Author: Shannon

In 1973, the median U.S. home size was 1,525 square feet. Since then, builders have gradually increased the square footage of the homes they construct.

In 2007, home sizes hit their peak (2,227 square feet) and have been dropping ever since, according to the Census Bureau.

Although Americans aren’t quite ready to completely give up their McMansions, the trend appears to be toward smaller homes.

A smaller footprint has its advantages. Let’s take a look at some of them.

Money Saver

The most obvious advantage to buying a smaller home is that the monthly payment will typically be lower than it would be if you bought a large home.  Less obvious money-saving advantages include:

• Lower utility bills – less area to heat and cool.
• Smaller houses require less maintenance, which can cost a bundle with a large house — a smaller roof requires fewer materials to repair it, for example.
• Small homes cost less to keep clean – you’ll spend less on cleaning supplies and whatever you estimate your time is worth.
• Small houses cost less to furnish – the furniture that you do purchase will be smaller as well.
• Smaller homes have smaller tax bills.

The case for downsizing to save money is even more urgent if you are nearing or in retirement. Annual property taxes and home maintenance can eat up a huge amount of your savings.

If you aren’t near retirement, think of what you can do with the money saved by downsizing – like furnishing it with high-quality furniture and appliances that will last longer; another cost-saving advantage.

No Wasted Space

Lifestyles have changed since the days when formal dining and living rooms were in vogue. Americans are awake to the fact that they have been paying for huge amounts of space that they seldom use.

Today, a country kitchen or informal dining room suffices for our smaller families and any extra space is typically devoted to a home office or larger kitchens and bathrooms.

One of the most common fears when considering a smaller home, however, is the lack of storage space. The solution? Downsize all your “stuff” too.

“We use 20 percent of what we own, 80 percent of the time,” according to Regina Brett at cleveland.com. This means that 80 percent of our “stuff” just sits, taking up valuable space.

If you feel that you absolutely can’t live without these belongings, put them in storage and pull them out on the rare occasions you need to use them.

The rest can be stored creatively in a smaller home. Utilize the vertical spaces in the home, such as placing shelves above the washer and dryer or the clothing rod in the closet. Raise the beds to create storage space beneath them.

Peace of Mind

While living large is impressive, living small brings happiness, according to Stephanie Rosenbloom of the New York Times. Smaller homes require less work thus freeing up time for leisure activities and time to make memories.

Since they also cost less, the extra money can be used to create happiness. “Current research suggests that, unlike consumption of material goods, spending on leisure and services typically strengthens social bonds, which in turn helps amplify happiness,” Rosenbloom claims.

Yes, large homes still signify status – especially if the home is of the luxury variety. If you aren’t a member of the country’s 1 percent, however, smaller may just be better.

Reach out to us for more ideas on downsizing to a smaller home.

When looking at homes for sale you may see in the listing description that a home isn’t on “city services.”

What this means is that the home has its own “sewer,” known as a septic system.

We frequently field questions about septic systems, so we put together this report with the basics you’ll need to know about buying and owning a home that isn’t on city services.

The anatomy of the septic system

Let’s face it: Sewage is probably the least glamorous topic to consider. But bodily fluids have to go somewhere and sewers and septic systems are our current choices.

Whatever is put down the drain, from the toilet, shower, washing machine and sink, ends up in the septic tank.

That tank is located underground and it’s watertight. This is where all the incoming “stuff” is treated. The solids are trapped on the bottom of the tank and the wastewater that’s left over is released into the leach field (sometimes called a “drain field”).

The solids, or sludge as it’s called in the septic business, are broken down by bacteria naturally found in wastewater. Not all of it is broken down and what’s not remains in the tank until the homeowner has it pumped out.

As mentioned earlier, this is a basic description. If you want to dive into the technical aspects of septic systems, you’ll find lots of information online.

Septic system maintenance

If you purchase a home with a septic system, you will be responsible for its maintenance. Defer maintenance on the system and problems will get worse.

In fact, the national average cost for septic system repair is around $2,700.

