Maximizing your remodeling dollars

Deniece W. Smith Welcome Home. Phone: 650.483.2055 License #: 01295757 Email: dsoldit@gmail.com Web: www.dsoldit.com

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Considering Selling Your Home?
If you are thinking about selling your home in the near future, I am sure you will find the information in the following article very valuable. If you are interested in finding out how much your home will likely sell for in today's market just give me a call or send me an email and I'll prepare a no-obligation market analysis for your property.

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REMODELING YOUR HOME

The classic way for homeowners to increase the value of their house is by remodeling existing rooms or adding on to its current plan.

Some choose to build recreation rooms and studies while others add new appliances, fixtures and cabinets to enliven rooms and make their home more attractive to future buyers.

But, when should you decide to stop sinking money into a home and buy a bigger place? And how much rehab is too much when it comes time to recovering remodeling costs through a home sale?

For instance, if you’ve just spent $1,000 remodeling your living room and didn’t expand your small bathroom, the chances of increasing the number of interested buyers are slim.

With these concerns in mind, I can offer a few tips for those struggling to add value to their home.

First, always protect the character of your home. Nothing sticks out negatively more than a new addition that is in a completely different architectural style. Be consistent. Recognize your home’s character and stay within its framework.

The most financially rewarding areas to remodel are usually the kitchen and bath. Newly re-done cooking spaces and cabinets can attract more buyers and may command a slightly higher price for the home than a comparable one on the market. Simple repairs that are made to last will bring you the biggest returns upon sale.

Some people think that tubs are not used anymore and remodel them out of their homes.  New families will notice this and wonder where they may bathe their children.  Keep at least one tub in your home, preferably in the master bathroom.

Buyers are, by convention, more interested in aboveground living space – not basements, yards and walkways. Swimming pools can be a poor investment if installed for the sole purpose of increasing a home’s value; it’s rare that a pool’s cost will be recovered in a home sale. It can also be a negative feature for potential buyers with very young children.

Replacing worn carpeting, tiles and wood floors can give your home an immediate advantage over similar properties in the area. Updating paint colors in all areas of your home can also prove beneficial.  Both of these upgrades can be done wisely and inexpensively with the advice of your Realtor.  We have connections to just the right people used to putting in carpet for a sale, and using paint colors that make the features of your home pop out in a positive light.

Stay simple with your remodeling and look at your home as though you were the buyer. Chances are that if you find the upstairs bedroom could be brightened by a larger window, potential buyers will probably feel the same.

Don’t go overboard. Concentrate on improving two or three deficiencies in your home. More than likely, the time and money you spend adding quality to your home will be rewarded with greater profit at selling time.

As always, I'm here to walk through your home with you at no cost to you, and give you a humble opinion of what is the best upgrade for your money.

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I hope you enjoyed this article. Please feel free to forward this on to others that might appreciate the information. As you know, I am a real estate agent specializing in your neighborhood and have access to excellent Realtors in other areas as well. Referrals are extremely important to my business. I would be most grateful if you would put me in touch with people you know that might be selling or buying a home. Thank you for the support.

Cash Buyers, High-End Sales, Local Market Strength

by Deniece Watkins Smith
Realtor, ePro, SRES
Coldwell Banker, Los Altos
www.dsoldit.com


     Six out of twenty-one homes in Los Altos that have closed escrow in the past month have closed over their asking price.  Twelve out of thirty-two homes in Mountain View that have closed escrow in the past month have closed over their asking price.  

     When we hear news on TV about real estate it's mostly for the entire bay area, state, or even nation.  Real estate is extremely localized and only local real estate news can tell you what's happening in your area.  

     For approximately three months now, we have been in a very active, multiple offer market.  Approximately one-third of all primary residences are being purchased with 100% cash.  Approximately one-fourth of all second homes are being purchased 100% cash.  Usually, when the cash buyers are out in force is when the "investors" believe the bottom of the market has been reached.  

     Thirty-one homes from Sartoga to Atherton have closed escrow over four million dollars.  Those are the ones actually reported on the MLS. Some (like Yuri Milner's Los Altos Hills property rumored to have sold for $100 million) have closed without ever being reported to the MLS. For a long time the high-end market was completely dormant.  Since February of this year that market has woken up.  


     It is my opinion that when the high end market starts up and is active, it is an indication that company leaders are confident in the economy and should, in-turn, be an indicator of hiring in the near future.

     So we have a great start to Spring of 2011 as far as Silicon Valley real estate goes.  Let's hope the ball keeps on rolling!

When Mortgage Rate Locks Expire

By LYNNLEY BROWNING

Published: January 6, 2011

A lock-in agreement — also called a rate lock or rate commitment — protects against sudden spikes in interest rates by freezing the terms of a loan while it is being processed, which could ultimately save a borrower tens of thousands of dollars in interest costs over the life of the loan.


