Are Home Inspections Worth Their Expensive Price Tag?

Buying a home is often one of the most expensive, longest and riskiest transactions of an individuals life. In competitive markets, home buyers might shop for several weeks or even months before finding their ideal homes.  When their offers are accepted by sellers, they have the opportunity to hire a home inspector to evaluate the homes’s condition before purchasing. Home inspections might seem like just another unnecessary, costly step in the total transaction, but the option exists specifically to protect the buyers investment.
Once buyers are in escrow, home sellers are obligated to inform them of any damages they're aware of in the homes. Buyers should thoroughly review the property disclosure forms for red flags such as illegal or unpermitted remodels, water damage or other issues that may entail costly repairs. If buyers don't find any major concerns, they may choose to forgo the home inspection to save money.
Although it's not required, home buyers can seriously benefit from hiring certified inspectors to examine the structural and mechanical conditions of the homes. If inspectors find significant damage, buyers can retract their offers or renegotiate with the sellers for reduced prices or sales pending repairs. The goal of a home inspection is to enable the buyers to make an educated purchase.
During the inspection, the buyer and buyers agent should follow the inspector throughout the examination asking numerous questions.  Inspectors evaluate home exteriors, from the roofs to the foundations. They look for obvious structural issues, damage and mechanical problems. They tests the interior plumbing, heating and electrical systems. Inspectors might shake the toilet to test its seal or climb into the fireplace to search for flammable materials. Buyers have the right to inquire about anything uncommon, suspiciously repaired or any area the inspector spends focused energy on. Experienced buyer's agents can indicate which issues are most serious, since they are likely familiar with the conditions of the area and the type of problems most buyers walk away from.
Home inspections take approximately three hours to complete, and their price varies based on the size and age of the home. In general, home inspections range from $250 to $500. Larger homes can run from $750 to $1,500. More expensive inspections are usually performed by highly experienced professionals who spend more time on the inspection. Additional termite and radon testing usually cost $75 and $100 extra, respectively.
Afterward, inspectors write thorough reports with their findings. The reports explain specific hazards but don't always indicate the exact cost of repairs. Instead, the reports list items such as the age of the HVAC unit or water heater and the condition of the roof or chimney. From the reports, buyers can assess the homes problem areas and then research the cost and urgency of repairs. Buyers should consult a contractor about the costs of major remodels to approximate the true price of upgrading necessary repairs.
Out of context, it seems obvious that buyers should pay for thorough home inspections to protect their potential purchases. However, buying a home can become financially overwhelming for buyers when they add up their down payments, closing costs, moving costs, pending monthly mortgages, the cost of desired improvements and the additional furniture they will need after moving.  On top of that, add the optional cost of a home inspection paired with a clean property disclosure from the seller. The choice can become difficult when money gets tight. Buyers should question whether they can afford to waive the inspection and risk the potential money pit they might be walking into.
Through inspections, many buyers avoid seriously expensive damages, negotiate fair credits from sellers or reduced sale prices. Occasionally, inspectors find few issues in the homes, proving to buyers that they are making safe purchases. Instead peace of mind worth $500 when the cost of the home is $500,000? With homeownership comes responsibility, and the first responsible step is to spend a small price now on an inspection to save potentially thousands later on repairing damages.

Should You Remodel Before Selling?

There are pros and cons to a house remodel before selling your home. You will have to weigh carefully the price and the payoff before deciding if a remodel is the best choice. In some cases, you may be better served to list the house as-is at a more competitive price.

• Check with your realtor to determine the features of a typical home in your area. Adding rooms, bathrooms or special features to your home can bring it up in value with the rest of your neighborhood. On the other hand, make sure you don't make the home too pricey as compared to other homes in the neighborhood.
• Adding square footage is the only solid way to add value to a home. Kitchen and bathroom renovations are another powerful way to make the home a better sell.
  
• If the remodel will occur immediately before you move and you won't be able to enjoy it, it may not pay itself off in the sale and therefore could be a waste of your resources.
• If your home is already up to par with the other homes in your neighborhood, you may consider striking a middle ground and forgo remodeling to sell for a lower price, making a few touch-ups here and there.
  
• Freshening up your home with paint jobs, retiling, carpet cleaning, landscaping, and other minor tasks should be a given when reselling your home.
• More bathrooms typically mean more value, especially if you create a luxury bathroom with a spa tub or specialty shower, or opt for a double-basin sink.
• In the past, it was much easier to sell a home without a remodel. However, because of difficulties in the housing market, renovations before selling have become more necessary.
• If forgoing renovations, be sure not to underprice your home, but still keep the price competitive. Your realtor can help you research homes in your market and determine a good price.
• If your home has wooden floors under carpeting, a good trick to add a significant amount of value to your home is to strip the carpet and have the wood refinished.
  
