In one of my last entries I talked about kitchens and bathrooms being the most important upgrades to your home, yielding the highest returns for your money, at least by way of insuring your home falls towards the higher end of current market prices for your neighborhood. In this entry I want to talk about step #2 in making sure your home is properly up-to-date to compete at the higher end of its market, and that is your flooring. This is the surface upon which you walk, stand and sometimes even sit. The symbolism of this is more important than the value it lends to your home, but since I am writing this with my appraiser hat on, I'll stick to the latter.
First, figure out what your favorite flooring is (alliteration completely intended, just for fun). Carpet, Vinyl, Wood, or Tile. I'll just go ahead and discuss pros and cons of each. For the most part each type of floor covering has varying degrees of quality and its hard to really say which type of flooring is more valuable, overall. In today's market, many people like wood flooring, so I'll start with that one.
Wood flooring is very popular and as mentioned above, has varying degrees of quality. Wood is actually my favorite floor covering. Mainly because the cheapest quality of it is the best, in my healthily humble opinion! Wood laminate is what I'm talking about. Of course, even within the sub-category of laminate there are varying degrees of quality and price as well, but no matter the quality, it is the cheapest of all wood floors. In the world of solid surface flooring its the most efficient and easiest to care for, therefore the best in my extremely well-informed, professional opinion. I don't exaggerate in the least bit! Compared to its more expensive older cousin, hard wood flooring, its much less costly, and much easier to maintain. Hard wood can outlast wood laminate however, but only if you keep up the maintenance of hard wood. I'm told maintaining hard wood flooring is an insanely horrible, back-lash offense to feminists, and anyone else with a life! Seriously, anybody who can find the time to properly care for hard wood floors needs to get a life in my rude, aggressive, and even a bit judgemental opinion! So, in closing, on wood flooring, if you really like it, go with wood laminate. They actually have very nice qualities of it that are comparable in aesthetic value (as well as life-expectancy) to hard wood. Besides that, I have a house full of boys, if I had hard wood floors the jokes around here would be ridiculous and despite how fast the jokes would grow old on me, boys of all ages will forever snicker at the phrase 'hard wood'.
Next I guess would have to be tile but the biggest problem with tile is grout! There's no fluid movement. Its all sharp-edged, perfect patterns separated by perfectly straight gullies. Its rather depressing, actually. It reminds me of our world right now.... The grout separating these equally proportionate, seemingly perfect squares always tends to collect dirt; dirt which can not, with the power of any mop known to this earth, be cleaned up without getting on your hands and knees and using a toothbrush and bleach to scrub up for hours on end. Please, for the sake of humanity, stop this insanity! These dividers show just how much standing, walking, sitting, spilling, dropping and dirty mopping has gone on in that particular area of the universe. But if you like the idea of perfect square tiles showing their dirty lines that divide them, then go for it. Like anything else, I won't be as impressed with how much you spent as I will be with how much you didn't spend. (In other words, follow all previous advice about sticking to materials your market can bear.)
Carpet is okay, I suppose. Its so wild and ever changing, things are always sticking to it and some things fall onto it that can never be cleaned up. In case you couldn't tell, I prefer a solid-surface flooring, but I understand some people like carpet. If you're going to get carpet, its best to spend some extra money. Nothing gnarls a house's look up more than ratty old looking carpet, and the cheaper the carpet, the quicker it rats up. (You won't actually get rats, it'll just get ratty and old looking quicker.) A tight, hard woven carpet is the best, like Berber. That's what kind of sucks, for lack of a classier term, about carpet, though. You have to get the most expensive quality to get something worth having, so for that, carpet's towards the bottom of the list.
The very bottom of my list is vinyl. It sucks to put it on the bottom of my list because it does meet my criteria of being very cheap material cost wise, yet easier to clean and maintain than carpet or even tile, but its so darn ugly! Nobody really likes it. I live in a trailer and I don't even have vinyl floor covering. It doesn't last all that long either, especially if you go really cheap. The little dimples and barely visible chaotic ruts that are molded into the surface of most vinyl floorings collect dirt, much like the dirt that got caught in the tile's dividing lines. Vinyl, sadly gets the lowest rating on my list of floor coverings because its just ugly and obsolete. Really for just a little bit more money you can get nice, wood laminate floor covering!
Wood, its a nice fluid pattern. Everything is basically going in the same direction but each line in the grain is moving in its own unique way. Its solid and while some hard woods do have grooves that collect dirt and must be maintained feverishly, somehow the dirt that collects in the grains of an old wood floor can be beautiful. It tends to give it some character, rich in color and symbolic in nature. Of course, no one wants dirty wood floors, realistically, so the grand prize winning floor covering for the current decade is..... Wood Laminate!!!
One last thing before I wrap up this ground breaking post, there is yet another category of flooring I didn't really talk about and that's the latest trend of painted/glazed concrete. I like the concept. I've seen it done well. The problem with this new fad flooring is it hasn't hit most residential markets. Another problem is it either looks really good or really bad. There's no middle ground, so to speak. If its a typical feature in your art-deco downtown condo in big city USA, then go for it, but if you live in suburbia USA, chances are, its just going to look like you have no floor covering.
Thanks for reading this entry! Its main lesson: stay well grounded and you will be peaceful. If you don't, you won't.
Thursday, August 6, 2009
Wednesday, April 29, 2009
WHAT AN APPRAISAL LOOKS LIKE
Most homeowners think an appraisal of their home should look like this:
BASE PRICE: $150,000
ADD GARAGE: $25,000
EXPENSIVE TRAVERTINE TILE: $10,000
YOU KNOW WHAT? ADD ANOTHER $5,000 BECAUSE TRAVERTINE TILE
TOTALLY ROCKS: $5,000
POOL & CUSTOM POOL FEATURES: $35,547 (because that's EXACTLY how much was spent)
POOL-SIDE CABANA: $75,000 (comes with phillipino bartender)
VELOUR BLINDS IN MOCHA (no one else on street has mocha, so this is
worth more, duh): $6,000
DOUBLE-PANE WINDOWS, YES I'M SERIOUS, DOUBLE-PANE WINDOWS!
ITS AMAZING: $10,000
GRANITE COUNTERTOPS AND STAINLESS STEEL APPLIANCES: $500,000 (because these things are the greatest things that ever existed!)
