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Spruce Up the Landscape and Increase Your Home’s Value

Many homeowners are thinking about making outdoor improvements. That can be a very good decision – especially if selling is in the near future.

According to Angie’s List, a Web site where thousands of consumers share their ratings and reviews on service providers in more than 425 different categories, well-designed landscaping can increase the value of your home by 7 to 14 percent.

Curb appeal is similar to meeting someone for the first time – a good first impression is likely to increase the chances of a second meeting. So, too, for a home on the market.

With so much inventory for sale, buyers simply can’t be bothered with homes that don’t dazzle them from the get-go. Buyers will look at many homes online; only the ones that entice, invite, and attract with curb appeal are likely to get a second look – this time in person.

Ken Andersen, vice president of Walter Andersen Nursery, says improving landscape makes the home not only more aesthetically appealing but also can help save you money.

“One of the things that you can do to help save money on your landscaping is making sure that you’re watering efficiently,” he says. “One of the ways that you can save water in a landscape is by mulching the landscape.”

He says placing a two-inch layer of mulch in your yard helps keep the soil from drying out, reducing the need for water. “It also adds organic material to the soil as the mulch breaks down and gets incorporated into the soil. So that’s always a benefit to the plants,” says Andersen.

Andersen says mulch has improved over the years. “There are a lot of decorative [mulches] that will turn what would have been a bare patch of dirt into a nice manicured area of your landscape – just a little bit of mulch or bark down in an area like that can really make a dramatic difference in the look of the landscape and it’s very cost effective,” says Andersen.

If you’re going to add mulch to your landscape, Angie’s List suggests getting a couple of neighbors on the block to purchase it with you so that you can buy it in bulk to save money. Here are a few more things Angie’s List says to consider:

Of course, landscaping involves more than just laying down mulch. That means the cost of sprucing up your yard can vary greatly. Andersen recommends having 10 percent of the cost of the home reserved for spending on landscaping. This doesn’t include any hardscape such as a patio floor, walkways or a pool. But for existing homes, depending on the current condition of the landscaping, improving it can be done cost-effectively.

While do-it-yourself homeowners may be eager to pick out plants they like and then promptly put them in the soil, Andersen advises to check with the pros first. If not, you could end up with plants not surviving due to outgrowing the space or being placed in poor locations.

“Don’t be afraid to ask for help. Go into a local nursery or garden center and ask for local advice as to what you can put into your yard so that you’ll be successful. If you put something in and it dies and you have to take it out and go get another one – even if it’s under a warranty – it’s not an efficient use of your time,” Andersen says.

He adds, “You really want to make sure that what you put in your yard is going to give you the most value for your investment, because landscaping really is an investment in your home.”

Copyright © 2009 Realty Times®. All Rights Reserved.

“The majority of lawsuits or claims that occur are as a result of buyers finding out about something that is wrong with their property after the close of escrow and coming to the belief that the seller knew but didn’t tell them,” says real estate attorney Peter Solecki of Winton & Larson, LLP.

Disclosure is vital. In one extreme case, it may have spared a seller from going to jail and even saved lives. The New York Times reported on a trial in the late eighties that found the seller of a home guilty for not disclosing to the buyers that the home’s heater had malfunctioned. The buyers and one of their children were asphyxiated by fumes from a gas-fired heater used to de-ice the driveway of their home. Only their 4-year-old child survived. The seller was convicted of involuntary manslaughter.

This case is believed to be the first of its kind where a home-seller was held criminally liable for the sale of a home that had a fatal defect.

While certainly this isn’t a typical scenario, it gives good reason to pay attention to the details that you’re disclosing when selling your home. It’s not worth it to leave off some important details just because you think the home won’t sell or will sell for less money if you disclose any problems.

Reporting problems about your property prior to the sale of it can be done through various reporting mechanisms such as the Transfer Disclosure Statement (TDS). But Solecki says some disclosure reporting statements are written in the present tense, which creates a reporting dilemma for some sellers.

Buyer Can Decide

“The seller will look at the Transfer Disclosure Statement and say, ‘Well, there was something wrong but it’s not any more; therefore, I don’t have to disclose it,” Solecki says. He adds, “If [sellers] haven’t disclosed it and it turns out to be a problem, then you have a potential significant issue, whereas if it’s been disclosed, then the buyer can elect what to do with it.”

A RE/MAX agent can help you with disclosure forms and every other aspect of selling your home. Locate a RE/MAX agent in your area now.

Chances are buyers won’t decide to do anything further, Solecki says. He says this is because the problem has been disclosed by the seller and reported that it’s been fixed. This will allow the buyers to feel that the problem has been completely resolved and therefore will not hold up the sale of the home.

