tskeeter
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Post by tskeeter on Aug 28, 2015 12:28:57 GMT -5
I think this is entirely dependent on your local market. And if Dark and Loop can get an extra 50K out of their house by only spending 15-20K, and it sells much faster, then to me that is a good investment of money. Where I live, almost every SFH now has granite and new or refinished floors (for all except the bottom 10% price-wise), and at particular price points if you haven't done those things the home typically takes longer to sell. However, we also don't have situations were there are multiple bids regularly. Agreed it's dependent on your local market. I can't speak for DH's market but I live in the same state south of him and in both of our areas prices have seen quite an increase since I bought in 2012. The point as Phil and Archie pointed out is that you don't always get your money back on upgrades. Also unless I'm mistaken I thought DH said they were moving in the next few months so they're talking about needing a HELOC then getting all that work done in the next month or so hoping they make their money back or more on the HELOC. To me that upside may not be worth the stress and trouble of trying to upgrade a house to sell in the next few months while preparing to move a family of 4 to another state. Edit - as GRG mentioned there are apparently already buyers who want in. Where I'm at (town house) there's 2 places that have been sold in the last 6 months that were on the market for a few days and based on those sales I could make at least 40% over what I paid. I've thought about selling to take the gain, sit on the cash and wait for the market to come down and buy a house. That's more talk than anything but point is if I were to do that knowing there's buyers who want in I'm just selling as is. I'm not going to throw any money, time or effort into the place in hope of making that or a bit more back when the would be buyers are going to do all that work for me because they want in that bad. Soul, I don't think there is going to be a significant drop in home values in the foreseeable future, except maybe in isolated locations. Why? Owning a home is still the American dream. That will keep demand relatively strong. Shortages of construction labor across most of the country is keeping the supply of new homes pretty tight. And much of the distressed existing home supply has been dealt with. (In our area, the supply of both new construction and existing homes is about 30 days or less. Only one area of town, out of about 10, is identified by the local realtor's association as a buyer's market. More than half are seller's markets.) A lot of folks who took a hit in the last downturn, are at the point where they can get reasonable cost financing again. As these folks re-enter the single family home market, they will push up demand. Lending criteria is being relaxed somewhat. Allowing more buyers to enter the market. A good share of the housing stock, pretty much anything that sold between about 2004 and 2007, was purchased for more than it's current valuation. (I estimate that our house would sell for about 30% less than we have into it, after you paid realtor's fees.) Owners of those homes are unlikely to sell, which helps to keep the housing supply tight and prices stable or increasing. Building costs will be increasing. The downturn left tons of construction ready lots available at bargain prices as banks disposed of property formerly held by developers who they foreclosed on (nearly 150 in our 450 home development, alone). These lots are getting pretty much built out, so developers and home builders are going to have to pay through the nose for permits, plans, grading, streets, sewers, etc. that they have been buying at bargain basement rates for the last several years. And remember those construction labor shortages? They will affect all of the building site preparation services, too. Excavation contractors and like like sold off a lot of their equipment during the downturn. So they don't have large fleets, of trucks, dozers, scrapers, graders, excavators, and the like to perform lots of new jobs. So the equipment and the people available will command premium prices and the pace of development will be significantly slower than it was in the mid 2000's. That will continue to keep new construction in short supply. Overall, strong demand and tight supply (and high rents) will keep home prices stable or increasing.
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Mardi Gras Audrey
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Post by Mardi Gras Audrey on Aug 28, 2015 12:45:08 GMT -5
FWIW, we sold our 1990s home in the area ~15 miles from Dark 6 months ago. We had carpet throughout the house (granted it was only 3 years old and it is just 2 adults and a few cats so it was in good shape) and the original kitchen (Had replaced the appliances so hat they matched). The house sold in 1 week, with multiple offers.