• Ornate landscaping can be a worthy remodel before selling your home.
  

Home Improvements That Pay Dividends

1. Homeowners prefer to find a home in `move-in' condition.--The No. 1 thing a homeowner can do is make sure the house is clean and freshly painted. A nice neutral color throughout will provide the future homeowner with a welcoming feel and provide a clean canvas for which the future homeowner can take their time after move-in deciding how to decorate and modify.

2. Updated appliances-- Having old kitchen fixtures doesn't excite a homeowner. An easy fix is to invest in new kitchen appliances that provide a modern experience for the new homeowner.

3. Create a presence from the beginning -- make the entry way welcoming. Walking over chipped patios, cracked steps and/or a front door that sticks when opening doesn't create the best first impression. Make the entry way inviting.

4. Kitchen -- in addition to new appliances, look at the counter tops. Granite, Corian or marble are preferred. If you have laminate, it will cost you in the long run.

5. Bathrooms--- even if they are old, make sure they are clean, neutral colors -- and take the time to grout tile and/or update faucets and fixtures to provide more of a modern and clean environment.

5 Things to Know Before Purchasing Home Insurance

 

Here is list of five things you need to know before opting for a home insurance policy:

1. The type of house or home you have determines the home insurance policy you need to purchase. If you own a single-family house, you need to have an HO-3 or special home insurance policy to protect your home and personal things. If you are the owner of a condo or townhouse, you need to have a policy which will cover your personal belongings as well as fixed structures in the home. If you own any rental property, you require a dwelling fire insurance policy. A dwelling fire policy does not cover stuffs within the home; it only covers for damage to the property.

2. You need to figure out the amount of coverage you need. The better the coverage, the less you have to pay out of your pocket if any disaster strikes. In many cases, your lender determines the amount of coverage you require to purchase a policy, which will at least cover the mortgage amount. The amount of home insurance coverage you get for your home and other personal contents will affect the premium you pay.

3. Whether you are a home owner or rent a property, there are various levels of coverage available for protecting your home and personal belongings. All home insurance coverage protects against a specific number of incidents. Some examples are storm, fire, theft or vandalism. Moreover, each insurance policy usually offers extra coverage such as personal liability, damage to the property, additional living expenses and medical expenses.

4. Most home insurance policies have a maximum limit; they usually cover certain things, including jewelry, gadgets, furniture and other belongings. These limits offered by insurance companies differ from one to another. If you have any expensive items you want to protect, be sure the policy has enough coverage for your personal needs.

5. Most home insurance policies have restrictions. No insurance policy covers all kinds of loss. Many homes are located in areas that are prone to natural calamities like storm, earthquakes and floods. Home insurance policies do not provide any coverage for flood and earthquake damage. If your home is located in such areas, special flood and earthquake policies are there to protect your property against these loses.

In addition to these tips, check with your insurance agent every year to ensure that your policy provides sufficient coverage.

Saving Money on Home Insurance

  Saving money on home insurance seems like an impossible task, but I promise you, it can be done! A large portion of a household’s income is used to purchase insurance. If you are like me, you resent it. Insurance is one of those things that we all need and I grimace every time I review my bank statement and see my monthly premium payments.

I would much rather spend the money on things I don’t really need, like that sequined dress I can only wear on New Years Eve. Now THAT would be a fun purchase.
Insurance purchasing is unquestionably NOT a fun purchase. Well, let’s not spend more than we have to, shall we? Here are my recommendations for saving money on home insurance. Most discounts apply only to homeowners, but some can be applied to condo, tenants, and secondary residence (cottage) policies.
You may already have a lot of these discounts, as most are automatic, but some you can only get by asking for them.
Check your policy as the discounts are usually listed. Also, keep in mind that the type and amount of discount will vary between insurers.

Alarm Systems

If you have any type of burglary or fire alarm (except for the battery operated smoke alarm stuck on the ceiling type), you can usually get a discount from 5 to 20 percent depending on how many bells and whistles it has. You will have to provide proof in the form of an alarm certificate provided by your installer or monitoring company.

Claims Free

This discount is usually automatic, but check for it if you are at least three years claims free. Discounts can vary from 5 to 20 percent.