LAND VALUE (includes koi pond and 17 fruit trees): $275,000
TOTAL
(plus an extra $100,000; these people don't plan to move, EVER!): $1,500,000 (rounded)
This is what an appraisal, in condensed form, actually looks like:
House #1, which is slightly inferior to the sujbect, sold for $200,000
House #2, which is just like the subject, sold for $225,000
House #3, which is slightly superior to the subject, sold for $250,000
Subject house is worth $225,000.
The most common misconception I encounter is homeowners confusing 'cost analysis' with 'market analysis'. In fact, as example #1 illustrates, most homeowners think the stupid crap they purchase for their home will somehow be worth more in the re-sale home market than what it cost them. And in true narcissistic form they always throw in the word 'custom' when describing the materials of their home. "We have custom upgrades, which is obviously worth more than everyone else's 'cause we picked ours out ourself *burp*" as if they're some kind of celebrity and potential buyers of their 'custom features' should pay more for them just because some guy named 'Bob' picked them out. I can hear the new homeowner at a future cocktail party now "yes, its custom, the great Bob picked it out himself, we never wash it".
A potential buyer of your home can tell when a home has higher-priced upgrades and it may even be impressive to them, but believe me, they're buying something used, so they are not going to pay as much as you did for your personalized features and they're certainly not going to pay more for it than any other home in your neighborhood that's for sale. A potential buyer is going to buy the cheapest house with the nicest upgrades. Period, end of blog entry.
BASE PRICE: $150,000
ADD GARAGE: $25,000
EXPENSIVE TRAVERTINE TILE: $10,000
YOU KNOW WHAT? ADD ANOTHER $5,000 BECAUSE TRAVERTINE TILE
TOTALLY ROCKS: $5,000
POOL & CUSTOM POOL FEATURES: $35,547 (because that's EXACTLY how much was spent)
POOL-SIDE CABANA: $75,000 (comes with phillipino bartender)
VELOUR BLINDS IN MOCHA (no one else on street has mocha, so this is
worth more, duh): $6,000
DOUBLE-PANE WINDOWS, YES I'M SERIOUS, DOUBLE-PANE WINDOWS!
ITS AMAZING: $10,000
GRANITE COUNTERTOPS AND STAINLESS STEEL APPLIANCES: $500,000 (because these things are the greatest things that ever existed!)
LAND VALUE (includes koi pond and 17 fruit trees): $275,000
TOTAL
(plus an extra $100,000; these people don't plan to move, EVER!): $1,500,000 (rounded)
This is what an appraisal, in condensed form, actually looks like:
House #1, which is slightly inferior to the sujbect, sold for $200,000
House #2, which is just like the subject, sold for $225,000
House #3, which is slightly superior to the subject, sold for $250,000
Subject house is worth $225,000.
The most common misconception I encounter is homeowners confusing 'cost analysis' with 'market analysis'. In fact, as example #1 illustrates, most homeowners think the stupid crap they purchase for their home will somehow be worth more in the re-sale home market than what it cost them. And in true narcissistic form they always throw in the word 'custom' when describing the materials of their home. "We have custom upgrades, which is obviously worth more than everyone else's 'cause we picked ours out ourself *burp*" as if they're some kind of celebrity and potential buyers of their 'custom features' should pay more for them just because some guy named 'Bob' picked them out. I can hear the new homeowner at a future cocktail party now "yes, its custom, the great Bob picked it out himself, we never wash it".
A potential buyer of your home can tell when a home has higher-priced upgrades and it may even be impressive to them, but believe me, they're buying something used, so they are not going to pay as much as you did for your personalized features and they're certainly not going to pay more for it than any other home in your neighborhood that's for sale. A potential buyer is going to buy the cheapest house with the nicest upgrades. Period, end of blog entry.
Sunday, April 26, 2009
THE THINGS THAT COUNT
My last entry talked about amenities that can be added to your home to help its sentimental, as well as market value. Some amenities serve a utilitarian function, as I described when insulting your unruly, yet thankfully fenced in pets and children. Other amenities are merely for personal tastes and entertainment, like watching dad burn his eyebrows off while lighting the fireplace. It's great to improve your home with reasonable amenities or 'extras' but if you truly want to improve your home's value, the best thing you can do for it is fully update the existing living area before adding ANYTHING else to it. For example, if you're thinking of adding to your back yard, a nice little wooden gazebo with a galvenized steel roof and pressure treated oak bench seating, but your kitchen is straight outta 1985...then you need to think again. For the same amount of money, you could introduce your kitchen to the new millenium and make THE BIGGEST difference in your home's marketability.
That's right, your kitchen. It's the best room in your house, according to just about every typical American market. No one likes a house with an ugly kitchen. This can be an expensive investment. But it is a good idea to spend a few extra dollars here. You want the design as well as the life-expectancy to last as long as possible, and the only way to do that is to get a professional, well built, contemporary kitchen. This DOES NOT mean I'm encouraging you to get high-end upgrades like imported Italian marble tile backsplash, and the most expensive name brand appliances and granite countertops. But, don't get your drunken, two-fingered uncle to piece together some crap he built in his back-yard workshop either. You will want to take it easy on the appliances too. They're personal property and don't add a darn thing to your appraisal. True story.
You also want to make sure, while you're at it, that the design is functional. Tiny, u-shaped kitchens are so depressing to me that whenever I walk into one I immediately look for a sharp surface to slice my wrists with. Any company that installs kitchen cabinets can also help you with redesigning your kitchen layout, so make sure your kitchen is modern, functional, and sturdy. The kitchen is where you prepare you and your family's nourishment. Nourishment sustains life. Good nourishment sustains a happy life, so it's just fine with me that the real estate market places highest importance on a home's kitchen.
The next most important room in your house is where you expel the fruits of your kitchen's labor....the bathroom.
See, your kitchen prepares the nourishment, your bathroom gets rid of it...this is a very important process to typical home buyers, as it is a very important process in sustaining life, therefore these areas should be aesthetically pleasing as well as comfortable and properly functional.
The market readily accepts updated kitchens and bathrooms, so spending a little extra on replacing everything in these rooms can be a wise investment. This is something that is okay to do every 10 years if you can afford to, but you definitely NEED to do at least every 20 years.
