Before throwing down the cash, sellers should thoroughly investigate the ROI of home improvements
The last thing anyone wants to do is invest money, only to end up losing it. Home renovations are investments in the future return homeowners will make when selling their home. Although it may seem like every improvement will entice more buyers, and therefore, a bigger price tag, there are some renovations that incur a huge cost without a full return. If your sellers are preparing to put their house on the market, it might be especially tempting to spruce things up, but beware of the following five changes — they are a waste of money for sellers.
All of the home design shows on TV might lead you to believe that a new kitchen is vital if you want to sell your house. But a full-on remodel tends to bring in a return that’s a mere two-thirds of its original price.
According to Remodeling Magazine’s 2017 Cost Vs. Value report, a midrange kitchen remodel cost exceeds its resale value by over $21,000. The figure more than doubles in an upscale remodel. If sellers want to spruce up their kitchen prior to selling their home, advise that they try smaller, more cost-effective updates like swapping out hardware and repainting cabinets. The freshened-up look will be just enough to entice buyers.
Luxury or universal bathroom updates
Again, you might think new bathrooms are all that buyers want to see. But many luxury upgrades won’t get sellers’ money back — and neither will a universal update. For example, buyers no longer want whirlpool tubs, which are seen more as a pain to clean than as a luxury finish. Over-the-top waterfall faucets and foreign tiles are also unlikely to get renovation money back. The same goes for a universal bathroom, which caters to both able-bodied and disabled buyers. It’s rare to get more than two-thirds of the money back on a universal bathroom update.
Repainting the roof
If the roof is looking worse for wear, a fresh coat of paint might seem like the best option. Potential buyers, however, might assume sellers are hiding something wrong with the roof beneath a slick of paint. Sellers might just be better off replacing the roof — and copper shingles make the best investment. According to restoration roofing experts at Huber and Associates, although you may get a 25-year lifespan out of typical wood and asphalt shingles, copper lasts centuries. A long-lasting investment would certainly entice buyers who don’t want to deal with cosmetic roof issues — ever.
Landscaping to the nines
A little bit of landscaping goes a long way. A manicured lawn and well-maintained flower beds are examples of easy ways to enhance a home’s curb appeal. What buyers don’t want to see is a yard full of landscaped hedges and flowerbeds, water features or anything else that screams “high-maintenance.”
Another mistake sellers make is getting rid of trees around their home so the building stands out. The cost of a tree removal expert is certainly prohibitive, but trees also provide natural shade and reduce pollutants, among other benefits.
Adding rooms onto the home
This is the big one. Adding a master bedroom onto a home can cost upward of $100,000, making it an enormous investment — but one that only rakes in two-thirds of what it’ll costs. The extra square footage and luxury accommodations might make the home more enticing to buyers, but it won’t do anything to pad the sellers’ wallet. The same goes for adding on a bathroom, sunroom, bonus room or any other structure: it’s not going to get sellers’ money back.
Choose renovations wisely
These are just five of the many, many changes homeowners can make to their home. If owners plan to stay awhile, it might be worth it to consider massive overhauls to personalize and perfect the home. But if they’re planning to sell, they should avoid a major update. As we’ve already learned, they’re not going to do anything to increase sellers’ bottom line. Small and practical updates sell, so homeowners should kick back, relax and watch their slightly spiffed-up home go for a big return on investment.
Loan approvals and mortgages could be delayed, but experts think the housing market would bounce back.
Homebuyers and sellers could be in store for headaches–but not any long-term setbacks–if congressional budget talks fail to avert a government shutdown, housing experts said Friday.
As of the time of this article’s publication, a dispute in the Senate over the immigration program DACA still had not been resolved, and the U.S. federal government was set to shut down as of 12:01 a.m. ET on Saturday, January 20. If that happens, the Internal Revenue Service (IRS), Social Security Administration and the Department of Housing and Urban Development (HUD) are all set to furlough large swaths of workers, significantly delaying mortgage approval until work resumes.
Banks and private lenders will operate as usual, experts told Inman News. But the mortgage applications they approve or deny include tax records and financials requiring certification. Fannie Mae and Freddy Mac, despite being government-sponsored enterprises, are not government agencies–and therefore would not be affected.