Read Entire Article

California median home prices dip in December

Associated Press

Posted: 01/21/2011 12:37:40 PM PST

Updated: 01/21/2011 12:43:28 PM PST

LOS ANGELES -- California's median home price declined nearly 4 percent last month to $254,000 from $264,000 in December 2009, as low-priced foreclosures and other distressed properties continued to dominate the market.


Read entire article

Allstate sues Countrywide over toxic investments

NEW YORK -- Allstate has filed a federal lawsuit against Countrywide Financial over $700 million in toxic mortgage-backed securities that the insurer bought beginning in 2005, only to see their value decline rapidly.

Read article »

Court rules against Wells Fargo U.S. Bancorp in foreclosure case

BOSTON -- The highest court in Massachusetts ruled against U.S. Bancorp and Wells Fargo on Friday in a widely watched mortgage foreclosure case that could have serious implications for the nation's largest banks. 

Read article »

Silicon Valley home sales plunge, but median price edges higher

By Frank Michael Russell, San Jose Mercury News

frussell@mercurynews.com

Posted: 11/18/2010 09:47:09 AM PST

Updated: 11/18/2010 12:33:50 PM PST

Home sales in Silicon Valley plunged in October from a year earlier, but the median price for a resale house in Santa Clara County was up 2.3 percent to $562,500, MDA DataQuick reported this morning.

The number of single-family homes that changed hands in October was down 27.3 percent to 1,303, the San Diego real estate research firm reported in an e-mail. The drop in Santa Clara County reflected the market throughout the Bay Area, where sales for an October were at their second-slowest pace in more than two decades.

"Part of what we're seeing is the hangover effect from the expired homebuyer tax credits, which spurred many to buy in the first half of the year. But that effect is fading," DataQuick President John Walsh said in the news release.

"Now the real hurdles to more normal sales levels are the lack of meaningful job growth and the concerns many potential buyers have about job security and the overall economy. It's why ultralow mortgage rates, alone, haven't turned things around," Walsh said.

Resale condo sales were down 25.9 percent from a year earlier in Santa Clara County, and the median price dropped 4.5 percent to $320,000.

For all homes -- new and resale, houses and condos -- sales in the valley dropped 29.3 percent. The median price was up 0.5 percent to $502,500.

For all transactions throughout the Bay Area, sales were down 22.8 percent, and the median price dropped 1.8 percent to $383,000.

Should you refinance if you’re over 50?

With interest rates near record lows, refinancing has never looked so tempting – especially for people nearing retirement, who’d love some extra cash to pad their diminished savings.  But for homeowners over 50, there’s more to consider than just a lower rate.


Read the full story


From Smart Money

Biz Break: Will California's flailing real estate market stabilize next year?

Just how grim is the real estate market in the Golden State? Even the Realtors (normally an optimistic bunch whose income depends on improving conditions in the housing market) expect sales to plunge 10 percent this year from 2009. 

Read full article »

From the San Jose Mercury News

Pace of house flipping picks up

Robert Selna, Chronicle Staff Writer

Tuesday, March 30, 2010

Lance Iversen / The Chronicle

Luis Jimenez bought and remodeled this home in Richmond, and he is now in contract to sell it at a profit.

When Luis Jimenez bought a two-bedroom house in Richmond from a bank last year for $46,000, he joined the ranks of Bay Area real estate investors, who in 2009, purchased homes in moderate-priced ZIP codes, siphoning off housing inventory and resuscitating neighborhoods hit by foreclosures - but also pushing out some first-time home buyers.
Jimenez, a handyman and construction worker, spent about $14,000 renovating the house and now is in contract to sell it for $110,000 after eight prospective buyers made offers.


Bay Area bidding wars were big news in 2005-06 at the height of the housing bubble. They were driven by buyers who feared they would lose out on the American dream if they didn't act fast, and by investors, who imagined no ceiling to rapidly rising prices.


Multiple offers made a comeback in 2009 and early 2010, but this time around they occurred mostly in below median-priced areas, and were propelled significantly by investors buying bank-owned properties.


A Chronicle analysis of sales data from MDA DataQuick, a San Diego real estate research firm, shows that house flipping activity - where a home is bought and quickly resold - increased from 2008 to 2009 in several Bay Area ZIP codes.


For instance, the Pittsburg ZIP code 94565 had 52 flip sales in 2009. In 2008, it had 13.
DataQuick defines a flip as a recently purchased home that had previously sold within 21 to 180 days prior. The firm's data do not capture homes bought at auctions.


But other figures show that investor buying at public foreclosure auctions also has boomed.
According to research firm ForeclosureRadar.com in Discovery Bay, the number of houses in the nine-county Bay Area purchased by investors at public auctions jumped from 122 in January 2009 to 637 in January 2010. February 2010 saw similar increases.

Types of investors

Investors are not monolithic. Some are individuals, similar to Jimenez, who pooled his funds with family members in hopes of getting a leg up. Others are investor groups and real estate investment firms that buy scores of homes in succession or all at once.


