5 MIstakes That Could DECREASE The Value Of Your Home

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Renovating or improving something too much sounds like an oxymoron, however when it comes to attracting a buyer and generating a return on investment, it is possible. The decisions you make may be best for you and your family, but it is crucial to consider the mindset of potential buyers.

Here are five common renovation mistakes that may decrease your home value:

  1. Over improvement: Your home should be similar to other homes in the neighborhood. If your home costs much more than other homes in the neighborhood, potential buyers may choose that the updates you made do not outweigh the increased cost.
  2. Over personalization:You may love bright paint, built-ins, and elaborate tiles but the potential buyer may see changing it as too much of a hassle. You want buyers to be able to picture themselves living in the home so it is helpful to have a neutral design aesthetic when you show your home.
  3. Inconsistency: It is better to spend smaller amounts on many projects than spend a large amount of money on one project while neglecting other parts of the home. Instead of spending upwards of $30,000 installing a pool while keeping old and outdated appliances, it is a wiser decision to update the appliances.
  4. Removing a wall: It may seem as though knocking down a wall between two small rooms to make one larger room is a no brainer but having more rooms is almost always better when it comes to increasing the value of your home. Your family may be smaller than the potential buyers and, for them, it may be better to have more rooms regardless of their size. Removing bedrooms can also decrease the value of your home. Turn an extra bedroom into an office or gym while you are living there, but switch it back to a bedroom when you are getting ready to sell.
  5. Functional Obsolescence: Make sure that your renovations make sense. For example, potential buyers will probably not want to have the only way to enter one bedroom be to go through another bedroom. Another example would be turning a garage into a guest house. Although having a guest house might be better for your family, many families would prioritize having a garage.

Remember these mistakes when you are choosing renovation projects around your home. What seems like a good idea might not actually lead to a return on investment or, worse, may detract someone from buying your home.

Contact me for professional real estate services at (214) 609-7123 or jtrump@kw.com

Home Prices Continue To Rise

“Broad-based Slowdown for Home Prices”

That is a headline you might have seen over the past weekend. And though it is true, we must understand the story behind the headline. Case Shiller reports on the year-over-year difference in home values. Their latest report revealed that the rate of appreciation has slowed – not that prices are falling!! Here is exactly what they said:

“The 20-City Composite gained 4.9% year-over-year, compared to 5.6% in August.”

Prices are still up this month over last year’s values (4.9%) just not as much as they were last month (5.6%).

Home Prices are NOT Falling.

As a matter of fact, the latest Home Price Expectation Survey by Pulsenomics (a survey of a nationwide panel of over one hundred economists, real estate experts and investment & market strategists) showed that home prices will continue to appreciate for the next several years.

Projected-Prices

Bottom Line

Both first time buyers and families thinking of moving-up to their dream home can be assured that their investment in their new home makes sense.

For professional real estate services, call Jim Trump @ (214) 609-7123 or jtrump@kw.com

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The Top 5 Benefits Of Using A Professional To Buy A Home

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Every year the National Association of REALTORS releases their Profile of Home Buyers & Sellers, in which they reveal the results of a yearlong survey of buyers and sellers. The latest profile revealed what actual buyers saw as the benefits of using an agent during the home buying process.

Here are the Top 5:

#1: Helped the Buyer Understand the Process

Whether it is your first time purchasing a home, or you’re an experienced buyer, there are over 230 possible actions that need to happen during every successful real estate transaction. Having someone to guide you through the process who can simply explain what is going on at every step of the way was sited as the top benefit by 63% of all buyers (that number jumped to 83% with first time buyers).

#2: Pointed Out Unnoticed Features/Faults with the Property

When you start the process of buying a home, you may be too excited to see each potential home for what it is, good and bad. An experienced professional can help you realize the potential hidden gems or risks before you make an offer.  Nearly 60% of all buyers listed this as a major benefit of hiring a professional.

#3: Improved the Buyer’s Knowledge of Search Areas

Whether you are looking to relocate to a new state, or just across town, having someone who knows the neighborhoods in which you are looking can be an invaluable asset.

#4: Negotiated Better Sales Contract Terms/Better Price

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

#5: Provided a better list of service providers

A great agent has relationships with mortgage professionals, home inspectors, appraisers and other experts that you will need in securing your dream home.

Bottom Line

If you are considering purchasing a home, whether as a first-time or move up buyer, sit down with a local experienced real estate professional in your area and see what they have to offer. Contact me for professional real estate services at (214) 609-7123 or jtrump@kw.com

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Will New Construction In My Neighborhood Alter My Homes’ Value?

investment-basicsThe terms “seller’s market” and “buyer’s market” describe the party most likely to benefit from a real estate transaction in certain conditions; deriving from the basic economic principle of supply and demand. Put simply, when more houses are listed for sale than there are buyers willing to buy those houses, prices will go down. The opposite is also true. Here’s why.  

