Your Home Matters

Your Home Matters

  1. Part 2: New Construction or Renovation? Which is for you?

    Our last blog focused on choosing new construction versus renovating and remodeling an existing home. There are many benefits of moving forward with a new build, and after we wrote that piece, many felt pretty confident that a brand-new home would be top choice at this time. However, after thinking about the remodeled homes we have been fortunate to tour, and scouring many articles and before-after photos online in my preparation for this piece, many of us have reserved the right to change our mind. While a major remodel is a time-consuming and likely inconvenient venture, the results are downright spectacular in many cases.

    Admittedly, so many of us are partial to older homes. Their character, unique features, ample space and storage, and established yards just speak to me in ways new construction does not. While we love the fresh start and literal “newness” of a new home, there is a quality it always lacks. We want to be fair in analysis, so like the last blog, we will go through the most important categories to consider in embarking upon a remodel, and to keep our thoughts organized, we're going to outline the same categories as last time, only now we will focus on remodeling an existing home – whether it’s your current house, a home on the market, or maybe even a historical property.

    ·        Meeting Code and Structural Soundness: The quality construction of a renovation is as important as its cosmetic appearance. Be sure your contractor has plans to show you, references, and a portfolio of work that mirror the vision for what you want upon completion of this project. What materials will be used? How will demolition and subsequent rebuilding be handled? How often will inspectors stop by to check in and ensure standards are met? Better yet, does your contractor note and explain building code during conversations about the renovation plans? Once you build trust in your contractor and his or her team, you can feel confident that the plans – no matter how extensive – will be carried out with the highest quality and safety concerns in mind. Just be ready for frequent visits and permitting hoops from your local building commission.

    ·        Short and Long-Term Costs: Compared to building, the short-term costs for remodeling tend to be higher. You can certainly get a loan for the work, but many contractors need deposits up-front to start the work, and all too often I have seen budgets creep up during projects due to unexpected issues or changes to plans. Extensive, high-end renovation jobs can often cost as much as building a new home (kitchen remodels alone average $50,000!) but in the long run, you should feel like the location, neighborhood, and “bones” of the home will be worth the monetary investment. One prime example we can share is a client’s current renovation project. They found that their 100-year-old home was tilting forward when they took out the old flooring. They had to completely replace the floor joists and most of the foundation – totally unexpected and quite expensive.

    ·        Return on Investment: There is a great deal of potential to turn a dated, crowded home into a showstopper after renovation. Many older homes do not boast the open concept, trendy finishes, and modern features homeowners expect today, but they do have character and other outstanding qualities that make them worth keeping. When an older home has been renovated in a way that updates it while maintaining its “old charm”, it has the potential to turn a major profit upon sale. It will either make a stunning home for those remodeling and planning to stay or move in, but it also offers a tremendous opportunity for the right investor with a vision. Let me just caution you though; take note of the block or neighborhood. Do not invest in a six-figure renovation only to price yourself out of the area. Set the bar high for the whole community, but be sure the renovation plans don’t outpace the rest of the area.

    ·        Location: The locations of homes worth remodeling tend to be one of the selling points in this venture. Older, established neighborhoods are well-placed in towns, have mature trees, larger lots, more space to enjoy. As communities grow, new subdivisions are developed outside of town or away from urban spread. Personal preference certainly plays a role in deciding what location is best for you, so think through where you want to be in relation to a downtown area or parks, schools, retail, etc. In many areas, the older neighborhoods are within walking distance of restaurants, shops, theaters, and more. Many people find that feature extremely attractive and decide to renovate a home to be near “the action”.

    ·        Efficiency and Technology: While new construction might be favorable to feature the newest home features, many of the things you might desire can still be installed in a renovation. The building materials play a major role in a home’s efficiency, so if you replace the roof or windows, or even major systems like HVAC and electrical, talk to your contractor about which options will be favorable for the home’s efficiency because an older home and its dated materials need all the help it can get to compete with new construction.

    ·          Design and Layout Options: Designers and general contractors are almost miracle workers. They do some absolutely incredible work to transform the worst spaces into stunning rooms. While they can make nearly any vision a reality, homeowners need to be aware that there could be limitations and unexpected adjustments that accompany a renovation that a new build wouldn’t face. Remember, a renovation is gutting an existing home, a structure with that already has wiring, support beams, plumbing pipes, and gas lines that may or may not be able to be moved. If they can be, it’s often very expensive, but worthwhile if your budget can handle the hit. I definitely recommend getting drafts of several renovation plans to consider and finding as many potential roadblocks as possible before getting started.

