Tuesday, January 25, 2011

Get the Best Price for your home. 5 Tips to Prepare for a Home Appraisal

 Get the Best Price for Your Home: (5) Tips to Prepare for a Home Appraisal

With home values down as much as 40% from three years ago, it will be a long road to recovery in the housing market as foreclosures continue to flood the market. The importance of getting an accurate value for your home through an appraisal is essential.  Though it's not encouraging to hear, many homeowners are competing with these distressed properties when trying to sell.

Yet, every home has something special or unique that can help lift the selling price.  Securing the right appraiser is key to establishing a selling price for your home.  This appraiser should have experience in your neighborhood, preferably your street, and have first-hand knowledge of what other properties look like and know variables, such as their appeal and current value.

The appraiser needs to understand the advantages of living in your neighborhood.  In Chicago, one block can make a huge difference in the "feel" and composition of a neighborhood.  So when pulling together data for an appraisal, the appraiser should know which buildings to compare with yours.  The appraiser needs to value not only the sales of other units in similar buildings, but also be aware of the amenities and lifestyle your building offers, particularly when compared with other buildings in your area.

Before you list your home, check with friends and neighbors, or go online to a site with user reviews such as Angie's List (http://www.angieslist.com/) and find a company that is highly regarded and works in your neighborhood.  Then it's up to you to prepare for the appraiser's visit.  The appraiser's focus is to see your residence in the same way a potential buyer will see it and quantify that experience in the form of an estimate of market value.

Former banking professional and veteran appraiser Michael Hobbs, President of Pahroo Appraisal & Consultancy (http://www.pahroo.com/), has the following tips to prepare a home for an appraiser's visit in advance of selling your home:

1.)    Gather your documents on the financial history of your building/home, create a list of amenities, investment capital into the building and/or your individual unit, including remodeling/updates, parking availability, management company and neighborhood association (if applicable).  One place online for condo owners to resource while gathering such information is Chicago Condos Online (http://www.chicagocondosonline.com/).       

2.)    De-clutter and get organized.  While an appraiser and ultimately a buyer are looking at the physical space that will be purchased (and not your personal items), you want to optimize their experience of the residence.  If you wouldn't invite your friends over, much less a potential buyer, then tidy up.  Start with the most cost-effective improvements: de-cluttering your home, throwing away that stack of old junk mail, giving unused items to a local charity or Salvation Army (http://www.salvationarmy.com/), putting your lesser used items in portable storage, such as SmartBox (http://www.smartboxusa.com/), or hiring a professional organizer, such as Laura Olivares (http://www.borganizedinc.com/).

3.)    Light up your home, which is another cost-effective improvement.  Walk through your home and look closely at those individual light bulbs that burned out months ago, and replace them.  Consider higher wattage, more energy efficient bulbs.  By brightening up your home, you change not only the experience of a potential buyer, and therefore the appraiser, but you also change the energy.  Dimly lit rooms seem small and are not necessarily suited to today's buyers.  Bright and open spaces are more appealing to buyers and will sell faster per a recent article by http://www.realtor.com/.

4.)    Clean, clean, clean (inside and outside) your home, another very cost-effective improvement.  Have you ever arrived at a house and had a bad feeling before you even got out of the car?  When was the last time either you or a cleaning company went through and deep-cleaned your home, specifically the kitchen and bathroom which are areas of primary concern to potential buyers?  After curb-appeal and general basic landscaping, these two areas account for the primary attention of would-be buyers and should be clean and odor-free.   Remember, first impressions are typically the only opportunity you have to show off your home.

5.)    Repair broken items.  Before you consider overhauling your home for that would-be buyer, make those minor cosmetic repairs that you've been putting off for months or years.  A well-maintained house not only shows well and indicates move-in ready condition, but also sends a message to a buyer that if what they see is cared for, then likely what they can't see has probably been taken care of as well.  Whether you're a do-it-yourself (DIY) repair person, or you hire a local trusted handyman such as Dad's Handyman Service (www.calldads.com), make those quick fixes to maximize the appeal of your home.  If you are considering bigger investments, check out the recent cost vs. value analysis at (http://www.remodeling.hw.net/).

