The Top 10 Home Improvements That Could Devalue Your Home

March 23, 2011 by Leave a Comment

Donna Dazzo of Designed to Appeal

Sometimes, making an improvement to your home could actually hurt you when you try to sell it.

Here are the top 10 home improvements that can make your home harder to sell:

1. Kitchen Renovation. Any renovation of a kitchen that is too taste-specific or extreme in design. For example, a kitchen equipped with a restaurant-level stove or multiple refrigerators may not appeal to the buyer who is a simple cook. You want to appeal to the broadest range of buyers when selling a home, and if a buyer thinks they need to spend money re-doing what you’ve done, they will offer less.

2. Bathroom Renovations. The same can be said for bathroom renovations. Any design that is over the top could detract from the value of the home. It’s best to avoid garish sinks, faucets, and tiles.  And skip the heart-shaped bathtub!

3. Painting. Painting the walls is a great way to freshen up a space prior to putting your home on the market, but painting with bold colors such as red, orange, purple or even black (I’ve seen this) is a sure way to turn off a potential buyer. Buyers want to feel like they can move right in and not have to re-paint the walls to match their own tastes and their existing furniture.  The same goes for painting the exterior of the home – no bright blues, yellows or greens please!

4. Water Features. Having an in-ground pool, hot tub, waterfall or pond can also devalue a home, as buyers may perceive these as extra maintenance expenses they don’t want to incur. Also, buyers with small children may be fearful of these as well. The only exception of an in-ground pool definitely adding value is if the home is an investment property in a resort area where renters find homes with a pool to be more desirable.

5. “Wasted” Square Footage. Taking valuable square footage in a house and using it for a specific, personalized purpose can make the house harder to sell and/or detract from its value, for example, turning a garage into a gym. Also, on the Bravo TV show, Nine By Design, the hosts of the show were trying to sell their NYC townhouse. The ground floor was taken up by a basketball/squash court because the owners liked to play these games. However, most buyers would see this as wasted space and an expensive project ahead to change.

6. Redecorating. Redecorating in a highly taste-specific style, such as Asian, country clutter or extreme modern can turn-off potential buyers. When selling your home, you want to appeal to the broadest range of buyers, so it’s important that the furniture and décor is neutral and broadly appealing.

7. Illegal home improvements.  Decks, driveways, expansions, etc.  not approved by the local town authorities  can devalue the home as you will probably be forced to correct the situation prior to selling which could result in something as extreme as actually removing it.

8. Laminated Wood Flooring.  Installing laminated wood flooring instead of solid wood in an upscale home can also cause a buyer to think “I’ve got to rip this out”!  Better to refinish existing hardwood floors, if any, or cover floors with new but inexpensive wall-to-wall carpeting.

9. DIY Home Repairs. While needed repairs and maintenance should be done to a home before putting it on the market, doing these yourself could end up costing you money in the end as buyers perceive your shoddy workmanship as something they have to spend money correcting, and therefore offering you a lower price.

10. Gardens and Landscaping. A high-maintenance garden and landscaping could also lower the value of a home. If buyers are not avid gardeners or don’t want to spend money watering or on hiring someone to constantly weed, trim and rotate your plantings, this could be a real turn-off.

So, before you decide to make that improvement to your home, stop and ask yourself: “Will most buyers find this desirable so that they would be willing to pay for it, or is it just to satisfy my own needs and tastes?”.

About the author:

In 2007, Donna Dazzo decided to combine her talent for interior decorating and love of interior, architectural and industrial design with over 20 years of experience in project management and marketing, and formed Designed to Appeal, LLC.

A self-described residential real estate junkie and HGTV addict, Donna will help you to maximize the profit from a house or apartment, whether for rent or for sale.  Donna is always investigating the latest interior design and real estate trends from her home in New York City and her Hamptons retreat.

For more information, see www.DesignedToAppeal.com.