Reporting all problems with the home, regardless of whether they have been fixed, is the safest way to sell your home. Making sure you keep good records is vital because, as the years pass, many sellers forget about all the repairs they’ve done to the property.

“Every homeowner should have a file of everything they do to the house,” Solecki says. This file should be given to the buyers for them to review. The file should show all problems and how they have been repaired, complete with receipts.

Solecki says this is a step above what many states require a seller to do.

“Even though legally there’s no real requirement to tell about fixed problems, those are as critical as the existing problems.” He says when you don’t report a problem, buyers generally learn about it from neighbors and then assume that you were not telling the truth when you sold the home. Fortunately, Solecki says most buyers tell the truth.

But many sellers resist disclosing problems for fear that their homes won’t sell. “That’s the fallacy. People think if I tell the truth about my house, a buyer won’t buy,” Solecki says. But he says if you sell the home with a problem and the buyer finds out after the close of escrow, the buyer will likely file litigation to resolve the problem – creating a huge headache.

If the seller properly discloses all issues with the home, the buyer can make an educated decision to buy or not. “The fact is that the vast majority of buyers don’t walk away. They decide to buy a house because they’ve determined it’s the house for them. Once they’ve made that decision they usually find a way to make it work,” Solecki says.

Disclose Right Off the Bat

When’s the best time to disclose? Right away. “The good real estate agents will get whatever negative information there is out there as fast as possible. Once buyers make a decision to go forward they will have made their decision based upon all these factors, including that one,” Solecki says.

When you tell all before you sell, you’re positioning yourself not only for a successful home sale but also a headache-free post sale. “[Not disclosing information] is the primary post-close-of-escrow issue because that’s what leads to significant damages, which is what leads to lawsuits,” Solecki cautions.

Copyright © 2009 Realty Times®. All Rights Reserved.

According to the National Association of Home Builders, expanded tax credits for energy-efficient home improvements in the 2009 economic stimulus package puts more money in consumers’ pockets by providing financial incentive for homeowners to go green on their renovation projects. While more efficient homes save on water and energy bills, these tax credits will make such home upgrades even more affordable.
The Internal Revenue Code section 25C, regarding tax credit for existing homes – which had expired at the end of 2007 – was reinstated as part of the economic rescue package passed by the Bush Administration in 2008. Homeowners could be rewarded for installing energy-efficient windows, doors, roofing and insulation as well as furnaces, air conditioners and heat pumps. But remodelers found that the terms of the 25C credit – equal to only 10 percent of the cost of each product and with a lifetime cap of $500 – weren’t strong enough to push enough homeowners off the fence and into action.

Now, the credit rate and lifetime cap have been tripled – to 30 percent and $1,500, respectively – the list of eligible improvements expanded, and the deadline for applying has been extended through the end of 2010. Congressional estimates indicate that the new rules for the tax incentive will increase aggregate remodeling activity by more than $6 billion.
“The new tax credit also aligns with industry research indicating that even the most aggressive efficiency goals for new homes won’t make a dent in overall energy consumption. Instead, remodeling and retrofitting the nation’s older homes is by far the more efficient solution,” said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, a remodeler from Tucson, Ariz.

“These new tax credits are another way that the home-building industry can combat the potential effects of global climate change by encouraging homeowners to make energy-efficient improvements to their homes,” Miedema said.

A 2008 California study revealed that 70 percent of the greenhouse gas emissions related to single-family energy consumption can be attributed to homes built before 1983.
The bottom line: Retrofitting existing homes with energy-efficient features is four to eight times more carbon- and cost-efficient than adding further energy-efficiency requirements to new housing, the study showed.

Details on qualifying improvements are available at the IRS Web site. It is expected that homeowners will need to complete Form 5695 (Residential Energy Credits) and submit as part of their income tax returns to claim the credit. Further, homeowners should retain for their own records information that includes:

Due to the efforts of nonprofits like NAHB, the National Association of REALTORS and its affiliate organizations like the CCIM Institute, more and more businesses and individuals alike understand that “green” is good for our economy, for our health and for the sustainability of our nation’s communities.

Copyright © 2009 Realty Times®. All Rights Reserved.

Mortgage modifications now can include second mortgages – not just first mortgages – and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.

The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down – or turned off – because a second mortgage impeded the process.

Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.

Second Mortgage Modifications

Loan modifications are designed to make a home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.

Under the federal government’s Making Home Affordable second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.

Twelve mortgage servicers currently do. Among them are large banks including Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.

Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before Jan. 1, 2009; have a mortgage payment (including taxes, insurance, and homeowner’s association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.

