Real Estate Information Archive

In a market where home values are either steady or decreasing, it is important to think ahead before taking on certain remodeling projects. Some never provide a good return on your investment, some are always good, and some depend on your neighborhood competition and area "standards". Here is a list that can help you avoid some of the more costly home improvement blunders...

Original article by Jeanine Skowronski

Pool/Hot Tub 

Earlier this year, consumer review website Angie's List polled more than 500 remodelers, real estate agents and contractors to determine what types of home improvement projects netted the highest return investment by increasing the value of a house. The project netting the lowest investment return, surprisingly, was a pool installation.

In-ground pools cost between $20,000 and $60,000 to install, but a homeowner wouldn't even recoup half of that. You won't get much more on smaller pools, hot tubs, or whirlpool baths, either. Moreoever, if the homeowners were ever looking to move, their home may take longer to sell. "Some buyers do not want a pool due to the maintenance, cost and liability," Anne Millians-Roche, president of Owens Realty Network in Florida, explains.

Additionally, fish-out-of-water families may want to purchase their pool after they've secured a homeowner's insurance policy, since a cement pond can drive up monthly premiums.

Putting in a Home Office ... or Monster Garage

What are other costly remodeling projects that might not be worth the expense? Installing a home office or a monster garage, which only recoup about a 60% investment return, according to Angie's List. Both will impact your ability to relocate significantly.

Why? Doing unique and costly remodels essentially puts your home in a niche market. A home office won't appeal to large families needing to covert it into a third bedroom. And the giant cave holding your car, meanwhile, might alienate those not devouring Car and Driver.

"The more unique the improvement, the narrower the market, and the harder the property is to sell, which eventually impacts sales price," Brian Coester, CEO of Coester Appraisal Group, explains. "If a homeowner's upgrades produces unique results, those improvements could end up costing the borrowers thousands of dollars in lost time on market or even equity."

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Over-Decorating the Interior

If you're really sold on the idea of a home office, your best bet is to keep it simple. Don't paint the walls red, hang ornate chandeliers from the ceiling or weld the desk to the floor. Similarly, refrain from selecting orange countertops or patterned wallpaper for your kitchen. And definitely refrain from installing wood paneling.

"Paneling was great back in the '60s, '70s, or even '80s. Now, people are into clean exteriors," Reggie Marston, president of Residential Equity Management Home Inspections, says. He points out that you would probably have to undo all of the personal touches you added before putting your home up for sale, which could be costly and time-consuming.

"Homes for sale should look fairly neutral so the buyer can picture his or her family living there," Millians-Roche says. "If a seller redecorates to his/her taste and it is 'bold' or unique, it will definitely take away from the house."

Illegal Repairs

Even those intent on living in their home forever need to make sure their upgrades are installed legally. Many major renovations require permits from your state due to the safety risks involved. Marston recommends contacting your local Building Inspections Department before completing any major renovations to ensure proper permits are obtained and you understand the safety codes thoroughly.

"Chances are illegal improvements will be flagged by a buyer's home inspector or appraiser," Cleaver says. "Then you not only pay municipal fines to get after-the-fact permits and inspections, but you've destroyed the trust your buyer has in the house -- and in anything you say about the house."

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DIY Structural or Electrical Repairs

Similarly, if a project requires a professional, get a professional. And this is not only because you'll have to fix substandard work if your house ever goes on sale. Marston cites instances where shoddy do-it-yourself decks have fallen off of houses, resulting in injury or sometimes even death. Faulty electrical wiring or poor structural repairs can be just as deadly.

"Poor construction can harm the homeowner and their neighbors if, for example, a house was to catch fire," Florida contractor Kia Ricchi says. "Construction should be done by licensed and insured professionals."

Fiddling with the Floor Plan

Generally speaking, walls that are up should stay there. Railroad-style rooms you have to walk through to get to another room as well as long extended additions are prime examples of poor layout planning, says Benuska.