In summary, there are many features of your home that you cannot change, such as: the size of your home, the location/neighborhood, the total number of bedrooms and bathrooms, and recent sales activity of your neighbors.  Yet for all of these variables you cannot change, by performing the actions above, you can make sure that you have represented your home most favorably not only for the appraiser, but ultimately for that future buyer.

Michael Hobbs is the President of Pahroo Appraisal & Consultancy.  His firm is an Angie's List 2010 Super Service Award Winner, a designation given to less than 5% of all firms.  Michael is also an Appraisal Institute associate member.  Contact him at (773) 388-0003.  His e-mail address is Hobbs@PahRoo.com.

Friday, January 21, 2011

Sun sets on McMansions

Sun sets on McMansions

How economics of building larger homes have changed

The ongoing recession has done the country one good turn. It has -- at least for the time being -- killed off the McMansion Era.
The decade that brought us those monstrous homes of little architectural distinction in far-flung suburbs had surprisingly begun to unwind as early as 2006, but it took a five-year run of collapsing home prices and rampant foreclosures to kill it off. Maybe not forever, but at least for the time being.
"The median-sized home being built today is smaller," reported Paul Bishop, vice president of research for the National Association of Realtors. "And our survey of homebuyers indicates that as well. People buying new homes today tend to purchase slightly smaller homes than homebuyers of even a few years ago."
NAR's research gets empirical backing from the American Institute of Architects, which does a quarterly survey of home-design trends. One of the questions in its survey is: "Are the homes you are working on in your area getting bigger, smaller, about the same?" Every year since the AIA first added this question to its survey in 2005, a higher share of architects noted homes were getting smaller.
In the 2010 survey, almost 60 percent of the respondents said homes were getting smaller, while the rest reported home sizes were about the same. Virtually none of the responses indicated homes were getting larger.
There were a number of reasons for the McMansion phenomenon, the most apparent being so much cheap money was available.

Why wouldn't an ambitious homebuyer shoot for a bigger home, since the down payment was miniscule in comparison to price and the bank would just as well lend on the bigger home as it would on a smaller one?
Secondly, homes were appreciating so quickly that it was worth the gamble to buy bigger because the appreciation was also amplified.
A close friend of mine got suckered into this play. He and his wife moved into a house not far from where I lived. They stayed there for about five years and then sold, catching a handsome appreciation. The next house was bigger and further out in the suburbs.
They lived in that location for five years, then sold it, catching another big chunk of appreciated value. With their earnings, they bought a huge home in a new development very far out in the suburbs. That's where their luck ran out. The recession hit and the home lost 50 percent of its value.
It wasn't just the consumer pushing for bigger homes. Developers were equally to blame.
"Back in the housing boom, from 2003 through 2006, the way builders were justifying land prices was to build very big homes," explained Steve Cameron, president and founder of Foremost Communities Inc. in Irvine, Calif. "Builders could justify paying high prices for land by doing a pro forma for bigger houses."
Cameron should know what he's talking about -- his company had been in the home development biz but it's now a land development and investment company.
"Homebuyers, because the mortgage money was so easy, were saying, 'Geez, why not buy a five- or six-bedroom home even though we don't need it.' It was all kind of nice when it worked."
That's coming to an end because many homebuyers can't qualify for those big mortgages these days, and everyone is looking for what they need as opposed to purchasing their fantasy abode.
Going forward, homebuyers' aspirational desires will adhere more closely to economic realities.
"The economics of building a McMansion (have) changed," said Bishop. "Things like land values and cost of construction relative to what consumers are willing to pay at this point are out of sync. You have to finance the purchase of a home, even a McMansion, and that runs into the difficulties of getting a jumbo mortgage."
The impact of home-value appreciation has been negated by the downturn. Not only have home prices depreciated, but no one believes aggressive appreciation will return to the housing market for at least 10 years, if not longer. That makes the economics of owning a big house formidable.
The cost of furnishing a bigger house, heating and cooling the structure, and even the commutation between it and the place of employment was always imposing, but now there is no longer the appreciation factor that in the past made the situational sacrifice worth it.
"Homeowners feel the days of appreciation are not coming back so they are not going to be purchasing homes just for the sake of investing," said Kermit Baker, chief economist with the American Institute of Architects and a senior research fellow at Harvard University's Joint Center for Housing Studies.
"Homebuyers are purchasing because of how they intend to use the home, on the basis of what they need. They are treating their home more like typical consumer goods rather than investment goods."
Baker added that consumers don't need McMansion-type space, as "they can't afford to heat and cool the space, and given higher energy costs, why bother trying?"
It should be noted, historically, every time there has been a recession, home sizes tended to level off or even scale back. Also, today's numbers are influenced by the higher percentage of first-time buyers, who tend to purchase smaller homes.
"Some 40 percent to 50 percent of home sales are going to first-time buyers," said Bishop. "It's a different market than when the share of homes sold to first-time buyers had fallen to the 30 percent range."
That means there were a lot more trade ups, such as with my friends, than there are now.
Has the trend line to bigger homes has abated for good, or when this cycle turns, will homebuyers go on another McMansion binge?
"The shift to smaller homes could be long term," Baker suggested. "If you look back at what really caused the increase in home size, I'm guessing we're not going to see those factors again."

