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Know This Before You Do Any Home Improvements

When you do any home improvement, you probably figure it’s also going to improve the value of your home. And it probably will improve the value… but, probably not as much as it cost you.

In other words, if you spend $1,000 (for example), it probably won’t improve the value by $1,000 or more. Statistically speaking, it will probably only improve the value by a fraction of that amount.

So, the question becomes…

Is it even worth doing any home improvements!?

Not to sound wishy-washy, but the answer is…

Yes and no. It depends on a lot of factors. We’ll touch on that more at the end of the article.

But for now, let’s just take a look at the top 7 home improvements, according to the 2017 cost versus value report to start making some sense of it all.

1. Insulation

According to the 2017 Cost vs. Value Report, adding fiberglass insulation to the attic costs on average $1,343, but you’ll recoup $1,446.

Doesn’t sound all that exciting. When you think home improvements, you probably think of remodeled kitchens and baths being the biggest and best improvements to make (and they might be for you). But nope, according to the report, your best bet is to add insulation.

Pretty interesting, considering no buyer has ever walked into a house, gasped, and said, “Honey, look at this! They added insulation!” Yet, according to the report, it’s what’ll be the best money you could spend to add actual value to your home, and your bank account.

2. New entry door

Replacing your entryway door with one made of steel may set you back an average of $1,413, but you’ll get back $1,282, according to the 2017 Cost vs. Value Report.

So, at face value, it looks like you actually lose a few bucks…

So, why would you do it?

If your new door is more energy efficient, it’ll probably also save you some money on heating and cooling. It’s just tough to say how much exactly.

But the big X factor is how much your improved “curb appeal” will add to the sales price, when you sell your home. Again, that depends on a lot of other factors.

3. Manufactured stone veneer

On average, adding manufactured stone veneer will cost $7,851, but you can expect to recoup $7,019, or 89.4 percent, of that.

Obviously, this is another one that loses you money, at face value.

So, why would you do this home improvement?

How about, because you simply like the way it looks. Obviously, if you don’t like the way it looks, don’t do it. But, if you do, you’ll enjoy the home improvement. It isn’t all about making money on the money you spent. Sometimes it is about getting back a nice chunk of what you spent, on something that you wanted and enjoyed during the years before you sell your house.

4. Minor kitchen remodel

If you have a functional but outdated kitchen, you may harbor fantasies about beginning a total renovation. However, you don’t need to break the bank to make some valuable upgrades that’ll pay off in the long run. Consider swapping out old appliances for energy efficient ones. You can leave cabinet boxes in tact but replace doors or hardware.

The average minor remodel costs $20,830. As much as you’ll love the look and convenience of modern amenities, you’ll also enjoy knowing you can regain an average of $16,699.

This surprises a lot of people outside the real estate industry (and even some in the industry!).

Almost everyone thinks kitchens are the best thing to renovate, and will increase the value of a home. Again, it will add value, but just not as much as it costs.

So, this is another one where there’s plenty of reason to do it, simply because you will enjoy the benefits of the improvement during your ownership.

Just don’t tack on every penny you spent on the remodel onto your asking price when you sell. That’s not how this works. That’s not how any of this works.

5. New garage door

On average, a new garage door costs $1,749, but homeowners recoup $1,345, representing an almost 77 percent return on investment.

Chalk this one up to the X factor of added curb appeal as well, when it comes to justifying spending the money.

But it also just boils down to your sanity. When you have a garage door that doesn’t open or close right, or when you want it to, it can drive you nuts. That’s gotta be worth the 33% you don’t get back when you sell.

6. Siding installation

via GIPHY

The elements wreak havoc on your home’s exterior. If your place is looking a little worse for wear, it could be time to consider siding, which provides a fabulous facelift.

But, more than simply a cosmetic upgrade, siding can protect your home from heavy rains and damaging snowstorms, making it an investment with a multi-pronged pay-off.

The average cost of installing siding is $14,518 of which you should get back $11,093 at resale, according to the 2017 Cost vs. Value Report.

Starting to see the trend? There are benefits to doing any home improvement, but you just can’t expect to get every dime you spend back.

7. Adding a wooden deck

Decks are ideal for outdoor entertaining. Depending on the size, you may feel as if you’ve just added significantly to your living space — especially if you live in a climate where you can use it for much of the year.

The average wooden deck will set you back $10,707, but you’ll get back $7,652, or 71.5%, when you sell.