Aside from a hefty bill, if the tank isn’t maintained it may spring a leak, saturating the leach field. You may end up with sewage coming back into the home, into the bathtub or another plumbing fixture.

Allow the problem to get so bad that you need a new system and you’re looking at a cost of around $4,600 (but it can go higher).

When considering purchasing a home with a septic system you’ll want consider basic maintenance costs. This includes paying for an annual inspection and having the tank pumped every three to five years.

The cost to pump the tank varies according to the tank’s capacity. The national average, according to HomeAdvisor.com, is $381.

Your due diligence

Aside from the whole house inspection every smart homebuyer should have performed, we recommend that you also hire a professional septic contractor to inspect the septic system.

The inspection will include looking for leaks, ensuring that the sludge levels are below the outlet tee, checking to ensure the electrical and mechanical components are in good condition and more.

Typically, it’s the homebuyer’s responsibility to hire and pay for the contractor, but not always. In some regions, such as Central Virginia, for instance, the seller must have the septic system inspected “within 30 days of the closing date,” according to information posted at Realtor.com.

Septic systems aren’t as scary as many homebuyers think. Yes, they aren’t as convenient as being on city services, but as long as the system is inspected each year and you keep up the maintenance, you should have no worries.

And, it beats having to pay to get the home connected to the city’s sewer system.

Among the many forms you’ll be asked to sign when you buy a home is the Lead Based Paint disclosure. I’ve seen many clients give it just a cursory glance before signing it; rarely does anyone take the time to read it.

It’s an important disclosure, as it lets you know if there is lead-based paint on the walls, window sills and doors.

Why should you care?

Lead-based paint dust and chips can cause serious health problems, especially in kids. “Lead is particularly dangerous to children because their growing bodies absorb more lead than adults do and their brains and nervous systems are more sensitive to the damaging effects of lead,” cautions the U.S. Environmental Protection Agency (EPA).

“Babies and young children can also be more highly exposed to lead because they often put their hands and other objects that can have lead from dust or soil on them into their mouths.”

A little history

Before 1978, lead-based paint was the most commonly used in new-home construction.

The EPA estimates that 87 percent of homes built before 1940, 69 percent of those built between 1940 and 1959 and 24 percent of homes built between 1960 and 1977 contain lead-based paint.

The older the home, the better the chance that it contains hazardous levels of lead. The use of lead-based paint was banned in the United States in 1978.

Homeowner disclosure requirements

Although federal law requires the home seller to disclose the presence of lead-based paint if the home was built prior to 1978, most offer the disclosure even for more recently built homes.

The seller is also required to give the buyer a pamphlet titled “Protect Your Family From Lead In Your Home.”

The buyer must be allowed a 10-day period to inspect the paint in the home, but this time period may be adjusted by mutual agreement.

Homebuyer duties

Despite seller disclosure duties, homebuyers are expected to exercise due diligence when purchasing a home. This means reading and understanding each form you sign during the transaction.

If the home was built before 1978 and the seller claims he or she has no knowledge of the presence of lead-based paint, you should hire a lead inspector to ensure that there is no lead present in the home.

You can search for Certified Inspection firms on the EPA’s website.

Will finding lead in the home kill the deal?

The presence of lead in the home doesn’t necessarily derail the purchase. The inspector should be able to provide you with an estimate on fixing the problem.

We can take this estimate to the seller and ask him or her to make the repairs before the close of escrow or request the amount required to remedy the situation as cash-back at the close of escrow and have the repairs performed after you move in.

Feel free to reach out to us if you need more information on this disclosure or other aspects of the home purchase or sale process.

Seven in 10 real estate consumers work with the first real estate agent they interview, according to studies by the National Association of Realtors (NAR).

I don’t know about you, but I find that statistic shocking. Whether buying or selling a home, you’re dealing with one of the biggest investments you’ll make in your lifetime.

Why wouldn’t you take the time to ensure that the person that assists you in this transaction is experienced, knowledgeable and equipped with the skills required to get you where you want to be both financially and personally?

