• remodeling: getting the most for your dollar

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    Reader and regular contributor Joel McDonald – a real estate
    professional who frequently writes on issues important to those
    considering buying, remodeling or restoring an older home – submits the
    following:

    Most people, faced with the prospect of having to spruce up their
    home before selling it, have to face down the nagging thought of "Why
    didn’t we do this for ourselves?" It’s with a bit of regret that a
    homeowner will realize that work is needed, but you can’t go back and
    change the past. Starting from where you are, the question becomes,
    "How can we get the most return from the investment of repairs and
    remodeling?" There isn’t an exact formula, of course, but you’ll be
    spending money trying to make prospective buyers, rather than yourself,
    happy – at least happy enough that they will want to pay you more than
    you have to spend on the work. The satisfaction that you will get from
    turning over a home in top condition counts for a good part of the
    bargain as well. 

    Be Careful in Deciding What Needs to Be Done

    Just because you never liked that mirror over the guest bathroom sink,
    it doesn’t mean that now is the time to replace it. It may be the
    someone else’s favorite kind. We’re talking here about the kinds of
    things you have gotten used to over the years, and might not even see
    any more — broken shingles, worn carpet, the window that sticks,
    cabinets that need refacing. Some of these are things that, like seeing
    a child grow, change so slowly we don’t realize it day-to-day. In other
    cases something breaks and "I’ll get it fixed later" never happens and
    you adapt, work around it, and forget about it. In order to present an
    inviting and pleasant appearance you have to look at your home with
    studied, focused attention. Make a list.

    Get the Best Prices on Things You Have to Buy for the Project

    This one’s a no-brainer, but it’s so obvious that many people overlook
    it. Don’t just enter into a fog of "It’s a big project and it will cost
    a lot." To maximize your return, do some careful shopping for the the
    best prices you can find. If you are able, even in a stretch, to do
    some of the work yourself, do it. Depending on what needs to be done,
    if you take your time and shop carefully you can take advantage of good
    sales and discounts at home improvement stores and local suppliers.
    Look for discontinued and going-out-of-season items to find deals on
    things that will have appeal from a buyer’s perspective and still be
    inexpensive.

    Carpet It

    If you have old, worn carpeting, that gives a bad impression. New
    carpets can add significant appeal and value to your home. We’re not
    talking here about the possibility of finding beautiful wood flooring
    hidden under the carpet – that can happen, and it’s a different set of
    choices with a different set of economic payback possibilities. Just on
    the subject of what to do about old carpet, though, it can be more than
    just a shopping chore, and more rewarding with a little effort. To
    really go on the low-cost end of doing the upgrade, you can get
    remnants and end pieces from an outlet store, and piece them together
    at installation. If you can do a proper installation yourself, that’s
    all to the good, but it takes skill and experience to do a good job. If
    you get a professional carpet installer to install it, you can expect
    the seams to be invisible and the result will look as good as any other
    new carpet. 

    Paint It

    When it comes to getting the biggest return for your remodeling
    investment dollar, paint is in the superstar category. Shop discount
    stores for reasonably-priced paint. As for your color choices, keep it
    clean and simple. White, the old standby, is often the best choice
    because it represents a good "default" selection for many buyers. For
    buyers who have a clear sense of their own color preferences, the white
    background is no impediment to them and they will be able to "see" the
    room in their favorite colors. One thing you can be sure of: if you
    decide to use distinctively different colors to appeal to your own
    artful sensibilities, then the buyer’s preferences will be wildly
    different. It’s a rule of nature.

    Replace or Upgrade Appliances

    If you have to replace appliances such as the refrigerator, washer,
    dryer, dishwasher and so on, look for scratch and dent bargains. There
    are always lots of appliances with minor scratches, and you can select
    the ones that have the damage on a side facing a wall or next to
    another appliance, where it won’t be a problem. The price reduction can
    be dramatic, and in many cases you can get it for even less that the
    tagged price, if you ask. These are things that store managers want off
    their property and out of sight.

    Another consideration on appliances is that if they are in working
    order they might not have to be replaced at all. Even if they are a
    little outdated, as long as they work, you don’t have to replace them
    just to sell the house. Houses are often sold without appliances, after
    all: replacing or updating appliances is an upgrade that should pay you
    back right away in the price of the house, so you have to do it at a
    pretty low cost or you can skip it. In the in-between, hard-to-decide
    zone of whether it’s worth it or not, you may consider finding
    appliances at secondhand stores.

