Jan
24
4 Renovations that will Devalue your Home
Posted by realtorjessicamurr under FSBO, For Sellers, General Information, Home For Sale, Realtor, shasta, siskiyou, tips
4 Renovations That Will Devalue Your Home
Money CrashersFriday, January 21, 2011I found this article on Yahoo! Finance and liked its general content. However, I™ve added my own comments and feedback at the end of each section for your reading enjoyment.Most homeowners think that all renovations or home improvement project ideas will increase the value of their property. After all, who wouldn™t love a super-deluxe kitchen, or a bathroom fancy enough to be in a five-star spa? Sure, we™d all love that. But the problem is that most people don™t want to pay extra for someone else™s pet project when it comes to buying a home.Homeowners should of course invest in renovations that are going to make them happy and improve quality of life. It is œhome after all! But if you™re going to be putting your home on the market any time soon or are in the business of flipping houses, certain upgrades could end up doing you more harm than good.If you think you might be selling your home sooner than later, here are four improvements to avoid:1. Over-the-Top Kitchen RenovationsYou may love gourmet cooking, so a $30,000 kitchen upgrade might be just to your liking. But this could be a turnoff for potential buyers who aren™t crazy about cooking. To them, the restaurant-sized stainless-steel stove, kitchen island and fridge just seem excessive, and they™re not going to want to pay for them. Instead, they™ll pass on your home and end up buying one with a regular kitchen.
Take a look at some kitchen remodeling ideas on a budget. You can still enjoy an upgraded kitchen without going overboard and compromising the value of your home. In fact, remodeling a kitchen for less than $1,000 is definitely a possibility.Jessica™s Commentary: Yeah, remodeling a kitchen for under $1,000 is not going to happen. At least not in California. A new fridge by itself could cost the majority of your $1,000 budget so don™t bank on that. If you™re going to be making upgrades to your kitchen and putting your house on the market but don™t want to blow your agent™s commission on that remodel then stick to simple things: clean tile grout, fresh paint, clean & neat appearance, and clear horizontal surfaces.If you have tile floors, counters, or backsplashes in your kitchen make sure your grout is as clean as the day they were installed. There are plenty of do-it-yourself tips online about how to scrape out old tile grout & replace it with fresh, clean mortar/grout.If your kitchen walls have spots of food, mud, paint, or anything else that isn™t easy to wash off then tape it off and give it a fresh coat. The type and color of paint you chose will vary depending on the size, style, and other colors in your kitchen so get the opinions of others before you go buy a gallon of fire-engine-red for your small, shadowed space.If your kitchen towels are tattered and stained replacing those accents and other décor may help revitalize your kitchen. Get rid of the copper-plated bunt pans hanging on the wall if you want a modern look. Remove hardware from your drawers and cupboard doors, scrub any remaining residue and replace with newer, more updated hardware.Lastly, stage your kitchen if it™s up for sale, keep your appliances put away, your counter tops and other horizontal surfaces clear of any and all clutter, and keep everything clean. Stained, grungy, or discolored anything in a kitchen makes it look old. You™d be surprised how much newer your whole kitchen (and house) will look when cleaned thoroughly.2. Over-the-Top Bathroom RenovationsThat ultra-deep jacuzzi tub and custom Kohler 360-degree shower you just installed might make your mornings a blast. But to budget or eco-minded buyers, all that water use is going to be a serious drawback. As with your kitchen, keep your bathroom remodeling ideas modest if you think you™ll be putting your home on the market any time soon.