At the HUD, which oversees the Fair Housing Act, nearly all of the agency’s approximately 8,500 employees expect to be furloughed, a decision that would put a halt to all “meetings, visits and appearances” by HUD employees. Borrowers who apply for loans through the Federal Housing Administration (part of HUD) or the Department of Veterans Affairs will face delays.
National Association of Realtors President Elizabeth Mendenhall emphasized that a long-term shutdown could pose larger problems for the housing market and called on senators to vote in favor of a budget extension Friday.
On Thursday, House Republicans voted to extend a budget deadline past Friday, but oddsmakers predicted that without concessions on immigration, including permanent protection for so-called Dreamers in the federal DACA program, Democrats would largely vote against the measure, triggering the shutdown.
“The government shutdown will have an impact on real estate transactions should it continue for an extended period of time,” said Mendenhall in a prepared statement. “The National Association urges Congress to come together and reach an agreement to keep the government open and avoid any negative effects on our military, federal employees, housing markets and the economy.”
The overall impact of a shutdown on the economy or housing market, however, would likely be negligible, since mortgage approval would resume eventually, said economists at Redfin and the National Association of Realtors. In October 2013, during which the government shut down for two weeks, sales volume declined modestly nationwide and in Washington D.C. but rebounded soon after government employees returned to work, according to Redfin data. Total sales volume declined 16.9 percent, month over month, but rebounded over several months.
“At the time it was a big deal for the government to shut down for a couple of weeks and there was a lot of concern, but what that ended up being was just a blip on the radar screen for both housing and the economy,” Redfin Chief Economist Nela Richardson told Inman. “It didn’t really amount to a hill of beans. So maybe there’s a false comfort that we can easily shut down the government without economic impact. That could be proven wrong, but what we have to go by is what happened the last time around, and it just didn’t make that much of a difference.”
Article image credited to Credit: Jomar Thomas/Unsplash
The proposed federal tax overhaul — outlined in depth in the 429-page "Tax Cuts and Jobs Act" — will affect every taxpayer differently. But in multiple ways, most Floridians will be less adversely impacted than others since Florida has no state income tax, no state estate tax and has both relatively affordable housing and median household incomes lower than most of the country.
Here’s a closer look at how five of the key provisions in the proposal could play out for Florida.
Here’s a closer look at how five of the key provisions in the proposal could play out for Florida:
1. Limiting the home-mortgage-interest deduction — On new-home purchases, interest on loans up to $500,000 would be deductible, down from the current limit of $1 million. That has less of an impact on a state like Florida which, aside from a smattering of mansions, remains a relatively affordable locale. Only 4.8 percent of all new mortgages and refinancing so far this year in Florida are for more than $500,000 (compared to Washington, D.C., which has 35 percent in that category).
2. Elimination of the estate tax — The threshold for the tax, which applies only to estates with greater than $5.6 million in assets during 2018, would double to over $10 million. After six years, the tax would be phased out completely. Currently, the estate tax (dubbed the "death tax" by some) affects 5,000 estates out of roughly 2.6 million deaths each year. Florida no longer has a state estate tax (it was phased out in 2005), so the Sunshine State may become even more attractive to those states that do. Currently, 18 states and the District of Columbia impose either inheritance or estate taxes.
3. Tax bracket changes — Americans who make between $91,901 and $200,000 would be pushed into a new 25 percent tax bracket, instead of their current bracket of 28 percent or 33 percent. In Florida, only 4.1 percent of households are in the high-income category, making more than $200,000 a year. The median household income in Florida is $49,426 according to latest Census data, $6,349 lower than the national median income.
4. Elimination of the medical-expense deduction — Under current law, individuals who spend over 10 percent of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction. Floridians, on average, spend less than $680 a year of their income on out-of-pocket health care expenses, according to a recent JPMorgan Chase Institute report. That puts them in the middle of the pack and far below a half-dozen states like Texas and Colorado where out-of-pocket expenses are in the $821 to $1,000 range.
5. Changes in property and income tax deductions — Taxpayers would be allowed to deduct state and local property taxes up to a new cap of $10,000, but no longer deduct income or sales taxes. That has a lesser effect on a state like Florida that doesn’t have a state income tax and is on the lower end of property tax burdens. The median property tax in Florida is $1,773 compared to $2,839 in California and $3,755 in New York.
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