From what we saw, it wasn't worth it to do any upgrades (Kitchen had white tile). There were several houses around us that had upgrades and it didn't seem to make much of a difference price/time wise. 2 houses on our street had the same exact floor plan, one had a lot of grades (Wood floors, redone backyard, granite, etc) while the other one had only wood floor replace carpet in the living room. They sold for $10k of each other (These houses were 2 apart from each other) and were sold within ~2 weeks of each other.
Dark, I don't know what your realtor will say but let us know we didn't need to upgrade, just make sure everything was clean and decluttered. We moved a lot of stuff into storage, made a few trips to Goodwill and the , and the house sold for the price we wanted quickly. We were priced right (We were priced about $50k above what the house next door closed for ~6 months before).
A house behind our sold for about $15k less than us 1 month before ours did. They had all the upgrades (was ~300 sq feet smaller with a larger lot). The difference was it took a few months to get on contract (and below asking) while ours went immediately.
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CCL
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Post by CCL on Aug 28, 2015 12:45:22 GMT -5
FWIW I recently looked into a HELOC for the kitchen project. Was told in my part of the country it's a 6-8 week process because the appraisers and processors are so backed up. There is speculation the Fed will raise rates in the fall and people are scrambling to lock in while they can. Any chance Loops' folks can help out with a short term loan? We all know it depends on the local market, but I just got mortgage approval on the new house I'm buying. 2 weeks from application to closing. The appraisal was ordered and sent to me within 3 days. There's a lot of real estate activity going on around here, too. It doesn't have to be difficult. I suppose it also depends on your bank/mortgage company.
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souldoubt
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Post by souldoubt on Aug 28, 2015 12:53:55 GMT -5
Key word - isolated locations. Here we're almost up to 2008 levels but still off the 2006 highs. The city I live in the starter home prices is over 8x+ median household income. That price gets you into a 50-60 year old house that probably hasn't been updated in a few decades like the one I looked at in 2012 that had shag carpeting that was green in the living room then red once you hit the hallway. Part of me still wishes I had upped my final offer just a bit more but I would have needed to put in another 50-100K to make the changes I would have wanted because everything needed to be updated.
There's plenty of people here who make good money but there's also plenty of people who have lived here their whole lives and the only way they can afford a place is by getting help from family or inheriting a house from their parents. A family friend bought his place about 20 years ago and it's more than tripled in value since then which priced his kids out of buying here. A friend of mine clears 6 figures and still has problems getting into a house. I like my place don't get me wrong but there's no way I'd buy it at current market value based on the last few sales in the same complex. Real estate is obviously a local issue but I think at a point in a market like this fewer people here will be able to buy if prices continue to rise. I'm not a RE professional nor do I claim to be one I just don't think without more government intervention, low lending standards or foreign buyers (happening here and Northern CA) most people currently living here are going to be able to buy if prices continue to rise especially when rates go up. The last place that was comparable to mine sold for 40% over what I paid 3 years ago and incomes don't support that.
Edit - for the record I live in ground zero as far as one of the notable markets that crashed. Home prices more than doubled from 2000-2005 and some of the major lender blow ups were companies located within a stones throw from my work. I'm not making claims based on prices declining across the country just what I think here and everyone else I've talked to feels the same way. Doesn't mean it will happen because common sense isn't what dictates the market.
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CCL
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Post by CCL on Aug 28, 2015 13:04:07 GMT -5
Dark....would it be possible to get a loan from a home improvement store for what you want done? The interest rate won't be great (however, sometimes they have a 0% for XX months) to get someone in and do the counters and floor? We had Lowes install new counters for us in the past. They did a great job. I think now they also have a 5% discount for using their credit card. That was Formica, though. When we priced them (and Home Depot) on granite and butcher block their prices were more than double what we paid a granite place.
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CCL
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Post by CCL on Aug 28, 2015 13:05:21 GMT -5
Can you do any of the work yourself? Maybe engineered wood floors?
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TheHaitian
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Post by TheHaitian on Aug 28, 2015 13:06:26 GMT -5
I say declutter, clean and paint... Do some minor repairs that you can and put it on the market
If your neighborhood is that desirable, it will sell.
