home with a bunch of half finshed projects.
Depending on the style of your home the type of remodel you do should be one that stands the test of time.
Think back to the 1960's, pink and grey were the king and queen of decorating colors. In the 70's it was avocado green, harvest gold and chocolate. How do they stand the test of time? Not so good.The same thing will happen to granite countertops and stainless steel appliances. Take the long view of your remodelling projects as long as you enjoy the look.
Wednesday, January 27, 2010
When is your house a teardown?
I get this question alot from my clients and friends. In the inner suburbs of Northern Virginia and the metropolitan Washington Area renovation and potential redevelopment is always a possibility. Generally, the older the housing stock, the smaller the house, and the better the lcoation the higher the probability that your house could be a potential teardown.
The reason someone asks me this question is usually they are starting to notice that some houses in the their neighborhood are being torn down rather than just remodelled or renovated. Your house is about 30 years old and you are wondering whether you should spend your money to renovate a kitchen or a bath or would your time and money be better spent selling your house and finding a house that is already remodelled.
The answer as is usual with real estate is mixed.
1. Do you love your neighborhood and can't image wanting to live anywhere else?
2. What is the tax assessment on house?
3. What are similar unimproved homes selling for in your neighborhood? Is the price trend generally up?
4. How long do you expect to stay in your house?
5. How much would your remodel or renovation cost?
6. If you spent the money to remodel your place, what would it be worth afterwards?
7. How much would another house you would like in your neighborhood or elsewhere that you would like to live?
8. What is your personal tolerance for stress and coming home every night and waking up every morning to dirt, noise and uncertainty?
Okay so those are most of the questions, what are the answers?
If you don't want to move out of your neighborhood and can't find another house in neighborhood you want to buy. Then you should probably renovate. Rather than do a modest renovation you may wish to consider renovating your home to a level in fit and finish to the other new homes in your neighborhood.
Why do I mention the tax assessment on your property as a factor? Generally, most assessment in this area are split out into a value for the improvements and a value for the land or dirt. The rule of thumb is that if your house (improvements) is less than one third the value of the total tax assessment than you are hovering on a Teardown. For example. Your current tax assesment is $600,000. The tax assesor as attributed $150,000 to your improvments and $450,000. You are definitely a teardown candidate.
If new houses in your neighborhood are selling for $1,200,000, you need to look at the cost to the builder. Here are some assumptions the builder makes and how he makes his money. Again use the one third analogy. If a builder sells a house for 1,200,000. His proforma are based on thirds. One third of his money goes into the land purchase, one third goes inot the materials and labor to build the house and one third goes into his pocket. Lately builders have not been able to make the profits they traditionally wanted to so this formula maybe a little off balance, but in traditional markets it generally hold true.
So where does this leave you?Would putting $400,000 into your home yield you a house that would sell in your neighborhood for well over $1,000,000? Assume there will be up to 20% cost overuns on your improvements and that if you sell your home impoved it will cost 6% of the sales price to sell your home. Plus the intangible of stress, incovenience and time you have spent remodelling your place.
Are unimproved houses going for the tax assessment or less? If they are then you need to take a very hard look back at how your tax assessment is assigned. Look back at those ratios of improvement versus the land.
The reason someone asks me this question is usually they are starting to notice that some houses in the their neighborhood are being torn down rather than just remodelled or renovated. Your house is about 30 years old and you are wondering whether you should spend your money to renovate a kitchen or a bath or would your time and money be better spent selling your house and finding a house that is already remodelled.
The answer as is usual with real estate is mixed.
1. Do you love your neighborhood and can't image wanting to live anywhere else?
2. What is the tax assessment on house?
3. What are similar unimproved homes selling for in your neighborhood? Is the price trend generally up?
4. How long do you expect to stay in your house?
5. How much would your remodel or renovation cost?
6. If you spent the money to remodel your place, what would it be worth afterwards?
7. How much would another house you would like in your neighborhood or elsewhere that you would like to live?
8. What is your personal tolerance for stress and coming home every night and waking up every morning to dirt, noise and uncertainty?
Okay so those are most of the questions, what are the answers?
If you don't want to move out of your neighborhood and can't find another house in neighborhood you want to buy. Then you should probably renovate. Rather than do a modest renovation you may wish to consider renovating your home to a level in fit and finish to the other new homes in your neighborhood.
