Renovate or Decorate? 3 Things to Consider Before Deciding

If you are unhappy with the current look of your home, you may be thinking about redecorating to spruce the space up. For most, redecorating includes repainting the wall, refreshing the home décor and even purchasing new curtains or furnishings. However, in some cases, redecorating is not enough to produce the desired results. The last thing you want to do is spend hundreds or thousands of dollars redecorating only to still be unhappy with the look of the home. Renovating may be in order, but you should carefully consider these two options to determine the right move to make.

Your Budget

Your budget will be a critical deciding factor in whether you should renovate or remodel. Renovating a room may involve replacing the flooring, adding new molding, replacing the windows or window features, adding new lighting and more. After the renovation has been completed, many will also redecorate the space with new furnishings, paint and more. You should carefully review your budget to determine if you can afford a significant renovation project or if a remodeling project is more suitable for your financial situation. After all is said and done, you may find that getting some good furnishings from companies like The Century House can provide a satisfying change at less cost to you.

Related: Renovate Don’t Decimate: How to Remodel and Preserve Old Homes

The Functional Use of the Space

It is also important to consider the functional use of the space. With a renovation project, you may be able to knock down walls to adjust the shape and size of the room. You may be able to add a storage closet, built-in shelves or other features. These are just a few of the ways that a renovation can improve your functional use of the space. On the other hand, if you are happy with how the room meets your family’s needs for space, storage and more, you may not need to make any physical changes to the space.

The Significance of the Desired Results

A renovation project often takes several weeks or longer to complete, and it can provide much more significant results. Generally, it can change the style of the room and make it look more current. It also can improve the use of the space with great results. You should consider how in-depth and significant you want the results to be to determine if this is the right move to make.

It is common for homeowners to be unhappy with one or more rooms of the home. In some cases, a minor redecorating project will produce incredible, desirable results. In other cases, more significant and costly effort is needed to fully transform the space. Take time to consider your needs and desires for the space as well as your budget before deciding how to proceed.

It's a Seller's Market! Should I Downsize Now?

 A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market. In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire. This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, meet with a real estate professional in your area who can help guide you through the process

How to Get the Most Money When Selling Your Home

 Every homeowner wants to make sure they get the best price when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In reality, this just dramatically lessens the demand for their house (see chart below).  Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house. Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive, as the seller likely believes that he or she will net more money if they don’t have to pay a real estate commission. With that being said, studies have shown that homes typically sell for more money when handled by a real estate professional. Research posted by the National Association of Realtors revealed that:

“The median selling price for all FSBO homes was $185,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $163,800. However, homes that were sold with the assistance of an agent had a median selling price of $245,000 – nearly $60,000 more for the typical home sale.”

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

Mortgage Interest Rates Went Up Again... Should I Wait to Buy?

 Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters. This has caused some purchasers to lament the fact they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows. Here is a chart showing the average mortgage interest rate over the last several decades. 

Bottom Line

Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

Don't Let Your Luck Run Out! Interest Rates are Projected to Rise

A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture

The inventory of existing homes for sale in today’s market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20^th consecutive month of year-over-year drops. Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up. As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low. Recently Trulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching. Homes are generally bucketed into three groups by price range: starter, trade-up, and premium.Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.” The results of their latest analysis are detailed in the chart below. Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory. Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.

“It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”

Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon:

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”

Bottom Line

Real estate is local. If you are thinking about buying OR selling this spring, sit with a local real estate professional who can share with you the exact market conditions in your area.

HOW LONG DO FAMILIES STAY IN THEIR HOMES?

 The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of the data points that has changed dramatically is the median tenure of a family in a home. As the graph below shows, for over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%. 

Why the dramatic increase?

The reasons for this change are plentiful! The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move. With home prices rising dramatically over the last several years, 93.7% of homes with a mortgage are now in a positive equity situation with 79.1% of them having at least 20% equity, according to CoreLogic. With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago. One other reason for the increase was brought to light during a recent presentation by Lawrence Yun, the Chief Economist of NAR, at the Realtor’s Summit in San Diego, CA. Yun pointed to the fact that historically, young homeowners who were either looking for more space to accommodate their growing family or looking for a better school district were more likely to move more often (every 5 years). The homeownership rate among young families, however, has still not caught up to previous generations resulting in the jump we have seen in median tenure!

What does this mean for housing?

Many believe that a large portion of homeowners are not in a house that is best for their current family circumstances. They could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple planning to start a family that currently lives in a one-bedroom condo. These homeowners are ready to make a move. Since the lack of housing inventory is a major challenge in the current housing market, this could be great news.

Projects to Boost Your Home's Curb Appeal

Given the amount of time homeowners spend inside their homes, it’s no surprise that most remodeling dollars end up indoors. But neglecting your home’s exterior can leave it looking tired and rundown. Here are four projects that will boost your home’s curb appeal and ensure that the outside of your home looks as good as the inside.

1. Liven Up Your Landscaping

If you’re ready to spruce up your landscaping, you’ll want to do so when the temperatures are relatively cool. While you’re planning your project, be sure to take a look at the grade surrounding your home. Over time, it can become compacted and slope toward your house. Poor grading causes water to flow toward your home, putting your foundation at risk.

2. Touch It Up

If left untouched, your siding could start to rot, mold or warp. Thankfully, a little preventative maintenance can help you avoid any costly siding repairs. If you notice chipping or peeling paint, it’s time to break out the sandpaper, primer, paint and paintbrushes. Most of the time, painting is a project that you can accomplish in an afternoon. But, your project could involve more work than you have time for. If that’s the case, now is a good time to start talking to pros. Pro Tip: Pressure washing your home each spring removes dirt and can help prevent mold and mildew infestations.

3. Repair Your Roofing and Gutters

Missing shingles and sagging gutters do more than make your home look shoddy -- they can cause seriously pricey problems. If you notice that your gutters are having trouble moving water away from your foundation, or if it’s been a while since you’ve had your roof inspected, it’s a good idea to have a roofing pro stop by for an inspection.

4. Fantastic Fencing

Has your fence seen better days? If so, taking the time to make repairs now could prevent you from having to replace your entire fence later down the road. In many cases, repairs are minor. Unless your fence is really worse for wear, you should be able to tackle the repairs in a weekend.

Access: A Key Component in Getting Your House SOLD!

 So, you’ve decided to sell your house. You’ve hired a real estate professional to help you with the entire process, and they have asked you what level of access you want to provide to potential buyers. There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access that you can provide to your agent so that he or she can show your home.

Here are five levels of access that you can give to buyers, along with a brief description:

1. Lockbox on the Door – this allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.
2. Providing a Key to the Home – although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.
3. Open Access with a Phone Call – the seller allows showing with just a phone call’s notice.
4. By Appointment Only (example: 48 Hour Notice) – Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.
5. Limited Access (example: the home is only available on Mondays or Tuesdays at 2pm or for only a couple of hours a day) - This is the most difficult way to be able to show your house to potential buyers.

In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.

Over Half of All Buyers Are Surprised by Closing Costs

 According to a recent survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage. After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.

“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”

Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.  Keep in mind that if you are in the market for a home above this price range. your costs could be significantly more. According to Freddie Mac,

“Closing costs are typically between 2 and 5% of your purchase price.”

Bottom Line

Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.