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Mardi Gras Audrey
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Post by Mardi Gras Audrey on Aug 28, 2015 13:12:54 GMT -5
Soul, It is the same thing where Dark is/I was. The houses are not quite at their peaks but they are getting there. Most of the people coming there are priced out of the Silicon Valley proper and are willing to commute. What would concern me is that the commute is getting horrendous and these areas are bedroom communities (no high paying industries of their own). Last time the market corrected, it was very severe for people living in these types of communities (Relatives of mine live in the Central Valley where lots of Bay Area Commuters live. Their house went back to 1989 levels at the market bottom- it has now corrected somewhat but that is a wild swing in ~9 years). Dark, I say take the money and run. You have enough on your plate and don't need the aggravation of remodeling and all that. Listen to the realtor and do the minimum required to make it look pretty. Remember, "pigs get fed, hogs get slaughtered". You don't want to drag out the sale a few extra months on the hopes of getting like $20k more. I totally agree it is crazy. That's why we put what I thought was a reasonable price and sold quickly. We moved to the woods and traded our tiny house on a postage stamp for a few acres and a house that is twice as big. It was pretty much a wash, price-wise. Phil would be proud though... we banked the equity (DH bought the house at the market low) and took a VA loan out for the current home. We are hoping the Phil-script stays true
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GRG a/k/a goldenrulegirl
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Post by GRG a/k/a goldenrulegirl on Aug 28, 2015 13:18:07 GMT -5
How large are realtor's territories there?
Can you use Audrey's realtor?
Or, at least the one that handled the recent sales in your neighborhood?
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Opti
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Post by Opti on Aug 28, 2015 13:26:27 GMT -5
True, but Phil doesn't live in a place where homes sell for this much either. At certain price points buyers expect more updated finishes, even if the underlying reason for the high prices is the land value not the house. It's not rational, but when have people ever been rational about large spending decisions? If you can get an additional $50k in selling price by spending $20k in updates it is a no brainer. Its risky though. It is at the end of peak house selling season. Either they beat the holiday downturn and list as soon as reasonable or they risk selling in the new spring market in March hoping prices stay on the upper track.
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Mardi Gras Audrey
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Post by Mardi Gras Audrey on Aug 28, 2015 13:47:50 GMT -5
If you can get an additional $50k in selling price by spending $20k in updates it is a no brainer. Its risky though. It is at the end of peak house selling season. Either they beat the holiday downturn and list as soon as reasonable or they risk selling in the new spring market in March hoping prices stay on the upper track.
Out here that hasn't mattered much. Because of the shortage of housing, there has been a large blurring of the "traditional season". If anything, it could help Dark, as there may be less competition as more sellers sit out for the holidays. This is a seller's market and it is ridiculous. We listed at the end of January and had multiple bids. This was despite the fact that the HUGE selling point for our home was the elementary/high school it is next to (We were marketing towards families with children who wanted to be at the best public schools in that city... keep in mind these are best schools for that city, not best in the country or state or even county). One bid came with a "love letter" where the family put in pictures of themselves, why they wanted the house, what their future plans were, etc. I guess they had already lost out on several houses and were trying to give themselves an edge. Buyers are jumping on these left and right. Our buyers called us frantically at around 7 PM asking if they could come look at the house, we said yes, they came from the realtor's office (about 15 minutes), by 7AM the next morning, they had emailed a bid to our realtor. They had essentially 12 hours from first seeing the house to deciding to buy. They had never even seen the house in daylight (It was January so pitch black when they came to look). i thought it was crazy but it worked for them...
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Post by The Walk of the Penguin Mich on Aug 28, 2015 13:51:46 GMT -5
Your biggest problem is going to get it completed by the time you want to put this on the market. I want to say that after we chose our materials for the counter top and back splash, it took another 4-6 weeks before it was completed.
