As the market softens, the classic rules apply

Yes the classic rules of location, location, location, and 'curb appeal' are back. Those rules never really went away, but when the inventory was so tight that buyers had to take what they could get, those rules were temporarily ignored.

Inventory levels are starting to return to a more healthy level and that means buyers have choices again. Classic issues like, facing a busy street, outdated, functionally obsolescent design, or bad location are now affecting the price in a more traditional fashion. Some sellers and even some agents, have yet to realize this.

Getting top dollar for a house requires several things to happen. The house must have broad appeal in the market. Great location, quiet street, well maintained, excellent curb appeal, fresh and updated feel, clean and tidy appearance, etc. This brings the most possible buyers to look at the house and then of those one will like it the most and reach a little deeper to buy it. When some of these appeal factors are missing, fewer buyers will look at it, of those that do many will pass on it, leaving a small demand left. That leads to a lower price.

The items I mentioned above are not the only factors, but most of those are controllable. The home owner can't control the location, nor the street, but the others are well within the sellers reach. This market will not tolerate a sloppy house, buyers have choices and they will either pick the nicer house or low-ball the ugly one. Sellers are well advised to spend some effort making their property look as warm and inviting, positive curb appeal, and as fresh as possible.

We are in the transition to a neutral market and neutrality is healthy and sustainable.

It is autumn again...

Well Halloween is just around the corner. Holy Toledo where the heck did 2017 go? Buying and selling homes in the autumn is a completely different affair. For sellers the flow of would be buyers seems to soften as the cooler weather arrives. This is not just because of weather, but a whole plethora of life events that change the "mood" and availability of buyers.

Halloween can be a great time to connect with neighbors as parents escort their children through the neighborhood. Sellers with active listings have an opportunity to chat with neighbors at the door or on the curbside while the kiddies get their treats. This could be an opportunity for sellers to remind neighbors of that realty sign in the front yard and ask if they know anyone that wants to live in the neighborhood. Sound corny? Well, it isn't neighbors often do know people they like that are looking for a house.

As for the rest of the autumn / holiday period, I have a few tips and ideas that I have published in the past that I will bring to light again today.

Originally published October 7th, 2016 by Rod Sager

OK sellers, the leaves are starting to turn color and some trees are dropping already. Yes my friends it is in fact October and that is what happens this time of year. Sellers need to keep the gutters clear as overflowing gutters are an easy fix yet manage to suck the curb appeal away.

It seems like a simple thing but buyers need to have a positive experience when they pull up and then walk up to the house. Getting a soaking at the hands of a clogged gutter sets a negative tone before they even set foot in the home. We never want a negative tone now do we?

The further we march into the cooler, wetter autumn and ultimately the colder and icy winter the more serious buyers braving the elements are. Buyers need to look past the little stuff, but sometimes they don't. Sellers need to pay attention to details to maximize value and bring the highest offer.

Autumn is a truly magnificent time of year and real estate can be quite robust during this period. although the volume drops a little, buyers are more serious and inventory is a little tighter so it is about equal in as far as supply and demand is concerned.

I mentioned in previous posts that the market is still climbing but the steep price appreciation has moderated substantially. I believe this is a healthy condition.

Interest rates have been very low over the last several weeks even by recent standards but they seem to be yo-yo-ing up and down in the threes. Loan officers have to pay attention so as to lock buyers in on one of those fabulous lows in the cycle. In general this is still a great opportunity for buyers. Although buyers may wax nostalgic for the low prices of 3-5 years ago these low rates are amazing and that will ultimately save buyers tens of thousands of dollars over the life of the loan.

Fixers are still tougher to sell...

Many homeowners selling in this hot market still think that people will crawl out of the proverbial woodwork and buy their beat up house for top dollar. This is a bit of a stretch and even in this tight market with little inventory, the market can be cruel on fixers. The issue lies in a few factoids that are driving buyers decisions. First lenders are not real keen on fixers. Sure conventional loans will let some minor stuff slide but not like they used to prior to the crash in '09. FHA and VA lenders are even stingier on what they allow as 'fixer'. Most people still use financing to acquire a home.