Tuesday, January 18, 2011

2011... 20 New Kitchen design ideas

20 Kitchen Design Ideas

What’s on the front burner for 2011? Three leading kitchen experts offer advice on what’s hot.
20 Kitchen Design Ideas
What’s on the front burner for 2011? Three leading kitchen experts offer advice on what’s hot.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_kliptech_trend4_tcm81-686040.jpg
    Courtesy Kliptech
    Trend #4: This EcoTop countertop by Kliptech is an FSC-certified product made from 100% post-consumer recycled fiber and rapidly renewable bamboo with a water-based seal. Looks great and contains no VOCs.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_kbhome_trend5_tcm81-686039.jpg
    James F. Wilson
    Trend #5: Simple planter boxes made from scrap lumber cost next to nothing but score points with buyers. These weather-resistant containers just outside of Builder’s Concept Home 2011 are made from leftover composite decking material.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_rehkamp_trend6_tcm81-686043.jpg
    Susan Gilmore
    Trend #6: The scallop-edge vent hood capping the vintage stove in this kitchen designed by Rehkamp Larson Architects sets a whimsical tone and is anything but ordinary.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_subzero_trend7_tcm81-686044.jpg
    Courtesy Sub-Zero
    Trend #7: A colorful “tall wall” loaded with built-in SubZero appliances doubles as a wall partition, blending function with flavor.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_diamondspa_trend10_tcm81-686038.jpg
    Trend #10: Farmhouse style is also popular in times of simplicity. This copper trough skirted sink from Diamond Spas fits the aesthetic and offers a warm alternative to stainless steel.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_merillat_trend11_tcm81-686041.jpg
    Courtesy Merillat
    Trend #11: Shaker-style Merillat Classic cabinets in maple provide a simple complement to the dramatic exposed trusses in this rustic kitchen.
  • http://slideshows.hanleywood.com/Images/kitchenideas_0111_needham_trend14_tcm81-686042.jpg
    Bruce T. Martin
    Trend #14: Designed by Lilly Dadagian Architects, this small yet serene New England kitchen is as practical as it is pretty. It comfortably tucks a computer workstation with office shelving into its layout.
  • http://slideshows.hanleywood.com/Images/watermark_kitchenchef_0510_4_5_tcm81-686045.jpg
    Jonathan Benoit
    Trend #17: This modern bistro kitchen, designed by architect Robert J. Miller for a professional chef, has the requisite industrial-grade appliances, but also incorporates cost-saving materials such as chalkboard paint. A vegetable garden lies just outside the French doors.
Houses are shrinking in the recessionary economy, but kitchens? Not so much. As other rooms are eliminated from downsized plans, their functions are naturally migrating to the kitchen, placing more pressure than ever on this culinary zone to perform double or triple duty as the home's primary living space. Flexibility is a must in open areas that are used not only for cooking, but also dining, entertaining, homework, family time, and even telecommuting. Thrift is also a virtue. And there are other ingredients in the mix, too. Aging baby boomers, sustainability, health consciousness, stricter energy regulations, new technologies, and the rise of the single woman buyer are all factors shaping kitchen aesthetics and functionality today. These were just a few of the observations noted by kitchen designers Mary Jo Peterson and MaryJo Camp, and architect Doug Van Lerberghe in a January 13 session on "Reinventing the Kitchen" at the International Builder's Show in Orlando, Fla. They offered these timely tips for creating kitchens that shine in today's market.
1. Prepare for prep. Sinks aren't just for doing dishes anymore. As core prep areas, they are best when accessorized with trash and composting within reach, adjacent work surfaces, and motion sensor faucets for dirty hands. When it comes to functionality, large single bowls are more versatile than double wells. And if the budget allows, provide more than one sink. "As we go up in size, the first thing we want two of in the kitchen is sinks," Peterson said. "That allows two cooks to work simultaneously in the space."
2. Design for all. Baby boomers may not like being reminded of their age and may bristle at the term "accessible design," but they will love you for creating a kitchen that simply feels better and works better. Consider making universal design features such as right-height appliances, ergonomic hardware, user-friendly task lighting, and reachable storage part of your standard practice. At the end of the day, universal design is simply a synonymn for good, smart design that benefits every user. And when it's done well, it's transparent.