My best advice when redesigning kitchens and baths is go as cheap as possible without looking like you did. You want quality materials professionally installed, but you want to stay within reason for your market. You want to meet your own personal tastes but without exceeding the price range of tastes of other people in your income bracket. I know everyone these days likes their high end fixtures, granite countertops, etc etc and they'll max their credit and risk bankruptcy and foreclosure just to live with these luxuries, but it really doesn't matter either way in the market so stop convincing yourself that it does just so you can sleep at night. Time to wake up sweet heart...over-improving your home with the latest high-end fads is stupid and wasteful and in many cases ends up being considered what we professionals wish we could report as the "tackyest lipstick and powder job since Tammy Faye" in our appraisals. Granted, you'll get credit for having an updated kitchen, but remember, my opinion of value of your home will not be higher than the highest selling home from your market, even though it's most likely not as glamorous as your pimpin' paradise.
You could dress your average sugar cookie up with some colorful sprinkles, but those sprinkles are really flavorless and they jam in your teeth which in turn costs you extra money in dentist bills. (The dentist thing is a perfect analogy for over-spending on remodeling materials, I swear.) The only thing that matters in my appraisal is the amount of remodeling you did, not the amount of money you spent. All the travertine, granite, and stainless crap you threw your money away on gets boiled down to one component in my report "New kitchen".
Now, if you're rich (or barely passing as such) and you live in an up-scale neighborhood where you and your neighbors can afford such luxuries, then you better get them, or else you'll likely see me rope you into a comparison analysis with the low-end sales from your area. That's right, big-shot, you wanted the big-time, well here it is. Your house BETTER shine if you live in a fancy neighborhood and want top dollar. I still won't mention the name-brand of all the gawdy materials in your gawdy home, but I will take note of them when selecting sales from your neighborhood to compare you to. The internet is a wonderful place, stocked full of information about so many things...like the upgrades of homes that sold through the local Multiple Listing Service. They got color pictures and everything! I get to see the kitchens and baths of most of the homes that are selling in your neighborhood now-a-days, did you know that? And guess what? Most of them are nicer than yours. HAHA!
In closing, this blog entry's purpose is to let you know the two most important things that should be updated in your home, and that's the kitchen and bathroom(s). Next on the list is updated floor and wall covering throughout your entire home and I'll talk about that in another entry. For now, go in your kitchen and see what can be done, then mosey over to the bathroom and think about whether you should poop or just get off the pot.
That's right, your kitchen. It's the best room in your house, according to just about every typical American market. No one likes a house with an ugly kitchen. This can be an expensive investment. But it is a good idea to spend a few extra dollars here. You want the design as well as the life-expectancy to last as long as possible, and the only way to do that is to get a professional, well built, contemporary kitchen. This DOES NOT mean I'm encouraging you to get high-end upgrades like imported Italian marble tile backsplash, and the most expensive name brand appliances and granite countertops. But, don't get your drunken, two-fingered uncle to piece together some crap he built in his back-yard workshop either. You will want to take it easy on the appliances too. They're personal property and don't add a darn thing to your appraisal. True story.
You also want to make sure, while you're at it, that the design is functional. Tiny, u-shaped kitchens are so depressing to me that whenever I walk into one I immediately look for a sharp surface to slice my wrists with. Any company that installs kitchen cabinets can also help you with redesigning your kitchen layout, so make sure your kitchen is modern, functional, and sturdy. The kitchen is where you prepare you and your family's nourishment. Nourishment sustains life. Good nourishment sustains a happy life, so it's just fine with me that the real estate market places highest importance on a home's kitchen.
The next most important room in your house is where you expel the fruits of your kitchen's labor....the bathroom.
See, your kitchen prepares the nourishment, your bathroom gets rid of it...this is a very important process to typical home buyers, as it is a very important process in sustaining life, therefore these areas should be aesthetically pleasing as well as comfortable and properly functional.
The market readily accepts updated kitchens and bathrooms, so spending a little extra on replacing everything in these rooms can be a wise investment. This is something that is okay to do every 10 years if you can afford to, but you definitely NEED to do at least every 20 years.
My best advice when redesigning kitchens and baths is go as cheap as possible without looking like you did. You want quality materials professionally installed, but you want to stay within reason for your market. You want to meet your own personal tastes but without exceeding the price range of tastes of other people in your income bracket. I know everyone these days likes their high end fixtures, granite countertops, etc etc and they'll max their credit and risk bankruptcy and foreclosure just to live with these luxuries, but it really doesn't matter either way in the market so stop convincing yourself that it does just so you can sleep at night. Time to wake up sweet heart...over-improving your home with the latest high-end fads is stupid and wasteful and in many cases ends up being considered what we professionals wish we could report as the "tackyest lipstick and powder job since Tammy Faye" in our appraisals. Granted, you'll get credit for having an updated kitchen, but remember, my opinion of value of your home will not be higher than the highest selling home from your market, even though it's most likely not as glamorous as your pimpin' paradise.
You could dress your average sugar cookie up with some colorful sprinkles, but those sprinkles are really flavorless and they jam in your teeth which in turn costs you extra money in dentist bills. (The dentist thing is a perfect analogy for over-spending on remodeling materials, I swear.) The only thing that matters in my appraisal is the amount of remodeling you did, not the amount of money you spent. All the travertine, granite, and stainless crap you threw your money away on gets boiled down to one component in my report "New kitchen".
Now, if you're rich (or barely passing as such) and you live in an up-scale neighborhood where you and your neighbors can afford such luxuries, then you better get them, or else you'll likely see me rope you into a comparison analysis with the low-end sales from your area. That's right, big-shot, you wanted the big-time, well here it is. Your house BETTER shine if you live in a fancy neighborhood and want top dollar. I still won't mention the name-brand of all the gawdy materials in your gawdy home, but I will take note of them when selecting sales from your neighborhood to compare you to. The internet is a wonderful place, stocked full of information about so many things...like the upgrades of homes that sold through the local Multiple Listing Service. They got color pictures and everything! I get to see the kitchens and baths of most of the homes that are selling in your neighborhood now-a-days, did you know that? And guess what? Most of them are nicer than yours. HAHA!