Why do I mention the tax assessment on your property as a factor? Generally, most assessment in this area are split out into a value for the improvements and a value for the land or dirt. The rule of thumb is that if your house (improvements) is less than one third the value of the total tax assessment than you are hovering on a Teardown. For example. Your current tax assesment is $600,000. The tax assesor as attributed $150,000 to your improvments and $450,000. You are definitely a teardown candidate.
If new houses in your neighborhood are selling for $1,200,000, you need to look at the cost to the builder. Here are some assumptions the builder makes and how he makes his money. Again use the one third analogy. If a builder sells a house for 1,200,000. His proforma are based on thirds. One third of his money goes into the land purchase, one third goes inot the materials and labor to build the house and one third goes into his pocket. Lately builders have not been able to make the profits they traditionally wanted to so this formula maybe a little off balance, but in traditional markets it generally hold true.
So where does this leave you?Would putting $400,000 into your home yield you a house that would sell in your neighborhood for well over $1,000,000? Assume there will be up to 20% cost overuns on your improvements and that if you sell your home impoved it will cost 6% of the sales price to sell your home. Plus the intangible of stress, incovenience and time you have spent remodelling your place.
Are unimproved houses going for the tax assessment or less? If they are then you need to take a very hard look back at how your tax assessment is assigned. Look back at those ratios of improvement versus the land.
Wednesday, January 13, 2010
Walkability
Okay it's getting a little warmer today... 40 degrees instead of 20 something. So people are out in my neighborhood. Walking. I'm walking Scout, my lab, of course. But in my afternoon walk around the block. I met 5 groups of people outside walking. Just getting out. They were glad to have a sunny day and some warmth. I'd reminded me about the New York Time article I read just a little while ago about walkability. For some people that's a major decision factor for buy their next house. Does the neighborhood have sidewalks? Can I walk to anything? There is now an actually walkability factor assigned to homes. See how yours stacks up. Check how the link below to the New York Times article. Great stuff to consider.
http://www.nytimes.com/2010/01/10/business/10every.html
http://www.nytimes.com/2010/01/10/business/10every.html
What's the best way to get Mom or Dad's House sold?
A lot of my clients ask me questions about how to get their parent's house sold while they are transitioning into a retirement or nursing home. As stressful as selling Mom and Dad's house is for you, just think how challenging it is for them since they have been living there for many, many years. Downsizing to one or two rooms from a a full size home can be challenging for anyone. Poring over 40 or 50 years of memories is daunting for anyone, but is almost impossible for a senior. Your folks really need a lot of help. For you the challenge is how do you help them when you have little time and probably less patience. What about if they have saved every rubberband and twist tie since 1964?
Here's my advice. If financially possible move Mom and/or Dad first before you mess with all the things in the house or getting a Realtor. Game it out and have a plan. Pick the place they want to go, decide what furniture they want to take, move it and their favorite clothes and all other essentials over where they are going to live. Help them set up just like you would a kid going off to college. It's a lot less stressful for them and/or you to sort through things and make decisions once they are out of the house. If they are capable they can come by the house two or three times a week and start sorting through the remains. Some things may end up over at their retirement place, but after a few trips back in forth they probably won't miss their rubber bands and twist ties that much. They can spend a couple hours there everyday, but at least at night they can go back to their new place eat dinner, socialize and sleep in a unchaotic environment. It also gives them time to process their emotions around all this change.
Next decide what things go to family members and arrange for those to be picked up or sent. Sort out the big pieces of furniture and other objects left. Group them by classes - kitchen stuff, garage stuff, linens, etc. If you think there is more than $10,000 worth of stuff left call an estate sale person and have them come by and establish whether it's worth having a sale. If there are any good antiques send them to an auction house or try to sell to a dealer.
Sorting through all the papers and small stuff is probably the most time consuming exercise. I heard of many a son or daughter starting this process thinking they could toss most everything out and then they found $1000 in a coat pocket and the process bogged down. At that point you feel like you have to do everything yourself or possibly hire someone to work through it with you. In the meantime, once the piles are manageable start talking to a Realtor.
Unless your Realtor's assessment is that the house has been updated for today's buyer, you should set your expectations lower than the current market value of other similar houses in the neighborhood. There are some items the Realtor will absolutely require that you fix unless you plan on selling the house AS-IS. These might include taking down drapes, refinishing floors, replacing or cleaning carpets, repainting, taking down wall paper, checking out all the appliances and replacing any that are out of date or nonfunctional, checking the roof, and cleaning up the yard. Set a budget for these items. If it is greater than 5% of the value of the house then consider not doing them and selling the house AS-IS. Basically the fixing up the house should be enough to give the potential buyer a clean slate to work from when they are viewing the home. It will probably bring more than an AS-IS sale, and it will open you home to a greater buyer pool.