Mortgage Free

This is another reward for paying off that mortgage earlier! You will earn a discount of 5 and 10 percent. Insurers figure that if you own your home outright, you are less likely to burn it down when you are flat broke and can’t make your mortgage payments anymore.
Secured lines of credit can sometimes qualify, so check this one out if you have financed your home but it is not through a traditional mortgage.

Mature Owner

This discount can be offered to anyone from 40 and up, but it varies between insurers and is usually between a 5 and 20 percent discount. Your insurer will require the dates of birth for those that are on the.
Interesting Fact: Did you know that this discount used to be called “old person’s discount” before it was changed to “mature owner’s discount”?

 

Fire Hall Pumper Certification

If you live in a rural area (also good for secondary residences, such as cottages) your responding fire hall may have qualified for a special status, meaning they are able to respond to fires very quickly and with enough access to water. Some insurance companies reward those living in the response areas of these fire halls.
Inquire with your fire hall and if they have passed the tests required for this certification, you may qualify for a better insurance premium. Check with your agent/broker for what is required to prove your fire hall qualifies for special certification.

Multi-Line

If you carry home and auto insurance with one insurer, you should be getting a 5 to 20 percent discount.

Loyalty

This discount generally gets added on when you have been with the same insurance company for 5 years or more. It is usually from 5 to 10 percent.

Non-Smoker

If there are no smokers in your household, you can usually save an extra 5% off your insurance. You may have to sign a form to verify this status.

Group Rates

Check at work or your professional association to see if they have any arrangements with an insurer to provide a special rate for employees/members.

Sump Pump/Sewer Back-Up Preventative Measures

Insurance companies have been paying out in a major way for water damage claims in recent years due to aging city pipes, so some insurers will reward those that take measures to prevent this from happening.
If you have one of those fancy alarms that tells you that your sump pump is failing, or have installed some other type of water damage preventative, let your agent/broker know as this could save you some money.

Increase Your Deductible

Get quotes on different deductible levels. The savings can be quite substantial. Determine how much you could afford to pay out of pocket if something happened, and keep this in mind before changing your deductible. You don’t want to put yourself under more stress if you have to make a claim.

Home Upgrades

You may qualify for a better rate if you have recently updated or replaced major systems in your home such as furnace, roofing, electrical system, and plumbing.

Higher lot prices may boost new home prices

New homes could get more expensive in the coming months as a shortage of suitable lots drives up builders' costs. In 27 leading markets, the average price of a finished lot ready for building was up 40 percent in the second quarter from a year ago, according to John Burns Real Estate Consulting. Even steeper increases have hit some markets that have also seen strong gains in home values and demand. Year over year, finished lot values were up 87 percent in San Francisco and Oakland, 75 percent in Atlanta and 70 percent in Las Vegas. The big jumps are "making up for lost ground" during the housing downturn when lot prices fell, says David Crowe, chief economist for the National Association of Home Builders. The higher lot prices may foreshadow higher home prices months from now. Finished lot prices represent almost 22 percent of a new home's price, Crowe says. Builders expect future home prices will cover their higher lot costs. "We're betting on things two years from now," says Dennis Webb, vice president of operations for Fulton Homes, a Phoenix-area home builder. Finished lot prices there were up 65 percent in the second quarter from a year ago. Bigger homes are coming along with higher land and lot prices. The average size of a new home hit a record 2,642-square-feet in the second quarter, the Census Bureau says. Some first-time buyers have dropped out of the new-home market because of rising interest rates, Webb says. That means repeat buyers, who are financially better off, make up more of the market, and they want to move into larger homes. Later this year, Fulton plans to start selling luxury homes in a Phoenix suburb ranging from 3,800 to 6,800 square feet. They will be the biggest homes Fulton has built in Phoenix since 2005.

 Lot prices have risen fast because of their limited supply, especially in popular neighborhoods, and strengthening demand for new homes. July new-home sales, while down 13.4 percent from June, were still almost 7 percent higher than last year, the Commerce Department says. Meanwhile, few lots were developed during the home-building downturn that began in 2006. When housing started to pick up, builders got caught short. “There's been a big jump in demand for something in scarce supply," says Jody Kahn, vice president with John Burns Real Estate Consulting Prices for raw land — which will turn into finished lots months or years from now — have also soared in many markets. Since late 2012, raw land prices in parts of Las Vegas have more than doubled, says Dennis Smith, CEO of the Las Vegas-based Home Builders Research. Land prices have also doubled in Phoenix since that market bottomed in 2010, says Arizona land broker Nate Nathan. Finished lot prices in Dallas, Houston and Austin have rebounded past their 2005-2007 peaks. All three cities saw job growth of 3 percent or more, vs. 1.7 percent nationally, in the 12 months through June. Crowe doesn't expect lot prices to keep growing at their current pace. As developers and builders refill the pipeline, price gains will slow. "This year is the big bump," Kahn says.