Even more surprising, according to the NAR, sellers typically ask real estate agents only two questions before hiring them — they want to know how much their home is worth and how much they will have to pay in commissions. That’s it; they ask no further questions.

So, this month, we’ll take a look at some answers to the tough questions you should ask before trusting any real estate agent to represent you in the purchase or sale of real estate.

This is a job interview

When you interview agents to assist you in the sale or purchase of a home you are, in essence, conducting a job interview and you should approach it as such.

Be aware of how the agent presents herself (or himself, as the case may be) and his or her business.

Are listing presentation materials professionally formatted and presented? Remember, if any of the agents can’t or won’t market themselves effectively, how can they possibly market your home?

Ask the right questions

Ah, the internet – what would we do without it? Homebuyers, by and large, begin their home searches online and many sellers use the internet to size up the competition. The web also happens to be the ideal place to help you narrow your choices when it comes to choosing a real estate agent.

More than 70 percent of Americans seek online product reviews before making a purchase, according to researchers at Northwestern University.

While service reviews aren’t quite as prevalent, you can find agent reviews and testimonials from clients online. So, once you have your list of agents to interview, it’s your turn to seek out reviews.

Real estate consumer success stories, in their own words, are powerful proof of an agent’s effectiveness. You can typically find testimonials on agent websites, but the best are unsolicited by the agent and you’ll find those on yelp.com and some of the large real estate platforms.

OK, here’s question number one to ask in agent interviews: “May I have the name and telephone numbers of some past clients?” Then, don’t be afraid to call them and probe for details about the agent’s skills, strong points and work ethic.

Additional questions you should ask each agent include:

• Length of time in the industry – Even more important, or perhaps it goes hand-in-hand, is the number of “deals” the agent has participated in. The best agents have enough experience to where they can handle whatever a transaction throws their way.
• Marketing – It’s a listing agent’s primary job and therefore an important question to ask is how he or she plans on marketing your home.

The agent should have a visible and robust online presence as well as access to the many online real estate marketing platforms.

Ask to see examples of past marketing campaigns. Home descriptions should be compelling and the photos should be clear.

If a virtual or 3D tour is important to you, ask for examples that the agent has created for past clients. Finally, it takes money to effectively market a home so ensure that the agent you hire has a marketing budget to back up the plan.

• Ask the agents for their list-to-sales price ratio. This represents how close to list price the agent’s listings have sold.

Each agent should be able to tell you the average days a home remains on the market in our area so ask. Then, inquire as to how long the agent’s listings remain on the market.

Just as in any other industry, not all real estate agents are alike. To assume they are sets you up for wasted time and money.

Interview at least three agents and be prepared to ask the tough questions.

There’s nothing wrong with wanting to perform home improvement projects before you put your home on the market. In fact, some fixes are mandatory.

When you’re considering major renovations, however, you need to be careful that you don’t over-improve the home for the neighborhood.

Getting Started

Before you hire anyone or hammer one nail, get in touch with us so we can calculate your home’s current market value. In the process, we’ll learn how much neighboring homes are worth; important information when you are considering renovation projects.

Appraisers have a lot of tools in their evaluation tool belt and two of them are the principles of progression and regression.

The latter says that a larger home surrounded by smaller homes will be devalued because of the market values of those small homes.

The principle of progression says the opposite: tiny homes surrounded by big homes benefit from the value of surrounding homes.

So, the watchword when contemplating your projects is don’t “over-improve.” Don’t create the best home on the block, thinking you’ll get a return on your renovation investment. You probably won’t.

Here are some tips on how to avoid over-improving your home:

The Next Step

The next step is to determine how much the project costs and how much value, if any, it will add to the home. This will let you know if the project is cost effective.

For instance, suppose your home is worth $390,500 (the average U.S. home price currently) and you decide to do a minor kitchen remodel.

The project’s price comes in at $26,214 (the national average for a mid-range kitchen remodel). The resale value of this project is $ $18,927, meaning you will realize a 72.2 percent return on your investment when you sell the home.

