The Remodeling Trap

A couple of days ago we viewed a home that completely defied expectations. It was located in a somewhat low priced neighborhood. The average sales price over the last six months in this neighborhood was about $48 per square foot, which would put its value around $120,000 by my back of the envelope calculation. The aged and worn exterior was evident despite the fresh coat of bright yellow paint. The curb appeal was completely underwhelming.

Imagine our suprise when we walked inside and saw a completely different home. Wood floors in the living room and dining room. A spectacular marble and wood entryway. The kitchen had a beautiful antique modern look with stainless appliances, granite counter tops and marble floors. Upstairs was a huge marble bathroom with a gigantic soaking tub and separate shower. Even the second bathroom was adorned with marble and natural stones. It was a truly beautiful and well designed remodel. In the Houston market, one would normally expect to see this type of design in homes priced well north of $500,000.

Not the actual bathroom, but a good idea of what it looked like.

Since this was a rental property, the owners had most likely purchased and upgraded it for investment purposes. I am amazed by their lack of foresight. I am quite experienced with remodeling, spending the last few years remodeling my own home, so I know that a renovation of this caliber would cost at least $150,000. No matter how cheaply this house was purchased, there is no way you could make your investment back.

Any time you remodel and upgrade and existing home, you have to keep in mind the potential resale value. Of course if you are never going to sell and you love your location, put as much into your home as you want. It's your home and you should make it as comfortable as you want it. If you are eventually going to sell though, there is an upper limit to the amount of money you should expect to get back for renovations.

Your neighborhood is going to limit the potential sales price of your home, so you should always look into local market values to decide how much you should spend. A good rule of thumb is to never spend more than the difference between the lowest average sales price for comparable homes and the highest average sales price for comparable homes. Since every market is different, there are some exceptions, so it is probably a good idea to talk with a Realtor® before starting your renovation.

Top 5 Ways To Make Sure Your House Doesn't Sell

So, you’ve just listed your house on the market, but you really don’t want to move. That’s understandable. You’ve lived there for so long, there are so many memories; who cares that there’s six in your family using three bedrooms and one bathroom. If you really want to sabotage your realtor and make sure you don’t have to move, just follow these five simple steps.

1. Don't Bother Watering Your Grass.



It’s such a pain to go outside in the 100 plus degree heat and turn the sprinklers on anyway. You might as well stay inside and catch up on the last season of Lost. When buyers show up, they can be amazed at the desolate wasteland you’ve spent the entire summer cultivating in your front yard.



2. Keep The Clutter

Display your 600 piece collection of antique Russian nesting dolls with pride. Any and all potential customers will walk right out the door believing that yours is the smallest house they’ve ever seen.

3. Go Crazy With Color (Inside Your House)



You are a free spirit, and your home should reflect that. So, go ahead paint your den yellow with green trim. Even though it reminds you of a tropical oasis, your buyers will be less than thrilled. Keep in mind though that if you plant lots of colorful flowers outside your home, you will take away from your hard work on your desert landscape.

4. Don't Worry About Cleaning

You are just giving your home a “lived in” look. Dirty clothes on the floor and a sink full of dishes are what home buyers are going to see anyway, might as well give them a preview.

5. Price Your Home Too High



Of course you’ll be willing to sell if you can get a million dollars for your three bedroom 1 bath ranch. Thank goodness, no one will be looking at that price.

Website Update!

I just finished a website update to joshandbren.com. I added some great videos from HARtv and the Home Staging Channel. All of the videos are great tools for people to learn more about the real estate, Realtors, and how to buy and sell homes. To find the new content go to these pages:

-Buying Information
-Buyer's Guide
-Selling Information
-Seller's Guide
-Mortgage Information
-Leasing Information

Hopefully these videos will help to make our website a great source of quality consumer information.

Houston Home Prices Up In June

The average price for a home in the Houston area reached an all time high for the month of June. Since the first time homebuyer's tax credit expired, there has been a slowdown in sales volume. Now we are starting to see the market potential in a climate without special incentives, and the data is encouraging. If the market stabilizes, homeowners can start to see real appreciation for their homes in the near future, which will reemphasize the investment power of homeownership.

Check out this video for the full June update from the Houston Association of Realtors.

Apocalypse Averted

So they passed a compromise to the debt ceiling problem. No one likes it, but at least there will not be a default, maybe. Stocks dropped like a lead weight, so the deal must not have been that great. Of course there are still quite a few other problems weighing on the stock market, so the deal might not have been the only reason for the slide. We'll just have to stay tuned to find out whether or not the new debt ceiling deal will add a little more certainty to the economic climate.

Will The World End On August 3rd?

Its the biggest news around right now. Forget December 21, 2012, the new apocalypse is August 3, 2011. According to some, the Federal government is just hours away from defaulting on its debt, plunging the worldwide economy into a depression the likes of which the world has never seen. Soup kitchens, bread lines, double digit interest rates--pandemonium strikes everywhere!

If you listen to the other side, you will hear that default is just not that big of a deal. Everyone will wake up in the morning on August 3rd, continue with their normal routine--life and business will go on. For this group, the debt ceiling is a great bargaining chip. If they don't get what they want the government is forced to control spending, win-win right?

The truth is somewhere in between. For the most part, everyone will wake up in the morning, go about their normal day. There will be no mass layoffs, so most people will still have their jobs--at least the ones without government jobs. Retired people will still get their social security checks, in effect, the world will continue. The real effect will be uncertainty. Markets hate uncertainty, so this debate is probably dragging out the recession. Not a good thing, but we've already lived through three years of it, what's one more?

You might be wondering what this has to do with real estate in Cypress, TX. I say it has everything to do with real estate. Despite all of the talk of impending crisis, I still believe in the long term viability of the Houston area market. Statistically we've done pretty good in this recession, so I think we are poised to lead the nation out of it. All we need is a little more certainty and we'll be growing faster than ever.

Seller's Disclosures-Who Needs Em?

Seller's disclosures are a touchy subject in real estate. In Texas, we have some very specific laws regarding sellers' disclosures. First of all, nearly every seller has to fill out a seller's disclosure form when they sell their home. Many people will ask me if they are exempt, and the short answer I always give is that if you have to ask, you probably need to fill one out.

Here are the only exemptions according to the Texas Property Code:
(1) pursuant to a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest, or to a beneficiary
of a deed of trust by a trustor or successor in interest;

(4) by a mortgagee or a beneficiary under a deed of trust who has acquired the
real property at a sale conducted pursuant to a power of sale under a deed
of trust or a sale pursuant to a court ordered foreclosure or has acquired
the real property by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a decedent's estate,
guardianship, conservatorship, or trust;

(6) from one co-owner to one or more other co-owners;

(7) made to a spouse or to a person or persons in the lineal line of
consanguinity of one or more of the transferors;

(8) between spouses resulting from a decree of dissolution of marriage or a
decree of legal separation or from a property settlement agreement incidental
to such a decree;

(9) to or from any governmental entity;

(10) of a new residence of not more than one dwelling unit which has not
previously been occupied for residential purposes; or

(11) of real property where the value of any dwelling does not exceed five percent
of the value of the property.

That's all. As you can see, most of these exempt banks, government entities, estates, and trusts. Everyone else must provide the seller’s disclosure form to a buyer. That includes large companies, owners who have never seen the property, and even owners selling their home themselves.

That’s just one more reason why using a realtor to sell your home is advantageous. How many people selling their home know about disclosure requirements? I would guess not very many. And not having the right paperwork can open up sellers to costly lawsuits.