In closing, this blog entry's purpose is to let you know the two most important things that should be updated in your home, and that's the kitchen and bathroom(s). Next on the list is updated floor and wall covering throughout your entire home and I'll talk about that in another entry. For now, go in your kitchen and see what can be done, then mosey over to the bathroom and think about whether you should poop or just get off the pot.
TO IMPROVE OR NOT TO IMPROVE (stupid answers to stupid questions)
I inspect, on average, about 3 homes per day. For every 1 homeowner I meet, there's 4 stupid questions that come with it. If you don't have a calculator (or brain as efficient as one) that's between 12 and 80 stupid questions asked in one work day ...times six work days per week, times 52 weeks in the year, times the amount of years I've dealt with the uninformed masses of American homeowners equals a LOT Of stupid questions....Many of those questions go something like this "If I were to add a *whatever* to my house would that be bad or good?" While the answer is obviously "bad, unless you jab this pencil in my eye, then it'll be good" I usually restrain myself with discretion and explain that "most improvements aren't really bad for your home, but some are more valuable than others".
Many of the homeowners I deal with really are clueless and have no common sense when it comes to amenities to their homes. Too many people let their overly eccentric personal tastes interfere with their sensibility that they often will end up spending an obscene amount of money on an amenity that doesn't yield a dime in the realistic re-sale market. But, alas, I am not here to merely insult your tastes or poke fun at the idiots who throw their money away on stupid crap that no one else cares about...I actually serve a community service here today....today I offer up some useful advice on how the amenities you choose will either pump up the volume on your home's value or just pump up your undoubtedly already inflated debt.
Below is a small list of a few (NOT ALL) common residential amenities I get asked about and a quip about what kind of value they lend to your property.
~Pools: Depends on your neighborhood. If no one else in your 'hood has a pool, then don't waste your money because there obviously isn't a market for them. If you really want one simply for leisurely purposes, just get one of those above ground pools. Don't spend more than...say... $5,000, because you absolutely will not ever get a return for your money on an above ground pool. I like to call them 'disposable pools' because that is, in fact, exactly what they are. No amount of wood decking around them will spare them from their inevitable, untimely demise. But, they're cheap, fun and just as wet as any other pool. I grew up in an above ground pool and kids don't give a damn what kind of pool it is (well, cool kids don't anyway, if your kid is too good for an above ground pool, then you fail as a parent). If your kid is like me, then they'll join forces with their 200 lb cousin to create the Whirlpool FROM HELL....sending little brothers flailing helplessly muahahahaha...ehem, anyway....If that isn't really your style and you insist on an inground pool then you'll probably only get about 1/4 (or less) of a return for your money. That is, again, if you live in a market that doesn't really support pools. If you live in a fancy, OH MY GOD DON'T LET THEM GET ME, gated community where everyone has a pool, then absolutely, have a pool. Its usually a great improvement for your type of home and you'll get a good (probably not full but close) return for your money. If you live in a normal neighborhood where its about 50/50 ratio of pool home to non pool home, then you can still expect to get a good return in your market value, but just avoid over-spending on the unnecessary custom features that those soul-less pool sales men will try to con you into believing will increase your home's value dollar for dollar...they're lying to you and the tooth fairy isn't real either. Sorry.
~Fireplaces: You really can't 'add' these to an existing room, they typically have to be built-in during initial construction, but people do often ask if its worth it to add one to a proposed room addition and usually fireplaces are a welcome marketable amenity. But, the same old disclaimer that applies with most other amenities, applies here as well...don't be the only house in your neighborhood with a fireplace if you want a full return for your money. It really is a personal preference to have one. What was once as necessary as a toilet is now simply aesthetic in this modern day of electric fueled heating. So, if you really really need something to hang your christmas stockings from, then by all means, get a fireplace (lots of people do it for that reason) but keep it reasonable and in adequate proportion to the other materials of your home and don't burn yourself mishandling the flaming logs, Captain Caveman! (Unless I'm there, with my camera).
~Fruit trees: Nope! NEXT! Hahaha... but seriously people, why would I care about a stupid fruit tree?! I know there's reasons why I could, I just don't and neither does anyone else with half a brain. Some people hate fruit trees. Did you know that? Its true, they do. So, screw you and your nasty, rat-magnet fruit trees....seriously....Next!
~Fences: Meh, I can live with or without 'em. Some deed restricted neighborhoods don't even allow them, but most normal neighborhoods do. My advice for putting in a new fence; pick whatever material you prefer (wood, chain link, or pvc) and go as cheap as possible, because the return for this isn't that great. I'm not anti-fence, by any means, its just not a major feature that yields high returns. It is a useful function to your property and I am not about to discourage you from fencing in your unruly mutts and/or kids.
~Sheds: See above 'Fences' comments. Its basically the same advice; keep your kids locked in them AT ALL TIMES!! (just kidding, sort of) No, but seriously, sheds are cool with me. Just like anything else though, don't spend too much money. If ever an amenity fell into the 'Keep It Simple, Stupid' category, this one is it.
~Weather/Hurricane/High-wind Proofing: A fantastic idea that unfortunately doesn't give any kind of return for your money in a market analysis. But, when it comes to protecting your family, your family's belongings, and your family's dwelling from dangerous weather events, getting a return for your money should be the last thing on your mind....peace, of course, should be the first. This is an expense that is very important in protecting the sentimental value of your home, which, in turn, does protect the market value, but doesn't make your home worth more, in terms of sales price, than a home without weather proofing. Why, you ask? There's actually not enough weather proofing going on to establish there's a market for it. Even here in Florida, where I work, there's no real 'proof' that people actually pay more for weather proofed homes over non-weather proofed homes in most markets. This type of improvement to your home is what I like to categorize as a 'mentionable'. I'll mention it in the 'extra features' (aka fluff and bullshit) sections of the report, which will certainly be further evidence to the lender that your home is well cared for, but it really won't add any specific dollar amount to the bottom line. Its sad, but true. Moving on.
