by Neil Kearney | Nov 15, 2010 | For Sellers, General Real Estate Advice, Real Estate 101 |
I get calls all the time asking for advice on whether it would be smart to do a particular remodeling project around their home. 
Many times it is tough for me to make the call for them. I look at houses all the time and see what buyers like but in most cases improvements don’t pay off right away. For instance according the Remodeling Magazine’s Cost vs. Value Report 2010-2011 a two story addition in the Denver area will cost $155,903 and give added resale value of $118,301. This means that an owner could expect to get about 76% of the value out of that project. Not exactly a strategy from the pages of Trump – The Way to the Top.
Okay, we have established that you won’t get back all of your money if you do a home project but what if that scares you into paralysis? Say you have owned your home for 15 years and during that time you have done nothing but change the filters in the furnace. This strategy, in my opinion works even worse than improving your home right before closing. In the case of the do-nothings, the value of their home will lag behind the neighborhood in general. Their home will stay on the market longer and in the end sell for a lower price. Again not a way to get rich quick.
I think the best strategy for maximizing the value of your home over time is to make incremental changes over time. Take on a project every six months or 1 year. For example, take a six month period to remove the old wallpaper and repaint. Next, re-do the powder room by removing the wall sized mirror and replace with a framed mirror and replace the lighting. Next re-tile the master bath. After a few years your house will start looking refreshed and will be one of the nicer ones on the block. And when you go to sell it you won’t have much to do to get maximum value. Also, you get to live in a much nicer home. Not just fix it up for someone else. There is value in that!
Here is a sample of the value of Midrange projects and their pay back in the Denver market:(ranked in order of pay back percentage):
- Garage Door Replacement – cost $1,228 – cost recouped 93.1%
- Steel Entry Door Replacement – cost $1,165 – cost recouped 86.1%
- Minor Kitchen Remodel – cost $21,035 – cost recouped 79.6%
- Vinyl Window Replacement – cost $10,330 – cost recouped 77.1%
- Wood Deck Addition – cost $10,721 – cost recouped 75.1%
- Major Kitchen Remodel – cost $53,032 – cost recouped 73.5%
- Master Suite Addition – cost $100,775 – cost recouped 74.5%
- Family Room Addition – cost $79,383 – cost recouped 70.6%
- Basement remodel – cost $62,115 – cost recouped 63.2%
- Roofing Replacement – cost $17,943 – cost recouped 61.8%
For copyright reasons I can’t display the report on my website but if you would like a copy of the full report which includes midrange and upscale projects and defines the scope of each please let me know. I can send you one if you request one to neil@neilkearney.com.
To see the associated web page go here.
For more information this topic see my post on list price vs. condition.
From HGTV a before and after.
by Neil Kearney | Sep 15, 2010 | For Buyers, For Sellers, General Real Estate Advice |
The recent fires in our area bring to my mind the importance of homeowners insurance. During my 19+ years of selling real estate in and around Boulder homeowners insurance has never been a big part of the transaction. Years back it was a last minute detail, many times lined up the day before closing. Now there is a specific deadline on the contract in which the buyer has the right to cancel the contract if reasonable (in the buyers subjective opinion) homeowners insurance is not available for the property they want to purchase. Usually this contingency period is 10 – 14 days after an accepted contract.
Most people think about insurance in two ways. For 99% of the time they want to know they are
covered without paying too much (that’s why the save 15%… commercials have mass appeal). Having coverage brings peace of mind. Once you have a claim your perspective changes. If you have good coverage you are thankful and if you don’t you kick yourself for being cheap. Just think of the 166 families who have come home to their home and possessions which are now a pile of ashes. The pit in your stomach is deep enough without the nagging fear that your coverage is lacking.
So, with this in mind I asked my friend and insurance agent Ryan Brooks from Allstate to give some quick tips on making sure you are adequately covered. Here are a few tips:
- Don’t just shop for the cheapest plan out there. Yes it will save you on a monthly basis but this approach is penny wise and pound foolish. In case of a catastrophic loss you could be lacking some important coverages.
- The best scenario in setting up a policy is to sit down with an agent (not online) and go over your specific situation. Ask questions and tell them about your personal situation. Do you have art, expensive jewlery, memorbilia? Telling the claims adjuster after a fire will not fly, it needs to be disclosed in advance.
