Keeping Reality and Real Estate ‘Real’

HGTV is powerful.  I cannot even begin to tell you how many homeowners I speak to who got an idea to attempt a do-it-yourself project as a result of watching a home makeover show.  If you are chuckling on the inside, it may be because you are one of them.  I use the word ‘attempt’, because while these shows inspire and educate, they also tend to make projects seem simpler than they are.  Remember, it’s an 8 hour project shown in a half and hour.  These shows have the power to edit and often have a team completing the handiwork behind the scenes. It’s a reality show, just like any other.

I laugh on the inside and try not to show my angst on the outside when I go on a listing appointment with those who lost their drive on a remodel.  The results range from unfinished faux painted walls, tile put in place that was never grouted and crown molding that doesn’t completely go around the ceiling.  All of these unfinished projects are going to affect the sales price of your home.  It is easier to sell a dated home that is fully functioning and completed, than a home that seems to stop mid sentence. 

To a buyer, the project needs to be finished.  I often have to change the perception of the seller, to see these things with buyers’ eyes, because after a while the seller doesn’t see the projects anymore.  They have been living with them for so long; they just tend to blend into the background.

Many home supply stores offer classes on do-it-yourself projects.  I often recommend someone take one before making a decision to start a project.  We are all good at something, but certainly not good at everything.  Have a reality check with yourself when you are watching those reality shows. Get a real education on what’s involved with a do-it-yourself project, before you begin one.

Buying Power – By the Numbers

School is back which adds to a little more traffic, but also tends to re-focus people overall as we move out of vacation mood and settle into the daily grind. What am I seeing out there? Interest rates are in the 4’s, which haven’t been this low in decades.

Low interest rates give people more buying power.

For example, a $200,000, 30 year fixed rate loan at 4% will be $954.83 a month, while the same loan at 6% will be $1,199.10. Not only is your monthly payment lower, but your total debt-to-income ratio is lower too. In other words, you may qualify for a higher loan amount, than you normally would at 6%. People are taking advantage of this in 2 ways, by re-financing their existing loans or selling their existing homes and moving up.
 
Understand, re-financing costs money, so while you can often add some of your closing costs into the new loan — it still costs something because you are adding to the principle. If you don’t see yourself living in the house for 3 years or more, if may not be worth it. If you are saving $100 a month because you received a lower interest rate, but is costs $3,000 to close — are you really saving any money if you move in 2 years?

I am starting to see slightly longer days to close as a result of the lower interest rates. Although purchases tend to take priority with lenders, re-fi’s still add to the amount of work that needs to be done. I am starting see lenders ask for 40 days, when it normally takes 30 to close.