4 Considerations When Buying an Investment Property

Purchasing real estate has been a profitable option for investors for a very long time. Many investors have made hundreds of thousands of dollars (in some cases millions) by purchasing properties, building equity, and then selling for a profit.

Here are four key considerations when deciding to invest in housing:

1) Affordability
Purchasing a property and renting it out to cover the mortgage may seem like an attractive opportunity, but as the old saying goes "don't bite off more than you can chew." One of the most common ways to lose money in an investment property is to fail to rent the property out and then not being able to afford the monthly payments. Try to budget so you can afford to pay the mortgage on a monthly basis even if you can't rent it out (due to some unforeseen circumstance).

2) Location
Location is one of the most important points to consider when purchasing a property for investment purposes. Look for nearby rent-drivers, such as colleges/universities, public transportation, highways, and other attractions. Of course, the better the location is, the more expensive the property will be.

3) Condition of the property
Don't let the cosmetics of a prospective property put you off. Put on your investor hat and look at everything with a dollars-and-cents point of view. Ask yourself, "What can I do to improve this place?" or, "How will adding this or fixing that impact the value of the property?" Plus, if a property meets most of your criteria but isn't the prettiest looking home on the street, you may be able to get it for a lower price.

4) Do your research
Study the market, consistently review the stats and look at the properties available in your target area. You never know when the right property at the right price will present itself.

 

 

 

Treasure Valley Housing Market

Treasure Valley market NOW!

With the fundamentals falling firmly in place, the trend remains positive as the Treasure Valley market is expected to gain momentum through the second half of the year. This is according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
As of the end of June, there have been approximately 9,100 new jobs created over the past twelve months within the Boise MSA. Based on the most recent numbers released from the Bureau of Labor Statistics (BLS), there are currently 275,200 people employed in the Treasure Valley market. The unemployment rate increased slightly in June to 6.2%, which is down from 7.3% recorded last year at this time, and well below the peak of 9.9% in January of 2011. “The local economy was experiencing stronger growth during 2012, and while job creation has slowed in some sectors this year, all but one remains positive,” said Eric Allen, Regional Director of Metrostudy’s Utah/Idaho Region.
According to Metrostudy’s quarterly survey of all new home projects in the Treasure Valley market, there were 1,061 new homes started (both attached and detached) during 2Q13. This is a +69% increase over 2Q12, and +45% above last quarter. “As we enter the “high start” season, and contend with low levels of new and resale home inventory, it is no surprise that production continues to ramp up,” said Allen. Builders have started 3,144 homes in the past twelve months, which is an increase of +66%, compared to the annual pace last year at this time. Year to date starts have already surpassed the first half of 2012 by 696 homes, or +63%. New home closings totaled 910 during the second quarter, which is +95% higher than 2Q12. Annual new home closings have increased +90% compared to last year at this time, for a total of 2,975. There were 759 new home closings during 2Q13, up +90% compared to last year at this time, and annual new home closings increased +75% from last year’s pace to 2,363.

As of June, the total new home inventory for detached homes totaled 1,341. While the total number of homes has increased +19%, the supply has dropped from a 9.4 month supply to 5.8 months. Under construction inventory is up +34% from last year and +15% from last quarter, however sits below equilibrium with a 3.6 month supply. Finished vacant inventory has decreased -1.7% from last year, however increased 41 homes from last quarter. Despite the slight increase from last quarter, the supply of finished vacant homes remains well below equilibrium at a 2.0 month supply. “Despite their efforts, builders are having a difficult time delivering finished homes to the market as their specs tend to get purchased during construction,” said Allen.
Inventory of vacant developed lots (VDL), for both attached and detached product in Ada County has declined for 11 consecutive quarters, which is a 23.7 month supply, down from 46.5 months at this time last year. Vacant developed lot inventory in Canyon County is down -9.6% from last year. Based on the current pace of absorption, this is a 69.8 month supply, which is down from 198.1 months recorded in 2Q12. “There have been 1,212 new lots delivered to the market over the past year, while builders have absorbed 3,144 in the same time-period. This signals that the oversupply of lots, particularly those in desirable areas is no longer a concern, with the focus now turned to delivering lots for future demand,” said Allen.