January 31, 2015

Real Estate Outlook for 2014: Equity will rise but so will interest rates.

Filed under: Real Estate — Chuck @ 2:36 pm

The economy is strong enough that the Fed decided in December to scale back its bond-buying stimulus program, which has been in place for years. By stepping in as a major buyer of bonds – which are interest-bearing commodities – the Fed was able to artificially manipulate the markets in a way that helped to keep interest rates very low.

That was a helpful strategy at a time when credit was tight and people did not have the financial means to afford higher interest, and one of the main beneficiaries of the stimulus program was the housing market. Low prevailing interest rates make it easier to take out loans, especially for high-ticket items like houses. In 2013 we saw some of the lowest home mortgage rates in history, and that fueled a healthy year of real estate buying and selling.

For one thing that helped shrink the huge volume of foreclosures dramatically, thanks to lots of Fed and big bank support for facilitating short sales and other programs to help move inventory. With those homes no longer pulling down overall housing values because of their fire-sale price tags, the market for other homes strengthened and appraisals began to come in higher than they have in years. That boosted equity and helped convince buyers that the real estate market was once again a safe place to invest – with the potential for substantial gains for those who still got in while prices were extremely attractive and affordable.

Now that the economy can get off of life support from the Fed, interest rates are poised to start climbing – and since they have been around zero for about five years they have lots of room to rise. So don’t be surprised to find that mortgage rates start ratcheting upward in a stair step trajectory. The stock market is at new all-time highs, corporations are ready to invest much of the money they have been cautiously holding on the sidelines, and building permits for new homes are also enjoying some strong forward momentum. The days of ridiculously cheap loans are behind us, but as mortgages go up so will home prices – and that will reward homeowners with rising equity, making home purchases a good financial investment for 2014.

The savvy home shoppers won’t wait around for springtime – the busy season in the real estate business – because that is when the competition is going to really heat up. More buyers means more opportunity for homeowners to ask higher prices. So if you are buyer you should consider filing mortgage paperwork right now. As soon as you get an idea from the lender that you will qualify you’ll know about how much house you can afford and can start looking. That will also ensure a smoother closing, versus waiting until spring or summer when sales are brisk and banks are busy – which usually slows down the whole process and can significantly extend the time between signing a contract and completing the sale.

Homeowners ready to sell, on the other hand, should immediately begin to line up contractors to put the finishing touches on their homes and get them in tip-top shape with great curb appeal. By springtime most contractors will already be hired and committed to projects. Another good idea is to have a pre-sale inspection done, because a home inspector can tell you exactly what needs to be done to ensure that your home is good condition and free of problems that could concern a potential buyer or cause you to have to lower your asking price.

January 15, 2015

Homeowner Tips for the New Year

Filed under: Home Owner Tips — Chuck @ 2:44 pm

Every January it is the right time to make those annual goals and promises to yourself that will ensure a healthier and happier year. If you’re a homeowner you should also incorporate home maintenance plans and projects into the scheme of things, to ensure that your home not only stays safe and sound but that you also preserve your investment in it and grow your equity as much as possible.

The trouble with New Year’s resolutions, of course, is that most people either don’t make any or they make those that are not practical and achievable. Setting goals that are too lofty and ambitious can undermine the whole strategy and just leave you feeling as if you aren’t capable. We don’t want to start down that path, so the first step is to set realistic and doable goals.

A really great way to accomplish this is to create a home maintenance calendar of events. That way, all throughout the year, you can glance at your calendar to find out what home maintenance tasks have priority that particular month.

Here are some good guidelines that will work well with most people living in regions of typical climate across North America:

1st Quarter
January: Make sure your holiday decorations are taken down and stored away. Check your stock of emergency supplies like candles, flashlights, food and water, and a portable camping stove in case you get stranded by winter storms.
February: Be sure the handrails are sturdy and that you keep the steps and walkways clear of hazardous ice underfoot. Buy more de-icer if necessary before the next storm hits.
March: With winter winding down and high winds coming, it is a good time to police the grounds and look for damaged tree limbs. Set up an appointment with a tree surgeon if necessary to trim away dead or damaged limbs. Start planning your spring garden and lawn projects now, so that you’ll be ready as soon as the weather warms up enough to plant.

2nd Quarter

April: April traditionally brings lots of rain, and if your drainage is inadequate that could contribute to bigger problems. Check the drainage around your home and if puddles are gathering near the foundation have a contractor troubleshoot the problem.
May: Don’t forget to add mulch and compost to your flower beds or vegetable garden to keep the plants fertilized and capture as much moisture as possible, even when there is little rain.
June: June is a good month to schedule an annual termite inspection. Termites and other wood-boring insects can cause catastrophic damage, but if you check for them once a year you will have no worries.

3rd Quarter
July: July is a good month for exterior painting. So if your house needs a touch-up now is one of the best chances for that before the weather changes and makes house painting harder to schedule.
August: Since August is such a hot month – and there are plenty of projects to do outdoors like gardening – be sure to play it safe. Drink plenty of water and don’t work during the hottest time of day. Stay hydrated and healthy.
September: Get ready for leaf season and make sure your rakes and leaf blower are in good shape. If you have a ladder and a friend to “spot” for you so it is safe you can give the gutters a good cleaning.