 

 

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Guest Post – Shaun Meller’s Weekly Economic Summary

March 22, 2011 by Leave a Comment

Shaun Meller of Bank of America

Last week in review – (March 7 – 11, 2011)

Shaun Meller is a mortgage professional at Bank of America specializing in financing for Manhattan condos, co-ops, and townhomes.

First, let us extend our deepest sympathies to the families affected by last week’s earthquake and tsunami in Japan and our hope for a speedy recovery. The earthquake was a magnitude of 8.9—the strongest in 140 years. The earthquake in Japan and its damage created some counterintuitive market reactions.

Ordinarily, U.S. Treasuries and mortgage bonds would trade higher in the face of devastating natural events that drive money into “safe haven” trades. But in this case, buying of Treasuries and mortgage bonds as a safe haven trade was offset by the Japanese selling some of their own massive holdings of Treasuries and mortgage bonds in order to repatriate money back to their country during this time of emergency. Considering that Japan is the second largest holder of U.S. debt at $877 billion, selling just a small portion of their holdings has an impact on bond prices.

In addition, bond prices traded in very volatile fashion last week after getting jockeyed around on news out of Saudi Arabia that police had opened fire on protesters with rubber bullets. Let’s look at how this influenced the markets in a different way than one might at first imagine.

Oil fell last week, despite the news out of Saudi Arabia. Why? Shouldn’t unrest in Saudi Arabia – the world’s largest oil producer – push prices higher? Yes, but that news was offset by the earthquake in Japan. That’s because Japan is a huge importer of oil, and the market senses that the earthquake and subsequent tsunami may create an economic slowdown and diminish the demand for oil.

Seeing that mortgage bonds are lower – even in the face of weak stocks and enormous uncertain global news – tells us that the gains in bonds are not coming with a lot of conviction, and traders are selling into this strength. This is because a lot of headwinds remain for bonds – like inflation abroad, rising government debt and continued QE2 purchases.

In the news this week (March 14 – 18, 2011)

There are multiple reports this week focusing on the same segments of the economy. We’ll talk about these reports next week and their impact on the bond market: 

  • Federal Reserve report
    • Tuesday – Federal Open Market Committee releases policy statement
  • Housing markets reports
    • Wednesday – Housing Starts and Building Permits
  • Manufacturing reports
    • Tuesday – Empire State Index
    • Thursday – Philadelphia Fed Index
    • Thursday – Capacity Utilization
    • Thursday – Industrial Production
  • Employment reports
    • Thursday – Initial and Continuing Jobless Claims
  • Inflation reports
    • Wednesday – Producer Price Index
    • Thursday – Consumer Price Index

As you can see by the arrows in the chart below, bond prices experienced some up-and-down volatility last week, but ended the week near where they began.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday, March 11, 2011)

Economic calendar for the week of March 14–18, 2011

I’m here to help you through the entire home-financing process – from application through closing – and to match you with a mortgage that’s perfect for your financial situation.  Contact me today and let’s get started on achieving your home financing goals.

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Guest Post – Weekly Economic Summary by Shaun Meller of Bank of America

February 15, 2011 by Leave a Comment

Last week in review – (January 31 – February 4, 2011)

The Labor Department reported that 36,000 jobs were created in January, a much lower

Shaun Meller

number than anticipated. However, there were upward revisions to both November and December, which added another 40,000 jobs than previously reported.

But that’s not the only bit of good news in the report. The unemployment rate fell to 9%, down from 9.4% last month, rather than increasing as had been expected. In addition, the U6 unemployment report, which includes job seekers who haven’t actively looked for a job recently and those who have accepted part-time employment for economic reasons, fell to 16.1%, from the previous month of 16.7% and reflects the lowest level since April 2009.

So what does all of this mean when it comes to home loan rates?

It’s important to remember two things:

  • First, the Fed’s goals for their current Quantitative Easing policy (QE2) where $600 billion is being injected into the economy are to: (1) boost stock prices, (2) create inflation, and (3) lower the unemployment rate.
  • Second, while these goals are designed to stimulate our economy and keep our recovery moving forward, they are also unfriendly to bonds and home loan rates.