Under the new second mortgage program, in addition to lowering the payment, lenders can opt to erase a borrower’s second mortgage in exchange for a lump-sum payment from the government.

New Short Sale Incentives

Short sale incentives were among recent refinements to the Obama administration’s housing rescue programs.

In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It’s important to include a tax professional’s advice in the deal.

You also should get assistance from a real estate professional. RE/MAX has agents specially trained in helping homeowners avoid foreclosure. Locate a RE/MAX agent in your area now.

Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treating the difference as “income” to the seller.

Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.

Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second-lien holders up to $1,000 to relinquish their claims in such transactions.

Copyright © 2009 Realty Times®. All Rights Reserved.

Deadline Extended Into 2010
The tax credit was originally to end November 30, 2009. It has now been extended into 2010. If you have a signed purchase agreement by April 30, and close the transaction by July 1, you’re eligible for the credit.

Some Existing Homeowners Now Eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. (Married couples filing individually can receive $4,000 each.) You are considered a first-time buyer if you haven’t owned a principal home in the U.S. in the last three years.

The tax credit has also been expanded to existing homeowners who’ve lived in their principle residence for five consecutive years in the last eight. They can receive up to $6,500 – or $3,250 for couples filing as individuals.

Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.

Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return, or file an amended 2008 return to get the money sooner. There are also programs in place to enable you to use the funds to help with the down payment.

Contribution to the Economy
National Association of REALTORS® economists estimate that the tax credit has contributed more than $22 billion to the economy, and that 2 million people will take advantage of it this year.

Foreclosures: Inspect Before You Buy

It’s no surprise that buyers are looking for a bargain – but now, even more people are showing interest in the growing foreclosure market. According to Trulia.com and RealtyTrac, a recent survey shows that 55 percent of U.S. adults are at least somewhat likely to consider a foreclosed home when buying real estate. That’s nearly a 10 percent increase from November 2008.

However, many buyers are a bit leery of foreclosures. Approximately 85 percent said they can’t identify negative aspects of the properties. Among the top concerns are hidden costs, a risky process, and further de-valuing of the foreclosed property.

Buying a foreclosure doesn’t have to be a scary and unknown process if you take the right precautions. Inspect before you buy is a good motto for any real estate transaction, but even more so with a home that has been foreclosed and possibly sitting vacant for long periods of time.

“A lot of the foreclosures that I have inspected have had fires, usually due to the heating equipment. And it’s predominantly because somebody just wasn’t taking care of the equipment – not because they were trying to set the house on fire because they were upset. It’s just poor maintenance,” says Frank Schulte-Ladbeck, a home inspector based in Houston.

He says the trouble with foreclosures is what happens to the homes during the foreclosure process. “People who are getting into the point where they’re going toward foreclosure usually don’t have money for maintenance,” says Schulte-Ladbeck. Consequently, sometimes important housing needs are let go – or potentially worse, the former homeowners unsuccessfully attempt to do their own repairs.

“You see weird plumbing or wiring setups that can sometimes really cause a problem down the road, like with the electrical [system] causing fires or the plumbing causing leaks,” says Schulte-Ladbeck.

Another big concern is when the previous homeowners used various items in the home as replacement for something that had broken. Schulte-Ladbeck says because homeowners who are facing foreclosure frequently cannot afford to fix something in the home, they go without it. But that can cause more problems.

The best thing you can do if you’re considering a foreclosure is to have it inspected. Just make sure that the property is ready to be inspected or you could be doing yourself a huge disservice.

“Have everything turned on, because that’s when you might start seeing things that are wrong like leaks and electrical problems. You could see problems with the heater or the water heater, ovens or cook tops that use natural gas,” says Schulte-Ladbeck.

Seeing is believing and, with inspections, the only way to know for sure is to have everything operating so you can gain the most knowledge about needed repairs.

Copyright © 2009 Realty Times®. All Rights Reserved.

Listen to what professional appraisers say.

Their job is to determine the true market value of homes. So they know what makes a property sell for the greatest amount and can tell you how to best prepare your home for market now and later.

“A few years ago, houses were selling quickly with little effort. Now many homeowners actually have to make improvements before they can sell their home,” says appraiser Mike Evans, a Fellow of the American Society of Appraisers (ASA).

In the term, cosmetic touchups can help a home sell a faster. They include:

If you won’t sell your home for some time, but know that possibility looms, do the right improvement things, including:

“It pays to plan to make home improvement decisions strategically if you may be selling a home in the next few years. Think in terms of increasing the value of your home and not just about design and decor,” Evans says.

Copyright © 2009 Realty Times®. All Rights Reserved.