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White house, blue house, old house, new house?

“Depreciates $2000 the minute you drive it off the lot.”  We’ve all heard this justification for buying a used car versus a new one but how well does this relate to housing.  Unlike cars, homes are supposed to appreciate.  It was not until the most recent years that we have seen the opposite, or at least the less than stellar appreciation of years past.  So which does offer a better value, older homes or newer?

Don’t think just about the house but the whole package.  An older home is generally going to be in a more established part of town.  There will be little guessing what the neighboring properties will look like, what local businesses thrive and what people and amenities the area has to offer.  Making a bet or taking a risk on this neighborhood can be done with far more information backing up your decision.

To the contrary, or even the extreme opposite, if you buy a brand new home in a brand new subdivision you have far less information to back up your decision.  How well does the neighbor take care of their lawn?  You may not know for years.  How large will the neighboring homes be?  How long will it take for the developer to fill the subdivision?  Will changes in the market affect these plans?  If you see value in information and an ability to better predict the outcome of your purchase, then an older home may offer more value.  If you see value in crisp finishes, walk in closets, integrated technology and a theater room you may find more value in a newer home.

The most important thing is that you see value and that you feel those values are shared by many.  It is easy to pick a house you want to buy but few people remember they are also choosing the house they will someday have to sell.

The Coop Scoop

You may or may not know that I keep some chickens in the yard so if that is a pre-requisite for your next real estate agent, we’re all set.  If it is merely and added benefit that your agent can advise you on coop design and the suitability of your yard for poultry raising then that is okay too.

Recently our coop was featured in the Madison Magazine.  The print version featured a photo of my lovely girls (Lola and Evelyn) so the on-line version is far less attractive but here it is.

Tile or Vinyl

A recent email with a pretty common dilemma.

Ben- I was given your name from a friend, Bridget N.. I was wondering if you could answer a question for me? We are putting our house on the market in 1-2 years. This summer we are going to update our bathroom. Our biggest question right now is…..ceramic tile or linoleum? I know that ceramic tile is an upgrade, but is it going to make that much of a difference in the resale value of our house if we go ceramic tile vs. linoleum? Our house is under 1,100 square feet, definitely a starter home. Someone else also pointed out that our kitchen is currently linoleum so maybe we do want to stick with linoleum? I know there is no reason for you to be giving me advice, but would greatly appreciate it. Thank you so much for taking time out of your busy schedule!
Kristine

My Reply: Kristine,

That’s a tough one. Installing ceramic in lieu of vinyl will not add
a specific dollar amount to the value of your home. That being said,
it will and can make an impression. If a buyer sees 3 homes and 2
have vinyl and one had ceramic, it is possible that the ceramic along
with other features could elevate your home and give the perception of
quality finishes and fixtures.

That being said, a fresh new, well maintained home also adds an
intangible value. in 1-2 years one would hope that both tile and
vinyl will look fresh and newer. 4-5 years and the ceramic will win
assuming that caulk and grout are kept clean. ( I looked up where you
live) Your home is of a certain age that new tile could help
modernize more than vinyl and approaching 200k in value ceramic is as
much an upgrade as it is expected.

If the bathroom is not off the kitchen, then I would not worry about
not matching finishes. I should add this thought too. I tend to do
most of my own tile work so I always go tile.

I hope that helps. If the market is as tight in 1-2 years as it is
today you will want every bit of leverage you can get. When there are
more houses than buyers it becomes a beauty contest.

I hope that helps. I sell homes as well as pontificate on them, so
feel free to drop a line come those 1-2 years.

Ben

What would you have said?

Let there be light

Light Switch

So I get around a bit, not so much it is a bad thing but I have been in a few houses.  When you visit a home unknown to you, you have certain expectations.  You walk into a dark room and look to the left and right inside the door for a switch, no switch you look for a lamp, no lamp a draw string.  Another expectation might be that if you find a switch, and you switch it, something will happen.  If nothing happens I, and maybe the buyer I am with, will suspect something is wrong.  I will think that there is a dawn to dusk sensor or there is a bulb burned out, or the fixture is around a corner or outside, maybe just maybe a bad switch, but my buyer thinks there is an electrical problem. My god, who would buy a house with an electrical problem?

When you create your prep-to-sell list of to-do items, make sure you take an inventory of your switches and see that when you switch them, something happens.  If nothing happens, fix it, plug something in so something does happen or leave a note as to why nothing happens (exterior fixture, garage light etc.)

While I have your ear, replace all of your older but grounded two prong outlets with three prong.  That, to some cries $2.50 and 10 minutes, to others it cries “electrical problem.” and who buys a house with electrical problems.

I’d Be Happy To Help

home
I would struggle to make something more convincing up.  I present for your consideration…
Hi Ben,
I am done messing around with FSBO.  Would you be my agent?  I have it listed at ——.  I need to sell it for —— to pay off the mortgage and pay 6%.  The latest tax assessment came in at ——.
Thanks,
T.T.

I almost choked on my English muffin when I read this the first time.  I could see the face and hear the voice of the sender as I opened the email and read.  She is a new friend/contact but someone I felt I could work well with.  We had  joked a bit regarding he desire to sell her home on her own when we last spoke.  I understand, money is important and best when kept.  Even I might try the for sale by owner route first.  I am here to help, now or later. That being said, don’t wait too long to try another route should your plan A not go well.  The longer you wait to change directions the further from your destination you will be.

