Friday, May 29, 2015

Fixing it up to Sell? Caution is Advised

Many home owners are starting to realize that this recent upward trend in real estate values has put them in a position to sell.This market is very strong but the buyers are seemingly focused on clean, updated and move in ready properties. Fixers seem to be lagging in this current market. In general it is a seller's market but fixers are still fairly neutral. These home owners that have a house that needs some maintenance and updating are sometimes considering improvements to their home to increase its marketability.

It is important to recognize that improvements to a property can be either positive or negative towards the end result of cash in pocket for the seller. Most improvements will add value to a home, but will they add as much to the price achieved in the marketplace as they actually cost to make? That is the 64,000 dollar question.

Some improvements do not add value at all. Here in the Pacific Northwest in-ground swimming pools generally cost more to put in than they generate in value. In fact a swimming pools in middle class homes are generally ignored by appraisers in this market. Southern Californians by contrast will pay for an in-ground pool and in fact it is almost a mandate.

Home owners need to consider only the improvements that will truly generate additional proceeds for them. Kitchens and bathrooms have long been held as areas that should be kept updated. Remodeling a dated kitchen might be expensive but it could bring more in cash than costs to do so long as the seller doesn't over do it. Over improving a house can be a serious mistake. A 1950s three bedroom one bath rambler need not have a $50,000 kitchen remodel. The home has a price ceiling based on its size, age and neighborhood. Generally, there is no room for that kind of remodel. A modest kitchen update however might cost the seller $3000-$6000 and net $10,000 more in price.

Other improvements for sale would be a fresh coat of neutral color paint throughout the house and making sure the first few rooms the buyer will see inside are tidy, and bright. The classic curb appeal is still a major factor so keeping the front yard spic and span so to speak are crucial. Additionally most buyers in the sub-$300k market locally at least, are going to use an FHA or VA loan. The seller is advised to make sure the house will meet the guidelines for these government backed loan products. These products are not that difficult to satisfy so their value is immense. The market is driven by buyers at this point. What makes a seller's home valuable is the surplus of buyers seeking homes. If the seller eliminates the majority of buyers by excluding the bulk of the loan products, then the seller will find that the house will sit on the market or be forced to reduce price.

This is as simple as making sure the siding is not in contact with the ground, the exterior paint is not peeling away and exposing the siding to weather, rood is free of excessive moss and debris, no water in the crawls space and the proper vapor barrier is in place under the house.

  • Front yard sharp and clean
  • First rooms and entry to home tidy and bright
  • Kitchen updated, bright and clean
  • Bathrooms bright and clean updated if possible
  • Interior fresh paint with neutral colors such as a light beige or antique white
  • Exterior to meet FHA and VA guidelines
Following these simple ideas will yield the best possible results. Buyers need to pull up to a sharp looking house. They need to walk into a clean and bright entry. These two alone will ensure a thorough look at the rest of the house and thus give the best chance of generating an offer.

This market is demanding clean, updated houses. So give them what they want and make a lot more money when you sell.

Friday, May 22, 2015

Land Opportunities Abound

In the local market we are still fortunate to have a large area in which homes can be built on five acre estate parcels. These need not be far away from town, and many in fact are very close in.

I recently showed a five acre parcel ready to build in Hockinson just five minutes out of East Vancouver. It was listed at $179,900. Buyers dreaming about that country estate should consider looking now. Land prices are inching up and rates for now remain low. Building costs however have been rising sharply. Building materials are experiencing price increases that are disproportionate to the economy at large. This could be due to the recent heavy demand added by a major influx of suburban and urban development in the local market.

Here in Clark County five acre building sites abound from areas in close like Camas, Hockinson, or Ridgefield all the way out to places like Yacolt and Amboy. The further out locations will often yield better pricing. The trade off becomes convenience versus value.

Some of the lots that are found for sale are located in subdivisions with a strict set of CCRs or even an HOA that may place restrictions on the size and type of buildings. Other lots are relatively unregulated in that regard. Our office currently has a generous supply of listings for buildable land. I am quite impressed with the variety.

Red area is seeing suburban development pressure,
yellow area remains mostly rural in nature
and is outside of the urban growth boundary
For those who wish to have a five acre estate in close to the city, the time is now. These types of parcels are reacting to the increased pressure from hungry buyers. Soon land pricing couple with building costs may push these completely out of the reach of the middle class.

The future of housing is in cramped quarters with neighborhoods stuffed with homes on tiny lots. The chances to own some space grow thin as increased regulations and the finite nature of land create a market that can only get tighter. In the graphic shown the area in the inside the yellow line is all within 20-25 minutes of PDX and has many opportunities to have a five acre country estate.