Jessica™s Commentary: See kitchen updating tips above for tile grout and horizontal surface tips. The easiest ways to make your bathroom look newer than it is are 1) neutral colors and 2) clean fixtures. If your toilet and sink are blue, pink, avocado, golden harvest, or any other distasteful color from the 1960s then replace them immediately. These are relatively cheap replacements compared to remodeling an entire bathroom. Buy white fixtures and keep them clean, bathrooms always look better in white than in any other color regardless of the size or lighting. Scrub your bathroom with bleach, vinegar, any cleaner that will remove all the nasty crud that accumulates in bathrooms. Remove all rust stains, water spots, and anything black“years will be peeled off of your bathroom™s appearance more successfully than Vanna White™s chemical peels.3. A Pool or Hot TubYes, a pool addition can add significant value to your home (11 percent on average in the Southwest, but only 6 percent in the Midwest where the swimming season is much shorter). If it™s above-ground, though, then knock 2 percent of your home™s purchase price, since they™re less appealing than in-ground pools. The problem is that pools are polarizing. There are constant swimming pool costs ($1,500 on average per year) and they require a lot of maintenance.They™re also a liability, especially for families with young children, and could affect your homeowners insurance coverage. Pools will limit how many people want to buy your home, so keep that in mind before you have one installed (or consider buying a home with an existing pool).Jessica™s Commentary: I agree with the statement about the pools, they are a hassle and a liability and will not increase your home™s value. But if you have a luxury home in a classy neighborhood and you™re the only one without a pool or hot tub, you might want to reconsider your back yard landscaping choices. A pool or hot tub is like a lighting fixture: you don™t put a Tiffany Chandelier in a 500 square foot shack. Please use common sense when choosing a water feature for your home.
4. Overly Specialized RoomsSo, you just tore down the garage (which you never used) and built a four-season sunroom which resembles an English manor conservatory. You™re thrilled, but your potential buyers are going to be rolling their eyes. Where are they going to park the car and store the lawn mower and all their kids™ sport equipment? Installing nontraditional customized rooms (like indoor basketball courts or a basement music studio) is great if you™re going to be in your home for awhile. But potential buyers are likely to see this as a waste of space, and a project (and expense) they™ll have to deal with if they buy your home.
Jessica™s Commentary: We™ve all thought it to ourselves, œWhat were they THINKING?? And that™s exactly what a buyer is going to ask if they see your hobby room and realize that half the square footage of the house is dedicated to your video game collection. Again, if you have a disgustingly over-the-top luxurious home with your own grotto and view of the Hollywood sign then having an in-home movie theatre is a no-brainer but for the rest of us with normal, averaged sized homes your rows and rows of DVDs and Play Station 2 games is a drag. If you had put some windows in that game room you™d have a more sell-able house and heck, maybe even a tan!Final WordWe all want to live in a home that reflects our tastes and interests, and our homes should be exactly how we want them to be. Just keep in mind that if you plan to sell your home in the near future, those upgrades and expensive renovations might end up devaluing the home you™re trying to sell for top dollar.Jessica™s Commentary: Please keep in mind that my commentary is aimed towards potential home sellers, not the home owner who plans on living in their home until they die. If you know you™re there for good then by all means, paint your kitchen red, your bathroom avocado, and put your hot tub right in the middle of your game room, but if you™re going to sell (ever) do us both a favor and don™t make me answer a buyer™s question, œWhat the heck is that?? This goes for do-it-yourself jobs too, if you can™t tape and paint then DON™T. And if you find your tile grouting skills are lacking, get some one else to do it for you, just because you watched the YouTube video doesn™t make you a contractor so if it doesn™t look professional, then find a professional.Heather Levin contributes to the personal finance blog, MoneyCrashers.com, and writes about green living ideas and tips for saving money on The Greenest Dollar.Jessica Murr is a Realtor in far northern California who specializes in residential and vacant land sales. If you are looking to buy or sell in the Mount Shasta, Dunsmuir, McCloud, Weed, Lake Shastina, Yreka or Redding, CA areas please call Jessica at 530-941-6061 or email her at myagent@realtorjessicamurr.com.You can also add Jessica to your Facebook friends list by visiting www.facebook.com/realtorjessicamurr or follow her on Twitter at www.twitter.com/realtorjessicam
“So let’s put myself in the hypothetical situation of buying a home. Ward and I are getting tired of renting in an apartment complex, and homes for rent are out of budget. But when we do have more money (sooner rather than later, if everything works out to our favor) I have been looking at home buying. Pretending that right now if we were to look at a house listed in the $130K range with $0 (or very little) down, our payments would still come out less or the same as what we’re paying now. What are the true upfront costs going into buying the home, understanding the $0 down? And what is the average monthly cost of homeowner’s insurance? What is the credit score you MUST have in order to even look at purchasing a house of this costs? Just getting an idea if this home buying thing would be feasible in a year, or in 3 years, so I don’t get my hopes up too soon! Thank you!”And here is my response to June:”First of all, I recommend using an amortization calculator to figure your loan payments if you aren’t already. Here’s a great one: http://www.hsh.com/calc-amort.html scroll down to where you see Amortization Schedule Calculator and type in your loan amount, interest rate & loan term. Average rates right now are between 4.75% and 5.5%, I really don’t expect them to rise over 5.5% in the next several months. Standard loans last 30 years and the smallest amount down you’ll need is 3.5% of the purchase price. There is no safe 100% loan (that I’ve heard of) left any more unless you are a Veteran.So a loan on $130,000 at 5% interest that is paid off over 30 years is about $698/month. Insurance for a
standard, newer home (less than 30 yrs old) that isn’t near any water that might flood or a landslide area or anything like that is a little under $100/month. Your taxes will be 1% of the “assessed” value which is the amount the county thinks your home is worth. This can be the same as the amount you pay but not necessarily.Taxes are due twice a year but usually will be built into your monthly payment. So if you bought a house for $130,000 you could expect to pay $1300 in property tax per year, half due in April, the other half in November but if you make monthly payments to what they call an “impound account” it will break down to a little over $100/month in addition to your loan payment and insurance. So actually for a house costing $130,000 you should expect to pay close to $900 per month.