In recent weeks, we’ve seen evidence of all three goals: stocks have been improving, the unemployment rate has declined, and we’ve seen an increase in global unrest of late, not just in Egypt, but in other parts of the world as well and much of this centers around runaway inflation in commodities and food.

In the news this week (February 7 – 11, 2011)

This has been a quiet week on the economic report front, though with all the news happening around the world, there’s plenty of action that could impact the markets.

  • Thursday’s weekly Initial and Continuing Jobless Claims Report. Last week, Initial Jobless Claims declined to 415,000, which was below the 425,000 expected, and reversed most of the increase from the previous week. We’ll talk about this week’s report next time and its impact on the bond market.

As you can see in the chart below, bonds and home loan rates worsened due to a mix of positive economic news, a decline in unemployment, and hints of inflation in the air.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday, February 4, 2011)

Fannie Mae Mortge Bonds

Economic calendar for the week of February 7–11, 2011

Weekly Economic Calendar

I’m here to help you through the entire home-financing process – from application through closing – and to match you with a mortgage that’s perfect for your financial situation.  Contact me today and let’s get started on achieving your home financing goals.

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Guest Post – "Don’t Mess Up in Here!" by Noah Rosenblatt of UrbanDigs.com

February 7, 2011 by Leave a Comment

A: If you are a new seller, 4 weeks or less, then this post is for you. Fact is, if you take a step back and in hindsight look at the traffic patterns of any given

Noah Rosenblatt

exclusive, a pattern becomes clear. That pattern is sometimes the difference of tens of thousands of dollars in the end; IT WAS FOR ME!

Unless the apartment is aggressively priced, most of the activity will happen in the first 2 weeks and in the final 3-4 weeks (due to price cuts).

THE FIRST 2 WEEKS (The ‘Should Have’ Period)

I like to call the first two weeks of every exclusive the ‘should have’ period. The first 2 weeks is the period of time where you get a bunch of appointments scheduled from ‘B’ buyers who are trying to learn the inventory of their price point and their agents who just want to do a deal already. Maybe you’ll get a few ‘A’ buyers too. Most likely, you’ll get a low ball bid. Many times this very early bid is the nightmare for sellers 5 months later. So, I refer to it from the seller’s point of view as the, “I should have accepted that bid and saved 5 months of agony”.

It makes me think of that scene in Casino where Joe Pesci stares down DiNero as he goes to pick up his wife, Sharon Stone, at Pesci’s restaurant. You know that scene, where Pesci sneers, “Hey! Don’t Mess Up In Here…!”…

(Not the scene, but has that same look)

In Hindsight, every financial decision is 20/20; including whether or not YOU, THE SELLER should accept that offer.

It is during the first two-three weeks of listing your property that you will get the most interest and if lucky, an offer. The offer will not be high but will be very close, the same, or most likely HIGHER than what you eventually accept down the road after multiple price cuts!

I SAY TO YOU, THE SELLER, DON’T MESS UP IN HERE! And if you do mess up and ignore the offer because there is so much activity and you won’t sell below a certain price in the first 4 weeks, to NOT blame it on your broker for failing to move your property at the highest & best price possible down the road.

MY STORY: When I had my condo on the market at Astor Terrace, I showed you the work I did and how I was going to market it, I got the most activity during the first 3 weeks. Every open house was packed and I was thinking JACKPOT! I even got a bid. I was asking $1,075,000 (much higher than I knew it would sell for but it was my home, and my home is worth what I say…yea right!) and got a bid of $950K. I shrugged it away without a response and played hardball. Yea, real smart.

Four months later I found myself $6,000 into weekly NY Times advertising and other marketing expenses, tired, worried, and 2 price cuts down to $975,000. Traffic dried up and I was getting very nervous. HOW COULD I HAVE DISREGARDED THAT OFFER! Nights became sleepless and bills seemed threatening to my financial well being.