~Workshops: ...or overglorified sheds as I like to call them, range in value. The range of values of these money pits is completely dependent on your neighborhood. Most subdivisions are no place for a workshop and they're not really worth much, if anything, in an appraisal I'd do of a home in a cookie-cutter, Edward Scissorhands-like subdivision. But, I know that in most rural-like areas, workshops and barns are a marketable amenity and if they're built nicely, yet efficiently, I'll give them a good word in the appraisal, maybe even a nice adjustment in a sales analysis, but only if I can present evidence that there's other workaholics like you in your town that like to come home from their day jobs only to go out to the workshop and get to their REAL jobs of workin' on a case of beer and a '68 plymouth they picked up at a junk yard twelve years ago. Believe it or not, there's a lot of blue-collar Americans that are exactly like this, and they even tend to dwell near each other. I'm a simple, southern gal and workshops have their special place in my heart. Heck, my Uncle Larry, while workin' overtime on his case of budweiser one night, sliced off 3 of his fingers out in his workshop, but that didn't lower its sentimental value for him, just his ability to count to ten. I know what workshops mean to certain markets and I pay my respect (in many ways to Uncle Larry's fingers) when respect is due.
~Goldfish Ponds: Seriously, don't make me laugh. Its a terrible idea and I hate it, as does every other level-headed human being. Get rid of it if you got it as a feeble-minded attempt to increase your value or 'spruce up' your landscaping because it doesn't do either. Go ahead and keep it if you have an affinity for koi and know how to properly protect them from birds, cats, toddlers, and other fish-eating critters that roam your yard when you're not looking. If you were born and raised in Japan, by all means, have at it, but if you were born and raised in Peoria Illinois (or the like)....you will go to hell for having a koi pond. No lie. Seriously, don't give in to impulse buys at Home Depot. Expensive landscaping fads, such as a bacteria and mosquito breeding, energy-sucking, koi torturing pond, are a complete waste of money, not to mention environmentally unfriendly and everyone loves being a tree-huggin' hippy these days, so ixnay on the goldfish pond. I shall close with an ancient japanese proverb (that I just made up) A koi pond is to your home as a 'My Other Car Is The Millenium Falcoln' bumper sticker is to your vehicle....useless, tacky, and kinda dumb.
~Porches, Patios, Wood Decks: All good in any 'hood. Humans are a weird bunch. As soon as we set up shelter, we immediately want to go outside without really going away from home. There's no scientific explanation for this but its true amongst pretty much all or most civilized human cultures. Most human dwellings these days have some sort of room or area that is outside. So, by all means, do as the humans do and grill your kill on your moderately built wood deck or brick patio or whatever you prefer. But, like anything else keep the cost as minimal as effectively possible. Granted, a couple twigs with an old fish net stapled to them doesn't make a very good screen porch, but keeping the materials simple and cost effective for an outdoor area is always smart. This area will endure much more wear and tear than the inside (duh), so don't get too crazy here. But, it is a good investment for your home because most markets openly welcome porch amenities and as long as your cost is reasonable, you could easily get a full return for your money.
Now, this isn't a list of EVERYTHING that can be done to your home, obviously. Its just a small compilation of some of the amenities I get asked about the most. (I swear to God or whatever you believe in I get asked about koi ponds and fruit trees at least once a month!) There are other amenities I didn't go into detail on that lend significant value to your home, such as waterfront amenities, like docks and boat davits, or poolside amenities like wet-bars and outdoor kitchens, but these are for more upscale homes and upscale homes had BETTER have kick ass amenities like that, or they won't compete in their market. If you're like most Americans, you don't live in an 'upscale' home, monetarily speaking, and your home's market can't bear those types of expensive upgrades. If you want credit for having upscale upgrades in your average home, then you better live in a neighborhood where everybody else wastes their money suppressing their inferiority complex issues as you do with your $75,000 poolside cabana in your $165,000 home.
What I'm saying is, there has to be a market for your amenities, just as there's got to be a market for your home. Its funny how people will have a basic understanding of this, but think that just because I was momentarily enchanted by their newborn baby or their friendly jack russel terrier, they're exempt from suffering the negative effects of being over-improved for their neighborhood. I'm not the type of appraiser that gives a crap about how much YOU spent on barely marketable amenities, I only care about how much someone else might be willing to pay for it, USED. I also don't impress easily...I'm a redneck, through and through, so your holier than thou 'keepin up with the jones' bull doesn't fly with me, unless the market tells me to let it fly. Then I huff off in a jealous fit and reluctantly give you your credit, but only when its due. Just let your neighbors be your guide when deciding what to do to your home. Don't over-improve your home, its a big fat waste to anybody and everybody ever involved in a mortgage or sales transaction of your home.
Many of the homeowners I deal with really are clueless and have no common sense when it comes to amenities to their homes. Too many people let their overly eccentric personal tastes interfere with their sensibility that they often will end up spending an obscene amount of money on an amenity that doesn't yield a dime in the realistic re-sale market. But, alas, I am not here to merely insult your tastes or poke fun at the idiots who throw their money away on stupid crap that no one else cares about...I actually serve a community service here today....today I offer up some useful advice on how the amenities you choose will either pump up the volume on your home's value or just pump up your undoubtedly already inflated debt.
Below is a small list of a few (NOT ALL) common residential amenities I get asked about and a quip about what kind of value they lend to your property.
~Pools: Depends on your neighborhood. If no one else in your 'hood has a pool, then don't waste your money because there obviously isn't a market for them. If you really want one simply for leisurely purposes, just get one of those above ground pools. Don't spend more than...say... $5,000, because you absolutely will not ever get a return for your money on an above ground pool. I like to call them 'disposable pools' because that is, in fact, exactly what they are. No amount of wood decking around them will spare them from their inevitable, untimely demise. But, they're cheap, fun and just as wet as any other pool. I grew up in an above ground pool and kids don't give a damn what kind of pool it is (well, cool kids don't anyway, if your kid is too good for an above ground pool, then you fail as a parent). If your kid is like me, then they'll join forces with their 200 lb cousin to create the Whirlpool FROM HELL....sending little brothers flailing helplessly muahahahaha...ehem, anyway....If that isn't really your style and you insist on an inground pool then you'll probably only get about 1/4 (or less) of a return for your money. That is, again, if you live in a market that doesn't really support pools. If you live in a fancy, OH MY GOD DON'T LET THEM GET ME, gated community where everyone has a pool, then absolutely, have a pool. Its usually a great improvement for your type of home and you'll get a good (probably not full but close) return for your money. If you live in a normal neighborhood where its about 50/50 ratio of pool home to non pool home, then you can still expect to get a good return in your market value, but just avoid over-spending on the unnecessary custom features that those soul-less pool sales men will try to con you into believing will increase your home's value dollar for dollar...they're lying to you and the tooth fairy isn't real either. Sorry.