In line with this mode of thinking, don't add walls where there currently are none. Don't attempt to change a one-bedroom into two with a divider, either. Homebuyers will be turned off by a bedroom that's more like a crawl space.

"Original architects and builders usually had a good sense of how a floor plan should work," Benuska says. "Trying to make a house into something it was never meant to be can be a problem. Additions should be appropriate to the overall scale of the house."

Forgetting the Amenities

California real estate broker Susan Anderson once asked a client to remodel his condo prior to placing it on the market. He put in a lovely gallery-style kitchen, but there was one minor flaw: He didn't install an oven. Instead, the client opted for a small convection microwave that would meet his unique dining needs. In the oven's place, he added custom cabinets for show. But if buyers fixed the problem, they would have had to renovate the kitchen entirely. And of course, this condo never could sell. The moral? "When remodeling, make sure you include the minimum standards the average person would expect to find," Anderson says.

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Granite Countertops

Granite countertops aren't the problem. It's just most of your neighbors probably don't have them. You could shell out thousands of dollars only to never see any return.

"If you took a home you purchased for $300,000 and added $150,000 in improvements, you would like to make back what you paid for the home plus improvements ($450,000), but the market in your area may only be around $350,00 for the same size home," Patrick Liska, owner of KBM Remodeling Consultants, explains.

If marble floors haven't caught on in your neighborhood, you might want to refrain from installing those as well.

Muddling

Home improvements should be in tune with your neighborhood, but they also need to fit the style of your own abode as well. For example, if you own a ranch house, don't install an ornate iron doorway trimmed with gold leafing. Combining two discordant styles is what Marston calls "muddling," and it may make prospective buyers pass on your listing.

"Never make upgrades just for bragging rights," Cleaver says, referring to those coveted granite countertops. "If [they] make the rest of the kitchen look tired and shabby, better spend the money on new appliances that add flash and functionality."

Better Bets

So what type of renovations are actually worth your money? Angie's List recommends a proper remodel of a kitchen or a bathroom, which costs around $20,000. It will net you an 85% and 84% return on the investment, respectively, thereby increasing the value of your home.

Beyond that, decks are favorably received projects that recoup about 80% of the money you spent. And you can never go wrong with adding safety features, such as new, energy efficient windows or upgraded exterior siding, to your home. Those projects also have, on average, an 80% investment return.

For residents in Carmel, Fishers, Noblesville, and Indianapolis Indiana, let the Borushko Team help before you make a decision on home improvements. We will gladly keep you informed about the home improvement trends and area "standards" so you get the best return for your home improvement dollar.

Keep up to date with the real estate values and trends in your area with Market Snapshot, a free service brought to you by the Matt Borushko Team of Keller Williams Realty.

I ran across this article today and thought it was an excellent article...well written. The onlything I would change is to move #9 (Not using an agent or using sellers agent) to the number one position. I say this because a great agent acting on your behalf will pro-actively help you address every other issue and help you make a great choice!

10 Worst First Time HomeBuyer Mistakes

Are you gearing up to buy your first place? Shopping for a home is exciting, exhausting and a little bit scary. In the end, your aim is to end up with a home you love at a price you can afford. Sounds simple enough, right? Unfortunately, many people make mistakes the prevent them from achieving this simple dream. Arm yourself with these tips to get the most out of your purchase and avoid making 10 of the most costly mistakes that could put a hold on that sold sign.

1. Not Knowing What You Can Afford
As we've all learned from the subprime mortgage mess, what the bank says you can afford and what you know you can afford or are comfortable with paying are not necessarily the same. If you don't already have a budget, make a list of all your monthly expenses (excluding rent), including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings and so on. Don't forget major expenses that only occur once a year, like any insurance premiums you pay annually or annual vacations. Subtract this total from your take-home pay and you'll know how much you can spend on your new home each month.