OK, with all of that said…

These reports are based upon National and regional statistics. The thing is, real estate is extremely local. Like, down to the very street you live on local… And there are so many factors that will affect how much return you’ll get on any given project, in any given area, on any given house.

It may make sense for you to do a particular home improvement. It may not. It depends on your local market. It depends on the local supply and demand of homes. And it depends a lot upon what your personal situation is, and what your short and long term plans are.

So, the best thing to do when you’re considering any home improvement, is to reach out to your local real estate agent, and ask him or her for input. Considering they probably won’t charge you a dime for their time and insight, that’s going to be the best cost versus value you will find when it comes to home improvements.

Before You Make an Offer, Here Are 4 Tips for Success!

So, you’ve been searching for that perfect house to call a ‘home,’ and you finally found it! The price is right, and in such a competitive market, you want to make sure that you make a good offer so that you can guarantee that your dream of making this house yours comes true!

Freddie Mac covered “4 Tips for Making an Offer” in their Executive Perspective. Here are the 4 tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ should really take place before you start your home search process.

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.” 

The inventory of homes listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”

Talk with your agent to find out if there are any ways that you can make your offer stand out in this competitive market!

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller, or cancel the contract.

Bottom Line 

Whether buying your first home or your fifth, having a local real estate professional who is an expert in their market on your side is your best bet to make sure the process goes smoothly. Let’s talk about how we can make your dreams of homeownership a reality!

Rents Are on the Rise: Don’t Get Caught in the Rental Trap!

There are many benefits to homeownership. One of the top benefits is protecting yourself from rising rents, by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by Apartment List addressed rising rents by stating:

“Rents are up 2.7% year-over-year at the national level. Year-over-year growth continues to fall between the 2.1% rate from this time last year and the 3.4% growth rate from October 2015.”

The article continues explaining that:

“Despite the seasonal slowdown, rents are still up year-over-year in 89 of the 100 Largest cities.

Additionally, the Urban Institute revealed that,

Over a quarter of renters, or 11.1 million households, are severely cost burdened, spending at least half their income on rental housing.

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent 

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 6.5% less expensive in San Jose (CA), all the way up to 57% less expensive in Detroit (MI) and 37.4% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

Top 5 Benefits of Hiring a Real Estate Agent

The National Association of Realtors (NAR) recently released their 2017 Profile of Home Buyers and Sellers in which they surveyed recent home buyers and sellers about their experiences. An entire section of the profile is dedicated to buyers’ experiences with their real estate agents.

If you are looking to buy in 2018, here are the top 5 benefits of using a real estate agent when buying your dream home as cited by recent buyers:

1. Helped the buyer understand the process – 60%

If you are new to the home buying process, an experienced real estate professional can explain exactly what to expect during the entire transaction so you aren’t caught off guard.

2. Pointed out unnoticed features/faults with the property – 56%

Whether it’s pointing out possible uses for an extra bedroom/office, or using their trained eye to see potentially disastrous hazards that may be hiding out of site, your agent is there to protect your interests and make sure your home buying experience is a good one.

3. Negotiated better sales contract terms – 47%

When it comes to negotiating the complex terms of your contract and coming to an agreement with the seller, it never hurts to have someone who has been there before on your side. If earlier in your search you found a couple of less than desirable features on the home you are going to purchase, your agent can make sure that contingencies are in place for you to pay the best price. Their analysis of comparable properties in the area will also help to make sure that your dream home is priced properly for the market.

4. Provided a better list of service providers – 46%

Real estate agents are titans of networking. Many have a list of preferred providers who they have worked with in the past and who they trust to work as a part of your team to make your dream come true. This can include mortgage professionals (listed as the #8 reason to use an agent at 22%), home inspectors, plumbers, contractors, painters, landscapers, home stagers, and so many more!

5. Improved the buyer’s knowledge of search areas – 44%

Local real estate professionals are often members of community organizations and are usually well versed in their area’s history. Their ties to the community make them a great resource whether you plan to relocate to a new area or across town.

Bottom Line

If your plans for 2018 include purchasing your dream home, let’s get together to discuss your options and to help you make the most powerful and confident decisions for you and your family.

The Benefits of Homeownership Go Beyond the Financial

Homeownership is a major part of the American Dream. As evidence of that, 91% of Americans believe that owning a home is either essential (43%) or important (48%) to achieving that “dream.” In a market where some people may be unsure about the benefits and possibilities of buying a home, it is important that we remember this.