Where There’s Choice, There’s a Price Drop

When the Apple Macintosh computer, the world’s first affordable computer, was released in 1984, it cost $2,495. In today’s money, that equates to almost $5,500! How many people today would pay over $5,000 for a computer? Walk into a tech store and you can pick any number of models for a fraction of that cost.

The thing that has changed, of course, is competition. Basic economic theory suggests that if you have a large supply of a something, its value will go down. When there are more products for sale than buyers willing to purchase those products, suppliers must drop the price to attract the buyer and encourage a sale. In the real estate market, a large supply happens when there are more houses listed for sale than buyers willing to buy those houses. Buyers with multiple real estate options can bid down prices. More often than not a seller will accept a low ball offer because it is the only offer he will receive.

House values are determined by reference to the sale prices of comparable properties in the neighborhood. Over time, an oversupply will cause values to drop across the board.

New Construction Increases Housing Supply 

Housing inventory is in a constant state of flux, new construction; conversion and renovation add to the housing stock, which happens at local, regional or national level. For example, housing may be in short supply across the state but a popular city within that state might experience an oversupply of new development. All things being equal, a glut of new construction property in your neighborhood will increase supply and depress property prices. But supply is only one side of the equation. The concept is meaningless unless you also consider buyer demand.

Factors that Affect Housing Demand   

Multiple factors affect demand for housing, the primary factor being population. If a neighborhood experiences a population boom, demand for housing will increase. This frequently happens when a new employer moves to an area or a school district boasts outstanding results. In this scenario, new construction is needed to meet demand for housing. As long as demand keeps pace with supply, the value of local properties will not fall. In fact they will probably rise, particularly if the new development boosts the desirability of the area or signals that the neighborhood is on the up.

Another factor that affects housing demand is the buyer’s purchasing power. In a growing economy, workers typically experience greater job stability and rising wages. Homebuyers are more likely to qualify for mortgage financing, especially if interest rates are low. Existing homeowners find themselves with the cash to trade up, and people who previously rented can finally place their feet on the property ladder.

The opposite is also true. In a falling economy, wages stagnate. If inflation is high, true wages fall. Home seekers may struggle to get mortgage finance and demand for housing is typically weak. Listed properties may linger on the market without a sale. Over time, reduced demand will cause prices to fall.

The Verdict? 

New construction in a neighborhood may raise prices, reduce prices or have no effect at all. The outcome depends on the number of buyers and homes in the market, the quality of the subject property and external factors such as interest rates and attitudes to lending. The only way to figure out the true value of your property is through a comparative market analysis, which takes account of supply and demand factors in your local market. I would be happy to prepare this for you with no obligation.

For professional real estate services, contact The North Texas Home Hunter @ (214) 609-7123 or jtrump@kw.com

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NOW Is The Best Time To Sell Your Home. Here Is The Proof~

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Most homeowners believe that the winter is not a good time to sell. This belief is based on the fact that historically the number of buyers decreases in the winter and then increases dramatically during the spring buying market. Though this is still true, there is an interesting pattern developing over the last few months. The number of prospective purchasers actively looking at a home (foot traffic) has remained strong going into the fall. As a matter of fact, the foot traffic far exceeds the numbers reported for the same months last year (see chart):

Foot-Traffic

At the same time, the National Association of Realtors revealed that the months’ supply of housing inventory has decreased from 5.5 months to 5.3. That equates to less competition for homeowners selling today as compared to next spring when many homeowners will decide to put their home on the market.

Bottom Line

Since buying activity is still strong, this might be a great time to put your house on the market. Call The North Texas Home Hunter for professional real estate services, (214) 609-7123 or email jtrump@kw.com

Harvard University’s Five Financial Reasons To Buy A Home

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Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year, he released a paper on homeownership – The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home. Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You’re paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially.

For professional real estate services, contact The North Texas Home Hunter at (214) 609-7123 or jtrump@kw.com

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4 Great Reasons To Buy A Home Before The End Of The Year.

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It’s that time of year; the seasons are changing and with them bring thoughts of the upcoming holidays, family get togethers; and planning for a new year. Those who are on the fence about whether now is the right time to buy don’t have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

  1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 11.2% (most pessimistic) and27.8% (most optimistic). The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

  1. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year. An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

  1. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains: “Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

  1. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Contact The North Texas Home Hunter for professional real estate service, (214) 609-7123 or jtrump@kw.com