If you end up looking at homes that are outside your price range, you'll end up lusting after something you can't afford, which can put you in the dangerous position of trying to stretch beyond your means financially or cause you to feel unsatisfied with what you actually can afford. You may even learn that you can't afford the type or size of home that you desire and that you need to work on reducing your monthly expenses and/or increasing your income before you even start looking.

2. Skipping Mortgage Qualification
What you think you can afford and what the bank is willing to lend you may not match up, especially if you have poor credit or unstable income, so make sure to get pre-approved for a loan before placing an offer on a home. If you don't, you'll be wasting the seller's time, the seller's agent's time, and your agent's time if you sign a contract and then discover later that the bank won't lend you what you need, or that it's only willing to give you a mortgage that you find unacceptable.

Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your credit score, like finance a car purchase. If you cause the deal to fall through, you may have to forfeit the several thousand dollars that you put up when you went under contract.

3. Failing to Consider Additional Expenses
Once you're a homeowner, you'll have additional expenses on top of your monthly payment. Unlike when you were a renter, you'll be responsible for paying property taxes, insuring your home against disasters and making any repairs the house needs (which will occasionally include expensive items like a new roof or a new furnace).

If you're interested in purchasing a condo, you'll have to pay maintenance costs monthly regardless of whether anything needs fixing because you'll be part of a homeowner's association, which collects a couple hundred dollars a month from the owners of each unit in the building in the form of condominium fees.

4. Being Too Picky
Go ahead and put everything you can think of on your new home wish list, but don't be so inflexible that you end up continuing to rent for significantly longer than you really want to. First-time homebuyers often have to compromise on something because their funds are limited. You may have to live on a busy street, accept outdated decor, make some repairs to the home, or forgo that extra bedroom. Of course, you can always choose to continue renting until you can afford everything on your list - you'll just have to decide how important it is for you to become a homeowner now rather than in a couple of years.

5. Lacking Vision
Even if you can't afford to replace the hideous wallpaper in the bathroom now, it might be worth it to live with the ugliness for a while in exchange for getting into a house you can afford. If the home otherwise meets your needs in terms of the big things that are difficult to change, such as location and size, don't let physical imperfections turn you away. Besides, doing home upgrades yourself, even when you have to hire a contractor, is often cheaper than paying the increased home value to a seller who has already done the work for you.

6. Being Swept Away
Minor upgrades and cosmetic fixes are inexpensive tricks are a seller's dream for playing on your emotions and eliciting a much higher price tag. Sellers may pay $2,000 for minimal upgrades or staging that you'll end up paying $40,000 for. If you're on a budget, look for homes whose full potential has yet to be realized. Also, first-time homebuyers should always look for a house they can add value to, as this ensures a bump in equity to help you up the property ladder.

7. Compromising on the Important Things
Don't get a two-bedroom home when you know you're planning to have kids and will want three bedrooms. By the same token, don't buy a condo just because it's cheaper when one of the main reasons you're over apartment life is because you hate sharing walls with neighbors. It's true that you'll probably have to make some compromises to be able to afford your first home, but don't make a compromise that will be a major strain.

8. Neglecting to Inspect
It's tempting to think that you're a homeowner the moment you go into escrow, but not so fast - before you close on the sale, you need to know what kind of shape the house is in. You don't want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. Keeping your feelings in check until you have a full picture of the house's physical condition and the soundness of your potential investment will help you avoid making a serious financial mistake.

9. Not Choosing to Hire an Agent or Using the Seller's Agent
Once you're seriously shopping for a home, don't walk into an open house without having an agent (or at least being prepared to throw out a name of someone you're supposedly working with). Agents are held to the ethical rule that they must act in both the seller and the buyer parties' best interests, but you can see how that might not work in your best interest if you start dealing with a seller's agent before contacting one of your own.

10. Not Thinking About the Future
It's impossible to perfectly predict the future of your chosen neighborhood, but paying attention to the information that is available to you now can help you avoid unpleasant surprises down the road.