    ·        Long-term Maintenance: A home that undergone a major renovation still might require a bit more maintenance than a newly-constructed house. There will still be some “old” components in the home, so just keep an eye on what needs to be done on a monthly or annual basis. A renovation project does not come with a warranty like a brand-new home, so additional investments could be necessary if anything breaks down.  That possibility is certainly not a reason to shy away from renovation, but you must be aware and plan to care for an older home in a way that keeps it looking and aging its best.

    What else are considerations you feel are important in this decision? Which side do you tend to lean toward? We'd love to know!
  2. Building New or Renovation? Which is For You?

    There is a great debate among real estate professionals, contractors, and homeowners about choosing to build new construction or embarking on a “gut job” renovation of an existing home. Opinions are often strong, supported by various costs, stories of homes’ histories, and prime locations. The benefits and drawbacks vary in every situation, and we understand that cost is not always the determining factor in deciding which direction to move. There is currently a lot of new construction and impressive remodeling happening across the country. Because of beloved shows like Fixer Upper and Property Brothers on HGTV, the once-dreaded though of renovating a home has actually become kind of intriguing.

    Buyers see the potential of a dated home now rather than casting it aside. They understand a bit about the process and costs associated with a major remodel, so they can plan and make an offer accordingly. On the other hand, there has never been a more exciting time to build a new home. Contractors are building efficient, customized, and downright stunning homes in new developments all over. It’s a tough call, one that we all would have a difficult time making at this juncture after the many renovated and brand-new homes we’ve seen.

    So how might one go about deciding whether to build, renovate and stay put, or invest in a “fixer upper” to remodel and customize? This post and my next post will outline what to consider for each option. Let’s start with some of the benefits and potential drawbacks of building a new home.

    ·        Building code and structural soundness: Building code is always changing, and in my experience, the best builders are alwaysup to speed on the most current regulations and implement them immediately on their projects. A new home is most likely going to be your best option if you want a house that will not have any structural issues. One caveat, of course, is making sure you hire a builder with a great reputation who stands behind his or her work. Unfortunately, I have seen some nearly-new homes with settlement issues or are not up to code when inspected, so know the work of the builder you are considering.

    ·        Short and Long-Term Costs: Each option is expensive! However, if you sit down and figure out costs line by line of building versus remodeling, you might be shocked at the breakdown. What will taxes be? What kinds of up-front costs are associated with each and what would be rolled into your mortgage? Generally, I have heard that renovating is actually costlier in terms of cost per square foot, but there are so many factors that need to be considered based on your specific situation and needs.

    ·        Return on Investment: Which option will afford you the most profit if you ever want or need to sell the home? Talk to an agent to get an idea of how homes are selling in various neighboring and what features are at the top of buyers’ wish lists.

    ·        Location: If you own land or find a great piece of property you love either in the country or in a neighborhood, building would be the logical next step. Another option we are starting to see a lot is a tear-down new construction. In cities all over, buyers find a beautiful lot with trees, prime location, and a bit more space – perfect for their dream home. However, an old home already sits there. The most common “fix” or this problem is to tear down the old home and start from scratch. That way the homeowners get all the benefits of a new house with the beauty of a mature property.

    ·        Efficiency and Technology: New construction boasts the latest energy efficiency feature and building technology available today. If you were to remodel and older home, there would likely be some limitations on the efficiency and sustainability of the home because the original structure and its materials would still exist. New homes are just that – new. They have the most efficient windows, plumbing, electrical, roof and wall materials, and insulation. If you renovate, you’d just have to make sure any or all of those that you’d want to update could be changed.

    ·        Design and Layout Options: Typically, a designer or contractor can provide a lot more options if given a blank canvas. In an existing space, they are sometimes limited by space or code restraints, but when designing a new home, the options are endless (within budget constraints). I am not referring to cosmetic finishes like counter tops or cabinet colors in this point. I want you to consider how you want an area to flow and how it will be used. Be sure you can do what you want for that space when you are making your decisions about remodeling versus building.

    ·        Long-term Maintenance: It’s important to consider the overall maintenance of a home because cost, repair time, and potential issues can affect a new or older home. A new home should have very few maintenance issues and should also be under warranty for at least two (and sometimes up to ten years). There is a lot of comfort in knowing you are covered if a major component of the home breaks down for whatever reason. If you remodel, are you going to renovate every inch of the house, or will you still have an older HVAC system, plumbing or roof? This part of the decision not exactly glamorous, but it is crucial in getting an overall picture of the best move for you.

    Stay tuned because our next blog will outline many of the benefits and potential drawbacks of renovating and existing home. In the meantime, do you already know which you’d choose?
  3. The "Don't" List When Buying a New Home

    Welcome back! We hope you've had a great week and can get out a bit to enjoy this lovely weather! Things are continuing to stay busy around all the ERA First Advantage offices -- gotta love a "hoppin" local market!