Investors are not interested in paying top dollar for fixers. They tend to pay cash so they don't have to worry about lender guidelines and soft appraisals. But they want to "steal" it so they can turn a profit. That is the whole idea around the investors approach.

Sellers with pie in the sky dreams of getting full market value for their fixer as much or near what the neighbors fully restored and remodeled house just sold for, are going to get a kick in the teeth by the cold hard realities of a market that really wants clean move-in ready homes.

That said, fixers will sell. The market just wants to pay a little less for a home that needs a lot of work. These tight inventory conditions allow sellers to get 85-90% of the relative market value for a clean, move-in ready example of their home and that is a big bump up from a few years back when fixers were fetching only 50-70% of relative market value.

Additionally sellers need to be aware that functional obsolescence is still a thing even in a hot seller's market. One bath homes are not going to yield the kind of offers that a comparable two bath house will get. It may even shock people how much that second bathroom is worth to a great many buyers. Of course a third bathroom doesn't have as much extra "punch" as a second so worry not if you have two.

Sellers should consider doing some work themselves that they feel confident in doing and by all means a little TLC cleanup and some fresh paint can go a long ways toward pushing that value up. The rules of engagement don't really change as the market ebbs and flows. Curb appeal, clean and ready, and functional by modern standards, will always yield the best results.

Leaves are Coming Down! Fall is Here.

OK sellers, the leaves are starting to turn color and some trees are dropping already. Yes my friends it is in fact October and that is what happens this time of year. Sellers need to keep the gutters clear as overflowing gutters are an easy fix yet manage to suck the curb appeal away.

It seems like a simple thing but buyers need to have a positive experience when they pull up and then walk up to the house. Getting a soaking at the hands of a clogged gutter sets a negative tone before they even set foot in the home. We never want a negative tone now do we?

The further we march into the cooler, wetter autumn and ultimately the colder and icy winter the more serious buyers braving the elements are. Buyers need to look past the little stuff, but sometimes they don't. Sellers need to pay attention to details to maximize value and bring the highest offer.

Autumn is a truly magnificent time of year and real estate can be quite robust during this period. although the volume drops a little, buyers are more serious and inventory is a little tighter so it is about equal in as far as supply and demand is concerned.

I mentioned in previous posts that the market is still climbing but the steep price appreciation has moderated substantially. I believe this is a healthy condition.

Interest rates have been very low over the last several weeks even by recent standards but they seem to be yo-yo-ing up and down in the threes. Loan officers have to pay attention so as to lock buyers in on one of those fabulous lows in the cycle. In general this is still a great opportunity for buyers. Although buyers may wax nostalgic for the low prices of 3-5 years ago these low rates are amazing and that will ultimately save buyers tens of thousands of dollars over the life of the loan.

Seller's: Water the Lawn!

Here in Southwest Washington we have had one of the best Junes ever as far as weather goes. Nothing but big blue skies and sunshine. Certainly not the norm for June. So, we have an early summer and that means we have to actually water our lawns. In a typical year we can usually go 9-1/2 months without worrying about the lawn. In the summer however that grass with brown out faster than Usain Bolt runs the 100 meters.

Curb appeal adds value to a home. This is not a novel idea. Yes the water company charges in body appendages in the summer, but keeping that yard nice and lush could be the difference between nabbing that over full price offer.

Many sellers are caught up in the notion that this market is so good it doesn't matter. Lies, filthy rotten lies. This market is awesome IF you have a well priced, cherry house. Buyers are not just buying any train wreck at any price. In fact, buyers are particular. When someone has a clean, move in ready property priced right, the buyers come out of the proverbial woodwork with big juicy offers. Ugly, poor condition homes with clutter and mess will linger in the marketplace unless they are priced like it's 2013.