Some questions you should ask about your prospective property include:

• What kind of development plans are in the works for your neighborhood in the future?
• Is your street likely to become a major street or a popular rush-hour shortcut?
• Will a highway be built in your backyard in five years?
• What are the zoning laws in your area?
• If there is a lot of undeveloped land? What is likely to get built there?
• Have home values in the neighborhood been declining?
• If you're happy with the answers to these questions, then your house's location can keep its rose-colored luster.

Conclusion
Buying a first home can seem stressful and overwhelming, and it isn't without its share of potential pitfalls. If you're aware of those issues ahead of time, you can protect yourself from costly mistakes and shop with confidence.

For many people, a home is the largest purchase they will ever make, but it need not be the most difficult.

If you are a first time buyer or know of one in the Indianapolis area, the Matt Borushko Team of Keller Williams Realty would love to help.

If you are a buyer, did you know that you can be represented by a real estate agent for FREE?  Having been an agent for a long time, it still amazes me that more people don't know this and yet it is true.

In the past, all agents were agents working for the sellers. The term caveat emptor or "buyer beware" was definitely an issue. A few years ago the laws changed and now agents can represent either buyers or sellers. If I am representing a buyer, I as an agent need to keep a buyers best interest in mind. I have a fiduciary responsibility to that buyer to do the best for them. 

Here are some of the many benefits of having a great agent represent you:

• Saves you time
• Help you discover and define your wants and needs
• Helps you find and select your dream home.
• Saves you money through powerful negotiation
• Helps provide data on the home, area, and comps so you make a good decision
• Information Resources: Names of lenders, title companies, handymen, painters, and inspectors
• Navigates you through the paperwork, inspection and closing processes.

Great agents can help you with homes listed on the market, for sale by owner homes, builders, and may even know of homes not yet listed. Put simply, as a buyer hiring an agent is free and will save you money, time, and stress! That sounds like a pretty good investment.

If you are considering buying a home in Indianapolis, Carmel, Noblesville, Fishers or lakefront property in Indiana, call or email the Matt Borushko Team of Keller Williams Realty to put our experts to work for you.

We hear every day that you get what you pay for. Consumers apply this logic to many facets of their lives. If you need legal counsel or need to see a doctor, you are going to select based on their expertise, not on their hourly rate. We hire them because they can help us. We understand that the experts may charge more but in the long run will cost us less.

We apply this logic to most things. So why don't we apply that same knowledge when selecting a realtor? Too often one of the first questions a seller asks is "What do you charge" or "what is your rate?". I think sellers ask the wrong questions because they don't know which questions to ask. So here they are...The list of interview questions you should be asking your agent:

• Why should we select you as our Realtor?
• What areas do you specialize in?
• Are you a full time real estate agent?
• What is your average list to sale ratio?
• How long are your average days on the market.
• What are the market averages for this area. (Ask for proof)
• What is your strategy for marketing this property?
• How many people are on your team?
• Can we terminate our contract if you fail to perform?
• How and how often are you going to communicate with us?
• How will you help us get our home ready to sell?
• How will other agents schedule showings on your home?
• How often will we discuss market conditions?
• and most importantly How are you going to net us more money than other agents?

You should select the agent who:

• Will be HONEST with you about the market and show you supporting data.
• Will get your home SOLD
• Will net you the most amount of MONEY
• Will get your home sold QUICKLY

Great agents accomplish this in many ways. Properly pricing your home will generate interest in your home. They will help you stage your home so that it appeals to buyers. They employ a sound marketing strategy that will reach more buyers and agents increasing the number of showings. More showings to interested buyers increases demand for your home. Lastly, the best agents are great negotiators getting you more money and better selling terms!

If you are thinking about selling a home in Carmel, Fishers, Noblesville, or Indianapolis, call the Matt Borushko Team of Keller Williams Realty today!

The first time buyer tax credit expires April 30, 2010. At this point there has been no discussion about an extension and with the current political climate, an extension of the credit is very unlikely. For first time buyers this means you have to have a purchase agreement in place by April 30th and close by June 30th in order to get the $8000 first time buyer tax credit.

