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How Far Should You Go When Upgrading Your Whittier Home for Sale?

by The Domis Team

kitchen, remodel

As we discussed in our last blog, when you put your home on the market in the Whittier, La Habra, and La Habra Heights area, it may be on the market a while.  For someone who needs to sell, this makes the question of what to invest in the home to make it saleable a bit difficult.  You paint, clean, and declutter, but when it comes to deciding what improvements would increase home value, how far should you go?

Recently, the 2010-2011 Home Remodeling Cost vs. Value Report broke down the top 35 midscale and upscale improvements that can lead to increased sales prices; since last year, only 60% of improvements have this effect, as compared to 63.8% last year.  In a weak economy, where housing prices are down and where there is plenty of housing inventory for buyers to choose from, people do not want to pay a premium for upscale improvements.  They may want the finest quality accoutrements in the home but might not want to pay extra for them.

What's interesting about the report is that it not only compares project costs with resale values for 35 midrange and upscale improvements, but it take location into consideration.  Using census breakdowns of regions in the U.S., the report also addresses where there was a difference in the resale value based on geography as well as the project itself in 80 markets around the country.  Realtors® contributed their data and insights to the report. 

The payoffs vary by region, but for the Los Angeles area, here are some of the best improvements.

Top exterior projects

•·      Window replacement - 71.6% vinyl or 72.4% wood

•       Replace siding - 72.4% vinyl or 80& cement fiber

•       Wood deck addition, especially when coupled with kitchen remodeling, a resale value magnet - 72.8%

•      Garage door replacement - 83%

Top interior projects:

•      Attic bedroom  - 72.2%

•      Bathroom remodel - 72.8%

•     "Minor" kitchen remodel ($16,000 vs. $113,000) - 72.8%

To do an upscale variation on any of these upgrades bring less of a return.  What's the difference in the approach and the results?  For kitchens, for example a midscale renovation focuses on what improves the appearance and energy efficiency.  In contrast, an upscale remodel might include replacement of cabinets, flooring, and countertop with the top-of-the-line materials, custom artistry, special touches, and premium appliances.

Specifically, a basic kitchen remodel on a 200 square foot kitchen might include, according to the report:

•·         New cabinet doors and drawer fronts with raiser panels; new energy efficient appliances; new laminate countertops' mispriced sink and faucet; repainted trim with new wall covering; remove and replace old resilient flooring.

An upscale renovation on the same sized kitchen would include:

•·         Custom cherry cabinets with inferior accessories like sliding shelves; stone or glass tile countertops and backsplashes; built in top o f the line appliances including a commercial stove; built in microwave - convection oven; extras like a built-in warming tray and trash compactor; high end undermount sink with designer faucets and built-in water filtration system; new general lighting and task lighting and undercabinet lights; new cork flooring with cherry trim

Based on economics alone, a homeowner in the Whittier area who planned to sell might go the cheaper route, as least on some things.  Where it gets tricky is that in some neighborhoods, certain features like granite or glass tile countertops or custom cabinets are the norm.  Doing the minimum might put the home at a disadvantage, especially if similar priced homes have better upgrades or better craftsmanship.  The homeowner is compelled to spend a whole lot more money for an uncertain return.

Needless to say, how much any improvement pay off depends on the general condition of the house and neighboring properties, the neighborhood itself, and the regional economy.  Going for the upscale remodel is more of a gamble in an area where sales are down.  As noted above, it can be equally chancy to go "basic" when the neighborhood is going "luxury."

If you are thinking of selling, a knowledgeable Realtor®, who has access to lots of comparative data, can be invaluable in helping you plan what to do.  I have probably seen nearly every house for sale in the area and have good insights on what really turns buyers on vs. what contributes no value.  I always remind sellers that certain upgrades they might make if they plan on staying in the home for a while just don't pay off when they are readyto sell the place. 

This is particularly true of additions such a master suites.  Buyers might "ooo" and "ah" about an elegant bedroom with tray lighting, double walk in closets, and lots of space - but will they want to pay the extra money?  The survey says "NO!"  FYI, the Remodeling Report says the return at resale is only 52.7% of a sizeable investment ($232,062.)  In a neighborhood where prices are depressed, hoping for a $122,000+ price increase in the selling price might be a stretch!

Need insights on how far to go in your efforts to improve the selling price of your home?  Call The Domis Team today at 562-884-5373.

Courtesy of Linda and Tim Domis, Neighborhood Specialists

How much is your home worth?  http://www.homevalueslahabra1.com/

 Contact Linda and Tim at:

http://www.whittierhomes.com

http://www.lahabrahomesonline.com

http://www.lakeparkbrea.com

http://www.lakeparklahabra.com

Email the Domis team at linda@lindadomis.com

Will Your Home Be Among the 5.2 Million?

by The Domis Team

sold, homeAs your real estate agent, it is part of my job is to put a positive spin on the market.  If you ask me if it is a good time to sell your home in Whittier, I am likely to say “Yes.” This is not just wishful thinking I want to share just to make a sale.  According to the National Association of Realtors® (NAR), there will be about 5.2 million sales of existing homes this year, up about 8% from last year.  Is yours likely to be among the lucky 5.2 million?  What should you keep in mind if you are thinking about selling?