I winded up accepting a $935,000 one time take it or leave it bid, up from $925,000 originally. It was all cash and ‘looking to close within a month’ that made the offer a no-brainer for me. But the mistake was made and the lesson was learned.

THE LESSON: Think about any bid that you receive in the first two to three weeks! Think about even if it is well below your asking price. If you decide NOT to accept a low offer in the first 3 weeks, than be prepared to possibly have your apartment on the market for the next few months! I’ll explain why right now.

3rd TO 16th WEEK OF YOUR LISTING

During weeks 3 to 16th of your listing, assuming your property was on the market for 4 months or more, your traffic is pretty much the same; SLOW. The broker is showing the apartment 1-2 times a week, and you are having 2-4 people per open house. Not a good sign. The listing seems to have staled up, and feelings of nervousness fill both the agent and the seller as thoughts of ‘problems with marketing’ begin to arise. I usually hear questions like, “Why aren’t you showing the apartment more often?”, or “The ad in the NY Times wasn’t big enough”, and the best one, “I want this place SOLD, so get to work and SELL IT!”. Yea, ok.

You know what I think at this point? I hate to be the bearer of bad news but if you had 30 buyers through your property with no bid submitted, than your asking price is too high and needs to come down to reality; i.e. YOU HAVE TO WAKE UP!

I’ve said this over and over here on UrbanDigs:

YOUR HOME IS WORTH ONLY WHAT SOMEONE IS WILLING TO PAY FOR IT

It doesn’t matter that you are so close to the subway station, or that you have brand new stainless steel appliances, or even that you have a terrace (cause I had a sick one!). It only matters what a buyer will bid for it and whether or not you HAVE TO sell it right now. The problem is that as a seller, you get emotional and ONLY look at the positive attributes of your property when you price it and review offers! The solution should be to be as unbiased a seller as possible! Notice if your apartment is on a low floor, or has no views, or gets no sunlight, or is on a very busy/noisy street, or has a floor-through layout, or has low ceilings, or whatever! This is what buyers will be thinking about when they bid. A biased seller will be unable to make rational decisions when it comes to accepting an offer.

Moving on.

FINAL 3-4 WEEKS

Traffic begins to heat up as you already hit your turning point and have succumbed to price reductions. It happened for me after 12 weeks on the open market and 11 open houses. A very long time for any nervous seller!

I didn’t get a contract signed until the 18th week and 16th open house and for lower than what I was offered 16 weeks ago!

Your price comes down and activity picks up. Wow. I can’t believe it. It’s amazing how this works. Why didn’t I think of this earlier? Why didn’t I respect what my broker originally told me 15 weeks ago about where to price my unit? Why was I so blind?

BECAUSE YOU ARE HUMAN. BECAUSE IT’S YOUR HOME. BECAUSE IT’S HARD TO SELL ANYTHING THAT HAS EMOTIONAL TIES, MEMORIES, GOOD TIMES & BAD.

But you must not be clouded in your financial decisions. You must be able to recognize when to move on an offer. You must be able to realize that a highly qualified buyer may NOT be so easy to find!

This post was based entirely on the notion of hindsight and what I have noticed AFTER looking back at my clients and my own exclusive listings, to see if there were any patterns. There were. If anything should be gained from this post it’s that you must have the vision and the will to accept a reasonable offer if:

1. It comes very early and from a qualified buyer
2. Is reasonable in the sense that you were going to price your apartment at $750K but decided last minute to raise that to $800K. Now you get a $700K offer in first 2 weeks.
3. You are under time pressure to sell

Don’t Be Stupid. Don’t Be Greedy. Don’t Mess Up In Here!

By Noah Rosenblatt of Urban Digs.

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Guest Post – Steps to Take Before Buying a Home by Paul Purcell

February 6, 2011 by Leave a Comment

Paul Purcell

Paul Purcell is a co-founder of Rutenberg Realty, a top ten boutique residential real estate firm based in Manhattan.  A respected industry voice, Purcell is often quoted in such prestigious publications as The New York Times, and has appeared frequently on New York 1 News as well as CNN, CNBC, and WNBC-TV.