An AS-IS home is good for only a certain kind or buyer. It appeals to an investor, a flipper, and a do- it- yourselfer. These buyer's will discount their offers by the amount they plan on investing in the house to make it habitable for a tenant or their family. Many AS-IS homes these days sell for less than the assessed value of the home. If you are happy with that return and/or do not have the funds to make the fix-ups the Realtor suggests then that's the way to go. Just make sure your AS-IS house is cleaned out, clean, and the yard mowed and the shrubs cut back. No one is interested in seeing Mom's old floral sofa, console TV, sculptured carpet or faded drapes. That way at least the buyer doesn't have to imagine what they are buying. Cleaning it out will get you extra value for the home. Believe it or not I have been through houses that were part of an estate where I was stepping over trash, looking into refrigerators with rotten food, and very unclean bathrooms. Each of those things makes a buyer more reluctant to buy, but if inclined to purchase offer even less.
As challenging as this whole process sounds, it is one of the great gifts you can give your parents.
Here's my advice. If financially possible move Mom and/or Dad first before you mess with all the things in the house or getting a Realtor. Game it out and have a plan. Pick the place they want to go, decide what furniture they want to take, move it and their favorite clothes and all other essentials over where they are going to live. Help them set up just like you would a kid going off to college. It's a lot less stressful for them and/or you to sort through things and make decisions once they are out of the house. If they are capable they can come by the house two or three times a week and start sorting through the remains. Some things may end up over at their retirement place, but after a few trips back in forth they probably won't miss their rubber bands and twist ties that much. They can spend a couple hours there everyday, but at least at night they can go back to their new place eat dinner, socialize and sleep in a unchaotic environment. It also gives them time to process their emotions around all this change.
Next decide what things go to family members and arrange for those to be picked up or sent. Sort out the big pieces of furniture and other objects left. Group them by classes - kitchen stuff, garage stuff, linens, etc. If you think there is more than $10,000 worth of stuff left call an estate sale person and have them come by and establish whether it's worth having a sale. If there are any good antiques send them to an auction house or try to sell to a dealer.
Sorting through all the papers and small stuff is probably the most time consuming exercise. I heard of many a son or daughter starting this process thinking they could toss most everything out and then they found $1000 in a coat pocket and the process bogged down. At that point you feel like you have to do everything yourself or possibly hire someone to work through it with you. In the meantime, once the piles are manageable start talking to a Realtor.
Unless your Realtor's assessment is that the house has been updated for today's buyer, you should set your expectations lower than the current market value of other similar houses in the neighborhood. There are some items the Realtor will absolutely require that you fix unless you plan on selling the house AS-IS. These might include taking down drapes, refinishing floors, replacing or cleaning carpets, repainting, taking down wall paper, checking out all the appliances and replacing any that are out of date or nonfunctional, checking the roof, and cleaning up the yard. Set a budget for these items. If it is greater than 5% of the value of the house then consider not doing them and selling the house AS-IS. Basically the fixing up the house should be enough to give the potential buyer a clean slate to work from when they are viewing the home. It will probably bring more than an AS-IS sale, and it will open you home to a greater buyer pool.
An AS-IS home is good for only a certain kind or buyer. It appeals to an investor, a flipper, and a do- it- yourselfer. These buyer's will discount their offers by the amount they plan on investing in the house to make it habitable for a tenant or their family. Many AS-IS homes these days sell for less than the assessed value of the home. If you are happy with that return and/or do not have the funds to make the fix-ups the Realtor suggests then that's the way to go. Just make sure your AS-IS house is cleaned out, clean, and the yard mowed and the shrubs cut back. No one is interested in seeing Mom's old floral sofa, console TV, sculptured carpet or faded drapes. That way at least the buyer doesn't have to imagine what they are buying. Cleaning it out will get you extra value for the home. Believe it or not I have been through houses that were part of an estate where I was stepping over trash, looking into refrigerators with rotten food, and very unclean bathrooms. Each of those things makes a buyer more reluctant to buy, but if inclined to purchase offer even less.
