Which Home Improvements Pay Off?

In the first year my husband and I lived in our house, we spent almost $20,000 on home improvements.  When we set that money aside at the beginning of the year, we dreamed about granite counters and steam showers; what we ended up with was a new furnace, new gutters, a drainage system to keep the basement dry, new landscaping and lots of new paint.  At the end of that year as I wiped down my tacky Formica countertops and bathed in my 1950s seafoam green tub, I wondered if we had spent that money wisely.  If we had put our house up for sale, would potential buyers have really cared about the dry basement and reliable furnace?

After talking to a slew of Realtors, contractors and architects, the consensus was yes. "If the roof is leaking, buyers won't get beyond that.  I don't care how awesome the kitchen is."

You're less likely to recoup your investment in a major kitchen or bathroom remodel than you are to get back what you spend on basic home maintenance such as new siding.  Siding replacement recouped 92.8 percent of its cost, according to the study.  The only home improvement likely to return more at resale was a minor (roughly $15,000) kitchen remodel, which returned 92.9 percent.  Replacing roofs and windows were also high on the list, returning 80 percent or more at resale.

"Buyers want to take the basic systems for granted."  "They assume the roof doesn't leak and the air conditioning and plumbing work."  Maintenance can chew up a lot of cash quickly, and people are afraid of that.

That's not to say that granite counters and steam showers don't pay off; kitchen and bathroom remodels continue to be two of the best investments you can make in your house. "They're always right up there at the top of the list,"  "They're the big, sexy rooms that new home builders splurge on, so when buyers are shopping around that's what they want in an existing home, too."

If you're thinking about sinking some money into home improvement projects this year, keep a few things in mind.  What you'll get back on your investment depends on the value of your house, the value of houses in your immediate neighborhood, the housing market where you live, how soon you sell after making improvements, and the quality of the project itself.  Installing a $10,000 stove in a $200,000 house, for example, "just doesn't compute."  Nor does it make sense to update your kitchen if your house is the only house in the neighborhood with just one bathroom.  Here, the scoop on home improvements that will give you the biggest bang for your buck.

In the hottest housing markets, springing for a kitchen or bath remodel is a sure-fire investment, often returning more than 100 percent of the cost.

Kitchens and baths are the areas in a home "where you can tell if money has been well spent or not."  "They're the most expensive areas of the home in terms of construction.  And they're where people spend time in their homes."

So exactly what should you improve when you redo your kitchen or bathroom?  Think traditional:  all-wood cabinets, commercial-look appliances, natural wood or stone floors, and stone countertops.  Walk-in showers have replaced whirlpool tubs as the must-have cleaning machine in bathrooms.  "Forgo the tub to have a big walk-in shower" If they don't have room for both "Most people don't have time to take a bath."  "So a lot of time you're giving away all that square footage for a tub that rarely gets used."  Floor-to-ceiling steam showers are also hot (so to speak).  Two key points to consider, however. First, don't spend money remodeling the bathroom if it's the only one you've got.  Your money is better spent adding a second bath.  Many people love "the charm of older homes."  So if you've got a four-bedroom, one-bath home, it's certainly going to pay to add a second bathroom.  Adding a bathroom increased the sale price of a home by 8.7 percent, more than twice the rate for adding a bedroom.

Staging Ideas for the Cooler Months Ahead

3 Great Staging Ideas for the Cooler Months Ahead

On December 3, 2012, in Staging Tips, by Melissa Tracey ....More Sharing ServicesShare
Share on facebookShare on twitterShare on emailShare on printWhen trying to sell a home during the cooler months, it’s important to warm up the interiors and give the home a “homey” cozy look, agents say.

AOL Real Estate recently highlighted some tips for warming up your listings this fall and winter. Here are a few ideas:
1. Offer up some cozy smells: “We take some big old pots and dump cider in them, then warm it up and the whole house smells good,” Idaho real estate professional Gail Hartnett told AOL Real Estate. “It’s just a warm, homey smell that makes people feel good when they enter.”

2. Leave a few leaves: Keep the home’s lawn tidy but don’t sweat picking up every single leaf. “Leaves actually look nice as long as they have some color to them,” Harnett says. “But you need to make sure that your walkways are swept clear for safety purposes.”

3. Display photos from warmer days: Display spring and summer photos of the home’s exterior online as well as have photos at the home during showings. This will allow potential buyers to see what the beautiful flower beds and garden around your property looks on warmer days.

Real Estate Q & A > Making Offers & Related Issues

Is there a percentage a seller will mark up the price of a home? For example, if the asking price is $114,000 is an initial offer of $95,000 too low?


Although you can always offer whatever you want, yes, $95,000 is generally too low too offer for a home priced at $114,000.

It's like buying a car. You want to dicker with the salesman a little, but there is more room to dicker on a more expensive car than if you were going in and buying the least expensive car.

Sellers usually mark up the price a little because they realize most buyers aren't going to make a full price offer (though in different markets you can get offers ABOVE the listing price). In your example above, you were offering almost 15% below the listing price. They don't mark it up that much, just a few percent.

Before you make an offer, get your Realtor to go over the comparable sales of other similar homes in the same neighborhood. That is the same data the seller looked at when he priced his house, too. Make certain allowance for whether houses are selling briskly or slowly, and make an offer based on that data.

Note: When you look at comparable sales, you don't know for sure if the seller paid closing costs for the buyer or provided some other financing incentive, so keep that in mind.