Homeownership is NOT just about the money. In fact, some of the major benefits are non-financial. Here are a few of those benefits as per the National Association of Realtors:

  • Consistent findings show that homeownership does make a significant positive impact on educational achievement.
  • Several researchers have found that homeowners tend to be more involved in their communities than renters.
  • Early studies of homeownership and health outcomes found that homeowners and children of homeowners are generally happier and healthier than non-owners, even after controlling for factors such as income and education levels that are also associated with positive health outcomes and positively correlated with homeownership.

Bottom Line

Homeownership means something more to people and their families than just the financial considerations.

93% Believe Homeownership Is Important in Attaining the American Dream

Americans continue to believe that homeownership is important in achieving the American Dream. A recent survey by NeighborWorks America reported that:

“Owning a home remains a core element of the American Dream.”

When asked “How important a part of the American dream is owning a home?”

  • 18% of those surveyed said it was the most important part
  • 53% of those surveyed said it was very important
  • 22% of those surveyed said it was somewhat important

Homeownership and Financial Stability

The survey also revealed that 81% of Americans believe that owning a home leads to a family being more financially stable. This feeling was reiterated by Zillow Senior Economist Aaron Terrazas who, in a recent press release, explained:

“After about a two-year slowdown, rent growth is starting to pick back up across the nation…Looking into 2018, rent is expected to continue gaining.

More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.” (emphasis added)

Bottom Line

Owning a home always has been, and always will be, a crucial part of attaining the American Dream.

3 Common Fears Of First Time Home-Buyers… And How To Overcome Them

Buying your first home can be one of the most exciting experiences of your life. But it can also be one of the scariest.

Buying real estate is a complicated process. And if you’ve never purchased a home before, the fear of all those unknown variables can make the experience stressful, frustrating, and downright terrifying.

If you’re thinking about purchasing a home but are dealing with the fear that comes along with it, don’t worry! You’re not alone. Most first time home-buyers deal with a certain level of fear as they get ready to buy their first home.

But that fear doesn’t have to hold you back. Here are three of the most common fears of first time home-buyers (and how you can overcome them).

“I can’t afford to buy a home.”

The number one fear most first time home-buyers struggle with is the fear they can’t afford to buy a home.

But while there are certainly people who aren’t in the financial position to purchase a home, becoming a homeowner isn’t as expensive as you might think — and sometimes all it takes to be able to buy a home is a little budgeting.

If you’re worried about being able to afford a home, it’s time to take a good, hard look at your finances. Make a list of all of your monthly expenses and all of your debt. How much are you spending per month on living expenses? How does that compare to how much you’d be spending per month on living expenses if you were to purchase a home? How much are you saving each month? Are there any opportunities to cut back on spending and pad your savings a little more each month? How much debt do you carry and what’s your plan to pay it down?

Getting a firm understanding of your financial situation will a) give you a better idea of how much you can afford to comfortably spend on a house, and b) help you come up with a plan to get there.

“My credit isn’t perfect. How am I ever going to get a loan?”

If you have less-than-perfect credit, a major fear you might be dealing with is how you’re going to get a mortgage.

Many first time home-buyers fear that their credit report might hold them back from securing a loan. But while getting a mortgage with not-so-hot credit can be a challenge, it’s certainly not impossible.

First things first: if you’re thinking about purchasing a home, you need to get a copy of your credit report. According to an FTC report, 1 in 5 Americans have a mistake on their credit report — and those mistakes can end up costing you in the long run. The lower your credit score, the higher your interest rates will be, so it’s important to make sure there’s nothing inaccurate on your report that’s dragging down your score.

Once you’ve reviewed your credit report, you’ll want to do everything you can to bring up your score before you apply for a loan, like pay down any high credit card balances, which will bring down your credit utilization and bump your score. You’ll also want to make sure to pay all of your bills (including your rent and utility bills) on time, which will help show lenders that you’re responsible with your debts.

If you do all of these things and still get stuck with a high-interest mortgage, it’s not the end of the world! You can always continue to work on increasing your credit score and refinance in the future.

“I have no idea what I’m doing. How am I supposed to successfully buy a home?”

As mentioned, buying a home is a complicated process. From getting to know the market to finding the right kinds of properties to negotiating with sellers, there’s a lot to handle. And if you’ve never purchased a home, it can feel overwhelming. The sense of “I have no idea what I’m doing!” can be pretty terrifying.