- Here are a few items that you want to make sure you have on your policy.
- Cost of Living – this coverage gives you money to live in a home of similar size and quality while your home is being re-built or repaired. If you don’t have this coverage it can quickly cost you tens of thousands of dollars.
- Adequate Liability Coverage – Make sure you have enough liability coverage. In most cases this is $1,000,000 or more. This covers you if someone would slip and fall off your deck during a party, etc.
- Building Codes Coverage – This coverage is especially helpful in the case of an older home. This allows for modification of the house to meet current code if the covered repair needs to be re-worked in order to meet code. Think of an old home with a steep pitched roof.
- Condo Coverage – If you are a part of a homeowners association there is most likely a master HOA policy which covers the structure. However, this policy does not cover the individual owners possessions, or the interior finishes (drywall, plumbing , cabinetry, carpet). Make sure your condo insurance has adequate building structures coverage which will rebuild the interior of the unit. Many times this is capped out at 10% of the contents coverage and this is not enough.
- Loss Assessments – Speaking of condos. Loss assessments coverage covers you if a covered loss (roof, liability) on the part of the HOA results in a special assessment. This coverage runs around $10 a year and is well worth it.
- Sewer and Groundwater – Losses from sewer backup and water coming into the home are not usually covered unless there is a specific rider on the policy.
- Personal Property – Make sure the limits on your policy grow over time. The amount of personal property a typical household has grows ever time. We have much more in our home when we are 60 years old than when we were 20.
Once good insurance is in place you can rest easy. Many pay insurance their whole life and never take out, but for those who have a significant loss, insurance is well worth it.
Tip: Take an extensive video of your home, including closets, drawers, garage etc. and store either online (private Youtube) or in a safe deposit box. This will be a good inventory of personal property and will allow you to remember items that would have slipped your mind. Everything has value make sure your homeowners insurance is up to snuff.
by Neil Kearney | Sep 1, 2010 | General Real Estate Advice |
Five years ago I had never heard the term ‘short sale’, now I hear it almost every day. Even if you own
your home free and clear knowing what a short sale is and how it works will keep you up to date in today’s real estate market. Currently of the roughly 50 million households in the U.S. 2.5 million are in foreclosure and 7.2 are delinquent. A related number which encompasses many of these households are the 11 million homeowners (Corelogic) who owe more than what their home is worth. In order for these people to sell their house and move on they either have to come to the closing with money or negotiate with the bank who hold the mortgage.
The Basics: Wikipedia.com definition – A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
Owners Perspective: These would be sellers are stuck. They would like to (need to) sell but for any number of reasons (bought for too much, negative amortizing loans, second loans, etc.) they cannot find a price a buyer will pay for the home and pay off the existing loans and the closing costs. Convincing the lender is not an easy job. First of all there must be a compelling hardship where the seller absolutely cannot keep up the payments nor come up with cash to close. Once all of the documentation is complete a package including the sales contract signed by buyer and seller is sent to the bank for approval. This is the tough part, it takes patience. It can take up to 5 or 6 months but usually no fewer than 8 weeks to get an answer from the bank. If the short sale is approved, the sale goes through at a lower amount the sellers credit is hurt (although not as bad as a foreclosure) and the bank still has the right to claim and try to collect a deficiency.
Buyers Perspective: Short sales provide a unique value opportunity. Many times banks approve a price which is a great deal for the buyer. The main downside for a buyer is the uncertainty. The bank has the right to accept other offers so even if you were the first offer in to the bank, by the time they get around to reviewing it there may be multiple offers. It might take two or more months to figure out that the bank will not approve the list price of the house. Buying a short sale is not for someone who has a certain date in mind or is not willing to be patient while the weeks tick by without any word. There is no countdown, there are no numbers. You hear when you hear and the news is not always what you had hoped for. For the right buyer it is a good opportunity but it is certainly not for everyone.
by Neil Kearney | Aug 11, 2010 | For Buyers, For Sellers, Real Estate 101 |
A recent advertising campaign had the slogan “Make sure your agent is a REALTOR”. The campaign was paid for and developed by REALTORS who wanted to differentiate themselves from those real estate agents who are not REALTORS. Still, I don’t think the public gets it fully. “Aren’t all real estate agents REALTORS?” the public may think. This is like saying “aren’t all colas Coke” or “isn’t all tissue Kleenex?