Now there are exceptions, of course. There are a handful of neighborhoods that are so overwhelmingly desirable that the buyers are chomping at the bit for an opportunity to buy. These neighborhoods are few and far between. A few in Fisher's Landing, a few more in Salmon Creek, Prune Hill in Camas, Steamboat Landing, etc.

A healthy real estate market like we have right now, requires sellers to follow the time tested truths of curb appeal and the minimalist approach inside. Even if the property is located in one of the "HOT" neighborhoods, following these classic preparation techniques will still yield extra dollars on the offer(s).

Come on, just water the lawn already!

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.

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.

How Important is Curb Appeal in this Market?

I have talked about curb appeal in the past. It is and has always been a critical component to getting the best price possible. Curb appeal sets the tone in a positive fashion before the buyer even gets out of the car. Many buyer just drive by a listing when the curb appeal is low. I strongly discourage my clients from drive-bys. These low curb appeal listings are often the best value because the do not fetch top dollar. This is good for the buyer and bad for the seller. 

This post is from the National Association of Realtors®

WASHINGTON (January 16, 2014) – A home’s curb appeal is crucial because it can be the first thing buyers notice about a home. That’s why Realtors® rated exterior projects among the most valuable home improvement projects in the 2014 Remodeling Cost vs. Value Report.

“With many factors to consider such as cost and time, deciding what remodeling projects to undertake can be a difficult decision for homeowners,” said National Association of Realtors® President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio. “Realtors® know what home features are important to buyers in their area, but a home’s curb appeal is always critical since it’s the first impression for potential buyers. That’s why exterior replacement projects offer the greatest bang for the buck. Projects such as entry door, siding and window replacements can recoup homeowners more than 78 percent of costs upon resale.”

NAR’s consumer website HouseLogic.com highlights the results of the report in its “Best Bets for Remodeling Your Home in 2014” slide show. The site also provides information and advice on various home improvement projects, including a guide to kitchen remodeling with the best payback and dozens of exterior replacement projects.

Realtors® judged a steel entry door replacement as the project expected to return the most money, with an estimated 96.6 percent of costs recouped upon resale. The steel entry door replacement is consistently the least expensive project in the annual Cost vs. Value Report, costing little more than $1,100 on average.

Eight of the top 10 most cost-effective projects nationally, in terms of value recouped, are exterior projects. A wood deck addition came in second with an estimated 87.4 percent of costs recouped upon resale. Two different siding replacement projects also landed in the top 10, including fiber-cement siding, expected to return 87 percent of costs, and vinyl siding, expected to return 78.2 percent of costs. Out of the top 10 projects, the fiber-cement siding replacement project improved the most since last year, with costs recouped increasing by more than 15 percent. Two garage door replacements were also in the top 10; a mid-range garage door replacement is expected to return 83.7 percent while an upscale garage door replacement follows closely at 82.9 percent of costs recouped. Rounding out the top exterior remodeling projects were two window replacements; a wood window replacement is estimated to recoup 79.3 percent of costs and a vinyl window replacement is estimated to recoup 78.7 percent of costs.

According to the report, two interior remodeling projects in particular can recoup substantial value at resale. An attic bedroom is ranked fourth and is expected to return 84.3 percent of costs; nationally, the average cost for the project is just above $49,000. The second interior remodeling project in the top 10 is the minor kitchen remodel. The project landed at number seven and is estimated to recoup 82.7 percent of costs. Nationally, the average cost for the project is just under $19,000. The improvement project likely to return the least is the home office remodel, estimated to recoup 48.9 percent.

For the report, Realtors® provided their insights into local markets and buyer home preferences within those markets. For 2014, the national average cost-value ratio stands at 66.1 percent, a jump of 5.5 points over last year and the largest increase since 2005, when the ratio increased 6.1 points to reach a high of 86.7 percent. For the second consecutive year,Cost vs. Value data shows that the value of remodeling is up for all 35 projects included in the survey. Additionally, for the first time in four years, improved resale value of residential housing had more of an influence in the cost-value ratio than construction costs. A modest 2.2 percent increase in average national construction costs was more than offset by an 11.5 percent improvement in average national resale value.