3. Work with what you've got. Don't fall for the "gotta have it" mentality and feel obligated to cram certain features into a kitchen space that can't accommodate them. Be mindful of the room dimensions. If the kitchen is a skinny one, a peninsula may work better than a puny island, and a thoughtfully appointed pantry with French doors will feel less cramped than a walk-in. Maximize all available cavities with pull-out shelves, racks, and drawers that are easy to access--preferably at the point of use when possible.
4. Get some green. Even if you don't have the budget for full-on solar or a geothermal loop system, small choices in the kitchen can make a difference--particularly when there's a payback for the homeowner in the way of energy savings or health. Look into WaterSense plumbing fixtures, Energy Star-rated appliances, and recycled or rapidly renewable materials such as bamboo, cork, or quartz composite.
5. Enter growth mode. The local food movement is gaining traction--and there's nothing more local than a window box herb garden or a tomato grown in a planter just outside a homeowner's kitchen door. If you have an opportunity to provide built-in garden space, do so. It's not expensive, and green-thumbed buyers will appreciate the gesture.
6. Speak with an accent. It goes without saying that memorable spaces have personality. Does your kitchen design go beyond plain vanilla? If not, identify a focal point such as an island, vent hood, or picture window and emphasize it with a unique color, special lighting, or a change in finish. That kind of attention to detail will make the space more unique and memorable.
7. Try new hues. "Color alleviates monotony and is a wonderful, inexpensive way to make a statement," said Peterson. To spice things up, try a little variable color blocking in your cabinets and/or island. Mix natural woods with paints or stains in muted colors such as violet, navy, yellow, or beige. For accents, try a dash of turquoise, orange, raspberry, tomato red, or grass green.
8. Go for contrast. Not into color? You can also create sophisticated spaces with strong juxtapositions of light/dark, matte/shine, and smooth/texture in your cabinetry, flooring, countertops, and backsplashes. "Multiple, compatible, smooth countertop surfaces are best coupled with textured backsplashes," Camp advises. Black and white is an ever-classic combo, but you can also achieve a similar affect with cream and chocolate brown. "Today we are seeing texture and depth replacing layered glazes," Peterson said. Visual brushstrokes and surfaces with an aged, distressed look are popular.
9. Make short and long-term decisions. Being trendy is okay, but be strategic about it. Take risks with finishes and materials that can be easily and economically swapped out at a later date, such as paint colors, furniture, upholstery, or cabinet hardware. Keep the permanent stuff more neutral. A purple appliance is a 10- to 20-year investment, but a purple wall doesn't have to be.
10. Warm it up. Homeowners are entertaining more at home these days and they want spaces that feel welcoming, not sterile. So it's no surprise that Craftsman style is a current favorite, given its emphasis on craftsmanship and natural materials. Sinks and faucets finished in matte and warmer artisan finishes such as bronze, copper, and brass are making a comeback, too.
11. Exercise restraint. If your kitchen is graced with a dramatic feature such as exposed ceiling structure, a veiny countertop stone, or wood cabinetry with a pronounced grain, keep everything else simple and give that element space to breathe. "If your reclaimed wood floors are full of character, don't make them compete for attention," Camp said.
12. Simplify it. Traditional looks never quite go out of style, but their nuances do ebb and flow with economic tides. Today's idea of "traditional" is all about cleaner lines with minimal ornamentation and lots of white. "People are looking at heritage in a new way," Camp observed. Old World features such as heavy corbels and raised island bars are being traded for simpler elements such as crisp painted bead board, picture rail, and single height islands.
