Kissed a Frog Lately? Restoration Can Do Amazing Things!

We all grew up with fairy tales in which a frog was transformed into something beautiful with just a kiss.  Old houses are much the same.  If the “bones” of the home are good it can be restored to its former beauty and even enhanced with modern conveniences.

 Historic Springfield is filled with examples of homes that at first glance look a breath away from a tear down.  Yet someone had the vision to see beyond that “frog” to what was possible.

 Some folks have the expertise to do the work themselves.  Others choose to hire professionals.  The cost of the work can even be built into the mortgage to pay for the renovations.  In some cases the home was bought for a very small price and the restoration is the bigger part of the mortgage but the end result is a home that is restored to YOUR specifications and generally speaking worth more than you have invested in it.

 Take a look at some of these examples, and for even more, check out this video.

 

 

 

 

 

 

Obviously, before buying a fixer-upper a buyer needs to do some due diligence.  Having a good inspection, an evaluation by a contractor, a consultation with a lender, are all steps that need to be taken BEFORE writing a contract.

 And if the home is in a designated historic district there may be additional considerations to consider, but they are usually in the interest of restoring the home properly so that’s a good thing.

 Quality and workmanship in older homes is hard to come by in newer built homes.  Much of the woodwork cannot be duplicated these days.

Just imagine being able to live in a piece of history.  Knowing that a hundred years ago someone else raised a family or planted a garden or celebrated birthdays in your home.

Maybe it’s time to consider finding a “frog” of your own and get ready for a big kiss.

Can Your Agent Read?

Guess what?  If your agent can’t properly read and understand the sales contract, who do you think will suffer the consequences?  Yes, YOU!  All to often, a real estate professional, just like anyone else, can get too comfortable.  When that happens in real estate, the agent may summarize the contract to the buyer instead of reading it and explaining it.

Contracts are long, and mostly boring.  But they are the only thing that protects your rights in the sale.  So you’d better take the time to read it BEFORE you sign it and find yourself committed to something you thought read differently.

For example, time frames.  There are a number of time frames in any contract.  A time frame for the mortgage approval, a time frame for the inspections to be completed, etc.  Some of those may overlap.  Some time frames refer to calendar days and some refer to business days.  But miss one of those deadlines and you lose certain rights you had.

Another area for problems comes from assumptions.  There might be things the agent says are understood, when in fact if they are not spelled out in the contract, they don’t exist.

Protect yourself.  Don’t sign anything without thoroughly reading it, either with your agent or on your own.  It is not unreasonable to ask to see a blank copy of a contract early on in the process so that you can understand it BEFORE you need it.

Either way, don’t rely on the agent to do your reading for you.  It’s your name on the dotted line.

Murphy’s Law and Short Sales

Actually, Murphy’s Law IS short sales.  ANYTHING that can go wrong, most likely will.  There are simply too many pieces of the puzzle that are outside the control of the buyer and seller.  That’s not to say that short sale transactions don’t work – they do.  They are just not for the faint of heart.

Both sides need knowledgeable professionals on their team.  Short sales are too complex to be handled by someone who is clueless or won’t stay on top of things.  Short sales involve keeping a lot of balls in the air.

Then you have to hope that the lender who has the mortgage of the seller is professional and motivated.  The negotiator assigned to the transaction must be both, as well.  If there is more than one mortgage (like a home equity loan), then you just doubled the number of people involved, the number of agreements that have to be reached, and the number of things that can go wrong.

You won’t have a closing date, or even an accepted contract that is approved by the lender(s) for weeks or months, and in some cases it can take even longer.  So most of the time for the buyer and seller is spend in limbo.  Waiting.  Waiting for the phone to ring, the fax to come through, the answer to a simple question, etc.  In addition to mortgages, there may also be association dues, taxes, and other expenses that the seller has incurred that must be paid off or satisfied at the time of closing.

Last minute surprises are not uncommon, even for the pros.  Payoffs that were calculated prematurely, penalties that were unexpected, or whatever.  In short sales, it ain’t over till every fat lady has sung.

So if you are the buyer, or seller, involved in a short sale, hang in there.  It’s like child birth – it’s worth it in the end.

Band-aids and Cancer

If you had a serious health issue and the doctor told you that you should not worry, we’ll just put a Band-aid on it and it will be okay, you would probably feel grateful that the news was not bad and you would like the doctor.  Unfortunately, if you then went on to get worse and the prescription for fixing the problem was more drastic, you’d be ticked off at the doctor for not having the cojones to tell you what you needed to hear the first time.

Thus is the story of sellers and agents.  A good Realtor® will do a lot of preparation before meeting with a seller the first time and knows exactly what pricing is out there in the market and where the seller should strategically price the home in order to sell it fairly quickly.