But luckily, you don’t have to know what you’re doing when it comes to buying a home… as long as you work with someone who does. Working with a real estate agent who understands your market is an invaluable resource, especially to first time home-buyers. Your real estate agent can not only walk you through the entire process, but they also handle the hard stuff — like finding that perfect property and negotiating with tough sellers — so you don’t have to.

You might be afraid that the fact you’ve never purchased a house before will hinder the process, but when you work with the right real estate agent, there’s nothing to be afraid of.

Purchasing your first home can be a scary process. But now that you know the most common fears — and how to overcome them — it’s time to transform that fear into excitement, get out there, and find the home of your dreams!

3 Reasons Your Real Estate Agent WANTS You To Bother Them

Real estate agents hear this all the time…

“I wish I had called you before. But I just didn’t want to bother you. I know you’re busy…”

…after it is too late.

There are times when you might feel like you shouldn’t “bother” the real estate agent you know. (Could be your friend, a neighbor, your brother-in-law, cousin, your sister…)

Maybe you’re truly trying to be considerate.

But, maybe it’s because you’re not even aware that you should.

Or, you just don’t want to feel obligated or pushed into doing something. (Despite what many people think, most agents are not pushy. Most are the exact opposite.)

So, let’s go over a few times that you should “bother” your real estate agent. Because it really isn’t a bother.

In fact, we’ll get into why it will bother them if you don’t reach out to them for any of these things.

1. You just want to check out a house.

You see a house online. Or a For Sale sign. Maybe even just stumble across and open house.

You’re not all that serious about buying a house. Maybe you’re only just starting to think about it. Or, maybe you have no desire at all to move, and you’re just curious and want to take a peek.

So, you don’t want to “bother” the agent you know to show you the house.

Instead, you call the listing agent. Or some random agent you don’t even know. Or just walk right into the open house.

Next thing you know, you love the house. You’re making an offer. The offer is accepted. And then you regret it. Or problems come up. Or the process is miserable. Or you don’t feel like the agent you’re dealing with is giving you the best advice.

And that’s when you call the agent you know.

Too late. At that point, the agent you know can’t help. (Or at least shouldn’t…) Because now you are represented by another agent. The agent you know can get in a lot of trouble for even giving you friendly advice.

As innocent as it seems, when you just want to go see a house… you are inadvertently making a bigger decision than you think — you are deciding who will represent your interests, advise you, and help you through the process.

Even if you just go see a house with another agent, and before you even make an offer you decide to have the agent you know write up the offer and represent you… the agent who simply showed you the house could claim you as their client. It’s called “procuring cause”. I won’t get into the details here, but it can become messy.

You’re better off calling the agent you know to show you the house in the first place. You won’t be considered a bother.

What will bother him is to have to bite his tongue and not give you the help you want further into the process.

2. You want to know how much your home is worth.

Maybe you’re just curious about how much your home is worth. Or, maybe you’re actually thinking of selling. It might be because you want to get a feel for your net worth.

Nowadays, you can hop online and check out any number of sites that will give you the value of your home.

So, why “bother” the agent you know about this?

Because most of what you will find online is highly inaccurate to begin with. They are “automated” valuations. They are based upon data and algorithms. They have never even seen the inside of your home. They do not take into account your local market conditions.

And if you base your hopes, dreams, and decisions off of an inaccurate value, that can hurt you quite a bit.

Again, asking the agent you know to do an analysis and give you a true market value… not a bother.

But, it would be bothersome to hear that you’ve based important life decisions off of an inaccurate value once it’s too late.

3. You are considering a home improvement project.

The real estate agent you know probably isn’t an architect. Or a builder, a plumber, an electrician, a painter, etc. So, they probably can’t advise you about the ins and outs of a specific project or costs.

But once you have a sense of the proposed cost of a project, before you just pull the trigger and move forward, you really should “bother” your agent for their input.

Putting on an addition? That will surely increase the value.

A kitchen or bathroom remodel? Yep, your house will be worth more.

But will the value increase more than the amount you spent? Will that matter in your situation? Will the choices you make in decor, layout, or fixtures appeal to a buyer down the road? Does that even matter, given your future plans?

All questions and thoughts your agent can get into with you. Before you spend the money and go through the headaches of a huge project.

On the other hand, if you go forward with a home improvement project and spend, let’s say $60,000, and then call your agent…

You could seriously regret how much you spent, or even doing the project at all.

Your agent doesn’t want to break the news to you that your home is only worth $38,000 more after you spent $60,000. There is no joy in that. There is nothing that can be done at that point.