4th Quarter
October: Soon the snow and ice will come and if the roof is not in good shape it will contribute to all sorts of other home maintenance problems. Check the roof and make sure that it is in good shape with no curled shingles or missing flashing.
November: Make sure that all the plumbing pipes are well insulated and that the basement and attic are not leaking heat or letting cold air inside. Check the caulking around windows and the weather stripping around doors.
December: Be sure your car has a strong, charged battery and an emergency kit inside in case you get stranded on the road during winter. Make sure that any Christmas lights you put up are safe, and that if you have a tree inside you keep it watered so that it does not dry out and become a fire hazard.

Of course if you live in a really southern area or in the far north where the winters are long and colder you can adjust accordingly. The main thing is to start a calendar that works for you, with projects that are not going to take up so much time or cost so much money that you will never get around to them. Keep it simple, do what you can each month, and add you own ideas along the way. By this time next year you’ll have plenty of DIY home maintenance to feel proud about, and that’s something worth celebrating.

Home Inspections: Issues with banisters, railings, and decks.

Filed under: Property Inspection — Chuck @ 2:43 pm

Homeowners often become so used to the little quirks in their homes that they no longer even notice them. But when you get ready to sell the buyer’s inspector may go over the home with a fine-tooth comb and highlight all of those items that need repair. You want to resolve those issues quickly and with confidence, so that the sale is not jeopardized and the buyer does not get nervous and have second thoughts. That’s why if you find that the inspection report includes items related to safety with banisters, hand rails, and decks you need to address those right away.

As a seller that’s important because you do not want the potential liability of marketing a home where someone could lose their balance, slip, and fall. Accidents happen, and if you get embroiled in a lawsuit because someone is injured on your property that will hold up any sale you have planned. If you’re a buyer, on the other hand, you want to make sure that you get your money’s worth and don’t invest in a home that has potential safety hazards. You can always negotiate on price regarding who pays for the repairs highlighted in the inspection report, but the bottom line is that you want to get them taken care of before you move into the home.

• Any issues with hand rails, decks, stairs, and similar parts of the home can also be an obstacle when it comes to compliance with local building and housing codes. So the smart, direct path is to study the report, as the inspector any questions you may have, and then hire a qualified contractor to resolve the trouble spots.

• While these issues can represent expensive potential liability because safety problems can cause costly injuries, fixing them is usually not very expensive.

• A loose handrail may just need to be structurally supported. A problem stair step or walkway may simply need to be repaired, and oftentimes a hazardous deck railing needs to be raised a little higher.

• In some cases loose carpet on stairs – which is really easy to remedy – may be the culprit. The hardware holding a stair rail may be old or not properly anchored but can be simple to fix.

There are instances, however, when an entire deck, for example, may represent a hazard because it was constructed with bolts and screws that are rusting and could cause the entire structure to collapse. During 2013 there were some horrific collapses that made the news, and they were blamed on poor construction. In that case the repair will cost more, but it is still a bargain because it can save precious lives.
Once the repairs have been made you’ll want to have the home inspector do a follow-up repair to ensure that everything was properly completed. If you are the homeowner, be sure to hold on to receipts for payment to contractors and inspectors, however, because those are legitimate expenses that can later be subtracted from the capital gains you earn if you sell your home. That can reduce your tax basis and help you keep more of your profits in your wallet.

Home Inspection Issues: Stairs, railings, doorknobs, and walkways.

Filed under: Property Inspection — Chuck @ 12:05 pm

December is a great month for talking about inspection issues related to accidental falls, since this is the start of the season when most homeowners experience slips and slides on ice and snow underfoot. Your home inspector is well aware of the hazards that may be present in a home, even though to the untrained eye such things may go unnoticed. Whether you hire an inspector to perform a general inspection before buying a house or you hire one to evaluate your home before you list it for sale, don’t be surprised if items that seem insignificant to a layperson may be flagged as important on the inspector’s report. Those include such innocent-seeming items as staircases, shaky hand rails or banisters, or walkways that are uneven.

Issues That May Be Flagged in the Report

• The types of issues often mentioned in an inspection report that are related to tripping or falling hazards include such things as unstable handrails, stairs that are not properly designed, and outdoor walkways that could potentially be tripping hazards.

• When a home has a deck, for example, that presents another set of safety considerations that the inspector may comment on in the report. If the railing around an elevated deck is not tall enough, for instance, it makes it easy for someone leaning against it to accidentally fall.

• Missing doorknobs may seem inconsequential, but if your child ever gets accidentally locked in a closet because the inside of the doorknob is missing, you’ll realize how serious that can be.

• Walkways around your home may have slumping steps that can encourage your feet to slip from under you, or a tree’s root may be pushing up a section of a concrete walkway and creating a hump that’s easy to trip over. That kind of thing has the potential to be unsafe – and could become a serious financially liability if someone on your property like a visitor or the mail carrier falls and gets hurt.

What to Do Next

After you review the inspection report, ask the inspector to clarify and explain anything that you don’t understand. Then, using the inspector’s written recommendations as a guideline, have your handyman, contractor, or other qualified professional give you an estimate for repairs. In some cases, such as a loose or missing doorknob, you may be able to perform the fix yourself in order to save some time and money.

More complicated issues may arise when, for instance, the risers and runners that make up a staircase are not the right height or length or when a sidewalk is buckled or entryway stairs leading into the house are deteriorating.

Follow-Up Procedures

If repairs or maintenance are needed, the buyer and seller will want to negotiate the cost. The seller may do the repair prior to closing or pay cash at closing or reduce the sales price to help compensate the buyer fro the expense of doing the repair at a later date. Whatever the case may be, solicit 2-4 competing bids to figure out your actual costs. After repairs or upgrades it is always a good idea to have your inspector return for a follow-up visit to look over the work and give it a clean bill of health or make further recommendations as needed.