The Top 5 Home Improvement Don’ts

There are several things you can do that can actually lower the value of your home or make it more difficult to sell. Here are a few rules to keep in mind:

1. Do It Well, Or Don’t Do It At All

You may be tempted to do a lot of work yourself to save money. That’s fine, if you know you can do a good job. But if doing it yourself means a sloppy paint job or bubbles in the vinyl flooring, then I suggest hiring a professional. Hiring an expert can often be cheaper and faster in the long run. This is especially important when dealing with electrical systems or plumbing problems.

2. Don’t Over-Improve

Any project that raises your home’s value by more than 20 percent above similar homes in your neighbor should be reconsidered. The reason is simple; say your home is typical among neighborhood of $100,000 homes, and you make $50,000 in improvements. Buyers looking for a $150.l000 home are looking in neighborhoods where that is the norm, not the exception.

3. Don’t Plan On Moving Soon

If You’re Spending A Lot You probably won’t recoup your investment if you plan to move in less than two years. If you plan to move sooner, spend less money and focus your efforts on the most egregious problems. For example, turn a bad kitchen into a decent one rather than a chef’s kitchen.

4. Don’t Make Unique Improvements

Sure, you may love the built-in bookcases on every wall of your guest room, but prospective buyers will probably view them as a nuisance to tear out – which means they’ll be less willing to meet your price. Also, avoid remodels that make unusual use of a particular room. Anything that limits flexibility will limit interest in your home.

5. Don’t Create A Mess

Make sure your floor plan will make sense when you’re done. Be careful not to make changes that impede the natural flow of the house – closing off halls, doorways, etc. Room additions in particular are often done very poorly. If it looks like something tacked on to the original house, don’t do it. Adding a bedroom that only connects to the rest of the home via another bedroom should be avoided, as well.

In summary, as you can see, squeezing every last dollar out of your home sale can be a fairly involved process, but when you consider the end result – a quicker sale and top-dollar for your efforts, I think you’ll find that few well-chose home improvements are worth both the time and money.

When Selling Your Home – Remodeling Trends to Watch!

The Great Room –

A more recent hot remolding trend is the ‘great room’, combining the kitchen, dining and family rooms into one larger living area. While lagging behind kitchen and bath remodels, it is definitely a trend on the rise. Living rooms, family rooms and formal dining rooms on the other hand, are diminishing in popularity.

The Home Office –

This is yet another relatively new trend. With more home-based businesses and more companies allowing employees to telecommute, more people are looking for office-ready space in their homes. A recent survey conducted by Builder Magazine found that nearly one-third of all buyers in their 20s, 30s and 40s plan to use a room as a home office. Other rooms that are showing up on more buyers’ wish lists are exercise and media rooms.

Fireplace and Elaborate Security System Installations –

You can find professionals who will argue for and against forth of these projects, but with concerns about home safety on the rise, security systems appear to be moving into the desirable column.

Many of these projects are relatively inexpensive and will easily pay for themselves. With some projects you may not recoup your investment, but you will have removed impediments to a sale. If you don’t take care of things like leaky plumbing, drafty windows or outdated light fixtures, you’re giving a buyer ammunition to sue against you during negotiations.

When You’re Ready to Sell; Room-by-Room Improvements – Bedrooms and Bathrooms

Bathrooms

New fixtures, wall tile and flooring can make a big difference. If the bathtub is in poor shape, you can replace it, but a less expensive option may be to re-enamel. If you keep the old tub, at least regroup and rechalk. A good bathroom remodel or expansion can easily return more than 100 percent of cost when you sell.

If you’re feeling ambitious, adding a half-bath or a second bath to a one-bathroom house is another option, space allowing. Whatever the family size, one bathroom never seems quite adequate for most families.

Bedrooms

For most, the master bedroom is the third most important room in the house. If you have a large home with four or five small bedrooms and the floor plan allows for it, you might consider combining two rooms into a master bedroom. If you have a two- or three-bedroom home and a decent size lot, you may consider adding another bedroom.

When You’re Ready To Sell; Room-By-Room Improvements – The Kitchen

Kitchens and bathrooms have long been the top two remodeling projects, and you can expect them to remain so for years to come. They are the rooms that most consistently make or break a sale. A new or updated kitchen, a sparking bathroom . . .  these are features that help to sell a home.

If you can get away with a remodel rather than a new kitchen, do it. Because the kitchen is so important, sellers sometimes over-improve them to the point where there is no chance of recouping their investment when they move. Don’t fall into this trap.