That’s just three examples. There are certainly more. But you get the point…

So, reach out to your agent before you do anything real estate related… and just trust that it isn’t a “bother”.

4 Reasons Why We’re Not Headed For Another Housing Crash

With home prices rising in many areas of the country, many people are worried that we’re headed for a housing crash like the one we suffered in 2008.

But here’s the thing: it’s just not true. While it’s understandable that people would look at the current market, consider it a “housing bubble,” and assume it’s going to pop, the truth of the matter is the market today couldn’t be any more different than they were before the crash of 2008.

Let’s take a look at four reasons why we’re not headed for another housing crash:

1. Banks have tightened their lending practices

The biggest contributor to the crash of 2008 was risky lending practices. Financial institutions had extremely loose standards in terms of who they’d lend to; they were giving out mortgages to people with low incomes, bad credit, and who were unlikely to be able to pay their mortgage once their interest rates increased. Getting a mortgage was easy, regardless of your financial situation. While this made homeownership possible for people who previously would have needed to rent due to lack of income or bad credit, it also led to serious problems when millions of people began defaulting on their loans, leading to the housing crash and the ensuing economic crisis.

Today, those predatory and unethical lending practices have been completely overhauled. Mortgage standards are much more strict, and lenders are much more cautious in who they grant loans to and the terms of those loans. This has led to greater stability in the market and will prevent another crash like the one we experienced in 2008.

2. Fixed rate mortgages are the norm

As mentioned, a huge part of the housing crisis of 2008 was subprime mortgages. The mortgages given to the riskiest borrowers were adjustable rate mortgages. Once the introductory period was over, borrowers saw their interest rates skyrocket and their mortgage payments quickly double or triple in size, making them completely unaffordable and leading to mass defaults on loans across the country.

But today, while adjustable rate mortgages still exist, they’re significantly less common. Fixed rate mortgages are the norm. When people borrow, they know exactly how much their mortgage payment is going to be for the life of their loan. This allows them to assess their budget and only borrow as much as they can afford, making it much less likely they’ll default on their loans in the future.

3. Today’s rising prices are a supply and demand issue, not the makings of a bubble

In 2008, prices rose rapidly because everyone wanted to buy property. Real estate experts called it a “mania” because so many people who weren’t able to buy property suddenly had the ability to do so. Purchasing a home in the US accelerated to a frenzied pace, which drove up prices.

But today, prices aren’t rising because there’s a flood of frenzied buyers in the market. Instead, it’s a supply and demand issue. People are staying in their homes longer, which means there’s less inventory available in competitive markets. When there’s less inventory, there are more people vying for the limited homes available, which drives up property prices. This kind of price increase is just a normal part of a competitive market, not a reason to worry we’re headed for another housing bubble.

4. There’s economic growth to support rising prices

Perhaps the biggest reason you don’t need to worry about the US heading for another housing crisis, is the fact there’s economic growth to support rising prices.

The reason the most competitive markets in the country (like Silicon Valley or Seattle, WA) are rapidly growing and showing historic price increases is due to economic growth. The most competitive housing markets in the US are the markets with the most opportunity. People are flocking to areas where there are jobs, stable economic growth, and opportunities for the future. Potential homebuyers want to purchase property in a place they know will offer them plenty of career and economic opportunities.

When there’s economic growth to support growing prices like there are in today’s hottest cities, it makes for a much more stable market—and a market unlikely to head towards a housing crash.

If you’re worried that rising housing prices are an indicator another housing crash is on the horizon, take a deep breath. The conditions in the market today are completely different from the conditions in 2008, and thanks to the changes made in lending practices after the crash and our booming economy, you can rest assured we won’t see a housing crash anytime soon.

What Impact Will the New Tax Code Have on Home Values?

Every month, CoreLogic releases its Home Price Insights Report. In that report, they forecast where they believe residential real estate prices will be in twelve months.

Below is a map, broken down by state, reflecting how home values are forecasted to change by the end of 2018 using data from the most recent report.

As we can see, CoreLogic projects an increase in home values in 49 of 50 states, and Washington, DC (there was insufficient data for HI). Nationwide, they see home prices increasing by 4.2%.

How might the new tax code impact these numbers?

Recently, the National Association of Realtors (NAR) conducted their own analysis to determine the impact the new tax code may have on home values. NAR’s analysis:

Here is a map based on NAR’s analysis:

Bottom Line

According to NAR, the new tax code will have an impact on home values across the country. However, the effect will be much less significant than what some originally thought.