For first time buyers this is free money. As long as you stay in your home for at least 3 years you don't have to pay it back at all. Most readers know this already so why am I posting?

If you wait until the last 2 weeks of April you will lose in a few ways...

1. You will be putting all control in the seller's hands. Think about it, if they know you are a first time buyer and you don't have time to buy another home, they can refuse to repair anything and you are in a very weak negotiating position. They know you can't buy another home and get the credit so they can play hardball. The only exception to this is if the sellers have been in their homes longer than 5 years and are also trying to take advantage of the credit.
2. Home prices will be higher. This weekend I represented buyers who got into bidding wars on 2 different occasions. There are many houses on the market but only a few that will meet your needs...don't wait for more competition as you may lose out on your home or pay a higher price.

The Matt Borushko Team of Keller Williams Realty is here to help you with your real estate needs in northern Indianapolis, Carmel, Fishers, Noblesville, and Westfield. We can help you anytime, having said that if you are a first time buyer, call quickly so you don't miss out on thousands of equity or worse yet, need to buy your second choice home!

I have been in various aspects of real estate a long time. I represented builders for 11 years, was a mortgage broker for 4 years, and have been a Realtor@ for 6 years now. I've learned a lot in my time and yet everyday I get asked questions that cause me to step back and think. Not that the questions in and of themselves are difficult. My challenge comes in trying to keep simple answers simple.

A perfect example made itself clear to me the other day. I had a referral from an agent in Florida. The person they referred to me wanted to buy "foreclosures" in Carmel Indiana. When I contacted the potential buyer he told me his intention was to buy a home or two in Carmel and that he wanted to spend 10-15K for each (Carmel is a very affluent suburb north of Indianapolis). When I asked a few more questions, I found out that he was basing this thought process on someone else who was buying foreclosures in downtown Indianapolis for that same price. Somewhere in the process it dawned on me that this buyer didn't understand what drives home prices. In review I realize we really have this type of conversation all the time with potential buyers and sellers alike.

The simple answer to what drives home prices is supply and demand economics. If demand exceeds supply, prices go up. If supply exceeds demand prices will always go down. There, a simple answer to a simple question. In utopia we could use this simple answer and never have to delve deeper.

This however is when it is difficult to keep simple answers simple. For example, there is no such thing as a national real estate market. Real estate markets are local, sometimes as small as a specific street or neighborhood. Our buyers are beseiged with national statistics that may or may not apply to a local real estate market. If you ask me how the real estate market is in Carmel Indiana, I may ask you what price range you would like to know about because again, there are different answers.

Worse yet is when demand for homes is falsely modified. What happens when we completely relax lending standards and nearly everyone qualifies?  We have a false demand for homes and 3 things happen: 1) Existing home prices rise dramatically; 2) Builders build homes to this new false demand; and 3) Eventually the housing values will crash hard until they again reach the natural balance of supply and demand. That is exactly what happened up until around 2005 when prices peaked, the market was appreciating and building to a falsified or accelerated demand, so now we are trying to again find that balance between supply and demand. That is unless you believe that tax incentives and first time buyer tax credits are creating a new wave of false demand...we'll know the answer to that in 5 years or so.

How can you use this information?  If you're an agent, make it a priority to understand the laws of supply and demand economics and the factors that influence both supply and demand in your area. For buyers and sellers, don't rely on national media for local information. Ask your local real estate experts about the local market(s) conditions. They should be able to tell you what is happening and why. If they can't, they aren't experts and you should find another agent who can better help you.

So what happened to the 10-15K Carmel foreclosure buyer? There is no such market so we're trying to decide between location and price. Again, supply and demand!!

Recently Gary Keller of Keller Williams Realty was on Good Morning America. Here are some excerpts from the show. Great advice for sellers!