Currently there approximately 35,000 people in Colorado with a license to sell real estate. Of those people approximately 23,500 are REALTOR, meaning they are a member of the National Association of Realtors (NAR). So what is the difference and why should you care.
To start the explanation we go back to 1913 when The Code of Ethics (The Code) was first adopted by NAR. The Code is a document to which all REALTORS swear to abide by and be held to. The backdrop of the creation of The Code was an era of the fraudulent subdivision, the fake city addition, the multiple “first” mortgage, the “net” listing, and a myriad of other “get rich quick” schemes involving the sale of land.”1 It was a time before state regulations regarding real estate and the time when “buyer beware” really meant something. The Code was written on the premise that REALTORS should serve the public and being a REALTOR meant that you upheld a higher standard of business practices.
Nearly 100 years later The Code of Ethics is still going strong. It is a living document meaning that it is in a constant state of review and revision. Each year new interpretations and or Standards of Practice are added to The Code. It is as relevant now as it was 97 years ago.
The Code works because it includes both the ideals on which we should base our real estate practice and a mechanism for hearings, education and discipline where needed. The Code gives the public and our real estate peers a way to stand up for principle and make a stand for what is right.
The Code of Ethics is a document which includes 17 Articles organized under three main headings; ‘Duties to Clients and Customers’, ‘Duties to the Public’, and ‘Duties to REALTORS’. Each article is further explained by specific Standards of Practice which give clarification to the intent of the articles. The basis of all articles in The Realtor Code of Ethics is the Golden Rule “Whatsoever ye would that others should do to you, do ye even so to them”.
So what happens when in your opinion a REALTOR acts unethically? The public as well as fellow Realtors can file an ethics complaint with the local REALTOR association in which the offending agent is a member. There is then a pre-defined procedure in which the complaint is processed. The complaint is taken very seriously and is handled confidentially by a panel of peers. The first step is the Grievance Committee which determines if a hearing should take place. The Grievance Committee acts as a grand jury. If the complaint is determined to be valid, the next step is a full hearing which replicates a court of law. The outcome is not criminal but an offending REALTOR can be punished.
So, what does it matter if your agent is a REALTOR or not? Both are licensed and can help you buy and sell real estate but only a REALTOR has pledged to serve the public ethically and consistently, and is willing to be upheld to this standard by a panel of their peers. To me it is more than that. REALTORS have made a commitment to serve the public and to conduct business in a way that the public expects.
I am privileged to have been chosen to be the chairman of the Grievance Committe for the Boulder Area REALTOR Association this year. To me how business is conducted does make a difference.
To read The Code online click here.
1 – Article – “The Realtor’s Code of Ethics – A Gift of Vision, 1978 William D. North.
by Neil Kearney | Jul 17, 2010 | Colorado Lifestyle |
Even though we live about 20 minutes away, the Erie Recreation Center is one of my family’s favorite spots to visit, especially in the winter. The main attraction for us is the awesome twisty slide which my sons go up and down too many times to count.
Erie Colorado is a small community within an easy commute to Boulder, Longmont or Denver. It has been one of the fastest growing towns in our area. Initially, home buyers were just attracted by the affordable homes but now the infrastructure has caught up and Erie has some great public assets.
Erie Recreation Center 303-926-2550 website
Hours
Monday – Thursday
5:30 am – 9:00 pm
Friday: 5:30 am – 7:00 pm
Saturday: 7:00 am – 7:00 pm
Sunday: 8:00 am – 6:00 pm
One nice thing about a newer community is the community planning. The city reserved a large parcel of land right in a great location and over the past few years has made this area a town jewell. The Erie Recreation Center is housed in the Erie Community Center. The rec center includes the pool, gym, workout area, climbing wall and running track. Also in the building are a cool just for teens area, meeting rooms and a children’s center.
Sharing the same parking lot is the Erie Public Library. Right across the parking lot are some new additions this year. Ball fields, playgrounds and some nice tennis courts (as some of you may know good tennis courts are important to me!). Also in the complex are some open fields which also double as a great place to put on a concert.
If your looking for a great place to cool off this summer, or just a nice place to hange out check out the Erie Recreation Center. Your kids will thank you for the opportunity.