~Fireplaces: You really can't 'add' these to an existing room, they typically have to be built-in during initial construction, but people do often ask if its worth it to add one to a proposed room addition and usually fireplaces are a welcome marketable amenity. But, the same old disclaimer that applies with most other amenities, applies here as well...don't be the only house in your neighborhood with a fireplace if you want a full return for your money. It really is a personal preference to have one. What was once as necessary as a toilet is now simply aesthetic in this modern day of electric fueled heating. So, if you really really need something to hang your christmas stockings from, then by all means, get a fireplace (lots of people do it for that reason) but keep it reasonable and in adequate proportion to the other materials of your home and don't burn yourself mishandling the flaming logs, Captain Caveman! (Unless I'm there, with my camera).
~Fruit trees: Nope! NEXT! Hahaha... but seriously people, why would I care about a stupid fruit tree?! I know there's reasons why I could, I just don't and neither does anyone else with half a brain. Some people hate fruit trees. Did you know that? Its true, they do. So, screw you and your nasty, rat-magnet fruit trees....seriously....Next!
~Fences: Meh, I can live with or without 'em. Some deed restricted neighborhoods don't even allow them, but most normal neighborhoods do. My advice for putting in a new fence; pick whatever material you prefer (wood, chain link, or pvc) and go as cheap as possible, because the return for this isn't that great. I'm not anti-fence, by any means, its just not a major feature that yields high returns. It is a useful function to your property and I am not about to discourage you from fencing in your unruly mutts and/or kids.
~Sheds: See above 'Fences' comments. Its basically the same advice; keep your kids locked in them AT ALL TIMES!! (just kidding, sort of) No, but seriously, sheds are cool with me. Just like anything else though, don't spend too much money. If ever an amenity fell into the 'Keep It Simple, Stupid' category, this one is it.
~Weather/Hurricane/High-wind Proofing: A fantastic idea that unfortunately doesn't give any kind of return for your money in a market analysis. But, when it comes to protecting your family, your family's belongings, and your family's dwelling from dangerous weather events, getting a return for your money should be the last thing on your mind....peace, of course, should be the first. This is an expense that is very important in protecting the sentimental value of your home, which, in turn, does protect the market value, but doesn't make your home worth more, in terms of sales price, than a home without weather proofing. Why, you ask? There's actually not enough weather proofing going on to establish there's a market for it. Even here in Florida, where I work, there's no real 'proof' that people actually pay more for weather proofed homes over non-weather proofed homes in most markets. This type of improvement to your home is what I like to categorize as a 'mentionable'. I'll mention it in the 'extra features' (aka fluff and bullshit) sections of the report, which will certainly be further evidence to the lender that your home is well cared for, but it really won't add any specific dollar amount to the bottom line. Its sad, but true. Moving on.
~Workshops: ...or overglorified sheds as I like to call them, range in value. The range of values of these money pits is completely dependent on your neighborhood. Most subdivisions are no place for a workshop and they're not really worth much, if anything, in an appraisal I'd do of a home in a cookie-cutter, Edward Scissorhands-like subdivision. But, I know that in most rural-like areas, workshops and barns are a marketable amenity and if they're built nicely, yet efficiently, I'll give them a good word in the appraisal, maybe even a nice adjustment in a sales analysis, but only if I can present evidence that there's other workaholics like you in your town that like to come home from their day jobs only to go out to the workshop and get to their REAL jobs of workin' on a case of beer and a '68 plymouth they picked up at a junk yard twelve years ago. Believe it or not, there's a lot of blue-collar Americans that are exactly like this, and they even tend to dwell near each other. I'm a simple, southern gal and workshops have their special place in my heart. Heck, my Uncle Larry, while workin' overtime on his case of budweiser one night, sliced off 3 of his fingers out in his workshop, but that didn't lower its sentimental value for him, just his ability to count to ten. I know what workshops mean to certain markets and I pay my respect (in many ways to Uncle Larry's fingers) when respect is due.
~Goldfish Ponds: Seriously, don't make me laugh. Its a terrible idea and I hate it, as does every other level-headed human being. Get rid of it if you got it as a feeble-minded attempt to increase your value or 'spruce up' your landscaping because it doesn't do either. Go ahead and keep it if you have an affinity for koi and know how to properly protect them from birds, cats, toddlers, and other fish-eating critters that roam your yard when you're not looking. If you were born and raised in Japan, by all means, have at it, but if you were born and raised in Peoria Illinois (or the like)....you will go to hell for having a koi pond. No lie. Seriously, don't give in to impulse buys at Home Depot. Expensive landscaping fads, such as a bacteria and mosquito breeding, energy-sucking, koi torturing pond, are a complete waste of money, not to mention environmentally unfriendly and everyone loves being a tree-huggin' hippy these days, so ixnay on the goldfish pond. I shall close with an ancient japanese proverb (that I just made up) A koi pond is to your home as a 'My Other Car Is The Millenium Falcoln' bumper sticker is to your vehicle....useless, tacky, and kinda dumb.
~Porches, Patios, Wood Decks: All good in any 'hood. Humans are a weird bunch. As soon as we set up shelter, we immediately want to go outside without really going away from home. There's no scientific explanation for this but its true amongst pretty much all or most civilized human cultures. Most human dwellings these days have some sort of room or area that is outside. So, by all means, do as the humans do and grill your kill on your moderately built wood deck or brick patio or whatever you prefer. But, like anything else keep the cost as minimal as effectively possible. Granted, a couple twigs with an old fish net stapled to them doesn't make a very good screen porch, but keeping the materials simple and cost effective for an outdoor area is always smart. This area will endure much more wear and tear than the inside (duh), so don't get too crazy here. But, it is a good investment for your home because most markets openly welcome porch amenities and as long as your cost is reasonable, you could easily get a full return for your money.