New home sales are at an all-time low, and the market isn't expected to recover anytime soon. With the housing market so slow, homeowners who have to sell -- perhaps to move for a job or because of a looming foreclosure -- may not see much interest in their property. If there is interest, buyers may offer considerably less than expected.

It's a tough situation, and it places people under enormous pressure, but it's not impossible.

"Good Morning America" spoke with some of the country's top real estate brokers, including Gary Keller, the author of the best-selling "Shift: How Top Real Estate Agents Tackle Tough Times."

Keller explained how people can sell in a buyer's market.

'Good Buy' Market

"If a seller wants to sell their home and say goodbye to it, the buyer is going to have to perceive it as a good buy," he said.

Keller is the chairman of Keller Williams Realty Inc., one of the largest real estate franchises in North America. He shared some tips for sellers:

1. Don't try to make money. It's counterintuitive for most people, but sellers will do better if they don't ask for too much money. Listing a home at just below what a similar home in the area sold for will increase the odds of closing the deal, he said.

2. Don't be lazy. Even though buyers may be looking for bargains, your home shouldn't look like a warehouse sale. Because presentation matters, sellers should get rid of any accumulated clutter. Take the magnets off the refrigerator, take down photos, open windows and take trinkets off bookshelves, Keller said.

While basic is better, Keller pointed out that some photos may help show a home at its best. For example, Dennis and Josephine Hahn's real estate agent put together a photo album of the couple's New Jersey home during various times of the year. The album showed the home when the flowers were in bloom and when the swimming pool was sparkling.

Don't Neglect Repairs

3. Don't be cheap. Sellers should perform simple renovations and repairs -- from fixing leaky faucets to replacing appliances -- before placing their homes on the market.

Linda Dore, a real estate agent with Re/Max Team 2000 in Chicago, even suggested that sellers conduct a home inspection before listing their property.

"Have your home pre-inspected," she said. "If there are any surprises, deal with it before it hits the market. ... If the buyer finds it, they are going to ask you for a larger credit or they are going to ask for a more expensive repair than you would have to do if it were done beforehand."

4. Be available. Real estate agents across the country tell sellers they need to be available for showings and willing to negotiate prices. Sellers should be able to answer prospective buyers' questions about schools and the neighborhood -- and even the neighbors themselves.

Here Are Some Web-only Extra Tips:

• Because competition is higher in the summer, some agents believe that now is an excellent time to list homes. Also, interest rates are near historic lows and the first-time homebuyer tax credit eligibility ends soon.

• In "Shift," Keller says sellers shouldn't ask for too much money up front. If someone sets an initial sale price that is too high and potential buyers lose interest, it will be that much harder to get them to take a second look -- even if the seller continues to lower the price.

To help you with your home selling needs in Carmel Indiana and the surrounding areas, please contact the Matt Borushko Team of Keller Williams Realty!

I found this article and thought it was worth posting. It shows what buyers are currently looking for in a home. This is a national list so locally in the Indianapolis area there would be a few changes to the list. For example Main Floor Masters are not nearly as popular in our area yet and basements are very high on the list. Buyers may find this interesting, sellers should look at this list as a home improvement checklist! 

 
Home designers and builders speaking at the recent International Builders Show in Las Vegas say that buyers are seeking cost-effective features and rejecting things that don’t have lasting value.

“It's all about family togetherness – casual living, entertaining and flexible spaces," says Carol Lavender, president of the Lavender Design Group in San Antonio.

Paul Cardis, CEO of Avid Ratings, which conducts an annual survey of buyer preferences, identified these must-haves in new homes:

1. Large kitchens with islands
2. Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows.
3. Home offices
4. Main-floor master suite
5. Outdoor living space
6. Ceiling fans
7. Soaking tub in the master suite and/or an oversize shower with a seating area
8. Stone and brick exteriors rather than stucco or vinyl
9. Community walking paths and playgrounds
10. Two-car garages, but three-car garages are even more desirable

Source: MarketWatch, Steve Kerch (01/30/2010)