Originally printed in Resident magazine’s October, 2010 issue

The number one real estate question these days seems to be “Is this a good time to buy a home?”  Given the current state of the economy and the housing market, consumers are heavily weighing the decision of “buy or not to buy.”  The decision, however, is always based on each individual’s unique needs and abilities.  But, whether you’re a first time buyer or in the market for a second home, there are a series of steps always worth following.  With ample preparation, you’ll feel more confident about the home buying process and be better prepared to make an educated decision.

Why Buy a Home?

Homeownership still remains one of the highest goals for many people because of its benefits.  Besides the number one reason of being the American dream, owning a home of your own transcends pride of ownership as well as a sense of security and belonging.  For many, homeownership represents personal and financial success.  As a valued investment, a home can have many financial advantages and tax benefits.  The amount of interest you pay on a home loan and the real estate taxes you pay on your home are among the major federal tax deductions.  Also, owning a home is the way many people build wealth.

Before you venture into the home buying journey, you might want to consider the following:

  1. Know What You Can Afford. Before you begin, you should figure out what kind of home you can afford based upon your monthly budget.  Create an itemized list of what you spend each month and determine how much will go to housing.  You might have to economize in order to get the home of your dreams, but don’t be unrealistic with your regular day-to-day needs and obligations.  Also, be sure to speak with a trusted financial advisor to get an objective opinion about mortgages and to be clear about the precise amount you can borrow.  Most importantly, be certain to understand the mortgage product – its terms and conditions.  Don’t be afraid to ask questions.  It’s a good idea to know what’s on your credit report and have a clear idea of your income stream so you can pre-qualify yourself for a loan.
  2. How and Where You Should Live. Is a single-family home right for you?  Would a condo be a better choice?  Which neighborhood, town, or city best fits your lifestyle?  These questions are important and require work.  Your friends and family will all have an opinion.  Listen to them objectively.  Remember, there is no real incentive for your real estate agent to tell you about places where they don’t sell, so consider their opinion judiciously.  Do your homework, prioritize your needs and wants, visit neighborhoods, try out the commute, ask questions and use the Internet.  Now more than ever, take the time to learn the local market conditions and see as much property as you can to better understand price and value.  There are some tremendous opportunities in most markets, but you have to educate yourself.  If you’re not entirely sure about a location, you might want to consider renting something first to determine if the area is a “fit.”  After all, this is your dream and not someone else’s.
  3. Select the Right Real Estate Agent.  Most of us spend more time picking out a restaurant than we do a real estate agent.  Yet, this is potentially the single largest financial transaction most of us will make in our lifetime.  It deserves greater attention!  Ask your friends, neighbors and work colleagues for recommendations.  Interview several prospective real estate agents.  Ask questions about their background, tenure in the profession, their firm, sales performance, and their knowledge of the market in which you’re interested.  A good agent brings knowledge to the table.  They don’t just open doors.  Above all else, make sure your personalities match too.
  4. Build Your Team.  It’s never too early to begin thinking about the other service providers necessary to turn your home ownership dream into a reality.  In additional to your financial advisor, there are other members of this process that you will also want to take into consideration.  For example, you might want to consult with an attorney to help with the complex legal paperwork and contracts.  You may also want to use the services of a house inspector, who can help determine whether the structure, construction and the mechanical systems of the home are completely safe.  If you do not already have an insurance agent, you may want to “shop around” among several companies before selecting the right one to assist with your move to a new location (or even if you are staying local, for that matter).  When you begin your search, ask your realtor to help you compile this list of other potential team members.

Remember, as in most things, preparation is key.  If you understand your finances, do your homework, learn as much as you can about the market, select an agent who understands your needs, build a great team of people you can trust and keep your focus and your cool, you will be in a much better position when the right home comes along.

If you are interested in purchasing or leasing property in the Village, or another Manhattan or Brooklyn neighborhood please feel free to reach out to our team for a free consultation by calling (212) 400-4838, or by e-mailing yourkeytothecity@AkerlyRE.com.