This is the equivalent of that doctor saying you need surgery and it’s going to hurt.  The doctor would rather say the Band-aid will do it, but he is morally obligated to tell the patient the truth and stick to it.  Most patients accept that and don’t argue and bargain with the doctor because they recognize his professionalism and training or else they would not have consulted him.

But with the most valuable asset they own, they think they can bully the agent into listing the home for more than it’s worth.  They think THEY know best what their home is worth and the professional does not.  I know this because I’ve done it.  That argument ultimately cost me over $50,000 because by the time I dropped the price on my home, the market had dropped as well.  It was like chasing a ball downhill.

Agents who give in to sellers are not doing them any favors.  All they are doing is setting that ball in motion and beginning the chase.  In a declining market the seller is going to lose money that way.

Biting the bullet and pricing a home aggressively from the beginning is the best way in the long run to get the most out of selling your home.  Believe me, I know.

The Tax Credit is Over, So Why Should I Buy Now?

Okay, you missed out on the tax credit.  Maybe you weren’t ready to buy then.  Maybe you looked but just couldn’t find the home you wanted.  It doesn’t matter.  The tax credit was always “gravy”.  The real meat and potatoes is that this is the best time in years to buy a home, both from the stand point of price and interest rate.

For that matter, if you waited to buy until now, the interest rate is even better than it was during the tax credit time. 

Example, on a home that cost $175,000:

@ 5.25% interest on a 30 year loan, the principle and interest = $966 per month

@ 5.00% interest on a 30 year loan, the principle and interest = $939 per month

@ 4.75% interest on a 30 year loan, the principle and interest = $912 per month 

The first change in rate would give a savings over the life of the loan of $9720, already more than the tax credit.  The second change in rate would give that buyer a savings over the life of the loan of approximately $19,444!

 But don’t wait too long. Interest rates won’t stay low forever.  And prices will begin to edge back up.  The best time to buy a home is NOW!  And the worst thing to have to admit to yourself is “If only I had bought back then.”

How “Green” is Your Next Home?

Your first thought is going to be of things like Energy Star appliances.  Then you’ll think of insulation, solar power, light bulbs, etc.  But what about location?  How green can a home be if you have to drive everywhere for everything you do?

Transportation to and from a home can have energy costs that are twice as much as operating the home.  So what’s the alternative?  The oldest answer in the book when it comes to real estate – location, location, location. 

If you are truly concerned about living a “green” lifestyle then you need to consider whether or not you’ll be getting into a car for everything you need to do and how far you will have to drive.  Is anything you do walkable?

There is a wonderful website called www.walkscore.com that allows you to plug in an address and see its “walkability score”.  The higher the score, the more walkable, and therefore, greener, the home.

Not too long ago we were looking at $4 per gallon gas, and even though prices have dropped, most experts say they will rise again.  When that happens we will begin to see the walkability of a home connected to its market value.  The more walkable the score, the higher the value, relative to other factors.  

It’s already happening in some cities across the country.  CEOs for Cities just released a study based on data from Walk Score and Zip Realty that shows one point of Walk Score is worth as much as $3,000 depending on the metro area. 

So before you buy your next home, take a look at its score and decide if it meets your priority for a truly green life.

Owning a Piece of History is Easier than You Think

If you are in the market for a home sometimes the best values are in the areas that were most affected by the “boom” and “bust”.  One of those areas in Jacksonville is Springfield.

During the boom a few years ago Springfield was rediscovered and hit with an influx of investors who swooped in and fixed up older homes for resale.  That boom drove prices through the ceiling and in many cases priced a lot of would-be buyers out of the market.

Then the bust hit.  Springfield, like many other areas, was hit hard and many of those investors were caught holding the bag, having over paid for homes they no longer had the money to restore and flip.

Now the prices are back to pre-boom levels and buyers have rediscovered Springfield once again.  Everywhere you look sold signs are popping up and renovations are underway with a vengeance.

But this time the buyers are the future residents, not investors.  And Springfield is that rare community in which residents are more than residents, they are truly neighbors.  People greet each other from front porches, walk their dogs, or greet each other at the neighborhood coffee house.

Springfield has the oldest women’s club in town, a mommies group, a wine club, and neighborhood sports teams that play in the area parks (some of the oldest ones in town).

By the way, buying in Springfield doesn’t mean living without modern conveniences.  Most homes have been renovated and many have state of the art kitchens and baths, energy efficient features, etc.  You can even have a newly built, old LOOKING home if you’d like.

So you can build your own historic home, buy one and renovate it (with special renovation financing that makes it a breeze), or buy one that someone else has already restored.

I found my perfect home in Springfield and I can always use another good neighbor.