Add a new coat of paint, refinish the cabinets and counters, change drawer pulls and handles, install new appliances, put out a new floor – but don’t gut and start over if it isn’t necessary. When adding new appliances, be aware that many buyers consider brand name to be an important factor. If you don’t paint everything, at least repaint the ceiling bright white. You’d be surprised how much it can lighten up the room.

Another great way to brighten a kitchen is to add a skylight. And if you choose to put in a new kitchen, keep in mind what sells. Buyers are looking for lots of cabinets and counter space, new appliances and an easy flow between the sink, food prep areas, stove and refrigerator. Think sunny, spacious and clean.

Making the Best Impression When Selling Your Home

When it comes to preparing your home for sale, there are plenty of tricks you can use to improve your home’s interior that will push emotional buttons in prospective buyers:

Just as in preparing the outside, a coat of paint can literally make the difference between a sale and no sale. Be sure to stick to neutral colors, white or off-white. This will have a tendency to make everything look new, clean and bright.

Be sure to paint everything; inside of the closets and cabinets, etc. If a prospective buyer opens a door and sees dirty walls or shelves, you’ve just wasted the advantage you had gained by painting in the first place.

Like painting, new carpeting should also be in a neutral shade. This helps buyers visualized their own furniture in your home.

Wallpaper – like wall colors – makes a personal statement about the owner’s tastes. Remove it; buyers want to visualize what they would do with your house, and wallpaper gets in the way of their dreaming.

Many buyers value good wood floors, so sand and refinish yours if they can be restored, otherwise, consider new flooring. If your home is short on storage space, consider how you can add shelving, cabinets or other storage systems to remedy this deficiency. You may also consider replacing windows and doors with more energy-efficient models.

Taken individually, each of the above improvements may not seem like much, but you’ll find that the cumulative effect of fixing even relatively minor problems will be dramatic. A crack n the wall, a carpet stain or a light switch that doesn’t work can send a negative signal that results in the loss of a buyer. I’ve seen it happen.

Tips For Short Sale Buyers

1.     LOAN PRE-APPROVAL. Before you make an offer, get pre-approved for your loan and submit a pre-qualification letter with your offer.

2.     PRE-QUALIFY LETTER AMOUNT. Have the exact offer amount put in the pre-qualification letter by your lender. Don’t advertise up-front that you can afford to pay more.

3.     PERSONAL STATEMENT. Summit a brief 2-3 paragraph personal bio with your offer to gain more trust with the listing agent and bank. Tell them about yourself, your work,  financial situations and your intent to be a good homeowner.

4.     LENDER CHOICE. Though you don’t have to use them, consider getting pre-qualified by the lender who is holding title on the property. The more they know about your financial situation, the better.

5.     QUICK CLOSE. On your offer, put the closing date at 30 days or less to show you are serious. Just going in knowing that the escrow process will probably be extended by the bank but with shorter terms will make you a more attractive buyer.

6.     PROPERTY COSTS. Make sure to have a full assessment of property damage and understand costs associated with the property before you make your offer.

7.     CONTINGENCY OFFERS. If you make an offer that is contingent on the sale of your current property, you will be less attractive buyer to the bank approving the short sale. It is best to sell your property – or have at least have it in escrow – before submitting an offer on a short sale property.

8.     FIND THE RIGHT AGENT. Talk to a real estate professional who understands short sales and can guide you through the purchasing process.

Buyer Myth #5; Short Sales Are a Goldmine Opportunity and a Can’t Miss Investment

As you can tell from reading this report, there are many upsides and downsides in short sale real estate. If you know what you are doing and are prepared for the process that often comes along with purchasing a short sale property, opportunities can certainly be found.

You will be able to save a little money on the purchase price, but you have to make sure you are covered elsewhere. Be sure to factor in the fix-up costs, property taxes, HOA dues, any land lease fees and other things that will impact the overall price of the property.

Here is a good rule of thumb to consider when looking at a short sale or foreclosure purchase; add up the selling price and the fix-up price. If together they are equal to or ideally less than what you perceive to be regular market value for that property, then it is probably a viable investment.

To determine the regular market value for the property, consult with a real estate agent who can provide you with a Comparative Market Analysis – CMA – using similar properties and recent sales in the neighborhood as ‘measuring sticks’ to estimate the value of the home.