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Guest Post – Weekly Economic Summary by Shaun Meller of Bank of America

February 1, 2011 by Leave a Comment

Shaun Meller

Last week in review – (January 17 – 21, 2011)

 

The US dollar is starting 2011 with its value dropping relative to other currencies.

Let’s take a look at why and what this could mean for home loan rates.

  1. Some of the dollar’s drop is attributed to the recent strength in the euro, which has gotten a boost from some recent positive stories, like Spain and Portugal’s ability to sell debt in the bond market without crisis. But have Europe’s problems gone away? No – there will be more problems ahead for the region, and as they emerge, we should see a reversal in the euro’s strength along with improvement in the US dollar.
  2. Another reason for the dollar’s weakness is the Fed’s Quantitative Easing (known as QE2).

At this point, the weakening US dollar hasn’t had a big negative effect on the US bond market, but should the dollar materially weaken, it could make US-denominated assets like US bonds less valuable and desirable amongst global investors and it has been these foreign investors, like China, who have supported the US bond market for years by purchasing our debt. Remember, home loan rates are tied to mortgage backed securities, which are a type of bond. So negative news for bonds would also be bad news for home loan rates.

In housing news last week, existing home sales for December were reported much better than expected. The jump in sales is likely attributed in part to the recent trend of rising home loan rates, which has prompted many homebuyers to take advantage of the still low home loan rates. Building permits – which signal future construction – also came in better than expected last week, surging 17% in December.

The housing industry shows signs of improvement in 2011. There will still be some areas that suffer price declines, and those will be where foreclosure backlogs overhang and where unemployment rates are higher than the national average. But housing looks to have bottomed out in many areas and should see more of a pick up in the second half of 2011. And although home loan rates will likely rise slightly as the year progresses, they are still near all-time lows right now.

In the news this week (January 24 – 28, 2011)

This week includes a full load of economic reports ranging from housing and the economy – but the big event will be the Fed meeting. We’ll discuss impact of these events in next week’s report.

  • The week started with a read on consumer attitudes with the Consumer Confidence report on Tuesday. That report will be followed by the Consumer Sentiment Index on Friday.
  • We also saw additional housing news this week, with a report on New Home Sales in December on Wednesday and the Pending Home Sales report for December on Thursday.
  • The Federal Reserve held its FOMC meeting this Tuesday and Wednesday, with the Fed’s Policy Statement released Wednesday afternoon. There’s no chance for an interest rate hike at this meeting but what the Fed says about the economy, inflation, and its Quantitative Easing program could have an impact on rates.
  • Thursday’s weekly Initial and Continuing Jobless Claims Report is important, as always. Last week, Initial Jobless Claims came in below expectations and the 4-week moving average fell from the previous week. Those readings tell us the trend in the labor market is continuing to improve, albeit at a slower pace than historically seen at this stage within an economic recovery.
  • We also got a read on the economic recovery with Durable Good Orders on Thursday. This report provides an update on consumer and business buying behavior on big-ticket items that are designed to last for an extended period of time, like furniture, televisions, appliances, vehicles, copy machines, and so on. It’s an interesting report, as people tend to hold back on these types of purchases when they are feeling a need to be extra conservative with their finances or feel insecure about their employment.
  • The GDP report will be followed on Friday with reports on Gross Domestic Product (GDP) – which is the broadest measure of economic activity – and the Employment Cost Index (ECI). The ECI is one way to evaluate wage trends and the risk of wage inflation, as well as possible price pressures. This is important to the housing industry because if wage inflation threatens, it is possible home loan rates will rise through bond prices dropping.

As you can see in the chart below, bonds and home loan rates continued their negative trend to end the week worse than where they started.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday, January 21, 2011)

Economic calendar for the week of January 24-28, 2011

I’m here to help you through the entire home-financing process – from application through closing – and to match you with a mortgage that’s perfect for your financial situation. Contact me today and let’s get started on achieving your home financing goals.

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