    This week, we are going to focus on a topic that is not as widely discussed as it should be. We want to share a few things you should avoid once you have gone through the pre-approval process and are ready to buy your new home. Changes in your financial or employment status can really affect your mortgage terms, and lenders really frown upon borrowers who go out and incur debt during the transaction time leading up to closing.We want to make it easy for you! Just follow this guide and be frugal for the time period you're buying your new home. We promise it will be worth it when you close on that dream home!

    1. Don’t apply for new credit cards: It may seem like a great idea to apply for a credit card at a home improvement store or a furniture store when you are about to become a homeowner, but applying for credit can lower your credit score. Not only will you lose a few points because of a credit inquiry, but if you are approved for new credit, a lender might worry that you will spend up to your new credit limit and then default on your loan. Wait to make those furniture and home improvement purchases until after closing on your new home.

    2. Don’t close any credit accounts: You may be feeling that this is a good time to get your financial state in order by closing unused credit accounts or transferring your debt to a new credit card with lower interest rates. While that’s a smart move financially overall, it’s a bad one for your credit score because you lose points when you have a higher usage of debt compared to your limit on one credit card. Wait until your closing is complete before you make these changes.

    3. Don’t move your money around: Your lender will need the most recent bank statements before you go to closing, so if you have any unusual deposits you will need to provide complete documentation of where the money came from. If possible, it’s best to move the cash you will need for your home purchase into one account before you apply for a mortgage.

    4. Don’t increase your debts: In addition to your credit score, your debt-to-income ratio is extremely important in a loan approval. If you take on more debt, you could be in danger of going above the acceptable debt-to-income ratio. Again, wait until after you've closed on the house.

    5. Don’t skip a payment or make a late payment: One of the most important elements of your credit score is your history of on-time, in-full payments, so don’t get so caught up in your move that you forget to keep up with paying basic bills. Keep a list of payment dates for all your bills and check them off as they're paid!

    6. Don’t buy a car: You may be feeling that a new car would be a nice addition to the driveway of your new home. Resist that feeling!! Even if you can easily afford payments on a new car, the depletion of your savings or the addition of a new car loan could derail your mortgage application. Get that new car once you actually have the new driveway.

    7. Don’t change jobs if you can help it: While a job change could mean a raise or a path to a better future, it could also delay your transaction. Your lender needs to verify employment and will need pay stubs to prove your new income before your loan can go to settlement. If at all possible, stay put throughout the transaction process and make the switch after you've closed and settled in. Promotions or moves within your company don't count in this situation -- if you get promoted, we will be the first to offer our congratulations!

    8. Don’t spend your savings: You’ll need cash on hand for earnest money, inspection costs, and for your down payment and closing costs. Your lender may even verify your cash reserves one more time just before closing, so make sure the funds stay in place. It's best to just be as frugal as possible throughout the time you're in the buying process. It will give you peace of mind and ensure the process runs as smoothly as possible.

    We hope this information helps as you are navigating the home buying process. Remember to ask your ERA First Advantage agent and lender lots of questions! We are all here to help and will be happy to do whatever we can to give you the real estate experience.
  4. It's Almost Here! The 2017 Fall Festival Rundown

    It's the most wonderful time of the year (other than the holidays)! We all love the fall season in the Tri-State for many reasons. As agents, we get to be out showing houses and hosting open houses on gorgeous days (let's hope the recent heat wave is done for good!) and we also get to show off our towns' local autumnal highlights such as pumpkin patches, apple orchards and burgoo from many local churches/civic groups.

    No matter where you are in the Tri-State, each town showcases a wonderful display of changing leaves and harvested fields, and an array of corn mazes and types of homemade cider. Does it get any better?

    Actually, yes!! We live in a region known for various festivals and celebrations, but the biggest and most well-known is, of course, the West Side Nut Club Fall Festival. The 96th annual Fall Festival will be held October 2-7 this year, turning Evansville's beloved Franklin Street into a huge carnival showcasing rides, games, entertainment and perhaps our favorite, all kinds of incredible food.

    This tremendous street festival is free to attend, but we promise you will find your wallet a bit emptier upon leaving because you will want to try a delicacy from nearly all of the 136 food booths stretching from Wasbash to St. Joe -- be sure to take your 2017 Munchie Map so you can find all your favorites!

    While the Fall Festival is known for its fun and food, it's equally known for its charitable efforts and positive impact on the community. Because of this phenomenal event organized by the West Side Nut Club, non-profits, school clubs, and churches that volunteer in all those food booths can use this event to fund their charitable projects and mission. As a community, we are helping them do what they need to do to improve our community. It's really a win-win for all of us -- especially when we get to enjoy the amazing treats they sell year after year.

    Let's all hope for great weather and huge crowds again this year! We look forward to seeing all of you out on Franklin Street October 2-7! We might all find an excuse to work out of our West Side office for a few days to be near the fun!

