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You are here: Home » 2016 » February

SO HOW IS THE MARKET?

Last year I was expecting prices to flatten out in 2016. My reasoning was that the Fed was supposed to raise interest rates and we were expecting a medium to big increase in the number of resale homes for sale, all at the same time that more new home communities were opening up.

 

The Fed DID raise rates, but after an initial blip up, mortgage rates are the same or LESS than before the Fed’s action. A lot of that has to do with oil prices being lower, China’s economy slowing down (or crashing?) and the global stock market gyrations (mostly down).

 

As far as inventory goes, we still don’t have many resale homes for sale in our area. I still think there are large numbers of people that would LIKE to move. They like the new and improved value for their home, but then when they start shopping for what they’d have to pay to buy their next home, they often decide to just stay put.

 

We DO have a large number of new homes for sale now, but most of them are higher than $500K, some of them are a LOT higher.

 

I always go back to income and jobs. If people are working and making a good wage, that is going to keep the real estate market humming along. Right now the Silicon Valley is still mostly booming, and their real estate prices are astronomical, so that continues to send buyers out this way. I do realize there are dissenting opinions on how much longer this can continue, and I’m starting to hear and read more people talking about the possibility of the Silicon Valley being in another bubble, which would affect us greatly if it popped. My vote is for slow and steady. I’m tired of boom and bust! Stay tuned…

CHANGE THAT FILTER!

I’ve seen it hundreds of times. I’m at the home inspection with some clients as the inspector is telling them the issues with the home they are about to buy, and also dispensing some sage advice on home maintenance. When the inspector gets to the part about changing the air filters frequently, the new buyers both nod their heads enthusiastically, and promise to be responsible homeowners. Fast forward 5 years, and I am back in the same home getting ready to list it for sale, and I see it, the same filter that was there 5 years ago. Dust and dander are hanging off the filter nearly half an inch thick. I mention that they might want to change that before we put the house on the market because it has become an eyesore. They look up, as if seeing if for the first time, and finally it gets changed.

 

Sound familiar? HVAC filters need to be changed frequently. If they are not changed as recommended, the filter can become clogged and the airflow through it will be reduced. This puts an extra burden on your HVAC system that will reduce it’s life and increase your maintenance costs. If a clogged filter is left in a furnace, the furnace may cycle on and off because the interference from the filter will play tricks on the sensors. Under normal circumstances the filter should be changed every three months.

 

One option for you is www.Filters-Now.com. There you will find practically every make and model of filters. Can’t find yours? No problem, they’ll custom-make filters for you. Then you can sign up to have them auto-shipped to you every three months. So then you’ll have no excuse NOT to change them. Unless you can’t find your ladder, then I can’t help you.

DO HOUSES SHRINK?

So why is it that the square footage of your home is different when it is measured for an appraisal than what the builder’s floor plan showed? And how come different appraisers will measure a home at different sizes? Unless you’ve added onto the home, I’m sure it’s the same size as the day you moved in.

 

The most likely reason is that some appraisers are more careful with their measurements than others. I’ve observed some appraisers measuring with a measuring tape down to the 1/4 inch while others use a measuring wheel just to get the general dimensions of a room and round off to the nearest foot.

 

Another major reason is that some appraisers measure the outside dimensions of the home, while others measure the inside. Builders like to measure the outside of the home so the home appears larger for their marketing efforts. Lenders sometimes prefer to measure the inside of the home, since that is actual living space and lenders are usually more conservative since it is their money at stake. Some appraisers will even go so far as to measure and then SUBTRACT out the area where your fireplace sits.

 

If you are wondering how a few inches here or there could make a difference, I assure you it really does. The effect is compounded across every room of your home. If your walls are 6 inches thick, then an exterior measurement might measure one of your rooms at 12 feet by 14 feet, which is a 168 sq. ft. room. An interior measurement would yield a room 11 feet by 13 feet, which is 143 sq. ft. That is a 25 sq. ft. difference, and that is just in one room! Multiply that by all the rooms in your home, and you could be losing 250-300 sq. ft. altogether.

REMODEL TO SELL?

A common question I’ve heard from potential sellers over the years is in regards to what improvements or remodeling they should do to their home to maximize their price. It seems like the homes getting top dollar are the ones that have the granite slab counters, upgraded cabinets, pools, etc. It would seem that if you have a “standard” home, then adding these upgrades would be a good decision, right? Not so fast! Unless you have some unique situation, it’s usually better to NOT take on some huge remodeling project in order to sell.

 

Every year there are major studies done as to what remodel projects provide the best return on your money. For example, they say a new kitchen may raise your value 70-80% of what you spent, while a bathroom may add 60-70% of what you spent (of course these numbers vary widely based on what you do and how much you spend). While this sounds good at first, note that these numbers are LESS than 100%! This means you are losing money by doing these improvements.

 

Remember, what you care about is what you “net.” What sense does it make to pour $30,000 into your home, when it only increases your sales price by $20,000? In this case you would be in the hole $10,000, and have the inconvenience of a remodel, as well!

 

As I mentioned above, there are some rare situations where you might want to spend the money. Let’s say you have a 4 bedroom, 1 bath house. In this case, adding another bathroom should return well more than the cost. Or let’s say your pool is almost done, and it will take another $5,000 to finish it so it’s usable. If your carpet and/or paint are in poor shape, those are often worth the money, but don’t go extravagant!

ZILLOW UPDATE

Zillow is the most popular real estate site. Their most famous (or infamous) feature is their “Zestimate” of a home’s value. Their computer looks at the public records information about a house and then make adjustments based on recent solds. It’s just a ballpark figure, but some buyers and sellers treat it as the gospel when it comes to value. What they fail to see is that Zillow can’t know the subjective factors that go into local real estate values. You may have bordering neighborhoods with drastically different appeal to buyers, yet the Zillow computer can’t possibly know that. The same thing applies to some objective factors like upgrades inside the home, landscaping, golf course views, etc. Another big problem is when the public records are wrong, so they miss extra square footage or even a pool.

Even Zillow admits that their Zestimates can be off by about 8% high or low. So on a $500,000 house, that is $40,000 off. But some agents around the country have done their own research and they are seeing MUCH bigger discrepancies, from 11-42%! Around here I’ve seen Zestimates be off by almost $100,000 in some cases.

So keep in mind that Zestimates can be way, way off. If you are just curious, that’s fine. But if you need a more accurate number to help you make some hard decisions about whether you can or should move, you need a local real estate professional who knows your market. They will come take a look at your home, and take into account all the features and benefits of your home, and compare that to the actives, pendings and solds for homes like yours, and then give you an educated opinion of value. If you are curious what your home is worth, send me an email at Brian@SharpHomesOnline.com.

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