Upfront costs will be title & escrow closing costs which vary greatly from area to area because different escrow offices charge different fees. Typical fees for a single family home in this price range are about $2,000. Whether the buyer or seller pays these fees is negotiable when you make the offer. If you are buying a foreclosed home the bank will likely try to force you to use their escrow company which is always out of the area but if they require you to use their company they must pay your closing costs and there can be no other repercussion against you for that. Other upfront fees include the cost of any inspections you want to have done to get a clear picture of the property before you buy it. Typical inspections are a home inspection which a licensed home inspector with a contractors license will inspect every aspect of the home superficially. He’ll test about half the outlets to see if they all work, flush all the toilets, turn on all the indoor faucets, examine the roof, the attic, any crawlspace or basement, the appliances, heating and cooling systems, pretty much anything you think of that might be defective in one way or another. From there if he notes that further inspection is needed on the roof or for the electrical or plumbing you hire a specialized inspector to further examine the system and find out exactly what might be wrong with that system.Another inspection your lender will require is a pest inspection. The pest inspector doesn’t check for things like bugs or rats (although they will let you know if they find something like that-as will the home inspector) he’s looking for
signs of “wood destroying pests” mold, mildew, dryrot, termites, anything that is caused by moisture or “earth towood contact” that results in the deterioration of the structure. Your lender will require that all damage found by the pest inspector be repaired prior to close of escrow. The cost of the inspection and the cost of repairs are negotiable just like the home inspection. The person who pays for the costs is determined before the inspections are performed so you’ll know exactly what charges will be incurred by you before ordering the inspections. Home inspections are priced according to squarefootage usually starting around $150-$200 and going up from there. Pest inspections are usually a flat fee and run between $100-$150. Some inspectors will give you a price break if you pay them on the day of the inspection rather than have them bill your escrow account. This is because escrows sometimes don’t close and if there is not enough money in the escrow account to pay all the inspectors or all the repairmen, those people have to collect their fee without any security after the work has been performed.The minimum credit score right now for any safe lender (although I believe most of the “bad” lenders have been fleshed out of the business) is 620. The FHA requires a 620 credit score and 3.5% of the purchase price down. FHA loans used to be kind of “second banana” loans because there were so many other loans available. Now that those less scrupulous loans are banned or defunct FHA is the standard loan method for most first time home buyers. Think of it this way – traditional loans are for people who don’t need to borrow money, FHA loans are for the rest of us. If you’re shopping in the $130,000 range I suggest stashing savings aside over the next year until you build up about $7,000. This will be enough for your down payment, any additional costs that pop up (like title or escrow fees) and a little bit to move with. Also, be prepared to make your first month’s payment when you close just so that when your first payment is due you have the $$ available and haven’t used all your cash tied up in the escrow.If you want I can set you up to start receiving listings for houses in that price range so that when the times comes
you’re familiar with the trends and sales prices and the types of homes to expect to see. I’ll need to know how many bedrooms you’ll be looking for, bathrooms, if you have a range of square feet that you’d be comfortable with, if there are certain neighborhoods you want to watch specifically or if there are certain neighborhoods you don’t want to receive listings from at all.I hope I answered all your questions without creating too many new ones. If you have more questions just let me know, I’ll be glad to answer them any time. You can call me too, my number is the same, 530-941-6061.”

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