We are very fortunate in the metro Portland-Vancouver area to still be able to have a rural country home less than 30 minutes to the city core. Seattle lost that ability long ago. Those wishing to enjoy the country estate are well advised to make their move now.

Friday, May 15, 2015

Buyers Want it Move-In Ready

I have broached this subject before and I'll do it again. The market is robust but buyers seem to be gravitating towards the well maintained, fresh and ready homes. I have a listing that is 40 years old and pretty clean but needs some minor maintenance. The buyer is playing hard-ball on the inspection. This is not something one would expect in a so called "seller's market". But our seller's market has the caveat that the seller have a nice move-in ready home.

Seller's with the fixer or needs TLC home would be well advised to clean up the property prior to listing in this market. Sometimes sellers may not have the resources to do that so they need to be prepared to take a hit on price. This market is good but it has its limits.

Locally the new home construction market seems to be booming. This tends to support the idea that the current buyers in the marketplace are supporting the move-in ready house. Brand new of course is about as move-in ready as it gets.

It also seems that inspection reports are being heavily scrutinized by buyers. This is a good thing for buyers but can be challenging for sellers that are not in a strong financial position. It is always a good idea to give any listing as much 'curb appeal' as possible. When prospective buyers drive up the house should shine and the first room in the home, the entry and the kitchen should sparkle.

This is a solid and healthy market and both buyers and sellers can benefit from the current conditions.

Friday, May 8, 2015

Do You Really Know What Your Home is Worth?

In this day and age of Internet information many people feel like they have a solid handle on the value of their home. After all, sites like Zillow offer an instant value with a single click of just about any house in America. But how accurate is Zillow? They use a variety of data but mostly public records. Unfortunately companies such as Zillow are not intimately aware of the important details about any individual house. All of their posturing in the market really boils down to public data on a spreadsheet.

I think the coolest thing Zillow ever did was the old heat map but that is gone. But Zillow is a great tool for looking at trends across a broad market area. Are prices going up? Are they flat? Are they trending down? I am a professional Realtor® with a variety of tools at my disposal and I still enjoy playing around on sites like Zillow and Trulia because they offer an easy interface and provide a quick way to analyse broad markets and compare relative housing costs in different areas. How does Vancouver, WA compare broadly against Denver, CO?

Looking at an individual house however on Zillow is a fool's errand. They simply do not have enough information about the comps they used relative to to home they are evaluating nor do they know anything about the condition, upgrades, etc to the house they are applying a Zestimate to. They disclose all this in the fine print so they are doing it right, legally.

The last 18 months have been good to real estate values in the residential market locally and for the most part across the nation. Any homeowner thinking about value on their home would be wise to ask their trusted real estate pro to do a comparative market analysis. They should be willing to do that for free. Of course the alternative is to hire an actual appraiser but a local agent can give a solid evaluation providing they can see the home.

It is never a bad idea to be aware of your home value. Whether or not selling is in the near future or not, knowing where you stand against the market and any loans on the property is solid info to keep on hand. Talk to a Realtor® about the value of your home and go ahead and have some fun on those internet real estate sites, just keep a health pinch of the proverbial salt handy before jumping to any conclusions based on broad based internet data.

Friday, May 1, 2015

Loan Changes Ahead

The regulators have decided to change the loan process again with new requirements on final HUD statements and disclosures that many in the industry feel will slow the process down by a few weeks. Right now a government backed loan product already averages nearly 6 weeks to close and potentially adding another two on the end could make that process a two month ride.

Borrowers whether using FHA, VA, USDA or Conventional products need to follow the loan officer's explicit instructions and most importantly in a timely fashion. This will become even more important when the new regulations are activated in August.

Conventional loans that currently close in 20-30 days will likely see close times increase to 30-40 days. Government backed products will likely nudge up against that 2 month window. Buyers need to be sure to ask for a long enough closing time to get everything complete and ready for recording.

All too often buyers are sluggish getting the required documentation into the lender and this causes delays that could result in having to ask the seller for an extension. In this robust seller's market asking for an extension could end up in causing the whole transaction to end.

Buyers need to follow the advice of the loan office and act quickly on getting requirements fulfilled so the loan is funded on time and without complications. The added issue is that inspectors, appraisers and other professionals involved in the process are all quite busy right now and they may need several extra days to complete their process.

Buyers simply need to stay on top of the process and respond promptly and they will be in their dream home before long.