13. Put function first. People naturally congregate in the kitchen, and this tendency has only increased now that kitchens are intended as entertainment hubs. Be generous with clearances, allowing a minimum of 42 inches for work galleys (preferably 48 inches) and 36 inches for passage. And be sure to think about gathering space. If your house has no formal dining room, consider a built-in banquette or bar seating in the kitchen. Just avoid the "crows in a line" mistake of putting all of the seats in a row facing the same direction, Van Lerberghe advised.
14. Think portable. For maximum flexibility in a small kitchen, make this movable. Put dining tables (or even the island) on casters that can be rolled and repositioned during parties. Or eliminate one small section of base cabinets so that a chair on casters can be pushed under the countertop to create a laptop station. Build as many multiple uses into the space as possible.
15. Multitask your appliances. If space is limited, consider appliances that perform more than one function, such as the oven that is both microwave and convection, or the fridge with flexible drawers that can be separately programmed for refrigeration, freezer, or storage space, depending on user needs.
16. Accentuate the positive. If your budget is meager, the worst thing you can do is to skimp on everything unilaterally. Create a design hierarchy and spend accordingly. Identify one or two pulse points in the space and put higher priced finishes there. For example, go for the expensive tile in the backsplash, but then complement it with a less expensive field tile elsewhere.
17. Look for savings. There are ways to achieve the look of high design without the high price tag. A counter-depth free-standing refrigerator, for example, will cost thousands of dollars less than a built-in fridge but offer a similar visual effect. Plastic laminates made with photos of natural stone look like granite at a fraction of the cost. Smart lighting choices can also be cost savers. "An Energy Star CFL bulb will save about $30 over its lifetime and pay for itself in about 6 months," Camp pointed out. "It uses 75% less energy and lasts about 10 times longer than an incandescent bulb."
18. Lighten Up. For maximum ambiance and functionality, be sure to layer ambient, task, and accent lighting. Install the antique chandelier or cascading blown glass fixture for style, but then augment in spots that are closer to the action with undermount cabinet and task lighting. And have some fun. "Small LEDs installed in the toe-kick area are fun and can also be used as a night light," Camp said. Just be sure to pay attention to the temperature of the light. "The color rendering index (CRI), which operates on a scale of 1 to 100, indicates how well lighting renders eight standard colors," she explained. "A lamp with a CRI of 80 is better than one with a CRI of 50." Check the CRI before you buy.
19. Embrace nature. If your kitchen and great room open onto a patio or other outdoor living space, create harmony by using some of the same materials both inside and out--such as continuous surface floor tiles, brick, or even concrete block. To create visual connections, you can also specify natural colors and materials in the kitchen that evoke the colors and textures of the landscape outside, such as natural wood and stone.
20. Go ahead, splurge. A small thing of beauty or a tiny indulgence can have an amazing psychological impact in a time of recession. It isn't wise for homeowners to spend beyond their means, but if you can value engineer or trim costs and put a little more toward one precious item that resonates, do it. Perhaps it's a small wine fridge, vintage drawer pulls, or a reclaimed wide plank wood floor. The kitchen with a little dash of character is more likely to sell than the one with the plain jane scheme that takes no risks at all.

Wednesday, January 5, 2011

Ron Goldstein on WGN radio. New Year prognostications and thought leadership on 2011 for the real estate and mortgage industry


Have a listen. Great time and interesting discussion with my friend Bill Moller in the WGN news room and my friend Amiel Steuerman, president of Cypress mortgage.

2011 Easy Weekend Home Projects to simplify life and maximize space

Don’t waste your weekend decluttering and organizing your entire house. Instead, take on easy-to-manage home improvement projects, from organizing the basement and cleaning out a junk drawer to building bookshelves and making over a closet.

Before and After: A Refrigerator Makeover Create Book Shelves, Literally
Repot a Plant as a Hostess Gift

Before and After: Basement
Make Over Your Junk Drawer

Create Hooks Out of Silverware
Before and After: A Front Closet Makeover