Now, this isn't a list of EVERYTHING that can be done to your home, obviously. Its just a small compilation of some of the amenities I get asked about the most. (I swear to God or whatever you believe in I get asked about koi ponds and fruit trees at least once a month!) There are other amenities I didn't go into detail on that lend significant value to your home, such as waterfront amenities, like docks and boat davits, or poolside amenities like wet-bars and outdoor kitchens, but these are for more upscale homes and upscale homes had BETTER have kick ass amenities like that, or they won't compete in their market. If you're like most Americans, you don't live in an 'upscale' home, monetarily speaking, and your home's market can't bear those types of expensive upgrades. If you want credit for having upscale upgrades in your average home, then you better live in a neighborhood where everybody else wastes their money suppressing their inferiority complex issues as you do with your $75,000 poolside cabana in your $165,000 home.
What I'm saying is, there has to be a market for your amenities, just as there's got to be a market for your home. Its funny how people will have a basic understanding of this, but think that just because I was momentarily enchanted by their newborn baby or their friendly jack russel terrier, they're exempt from suffering the negative effects of being over-improved for their neighborhood. I'm not the type of appraiser that gives a crap about how much YOU spent on barely marketable amenities, I only care about how much someone else might be willing to pay for it, USED. I also don't impress easily...I'm a redneck, through and through, so your holier than thou 'keepin up with the jones' bull doesn't fly with me, unless the market tells me to let it fly. Then I huff off in a jealous fit and reluctantly give you your credit, but only when its due. Just let your neighbors be your guide when deciding what to do to your home. Don't over-improve your home, its a big fat waste to anybody and everybody ever involved in a mortgage or sales transaction of your home.
YOU CAN'T HANDLE THE TRUTH! (a word for homeowners about the values of their home)
First off, notice how I said values and not value? There's more than just one type and I'd love to point some of them out to you now.
The first and most important type of 'value' (and don't EVER forget this) is sentimental value. A home with sentimental value shines with pride of ownership and is usually in good condition, is clean and neat, and adequately updated for its market area. But more important than any of that, its where you and most likely a few of your loved ones live. Its your safe-haven. Its where your mind, body and soul all reside in utopian harmony. This is a value upon which no adequate monetary amount can be placed. Having said all that, you should know, sentimental value doesn't mean jack to an appraiser. Well, it means a little jack, but not much. The extent of our 'care' for your sentimental value is how it affects your home's condition. That's what many of you who do understand the concept of sentimental value don't get. I know you love your home, and that's very good...for you. If you love it properly it will show when I'm doing my inspection (without your guided tour, thank you very much). I don't really care how much you love your home, I only care about how your love affects it.
The next type of value is 'taxable' value. Pretty simple concept here...the County's Property Appraiser does a mass appraisal, studying all the sales in your neighborhood from the previous year to determine an approximate and proper amount to tax you for. Many people assume that this is always the 'lowest' type of value that is assigned to your home, but its not always the case. Especially these days where most American neighborhoods are currently suffering from declining sales prices. This leads me to discuss the next type of value of your home, 'Current Market Value'.
Current market value is the only type of value your lender cares about. Its all I am here to appraise. It is simply an analysis of how your home compares to recent sales from within your market area. Even in a refinance, your lender wants me to tell them what your home would sell for in TODAY'S market, not yesterday's, not tomorrow's....nobody gives a crap what it'll sell for when you freakin' die in 40 years (except for your heirs, so watch your back around them if you know what I mean *wink*). Another thing you should know about what your lender wants is, they want the WORST CASE SCENARIO!! Not the best. You homeowners seem to think its an appraiser's duty to appraise your home as high as possible and you couldn't be further from an intelligent thought with that one!
Right now, most of America's residential markets are in a pretty dramatic price decline with no clear end in sight and while everyone knows about it, they can't believe it when it shows in the appraisal of their home. If you just had your home appraised two years ago or even just last year, you can bet your ass, it won't be appraised for anywhere near as high as it was before (assuming you have a pet donkey to wager, if not, your bottom dollar will work too). Don't blame me! There are so many things at fault for the current declining market phenomenon and it ain't conservative appraisers who didn't adequately notate the obnoxious amount of over-improvements you made to your white elephant. (I'll talk about 'The White Elephant' in another entry.)
So now let me bring all this information together and explain that, we appraisers don't make the market, we just study it and see how you fit into it. Just as your value won't come in lower than the lowest sale in your neighborhood, it also won't come in higher than the highest sale, so stop asking. I know, I know, you love your home better than anyone else on your street, you don't plan to EVER move (why people think this matters, I'll never know) and yes, for the 18th time, I see the new energy saver ceiling fans, and the expensive travertine tile, but none of it amounts to a mosquito's prick if its not supported by current market conditions. Sorry to be so crass... I read that 'mosquito prick' phrase in some other blog about a video game the other day and thought it was funny....(that's how much I don't care about your travertine tile, see, I'm talking about video games and insect genitalia).
Now, if you're the sensitive type that can't handle hearing me tell you that you're not special to me and neither is your home, then turn away right now! Go jump in your gas-sucking SUV and pick your precious little super stars up from soccer practice and continue living in your unicorn-infested fantasy land. But if you're in trouble with your mortgage rates and want to gain a better understanding of why your home's value isn't where you would like it to be or where it was when you bought the place, then stick around, endure the insults and 'potty' talk I like to sprinkle my writing with, and try to learn something. I'm just trying to get you to be realistic about how your home is evaluated for mortgage lending purposes. Its a cold, impersonal, cruel business that should be met with an equally cold and impersonal attitude on your part.
My harsh attitude towards you, the homeowner, truly is better for you than the false encouragement of some starry-eyed mortgage broker working on commission, or some 'appraiser friend' who claims he can appraise your house for $X amount but for some odd reason is blacklisted by every reputable lending underwriter out there. My attitude stems from wanting to do the exact opposite of 'setting you up for disappointment', unlike your college drop-out friend and baggy old mortgage broker who desperately needs to make her next BMW payment.
I'm going to be pretty much the only non-biased professional involved in your mortgage transaction; my fee is the same whether or not your loan goes through. Let me tell you something, if you're in the market for appraisal services anytime in the near future, you'll be lucky, that's right LUCKY, if you get an appraiser that thinks EXACTLY like me (minus the toilet humor and insults). If your next appraisal is performed correctly, and by an appraiser like me, it will be the ONLY thing keeping you from getting in over your head due to an over-estimation of your home's value. If you don't see how that's a favor to you just ask one of the umpteen million American families who lost their homes due to foreclosure over the past couple of years. The over-estimation of their home's value by a bad appraiser was far from favorable for them.