What’s your personal situation?

Many people have found that price drops in housing have left them owing far more than the house is currently worth.  If you are in this position, selling would be a losing proposition for you.  My advice would be to stay put unless you have to sell.  With a few years under your belt, your home might regain some of its value so that selling might enable to you to break even or even make a profit.  If you are unemployed, fearful of losing your home, have poor credit, or beset with other financial issues, selling your home at short sale might be an alternative. 

What’s the local market?

The NAR cites national figures, but housing prices and sales records vary according to neighborhood.  I can show you sales figures for comparable homes a few streets apart that show vastly different selling prices, inventories of homes, and days on market (DOM).  If your local market is bad, your home might be the one that beat the odds, but I can give you the data to help you make the decision.

Despite the prevalence of useful local information on the internet, the detailed information that a licensed agent like myself can offer is what you need to know.  Right now, if you look on Trulia, a popular real estate site that presents local market statistics, you will see that prices in Whittier are down substantially from five years ago, but have remained stable over the past year.  These sites do not tell the whole story about Whittier, nor consider areas that appear nearby on the map but may have a different profile.  In 2010, in Whittier, La Habra, and La Habra Heights, an average of only 41.9 percent of all of the homes that went on the market thru the multiple listing service actually sold.

Is more competition coming?

The NAR is predicting that the supply of homes is shrinking toward “normal” levels, about a five months’ supply.  However, a potential influx of foreclosed and bank-owned homes could increase the competition for sellers.  At the moment, banks are holding off on finalizing foreclosures to avoid the carrying costs of owning real estate and a due to freezes after disclosures about robo-signing.  Within a year, many homes in default will hit the market as foreclosures.  Though a foreclosure is not appealing to many buyers, the addition of many homes to the mix gives buyers more choices.  A would-be seller, who doesn’t know how long the process will take, would be smart to try to sell now.  You could have your home out there before the pool of available properties increase.

How low will you go?

Five million homes may sell in 2011, but buyers are savvy and feel no urgency.  They watch real estate news like you do and know that prices are relatively low.  Will prices go lower? Will having more foreclosed homes on the market further depress prices?  What will happen with interest rates?  Should they take a chance on ownership in a still-weak economy?  With the federal tax credits gone, why buy now when prices might go lower or the economy may tank?

With this mindset, buyers want bargains.  They will pay 2011 prices, not what the home would have sold for five or ten years ago – and want to negotiate on those.  What this means for you as a seller is that you must be willing to price your home right in view of current market conditions.  If you are planning to buy another home, it may soften the blow to realize that the sellers of your next home are making the same painful price adjustments.

In addition, you must be willing to go the extra mile to make your home stand out to prospective buyers.  You must make repairs and stage it inside and out so that the buyers are drawn in by the curb appeal and impressed once they get inside. You may have to offer to pay some closing costs, throw in the riding lawnmower or the appliances, and offer some creative incentives to further sweeten the deal.  Needless to say, if you live in a community where there are many similar homes for sale, your pricing, staging, and bargaining strategies must be spectacular if you want to be in the number of successful sellers.

What if you own a condo?

Deciding to sell your condo right now is even trickier, as federal regulations and home owner association (HOA) circumstances are at play as well as market forces.  Many HOAs have low reserves these days, as owners back off from paying their dues when times are tough.  When condo complexes have more than a 15% delinquency rate on dues, lenders back off.  They reason that the association won’t be able to fund necessary repairs, which makes their loan riskier.

Owners may then sell for cash, but the buyers are often investors who plan to rent the units.  If the renter/owner ratio climbs too high, lender are even less likely to finance future sales.  Since many condo buyers use FHA loans, a whole new layer of regulations comes into play.  FHA must approve the complex, yet will only back loans on up to 30% of the buyers of individual units.  If you want to sell your condo, checking with your HOA about delinquency, ownership rates, reserves on hand, and FHA saturation are necessary first steps.

So, should you list your home?

If you have to sell your home, you may have to proceed, regardless of anything else.  If your moving is more discretionary – i.e., you want a bigger home or one in a different neighborhood - you must carefully weigh the facts.  This is not the time to “test the market” to see if your home will sell if you are not committed to making the tough choices that will increase its salability in a tough market.  It is also not the time to “go it alone” based on internet tips.  You need an experienced professional by your side to help you analyze whether you should list now and then strategize how to increase the likelihood that your home will be among the 5.2 million predicted to sell this year. 

Courtesy of Linda and Tim Domis, Neighborhood Specialists in Whittier, La Habra, La Mirada, and surrounding areas.

How much is your home worth?  http://www.homevalueslahabra1.com/

 Contact Linda and Tim at:

http://www.whittierhomes.com

http://www.lahabrahomesonline.com

http://www.lakeparkbrea.com

http://www.lakeparklahabra.com

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Photo of Linda & Ryan Domis - The Domis Team Real Estate
Linda & Ryan Domis - The Domis Team
Keller Williams
16310 E. Whittier Blvd. Suite F
Whittier CA 90603
Cell: 562-884-5373
Cell:562-458-6947
Fax: 562.902.5158
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