If you are remodeling your kitchen for your own benefit, then the fact that the ROI is on the low-ish side may not bother you.

If you want to perform the project for an increase in home value, however, you may want to rethink the idea.

Remember as well that if the return is higher than the local market will bear, it doesn’t make sense to make the improvement to a house you’ll be selling.

The highest ROI you’ll find when it comes to replacements and remodeling is a garage door replacement, according to according to the Remodeling 2020 Cost vs. Value Report (www.costvsvalue.com). The average cost nationwide for the project is $3,907 and the ROI is $3,663 (93.8%).

Think carefully before performing a remodel in the hopes of raising your home’s value. Consider the following:

• Is it necessary? Can the current kitchen, bathroom or whatever be cosmetically updated?
• If a project increases your home’s value, is the new value the highest in the neighborhood?

To avoid wasting money by over-improving your house, choose your projects carefully and learn the maximum potential sales price you’ll realize from the performing the improvement.

We’re happy to help you crunch the numbers so feel free to reach out.

 

If you’re considering buying a home, statistics say that one of the first things you’ll do is surf the Internet. From looking at homes for sale to learning about the process and choosing a real estate agent, you’ll find lots of information.

Be forewarned, however, that not everything you read is factual. For instance, some real estate agents, especially, recommend that your first step to homeownership is to hire a real estate agent.

While it’s important that you go into the current market alongside an expert, the first and most important step doesn’t include hiring that expert.

All homebuyers who will not be paying cash for a home should see a lender before hiring an agent and WAY before looking at homes for sale, either online or in person. But even that isn’t the first step.

So, what is the first step?

It’s easy to feel overwhelmed with the homebuying process when all you really want to do is skip over the boring steps to get to the fun stuff: looking at homes.

Especially considering that the beginning of the homebuying process has to do with finances.

If your dream is to buy a decent home, in a decent area, with a comfortable mortgage payment, step one must come first: raise your credit score.

Raising your score even a smidge can make a huge difference

The Fair Isaac Corporation, commonly known as FICO, is an analytics company that takes all of your credit information and scores from the credit reporting agencies and calculates a FICO® scores

These scores can range from 300 to 850, and a “good” credit score is considered to be between 670 and 739.

Yes, many borrowers obtain an FHA-backed mortgage with lower scores and a lower down payment, but they pay more for the home in the end.

Plus, what many first-time homebuyers may not realize is that the loan that the FHA guarantees comes from a lender who will charge big-time interest rates because of a low FICO score.

Those rates result in a higher monthly home payment ― which will already be elevated because of the tiny down payment and FHA’s mandatory mortgage insurance premium that accompanies it.

Boosting your score, on the other hand, can mean big savings on your monthly mortgage payment.

Here’s a scenario, using a base rate we determined randomly (current rates are far lower). A borrower with a credit score of 700 to 759 might be offered a rate of 3.73 percent on a 30-year fixed rate loan. The borrower with a 620 to 639 score, on the other hand, would be offered a rate of 5.09 percent.

If you’re the low scorer in the above scenario you’ll pay $187 more a month on your mortgage payment than the high scorer. You will also pay $67,181 more in interest over the life of the loan.

If you were to raise your score to 640 you would end up saving more than $238,700. Raise it even higher, to 660, and you’ll save $42,000. Finally, if you can get that score up to 700 you will save more than $58,000.

As you can see, patience and a bit of hard work before you purchase a home definitely pays off.

How to boost that score quickly

At the very least, pay down bills, don’t apply for new credit and pay bills on time.

In fact, the folks at FICO specifically caution borrowers to cease the use of their credit cards completely and pay down what is owed on them.

Start paying off other debt that appears on your credit reports one-by-one; hack away at them and before you know it, those balances will be gone and your credit score will reflect the new, more financially responsible you.

Now you’re ready for step 2 of the home buying process – so strut into that lender’s office and confidently ask the representative to pull your credit score.