As challenging as this whole process sounds, it is one of the great gifts you can give your parents.
Friday, January 8, 2010
Is Love Worth It?
Okay, I get this question a lot. You've found your dream home. It meets all your wants and desires. You think you should pay $950,000. The seller wants $1,000,000. You offer an insulting $920,000. You and the seller counter back and forth and the last counter and final one to you is $965,000. You dig in your heels and keep saying you don't want to pay over $950,000. But you love the house!
Okay so let's get real here. If mortgage rates are 5%. That means for every $1,000 of mortgage you are going to pay $5.37 per month. So your delta here is $15,000, or a payment difference of $80.55 a month.
So let's check in again. You love the house. You have seen lots of other houses, they all need something, some more than others, but this house doesn't need anything. You'd be happy to move in tomorrow, colors and all.
But you think it's worth $950,000. You think you would be a schmuck if you pay more. Baloney! You could easily spend $80.55 a month at Starbucks or the 7-11 or whatever. You could pay a lot more in the long run to buy a house that wasn't move in ready and had to have a new bath a kitchen or whatever. Remodeling and living through it, is not fun.
Whoever remodelled it before you paid alot more for the improvements than they are getting from you at $965,000.
Trust me buy the house. You are in love. Enjoy it.
Okay so let's get real here. If mortgage rates are 5%. That means for every $1,000 of mortgage you are going to pay $5.37 per month. So your delta here is $15,000, or a payment difference of $80.55 a month.
So let's check in again. You love the house. You have seen lots of other houses, they all need something, some more than others, but this house doesn't need anything. You'd be happy to move in tomorrow, colors and all.
But you think it's worth $950,000. You think you would be a schmuck if you pay more. Baloney! You could easily spend $80.55 a month at Starbucks or the 7-11 or whatever. You could pay a lot more in the long run to buy a house that wasn't move in ready and had to have a new bath a kitchen or whatever. Remodeling and living through it, is not fun.
Whoever remodelled it before you paid alot more for the improvements than they are getting from you at $965,000.
Trust me buy the house. You are in love. Enjoy it.
Wednesday, January 6, 2010
All Cash Contract Offers
I had a neighbor stop me the other day and ask me about an all cash offers on a contract for a second home they were trying to sell in Hawaii. Don't you wish you were the buyer given the weather here? Anyway, they were all excited because they had a contract offer for all cash and they felt they should really give it much more attention than any other offer that might included financing. They asked my opinion. I said Yes and No.
The Yes is always seriously consider any all cash offer. But sometimes that strategy is used by buyers to get you to take less money for the property and then once you are under contract the buyer legally switches to financing the purchase. The No is this all cash contract may be no better than an offer with financing , but you've possibly accepted less because you thought it was a sure thing. If the contract offered has a appraisal contingency with it you are then bound by the appraisal and the supposedly sure thing again is no better that a contract with financing.
Okay so how do you make sure the buyer has the money to pay all cash? Ask your realtor to request the buyer's evidence of funds to close the all cash deal and if really pushed ask them to remove the appraisal contingency as a condition of the contract. Then at least you know that if you are giving them a great price they can't use the appraisal to walk away or get you to lower it more. You can also add a "as-is" condition clause to the contract so you aren't being nickled and dimed with the home inspection.
Generally all jurisdictions have contract language that allows the buyer to use alternate financing as long as they settle by the establshed and agreed upon contract settlement date and also do not cost the seller any additional expense.
The Yes is always seriously consider any all cash offer. But sometimes that strategy is used by buyers to get you to take less money for the property and then once you are under contract the buyer legally switches to financing the purchase. The No is this all cash contract may be no better than an offer with financing , but you've possibly accepted less because you thought it was a sure thing. If the contract offered has a appraisal contingency with it you are then bound by the appraisal and the supposedly sure thing again is no better that a contract with financing.
Okay so how do you make sure the buyer has the money to pay all cash? Ask your realtor to request the buyer's evidence of funds to close the all cash deal and if really pushed ask them to remove the appraisal contingency as a condition of the contract. Then at least you know that if you are giving them a great price they can't use the appraisal to walk away or get you to lower it more. You can also add a "as-is" condition clause to the contract so you aren't being nickled and dimed with the home inspection.
Generally all jurisdictions have contract language that allows the buyer to use alternate financing as long as they settle by the establshed and agreed upon contract settlement date and also do not cost the seller any additional expense.
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