Buyer Myth #4; The Listing Price is What the Bank Will Most Likely Accept When You Make Your Offer

Before a short sale is ever put on the market, the listing agent and bank will determine an undisclosed price range for the property. The high-end will be what the bank would ideally like to get back. The low-end is the minimum they would be willing to accept at the time of the approval. The listing will generally go on the market at a price that is closer to the high-end of the range.

A lot of buyers will make the mistake of making a real ‘low-ball’ offer. If it is below the low-end of the accepted price range, they will likely dismiss such an offer immediately. Remember, banks are not as desperate to sell as most people think, and they’ll do whatever they can to have the property sell at the highest possible price. So, if you are serious about the property, make a reasonable offer. An experienced and market-savvy real estate agent will be able to help you determine what a ‘winning’ offer is on any specific property, short sale or otherwise.

Even if the seller accepts your offer and the bank accepts the offer initially, they will still go through the full short sale approval process before anything is finalized. They will appraise the property once more and review all aspects of the contract to make sure it is to their liking. If they determine that the property is worth more than you are offering, they can – and usually do –make a counteroffer asking for something more. This can include a higher selling price, a larger down payment from you, reduced agent commissions or in some rare cases, a stipulation that you must secure your home loan through them.

When you submit your officer and pre-qualification letter, make sure the amount in the letter is the same as the offer price. Even though you may be qualified for more, have your lender put in the exact price you are submitting. If they see you are qualified for more there is an increased chance that they will ask for more. Even though they will eventually review your full financial situation, you don’t want to advertise upfront that you can afford more than you are offering. This is a good strategy when making any real estate offer, but especially important to remember when purchasing a short sale property.

Buyer Myth #3; ‘Short’ Sale Implies a ‘Shorter’ Closing Period

This is where many people have misguided perceptions about short sales. People hear the term and they think it means that the process will be ‘shorter’; because both the bank and seller want to sell the property as quickly as possible. That’s true in one sense, because they do want to get it off of their books sooner rather than later, however, they will still take whatever time they need to get the best return on their investment. In addition to the extra diligence they will take to make the decision, keep in mind that a many banks are now too understaffed to handle the growing number of short sales and foreclosures in a timely manner.

Because most banks are stringent in the short sale approval process after an offer has been submitted, it can often drag on for several extra weeks, if not months. You need to go in knowing it could be quick close or it could take much longer. It can be frustrating in that you may not know for certain until after you’ve made a offer. This is where an agent can ‘scout’ the listing for you by speaking with the listing agent – and sometimes, the bank itself – feeling out the situation to see what the desired terms may be.

When I work with buyers to create a short sale offer, I always recommend they put a relatively short close period – 30 days or less – in the contract. Why? That proves to the bank that you are ready and willing to close quickly. They will be drawn to your offer when they understand that you are serious. This also allows you an ‘out’ later if they drag on the escrow process.

But even though the bank may be more apt to accept your offer because of a short close period, it does not necessarily mean escrow will close within that timeframe. Most of the time, it doesn’t. The escrow process can be extended as long as they need it to be in order to make a financial decision. This is very important to understand before you make your offer, especially if you are in the process of selling your current property and trying to ‘time it’ accurately. Make sure your agent stays on top of the listing agent – and the bank, if needed – keeping the process moving forward and avoiding getting your contract get lost in the shuffle.

Buyer Myth #2; Banks are Desperate to ‘Unload’ Their Short Sale Properties

It’s always crucial to keep in mind that the banks are motivated by the bottom-line. Many buyers go into a short sale offer thinking the process will go quicker because they think the banks are desperate to unload the property. This is the perception for buyers when it comes to foreclosure properties, as well.

The fact of the matter is, banks are extremely careful with every aspect of the short sale, from initial approval of the price all the way through to the close of escrow. When you submit an offer, they scrutinize every detail. They fully review the seller’s situation and your financial stability to make sure there will be no problems with the transfer of the property or payoff of the loan. Again, these are the types of things that can often draw out the buying process.

With that in mind you need to make sure you are covered on your end before submitting an offer on the short sale property. Be sure to talk to a real estate professional and a knowledgeable lender.

It is best to get pre-qualified for your loan and submit a pre-qualification letter with your offer. This will show the bank you are not only serious about buying, but also willing and able to pay for your loan. If you want to take it one step further, you can consider getting pre-qualified by the bank that holds the title. Quite simply, the more information they have about you, the more faith they’ll have in you as a buyer, and thus, the more likely you will be to have your offer accepted.