    Remodeling Makes a Difference

    In getting a home ready for sale, what you want to achieve is an
    inviting and pleasant appearance, where buyers can imagine themselves
    living with everything in perfect order. Distractions, entering from
    the realm of broken, dirty or worn things in the home, impinge on this
    dream-home experience. That can cost you the sale. You want to create
    this experience for the buyer, though, without spending too much. The
    prices you pay won’t impress anyone, so spending more than you need to
    can be a particularly bad choice when the main reason for doing it is
    return on investment. Keep it simple, shop carefully and don’t overdo
    it. The money you make will be the result of not only careful choices
    in what needs to be done, but also of finding smart ways to do it.

    Article provided by Colorado’s Automated Homefinder – a Louisville real estate company.

    Creative Commons-licensed image by Tall Chris

  • another reason for old homes: the hidden costs of commuting

    Reader Joel McDonald is a real estate agent in Boulder CO and wrote the following for Hewn & Hammered. Please note that this article’s copyright belongs solely to its author, and may not be reproduced without his written consent. He makes good points: while many people lust after the big lots and imagined superiority of new construction (which we know is a myth 99% of the time) and imagined safety of the suburbs or the (also sometimes imaginary) superiority of schools, the increasing cost of fuel – something that won’t decrease in price anytime soon – will often make exurban living much more expensive.

    In my own community – Sacramento, California – the oldest neighborhoods inside the city limits are Curtis, McKinley and Land Parks. They are also the most desirable. I doubt anyone, no matter how stunted their aesthetic taste, could argue that new tract homes in even the ritziest suburban neighborhoods hold a candle to the beautiful and sturdily-constructed Craftsman, Tudor and Mission Revival masterpieces of the urban core.

    If you’re not careful, you’ll spend more in gas than what you save in mortgage payment.

    One of the most common decisions we see buyers make is to buy 10 or 20 miles from the town they plan on working in because the price of homes in that area is 10% or 20% less out that way.  Boulder real estate company owner Joel McDonald points out that the biggest factor homeowners don’t take into consideration is what their own time is actually worth, the wear and tear on their car, and of course, the cost of gas (which ain’t cheap these days).  That’s not to say that buying a home in a less expensive area that isn’t in town isn’t a good idea, but more often than not, it’s not saving as much money as you might have initially thought.

    Let’s say you’re contemplating buying a $450,000 home in-town, vs buying an otherwise similar home for $400,000. Let’s also say the $400,000 home is 18 miles from the town you plan on working in 5 days a week.  That $50K in savings might be attractive to you because if you take out a loan for the difference, you’re looking at a monthly savings of between $320 and $370 a month.  The key in making the best decision, however, isn’t whether or not you’re saving a few hundred bucks a month on your mortgage payment — it’s how much you’re spending every month by commuting into town.

    Let’s say your car gets 20 miles a gallon.  At $3 a gallon, you’re looking at about $6 a day to drive into town.  Every mile you drive on your car typically represents about 20 cents in wear & tear.  (Those oil changes, new tires & every mile put on your car depreciate your car’s value, and those expenses are usually more than the cost of gasoline!)  36 miles round-trip times twenty cents is another $7.20 a day in expenses.

    Last, but definitely not least, you’ve got the most expensive part of the equation to weigh: your time.  If you have a $40,000 job, your "on the clock" time is worth $20 an hour.  Believe it or not, your "off time" is twice as valuable as your "billable time".  If you don’t buy into that logic, think about how valuable vacation time is to you, or think what you’d pay on Monday morning if you could just have a third day off.  Your "billable rate", by the way, assumes a 40-hour work week.  The more hours you work per week, the more valuable your off-time is, so $40 per hour could even be underestimating what your time is actually worth.  For the sake of this argument, however, let’s just say that if you earn $40,000 per year, your time is worth $30 an hour.  By living 18 miles from work, you are spending an average of 4 extra hours per week commuting!  That’s $120 per week (or $24 per day.)

    When you add all 3 variables up, and consider that you commute to work an average of 22 times a month, let’s see what you’re spending to make that commute:

    • $6 in gas 22 times a month is $132
    • $7 in wear & tear 22 times a month is $154
    • $24 in lost time 22 times per month is $528!
    • Add it all up, and your 18 mile drive is going to cost you $814 a month!

    Even if you don’t value your off-time at $30 an hour, or you enjoy that drive time because you get to listen to a good book-on tape, you’re still looking at $286 in car expenses every month.  Next time you find yourself grappling with the issue of whether to buy in town vs. commuting into town for a less expensive home, be sure to not to ignore the extra expenses you’ll be picking up in trade for what you save in monthly mortgage payment.  Your "more expensive" home could be several hundred dollars a month LESS expensive, when you factor in all of your peripheral expenses.

    This article was contributed by Automated Homefinder – your Boulder CO real estate experts.