Four Dollar Coffee

Coffee ImageI read articles all the time that link a spending habit or surge in one categories numbers to a different industry or market trend. Evidently the $4 coffee has seen a re-birth in the last few months. Starbucks and other purveyors of overpriced lattes are back in the black. Pundits, journalists and baristas alike feel this is a sign of our economy’s rebirth and we are on the mend.

The masses’ willingness to indulge, treat themselves, pay more for less, spend outside their means, and exercise a  “we’ve worked hard to get through these “trying times” mentality all point to consumer confidence and the light at the end of the tunnel.

I  though might take a moment and ask of you this: Is not the four dollar coffee and all it stands for exactly what got us in trouble the first place?

Paying The Piper

From an early age we learn lessons about our behavior and it’s consequences. Losing allowance for the household treasure you lost or broke, losing your car insurance because you drive like a teenage idiot boy are decisions that cost you money and teach you lessons. Why then is it so hard for people to understand that if you make a poor choice in buying, maintaining, renting, remodeling, or selling a home you may have to pay the price (or often more appropriately lose the money)? Have we been spoiled for so long and treated with kid gloves regarding housing that the idea of losing money in real estate is inconceivable? If there is a potential gain, there is also a risk. We all knew the growth real estate had seen could not last forever. Why then is the final end of the ride so surprising and disruptive?
If your decision turned out to be a bad one, don’t be the victim, address your hurdle and overcome it. If you lose now, you’ll appreciate winning even more next time. Learn from it and move on.
If you are going to buy a home working with a trusted partner, someone who values you and the deal equally, and who will someday proudly help you sell that home will help minimize your risk. It will still be there, but you will have protections and advantages others do not. I can be that guy.

The List Price

Yesterday I showed a home on the Isthmus with a list price of 141k. It sold just a few years back and had seen some recent updates but was priced below what the current owner paid and was languishing on the market. The home also had a list, as in the eastern edge of the home was probably 6 inches lower than the western edge. Other than the obvious difficulty of frying a decent egg on a stove that was not level, it was a fine house. Keep in mind that in hot markets or even in areas perceived as hot, you may feel forced to accept less than the ideal. Make sure that whatever you buy will be acceptable to the next buyer in a potentially less attractive market and you’re covered.

Do you need an agent to buy a home?

I pulled this from one of the local FSBO websites in Madison.  I thought I might do some point, counterpoint.

Do I need an agent?

No!   If you’re buying a FSBO or a Flat fee property they diminish the sellers ability to bargain.

Yes, working a commission into your offer could eat up some of the seller’s wiggle room.  Your not working with an agent could just as easily allow you to pay too much.  Will the seller of this home critically review recent sales and help ensure you are not paying a premium.  In my experience, most fsbo sellers anticipate the likelihood of compensating an agent and make allowances.  Keep in mind that even though this seller has chosen to go without representation, they will see some value in the involvement of a professional, if for no other reason to facilitate and see the home to close.  This does not even take into account the problems that can arise during an inspection or appraisal. It might be nice to have someone around that does this kind of thing for a living.

No!  They get paid when you close so they want to close, close, close!

That’s just stupid.  They get paid when you close, fine.  It will come.

No!  When you pay too much they get paid more!

I get 3% if you pay too much, once.  If you get a sweet deal, I get a commission from your buying a home, your selling a home, your co-worker buying a home, your grandmother, you get the idea.

These two just seem like playground taunts.  The sooner you close the better for them.  The more discerning you are the worse for them. Sure, if your agent is a lousy, then yes.

This is when they think it is a good idea and I guess I agree.

If you’re buying a “full service” MLS listed property you should have an agent, but only if you have a buyer agency (BA) agreement. Without BA “your” agent works for the seller.  With BA the agent must legally represent your best interests.

If an agent shows you a property they’re “your” agent for that property.  If you don’t have a BA with them you’ll be locked into representation with an agent who is legally obligated to put the interests of the seller above yours.

For the seasoned real estate purchaser there are arguably benefits for working directly with the listing agent but a buyer’s agent is always a  safe bet.  It appears to me that working with an agent, in particular a buyers agent, triumphs.  I know a decent one if you are in the market.

Environmentally Friendly Features

Every time I list a house I have to fill out a profile sheet. This data is what becomes the MLS sheet with all its dimensions and numbers. I usually skip over the part for noting the “Environmentally Friendly Features.”  I sell mostly older homes. Homes built before it was cool to be green (yet oddly built in very green ways with far more locally sourced and natural materials). Some of the choices are Certified Green Built, Energy star certified, or that you have energy star certified appliances. As far as I am concerned these are all a bunch of hooey. My old house has an exceptionally low fuel usage because we are responsible, have made updates and try to be efficient. The irony is that the homes that can boast these features are often in car centric new subdivisions carved into farm fields on the cities periphery. Shouldn’t I get to list a green feature like, can walk to get beer, or dinner, a show, the market. At what cost are we discarding or devaluing the old so we can save the environment. To test another “green” aspect of your home, check you address at www.walkscore.com. I got an 83.