Is it Still worth it to remodel? Yes it is!!!

Remodeling your home,,, Is it worth it?  Yes it is.!!!

The home-sale market has taken a beating in the last few years, which begs the question: Does it makes sense financially to invest in home improvements? Remodeling Magazine's annual “Remodeling Cost vs. Value Report for 2009-10,” published in agreement with the NATIONAL ASSOCIATION OF REALTORS®, indicates that remodeling still pays off, but more so on less expensive projects. Most high-end remodeling projects don't return dollar for dollar on the investment even in a good market. That is, unless homes are appreciating at a fast clip. In this case, you might get your money back due to appreciation. But the profit on the sale might not be as much as it would have been if you hadn't done a high-end renovation. Just as today's homebuyers are making pragmatic decisions, so are today's homeowners when it comes to making improvements. Most of the remodeling projects with the largest return were for such things as replacing exterior siding and windows. On average the cost involved was less than $14,000, according to Remodeling Magazine. These projects returned from 71 to 83 percent nationally depending on the materials used. The project that paid back the highest return was a midrange front-door replacement that cost approximately $1,200 and returned an average 128.9 percent nationally. Sellers may wonder why it would make sense to invest in an improvement just for the sake of selling if it won't repay the amount invested. In today's challenging home-sale market, these improvements may be warranted for the home sell at all if there is a lot of inventory in your neighborhood. Buyers expect more for their money and gravitate to listings that are in the best condition for the price. HOUSE HUNTING TIP: Be judicious about how you spend your money fixing your home up for sale. For example, if your kitchen is a disaster, it makes more sense to do a midrange than an upscale renovation. According to the “Remodeling Cost vs. Value Report,” a midrange minor kitchen upgrade will return an average of 78.3 percent nationally. A major upscale kitchen remodel will pay back only 63.2 percent. The national average returns on remodeling investments do not give an accurate picture of the renovation returns that might be typical in your neighborhood. For instance, the payback for Honolulu homeowners for most of the 18 remodel projects analyzed returned 100 percent of the investment. San Francisco was close behind with 10 projects paying back the full investment. The cost versus value report recommends the following cost-effective improvements you might consider to prepare your home for the market: tidying up the kitchen cabinets using organizers will make your cabinets roomy; add an inexpensive tile backsplash to a tired kitchen, and use inexpensive tile to give an old bathroom a new look; add a breakfast bar by cutting an opening between the kitchen and family room; and install granite tile rather than slab. Other suggestions include: Replacing outdated light fixtures; freshening up the basement; giving the kitchen cabinets a new look by reconditioning and adding new knobs or having cabinet doors and drawers replaced; updating a bathroom without replacing tile by changing the medicine cabinet, light fixtures, vanity, cleaning the grout or replacing it and adding glass shower doors. The findings of this report were based on a survey sent to 150,000 appraisers and real estate agents in the summer of 2009. The survey included information about the cost and description of the remodel projects and median price data for the 80 metropolitan areas surveyed. Some 6,233 survey respondents estimated how much value the improvements would add to the house at resale in the current market. THE CLOSING: Before starting any fix-up-for-sale projects, seek your real estate agent's advice so that you don't waste money on improvements that won't pay back much in your area. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author. Contact us Cynthia Peeden or Douglas PembertonRealty Executives OC Coastal SouthOCEstates@gmail.com 949-429-7476 or 949-273-0018

The Pros and Cons Of Rent To Own

The Pros and Cons Of Rent To Own

By Gil Gross - Real Estate Today Radio · April 16, 2010

In last week’s post we talked about credit recovery and how a rent-to-own agreement may be an option while you work towards getting your credit back on track.

So, we thought this week we would expand on the rent-to-own scenario and talk about the pros and cons of entering into such an agreement. Keep in mind, entering into any rent-to-own agreement will require the services of a lawyer and a contract that is agreeable to both parties.

For Buyers

Let’s weigh some of the pros and cons from the buyer’s perspective. Looking at a rent-to-own agreement objectively will give you a better feel for what you can expect and perhaps how to avoid some of the pitfalls that can be associated with a rent-own-scenario.

First and foremost, rent-to-own gives you the benefit of building a down payment towards the home you are currently renting. Financially, this is a great benefit to you, the renter, as you now are building a nest egg towards the eventual purchase of the home. Your agreement may require that you pay higher than market value rent but the extra will come back to you when it comes time to purchase the home.

An additional benefit is that you are able to “test drive” the home, the neighborhood and what it would be like to own a home in the area. This is a benefit that a regular home buyer does not have.

However, there are some things to be aware of when entering into a rent-to-own agreement.

Probably the number one concern with any home buyer is price and this is where having an agreed upon written agreement is most important. Locking into a price early on can be a double-edged sword. If you agree on a price now, and then the home’s value goes up? The landlord might not want to sell to you. But if he does, you’ll be getting a great deal.

If the price falls, you are not going to want to pay more than the house is worth. In addition, your financial institution will not provide you with a mortgage on a home that you are paying too much for. You are better off to agree to a professional appraisal down the road, when you are ready to buy.

Lastly, keep in mind that you will still need to qualify for a mortgage when you decide to buy the home.

For Sellers

In the rent-to-own scenario the seller’s pros definitely outweigh the cons.

In today’s tough real estate market a rent-to-own agreement may be able to attract buyers you might otherwise not get.

One of the key benefits to such an agreement is your renters now have a vested interest in the property and it is in their best interest to take care of the home they are currently renting.

Additionally, if the renter decides not to buy at the end of the lease you will have still earned significantly higher rent during the tenancy.

There are very few scenarios where the seller would lose in signing a rent-to-own agreement with a current tenant other than locking into a price early on in the agreement and selling the home below market value. However, this could easily be avoided by not determining a price on the home and agreeing to a professional appraisal down the road, when the tenant is ready to buy.

How To Make It Work

As a buyer or seller it is imperative that you speak to a REALTOR® and your attorney to insure the contract is fair for both sides.

Buyers will need to approach their mortgage lender and be sure they will qualify for financing when the time comes. Remember, if you cannot qualify for the mortgage at the time of purchase it is more than likely any money amassed towards the down payment will be lost.

Make sure that the agreement covers maintenance and repairs as these are common points of contention, for both the buyer and seller, in rent-to-own scenarios.

Whether you are buying or selling, a rent-to-own agreement can be a creative solution in a tough real estate market. Just remember, consult an attorney before you step into any agreement.