I am looking at putting an offer in on a house listed for $134,900. The house is vacant and I believe it has been on the market for over 6 months. My realtor is saying is should bid 134,00 with the seller paying my closing cost and paying for a 2/1 buy down. I want to try and offer less. What do you think?

Your closing costs should be approximately $4000 or so (depending on what type loan you get, how many points, etc.). The 2/1 buydown (assuming it is an annual buydown) will cost the seller about $4000, too. By paying for these costs, if you offer a price of $134,000, the seller is netting the same as he would on if he accepted an offer of $126,000 and paid no costs.

If you think the house is worth less that $126,000, then make a lower offer. If you think it is worth more than $126,000, then you would be getting a deal with your Realtor's suggestion.

Your Realtor provides advice. You decide what to offer based on that advice.

If you make an offer on a house and the owner comes back with a counter offer and you agree to it can the owner still change his mind and sell to someone else?

A seller is free to withdraw the counter-offer any time prior to your acceptance of it. The communication method for acceptance is usually described in the contract. If your acceptance was communicated to the seller in the method required by the contract (prior to the seller withdrawing the offer), the seller should honor the contract with you and not entertain other offers.

But people don't always do what they should.

The problem then becomes whether you try to enforce your contract or not, which requires legal advice and expenses. For that, you have to consult an attorney.

Although you could probably technically enforce the contract, you have to reach a decision on whether it makes sense to expend the time and money to do so. Or does it make more sense to realize the seller is unethical and just move on to buy something different?

Can you negotiate when making an offer on a new home?

Making an offer on new construction is not the same as making an offer on a resale. Most of the time, the margin for profit is so small on new construction (per unit) that there is basically little or no negotiating. You can try, of course, because "everything in real estate is negotiable," but do not expect too much.

Can you negotiate the price of a bank owned home

Everything in real estate is negotiable. However, banks are more sophisticated about pricing than they were years ago. So those "Get a great deal on a foreclosure!" days aren't what they used to be. Lowball offers generally don't go very far.

Despite Rising Home Prices, a Third of Homeowners Still Underwater

Home prices have been rising on a national level for several months now, but surprisingly the number of homeowners who are underwater on their mortgages has also continued to increase, according to real estate data company Zillow.

During the first quarter of this year, 31.4 percent of all U.S. homeowners owed more on their mortgages than their homes were worth, up from 31.1 percent during the previous quarter. The current rate is down slightly from one year ago though when 32.4 percent of all borrowers were underwater.

Curiously, during the same three months of this year, national home prices rose 0.6 percent, the first gain since 2007, according to a report from the Federal Housing Finance Agency.

The discrepancy seems to lie in the backup of foreclosure processing kicked off by the robo-signing scandal. Many delinquent borrowers have been hanging on the balance sheets, as banks have not yet had time to repossess the homes. Once the banks have taken back those foreclosed homes, those borrowers will no longer count in the negative equity totals.

Having such a large share of the population underwater has been a serious obstacle to the housing recovery. Borrowers who owe more than their homes are worth are unable to sell when new job opportunities arise elsewhere or when personal or medical emergencies strike. If they have a lot of negative equity, they are also much more likely to walk away from their homes, fearing they will never recoup the losses in the future.

However, Zillow said that as this point nine out of 10 borrowers with negative equity are still making their payments and are current on their mortgages. It is just the remaining 10 percent that are seriously behind on payments by 90 days or more.

"Negative equity does not necessarily equal foreclosure," said Stan Humphries, Zillow's chief economist. "Most people are holding in place and paying their mortgages."

That's likely because many borrowers are just barely underwater, with great hopes that they will recover the equity within the next few years. Zillow reported that about 40 percent of underwater borrowers owe between 1 percent and 20 percent more than their homes are worth. Others may not even know they are underwater if they haven't tried to refinance or sell recently.

Still, there are plenty of people who are seriously underwater. Roughly 15 percent—or 2.4 million people—of borrowers with negative equity owe more than twice the current market value of their properties.

The worst hit real estate area is Las Vegas. There, a whopping 71 percent of homeowners are underwater on their loans, with a quarter of them owing double what their homes would sell for. Home prices have fallen 62 percent from their housing bubble peak, according to the S&P/Case-Shiller home price index.

Those at Zillow are confident though, that the problem will soon start to dissipate on a national level.

"[It's] important to note that negative equity remains only a paper loss for the vast majority of underwater homeowners,"Humphries said. "As home values slowly increase and these homeowners continue to pay down their principal, they will surface again."

Home Sales Continue to Climb

Metro Detroit Home Sales Continue to Climb over 2011 & Median Sale Prices Continue to Rise

* Average Days On-Market (DOM) for the entire MLS decreased from last year by 14 days, from 91 to 77.
* Overall, YTD sales are up by 9.0% compared to last year.
* Of the 7,041 sales closed in August of this year, 11.1% (784) were identified as short sales.
* 43.8% of all sales this month were identified as cash sales.
* The median sale price for all MLS sales increased to $89,500 - this is up 9.1% over last year.
* The on-market inventory declined by 16.1% from 31,457 in August 2011 to 26,404 in August 2012.
* Approximately 11.8% of the on-market inventory (3,106) is comprised of properties identified as foreclosures.
* Approximately 21.3% of the on-market inventory (5,629) is comprised of properties identified as short sale.