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cktc
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Post by cktc on Aug 28, 2015 14:26:08 GMT -5
Crossing our fingers she tells us to paint, replace the living room carpet, and that's it. We can do that easily. I think that is likely the best option. If you do decide to do more, be really honest with yourself. Do you have a knack for construction and an eye for design? When you compare neighboring houses, are there really so few differences between the properties that sell for more? Is pride of ownership a factor? When I look at houses, there is turn key, and everything else. I will pay more for turn key if it means I'm not going to spend the next 3-5 years slowly renovating. Wood floors, granite counter tops and stainless steel are all great, but when I think turn key it also has nice trim, updated bathrooms, modern fixtures, and if they are really on it, shutters. Yes many of those things are easy and cheap enough to update on your own, but I won't spend an extra $50k to have to spend another $10-20k and years to get it fully updated.
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phil5185
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Post by phil5185 on Aug 28, 2015 15:44:46 GMT -5
lol - don't forget, this is YOUR house and your money.
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dondub
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Post by dondub on Aug 28, 2015 15:59:03 GMT -5
19 hours ago dondub said: If you applied for an owner occupied HELOC with the intent to sell in the near term, you may be committing mortgage fraud.
Shit. Seriously?
Yes.
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whoami
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Post by whoami on Aug 28, 2015 16:17:09 GMT -5
Its risky though. It is at the end of peak house selling season. Either they beat the holiday downturn and list as soon as reasonable or they risk selling in the new spring market in March hoping prices stay on the upper track.
Out here that hasn't mattered much. Because of the shortage of housing, there has been a large blurring of the "traditional season". If anything, it could help Dark, as there may be less competition as more sellers sit out for the holidays. This is a seller's market and it is ridiculous. We listed at the end of January and had multiple bids. This was despite the fact that the HUGE selling point for our home was the elementary/high school it is next to (We were marketing towards families with children who wanted to be at the best public schools in that city... keep in mind these are best schools for that city, not best in the country or state or even county). One bid came with a "love letter" where the family put in pictures of themselves, why they wanted the house, what their future plans were, etc. I guess they had already lost out on several houses and were trying to give themselves an edge. Buyers are jumping on these left and right. Our buyers called us frantically at around 7 PM asking if they could come look at the house, we said yes, they came from the realtor's office (about 15 minutes), by 7AM the next morning, they had emailed a bid to our realtor. They had essentially 12 hours from first seeing the house to deciding to buy. They had never even seen the house in daylight (It was January so pitch black when they came to look). i thought it was crazy but it worked for them... We sold a house in San Diego the week of or after Thanksgiving (I forget). On the market 3 or 4 days and had 5 or 6 offers all over asking. Sold for $50K over listing, 1960s kitchen and all.
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zibazinski
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Post by zibazinski on Aug 29, 2015 10:34:36 GMT -5
Sold one of my rentals this spring in one week. Full price. What I won't do for the last one is put money into it that I didn't get out of it. Made it easier for realtor to sell is all. I'd have gotten the same price regardless.
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zibazinski
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Post by zibazinski on Aug 29, 2015 10:35:25 GMT -5
But I had time to wait. No payment and no rush to sell.
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dondub
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Post by dondub on Aug 30, 2015 12:50:43 GMT -5
The key word is 'may'. If you revealed to your bank your intentions to move and they are ok with it then you are fine. Of course, she may be wrong and you should check your signing docs that there isn't a provision for how long you have to stay in the home after closing.
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Deleted
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Post by Deleted on Aug 30, 2015 16:36:03 GMT -5
I was told by my bank contact prior to application not to mention "renovation", "remodeling" etc. b/c they would not issue a HELOC for that purpose, only a "home improvement loan" which was much more elaborate and meant they would disperse funds to contractor in stages as work progressed. Of course, they screwed up funding for so long I had to fund $25,000 out of $30,000 from my cash reserves anyway. When the contractor is scheduled to start and you've ordered $$$$ in materials is not the time to say, "Oops, my bank screwed up and sent the HELOC checks to someone else in New Jersey", which is exactly what they did. And there was a clause in my documents about remaining in the home for a period of time unless we died or went to assisted living, etc. And they also made themselves lien holder on my homeowner's insurance before the closing.
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