The characteristic the investors have in common is that they tend to pay cash, placing them a step ahead of buyers using mortgage loans, which often involve more paperwork and are less certain to come to fruition.


"We've seen a notable increase in investors over the past year," said John Robin, a Realtor with Keller Williams in the East Bay, who represents Jimenez and primarily works with investors. "At the beginning of 2009, there was a big spike in foreclosures and the places that had the biggest inflation in the boom had the biggest cuts."


Robin works with buyers who flip property and others who rent the houses they buy. He says his clients likely have elbowed out some first-time home buyers, but notes that they also have restored the health of neighborhood blocks that had become partly vacant, and forlorn.
While Jimenez's house in Richmond was up for sale, he and Robin decided to board up the windows to discourage squatters and break-ins.


"When foreclosures took hold of neighborhoods there were problems with squatters or they became like ghost towns," Robin said. "When homes are rented out, the tenants use the schools and supermarkets. ... It's better to have people in the homes than to have them empty."


Robin and others believe that the tide may ebb for investors in 2010. As more investors have descended on the market, fewer bank-owned properties have appeared on listings, suggesting that banks are either moving through their stockpile of foreclosures or dribbling them out more slowly as they try to modify loans of borrowers who have defaulted.


The Treasury Department also will soon start a program encouraging more transactions known as short sales, which are not popular with investors.


In a short sale, the lender allows a homeowner to sell a house for less than, or short of, what is owed on a mortgage. Owners seek short sales to lessen the credit damage that comes with a foreclosure.


Banks historically have resisted short sales because they require extra administrative work to analyze details, such as the owner's finances and property values, and they typically represent a loss of money.


Investors generally don't like short sales because of the lengthy process involved and the uncertain outcomes.


In 2009, banks added staff to handle the transactions. Wells Fargo, for instance, has hired 8,000 workers since the start of 2009 to manage short sales.


The Treasury program pays $1,500 to homeowners who move out, $1,000 to the servicing bank and another $1,000 to any second lien holders if a short sale is completed.


East Bay Realtor Kerri Naslund specializes in helping buyers with short sales. She is skeptical that banks will become more efficient with the transactions. Naslund, who focuses on Oakland, and also represents investors, said she has seen many instances in which an investor edged out a first-time home buyer.


"Investors stalk every property I see," said Naslund. "They fix places up for pennies on the dollar and then sell them to first-timers who have become frustrated by losing out on all the sales."

FHA help for investors

But although increased short sales may cool off investors, a different government policy may facilitate house flipping. As part of a recent change, the Federal Housing Administration reversed a rule and decided to allow government-insured mortgages for homes sold and resold within three months.


Previously, the FHA refused to provide mortgage insurance for homes resold within 90 days in order to prevent fraud. A common scam was for investors to purchase a house, make minor repairs and then sell it to a straw buyer who never planned to pay off the loan.
That kind of ploy artificially ramped up housing prices, left the FHA with inflated insurance claims, and made for vacant and blighted housing.


The FHA has said that it made the rule change - scheduled to last for one year - not to fuel an investor-driven market, but instead, in recognition of the fact that investors already are playing a key role in bringing foreclosures back to sale.


Jimenez plans to look for another home to buy in the coming weeks. For him, the equation is straightforward.


"It didn't cost that much to fix up the last house. I can do the work myself, and I made it better for the buyer and for myself."

E-mail Robert Selna at rselna@sfchronicle.com.

Mortgage rates inch up, but stay below 5 percent

Associated Press

Posted: 03/25/2010 09:31:51 AM PDT

Updated: 03/25/2010 09:31:51 AM PDT

McLEAN, Va. — Mortgage rates moved slightly higher but remained just below 5 percent this week, as a Federal Reserve program that has maintained rates near record lows prepares to end.

The average rate on a 30-year fixed rate mortgage inched up to 4.99 percent this week from 4.96 percent last week, mortgage finance company Freddie Mac said Thursday.

Rates on 30-year fixed mortgages fell to a record low of 4.71 percent in December and have hovered around 5 percent since. Rates have been kept down by the Fed's $1.25 trillion program to buy up mortgage-backed securities issued by Freddie Mac and sibling company Fannie Mae.

The Fed's program is set to end March 31. Some analysts fear that mortgage rates could rise once the program ends, weakening the fragile recovery in housing and the overall economy.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.

This week, the average rate on a 15-year fixed-rate mortgage was 4.34 percent, up a bit from 4.33 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.14 percent, up from 4.09 percent a week earlier. Rates on one-year, adjustable-rate mortgages rose to 4.20 percent from 4.12 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for the four loans in Freddie Mac's survey averaged 0.6 of a point.

New 2010 Real Estate Laws

Many new laws for real estate have been passed for 2010. They are lengthy and wordy and not always easy to understand. However, the California Association of Realtors has done a good job of putting together a table of the laws, with a summary of what each of them means. You can find that table here.