    Share with us, which delicacies are you most anxious to sample this year? We've heard there are a ton of new additions to the list this year!
  5. Pros and Cons of a Pre-Listing Home Appraisal

    We recently posted an article outlining the benefits of a pre-listing home inspection. Many agents firmly believe that the investment for an inspection is a solid decision, and writing that piece got us thinking about how we would advise clients regarding a pre-listing home appraisal. Typically, a home appraisal is conducted by the buyer’s lender during escrow to make sure the home is really “worth” what the buyers are paying for it – most often with borrowed money in the form of their mortgage.

    The appraisal is the lender’s safety net to catch over-inflated market values and also a way to recoup their losses as much as possible if the homeowners ever go into foreclosure. Some must admit that enthusiasm for the pre-listing appraisal is much less than the pre-listing inspection. There is very clear evidence in terms of the benefits of the inspection prior to listing, but the appraisal is a bit trickier. It is completely worthwhile in some cases, while in others it is, quite frankly, a hassle and waste of money.

    We think the simplest and most organized way to sort through this topic by weighing the pros and cons of the pre-listing appraisal. This information is very similar to the way we present the idea to clients. We try to remain objective because the decision is always left to the homeowners.

    Pre-Listing Appraisal Pros

    • ·        The professional appraiser’s opinion is credible as long as any relationship between the appraiser/agent/homeowner is disclosed if necessary. This point is included because there are quite a few realtors who are licensed appraisers, and no one wants to get the feeling a colleague is trying to skew data for a friend.
    • ·        The appraisal “backs up” the list price of the home, especially is extensive remodeling has been done (i.e. a flip house) or the home has valuable, unique features that comparable homes lack.
    • ·        This step is beneficial for sellers if the neighborhood has seen a recent substantial rise in property values.
    • ·        The appraisal provides data to back up the real estate agent’s recommended price according to a comparative market analysis. This might help prevent a deal-breaking low appraisal from the buyer’s lender while the home is under contract.
    • ·        The appraisal will accurately calculate the home’s square footage, which is very helpful for buyers in space planning and considering price per square foot.
    • ·        Sellers can include appraisal packets for interested buyers with the home’s data sheets during open houses and showings. This qualified data can increase buyer confidence in the home tremendously.
    • ·        If you are an investor or homeowner selling for sale by owner, the appraisal will give you access to the information typically used by a realtor to conduct a comparative market analysis. In this situation, an appraisal would add a level of professionalism and transparency that buyers need when considering a FSBO.
    • ·        The appraisal can provide some effective home improvement ideas to boost value if you’re not in a rush to sell. Make some recommended improvements, allow the home to appreciate for another year, and then sell for a higher price.
    Pre-Listing Appraisal Cons

    • ·        Buyers don’t often agree with appraised value. Remember, the current market dictates what a home’s price and value in terms of sales. That doesn’t always match up to the appraised value in a down market.
    • ·        The appraisal will not necessarily pinpoint what your home will sell for. Some people keep that appraisal number in their minds and will not negotiate with offers. That is a mistake if you really need to sell the home.
    • ·        An appraisal can be expensive, often in the $300-$500 range, but the price can spike to over $1,000 in some markets. While this is expensive, so is a price reduction for an over-inflated list price that costs both time and money.
    • ·        Appraisers often value features in a home for lending purposes, so if the valuation number comes back low, you could have a difficult time listing and certainly selling the home at a higher price.
    • ·        No valuation is totally objective. Appraisers admit that techniques can be used to back up opinions about a home with facts. What you might deem valuable as a homeowner, an appraiser might overlook or share a different opinion based on his or her knowledge and experience.
    • ·        A real estate agent’s comparative market analysis is often just as (or more) accurate than an appraiser’s data in terms of pricing. Agents have access to the same information and could be privy to more current sales records, so consult with your agent before paying an appraiser.
    • ·        The buyer’s lender will still require their own appraisal prior to closing. That step is non-negotiable and just part of every transaction. So, a seller’s pre-listing appraisal doesn’t save a step for anyone.
    Clearly there are benefits and drawbacks to consider when deciding whether to invest in a pre-listing appraisal.  It’s a task that is best to consider on a case-by-case basis because it can affect the sale of the home in some situations. Additionally, since we’re discussing home appraisals, we want to share a brief article that many have found helpful in dealing with low appraisals.

    A low appraisal can break a sale in a lot of transactions, but there are actions agents and homeowners can take to prevent and combat that setback. Take a look at this piece from Bankrate for more information. 

    In the meantime, carefully consider your own pre-listing appraisal as you think about selling your home, and as always, email your ERA First Advantage agent anytime if you have questions or would like more details about anything we have discussed. 

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