Before I close out this first entry, let me just say that I love homes...not just houses, but homes. A home truly is where your heart is and I know that. I come from a great respect for what a home is to most people and their families and I'm not here to insult your home (just you and your family). I'm also here to point out that a lot of unrealistic, over-estimations of the average American home has, in many ways, contributed significantly to the fledgling economy and declining real estate market. Granted, bad appraisals are just one bee in the swarming hive, but still, its something worth discussing in my not so humble opinion. So, if you like what you've read so far and think I can help you gain a more realistic perspective of how your home is evaluated for mortgage purposes, then come on back. If you hate it and think its trite, over-stated, bullshit, then just wait 'til you see what trite bullshit I over-state next.
The first and most important type of 'value' (and don't EVER forget this) is sentimental value. A home with sentimental value shines with pride of ownership and is usually in good condition, is clean and neat, and adequately updated for its market area. But more important than any of that, its where you and most likely a few of your loved ones live. Its your safe-haven. Its where your mind, body and soul all reside in utopian harmony. This is a value upon which no adequate monetary amount can be placed. Having said all that, you should know, sentimental value doesn't mean jack to an appraiser. Well, it means a little jack, but not much. The extent of our 'care' for your sentimental value is how it affects your home's condition. That's what many of you who do understand the concept of sentimental value don't get. I know you love your home, and that's very good...for you. If you love it properly it will show when I'm doing my inspection (without your guided tour, thank you very much). I don't really care how much you love your home, I only care about how your love affects it.
The next type of value is 'taxable' value. Pretty simple concept here...the County's Property Appraiser does a mass appraisal, studying all the sales in your neighborhood from the previous year to determine an approximate and proper amount to tax you for. Many people assume that this is always the 'lowest' type of value that is assigned to your home, but its not always the case. Especially these days where most American neighborhoods are currently suffering from declining sales prices. This leads me to discuss the next type of value of your home, 'Current Market Value'.
Current market value is the only type of value your lender cares about. Its all I am here to appraise. It is simply an analysis of how your home compares to recent sales from within your market area. Even in a refinance, your lender wants me to tell them what your home would sell for in TODAY'S market, not yesterday's, not tomorrow's....nobody gives a crap what it'll sell for when you freakin' die in 40 years (except for your heirs, so watch your back around them if you know what I mean *wink*). Another thing you should know about what your lender wants is, they want the WORST CASE SCENARIO!! Not the best. You homeowners seem to think its an appraiser's duty to appraise your home as high as possible and you couldn't be further from an intelligent thought with that one!
Right now, most of America's residential markets are in a pretty dramatic price decline with no clear end in sight and while everyone knows about it, they can't believe it when it shows in the appraisal of their home. If you just had your home appraised two years ago or even just last year, you can bet your ass, it won't be appraised for anywhere near as high as it was before (assuming you have a pet donkey to wager, if not, your bottom dollar will work too). Don't blame me! There are so many things at fault for the current declining market phenomenon and it ain't conservative appraisers who didn't adequately notate the obnoxious amount of over-improvements you made to your white elephant. (I'll talk about 'The White Elephant' in another entry.)
So now let me bring all this information together and explain that, we appraisers don't make the market, we just study it and see how you fit into it. Just as your value won't come in lower than the lowest sale in your neighborhood, it also won't come in higher than the highest sale, so stop asking. I know, I know, you love your home better than anyone else on your street, you don't plan to EVER move (why people think this matters, I'll never know) and yes, for the 18th time, I see the new energy saver ceiling fans, and the expensive travertine tile, but none of it amounts to a mosquito's prick if its not supported by current market conditions. Sorry to be so crass... I read that 'mosquito prick' phrase in some other blog about a video game the other day and thought it was funny....(that's how much I don't care about your travertine tile, see, I'm talking about video games and insect genitalia).
Now, if you're the sensitive type that can't handle hearing me tell you that you're not special to me and neither is your home, then turn away right now! Go jump in your gas-sucking SUV and pick your precious little super stars up from soccer practice and continue living in your unicorn-infested fantasy land. But if you're in trouble with your mortgage rates and want to gain a better understanding of why your home's value isn't where you would like it to be or where it was when you bought the place, then stick around, endure the insults and 'potty' talk I like to sprinkle my writing with, and try to learn something. I'm just trying to get you to be realistic about how your home is evaluated for mortgage lending purposes. Its a cold, impersonal, cruel business that should be met with an equally cold and impersonal attitude on your part.
My harsh attitude towards you, the homeowner, truly is better for you than the false encouragement of some starry-eyed mortgage broker working on commission, or some 'appraiser friend' who claims he can appraise your house for $X amount but for some odd reason is blacklisted by every reputable lending underwriter out there. My attitude stems from wanting to do the exact opposite of 'setting you up for disappointment', unlike your college drop-out friend and baggy old mortgage broker who desperately needs to make her next BMW payment.
I'm going to be pretty much the only non-biased professional involved in your mortgage transaction; my fee is the same whether or not your loan goes through. Let me tell you something, if you're in the market for appraisal services anytime in the near future, you'll be lucky, that's right LUCKY, if you get an appraiser that thinks EXACTLY like me (minus the toilet humor and insults). If your next appraisal is performed correctly, and by an appraiser like me, it will be the ONLY thing keeping you from getting in over your head due to an over-estimation of your home's value. If you don't see how that's a favor to you just ask one of the umpteen million American families who lost their homes due to foreclosure over the past couple of years. The over-estimation of their home's value by a bad appraiser was far from favorable for them.
Before I close out this first entry, let me just say that I love homes...not just houses, but homes. A home truly is where your heart is and I know that. I come from a great respect for what a home is to most people and their families and I'm not here to insult your home (just you and your family). I'm also here to point out that a lot of unrealistic, over-estimations of the average American home has, in many ways, contributed significantly to the fledgling economy and declining real estate market. Granted, bad appraisals are just one bee in the swarming hive, but still, its something worth discussing in my not so humble opinion. So, if you like what you've read so far and think I can help you gain a more realistic perspective of how your home is evaluated for mortgage purposes, then come on back. If you hate it and think its trite, over-stated, bullshit, then just wait 'til you see what trite bullshit I over-state next.
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