The 2014 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 mid-range and upscale remodeling projects comprising additions, remodels and replacements in 100 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 16th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed in cooperation with NAR.

“Every neighborhood is different and the desirability and resale value of a particular remodeling project varies by region and metro area. Before undertaking a remodeling project, homeowners should consult a Realtor® as they are the best resource when deciding what projects will provide the most return upon resale,” said Brown. “Realtors® have a unique understanding of local markets, home features and buyer preferences and know that there are a variety of factors that affect a home’s value, such as location, condition of surrounding properties and regional economic climate.”

Seven of the nine regions covered in the report outperformed the national average, a distinct improvement over 2013, when just four regions performed better than average. Once again, the Pacific region, consisting of Alaska, California, Hawaii, Oregon and Washington, led the nation with an average cost-value ratio of 88 percent, due mainly to strong resale values. The next best performing region was West South Central with 76.4 percent, followed by three regions tied at 74.6 percent: South Atlantic, which improved from 63.7 percent in 2013, New England, which improved from 56.2 percent in 2013, and East North Central, which improved from 54.8 percent in 2013.

To read the full project descriptions and access national and regional project data, visit www.costvsvalue.com. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

HouseLogic is a free source of information and tools from the National Association of Realtors® that helps homeowners make smart decisions and take responsible actions to maintain, protect and enhance the value of their home. HouseLogic helps homeowners plan and organize their home projects and provides timely articles; home improvement advice and how-tos; and information about taxes, home finances, and insurance.

Founded in 1976, Hanley Wood, LLC, is the premier media and information company serving the housing, commercial design and construction industries. Through its operating platforms, the company produces award-winning magazines and websites, marquee trade shows and events, market intelligence data, and custom marketing solutions. The company is also North America’s leading publisher of home plans.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Curb Appeal is Buy Appeal

Yeah, yeah, I know that title is a cliche. But a cliche is often based in a hard reality. In my experience, people typically form strong opinions from their first impression. These can be difficult to change. There has been many a house that I have shown that looked horrible upon pulling up. I always tell my clients to give every house a chance. But over thirty five years of working with clients including fifteen in real estate, that first impression is hard to shake.

Sellers that have a rough looking front yard are well advised to take as many measures as they can afford or manage to perk up that curb appeal. Buyers should also learn to be forgiving when a house looks bad from the front. Ideally, the perspective should be very different depending on whether one is looking to buy a house or trying to sell their home.

Sellers need to maximize the number of people touring their home. They need to get the best price possible and curb appeal starts the tour off with a positive feeling. When a prospective buyer has a warm fuzzy experience as they pull up they are very likely to be more forgiving of minor defects inside. The tone has been set for a good showing when the curb appeal shines. This can add thousands of dollars to the value and that can lead to more and stronger offers.

As a buyer, one needs to learn to look past a rough looking exterior. Buyer's are often looking for a "deal". When the majority of prospective buyers have a tendency to have an unfavorable opinion of a house with bad curb appeal; a savvy buyer can see opportunity for a solid property at an under market value. This is true with interior issues such as bad paint and carpet or poor decorating choices. These are easy fixes for a new homeowner. The reduced competition means the seller will receive fewer offers and likely for lower amounts than a comparable, well staged home with broad curb appeal. That translates for buyers as a "good deal".

Sellers attempting to sell in the winter may have a difficult time building a strong curb appeal unless they are located in the southern half of the nation. Upper latitudes often have dark and dreary winters with dead grass, leafless trees and a general ugly yard syndrome. Keeping the home free of yard debris and greened up with some evergreen bushes or trees can help.

In summary, sellers can not overlook curb appeal if they want the best price for their house. Our current market rewards turn key, move in ready listings, with multiple offers often at or above full price and a quick closing. Less desirable condition tends to benefit buyers. Houses that don't have that move in ready sharpness, lend to linger on the market. These homes are the ones that get discounted and sold for less than market. For buyers these can be that "deal" they have been looking for.