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Thinking of Selling your Home?Step 1: Get a Value Wizard report for your property: Step 2: Home improvements to increase valueThere are two reasons for pursuing home improvement projects:
In the right market conditions, a project might fit into both categories. Other times, though, the two approaches will conflict: Just Want To Do It — In situation A, the project is perceived as a necessary or worthwhile improvement to your family's lifestyle. Say you have two or three teenagers in the family and the morning bathroom situation is completely out of control. It doesn't matter if an additional bath generates a 150 percent return on investment or actually decreases the value of the home (unlikely, unless you're a completely incompetent do-it-yourselfer with a bizarre design sense). The economic impact just doesn't matter. If you have the money for a new bath and you don't want to move — you add the bath. It's that simple.Or say you're a barbecue fiend and the only feature missing from the dream home you've just purchased is a sprawling backyard patio with a natural-gas grill custom-built with flagstone and river rock. Again, return on investment just isn't going to be a critical question. The improvement becomes more comparable to purchasing a depreciating asset that you feel is a necessity for your lifestyle — such as an automobile. When the barbecue aficionado adds a deluxe patio to a home that's already the most expensive property in the neighborhood — perhaps destroying the entire backyard in the process — there's a good chance that very little of the cost will be recouped in a subsequent sale. An even better example might be a pool. If you're a person who simply has to have one — fine. Put in a pool. But it's probably worth checking with a real estate professional first, just to make sure you fully understand that adding the pool might actually lessen the property's value and make it more difficult to sell should you later decide to move. That's the reality in many markets. That doesn't necessarily mean you shouldn't do it, especially if you're planning to live in the home for the rest of your life. It just means it's worth knowing the cost and salability impacts at the front end — even if they're not going to deter you from pursuing the project. Really Need To Do It — The "type-B" home improvement project is pursued primarily to increase the property's salability. In turn, this often increases your return on investment. A good real estate agent can advise you of possible improvements that will attract more potential buyers and also pay for themselves either through increasing the home's value or through shortening the time it takes to sell the home. Here we're typically talking about projects such as: painting — either because the existing paint is in bad shape or is an unusual color; replacing carpets — again because of age, color or style; repairing or resurfacing a cracked driveway or sidewalk; refacing kitchen cabinets; and trimming or removing overgrown or unattractive landscaping.While spending several thousand dollars on your home right before you sell it might not sound very appealing, it's not uncommon for the right work to more than pay for itself in a higher selling price and shorter marketing time. Consult with an experienced real estate agent to learn what improvements will make your home more marketable in comparison to similar properties that are now — or recently have been — on the market in your area. Glossary
Agent A person acting on behalf of another. Agreement of Sale A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties. Also known as contract of purchase, purchase agreement, sales agreement, or binder. Annual Percentage Rate (APR) The quoted interest rate on a loan plus all additional service and finance charges associated with the loan, including those paid at the time of closing and those paid over the term of the loan. The APR is usually slightly higher than the note rate. Appraisal An expert judgment or estimate of the quality or value of real estate as of a given date. Assessed Value The valuation placed on property by a public tax assessor as the basis for taxes. Bill of Sale A document which transfers personal property. Certificate of Title A document signed by a title examiner or attorney, stating that the seller has a good, marketable, and insurable title. Closing Statement A document which details the net amount of money a buyer and seller must pay to complete the purchase of real estate. Also called settlement sheet or HUD-1 statement. Commission Payment to a real estate broker for services performed. Convey To transfer title of property from one person to another. Deed A document which transfers title to real property from one owner to another. Deed of Trust Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties involved: the borrower, the trustee, and the lender (or beneficiary). Earnest Money A deposit given to the seller, and usually held in escrow, by a potential buyer to show they are serious about buying a house. Equity The difference between the current market value of a property and the debts against it. In general, sales prices minus mortgage balance equals equity. Escrow Funds, property, or other things of value left in trust to a third party. The escrow may be released upon the fulfillment of certain conditions or by agreement of the parties. Fixture Personal property which is permanently attached to real property, such as lighting, medicine cabinets, and mantels. Fixtures are included when the property is sold. Hazard Insurance Protects property against damages caused by fire, windstorms, and other common hazards. Listing Agreement A contract between a homeowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed to market the property within a given time and the homeowner agrees to pay a commission. Also called a listing contract. Market Value The highest price a ready, willing, and able buyer will pay, and the lowest price a ready, willing, and able seller will accept. Market value is the basis for the listing or asking price. Market Price The actual amount for which a piece of property is sold. Also called sales price or purchase price. Mortgage A loan to purchase a house where a claim, or lien, against the house is given by the buyer to the lender as security. Mortgage Note A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. Also called a deed of trust note. P.l.T.I. Principal, interest, taxes, and insurance. Most residential mortgage payments include P.I.T.I. Also called carrying charges. Points One percent of the amount of the mortgage. Also called discount points. Prepayment Penalty Penalty for paying a mortgage note or deed of trust note before it actually becomes due. Principal Principal has three definitions in real estate:
Property Management
Managing real estate including selecting tenants, leasing space, collecting rent, and repairing property. Prorate To distribute proportionality. Property taxes, insurance, or condominium fees are often prorated at settlement. Sales Associate A person with a real estate license and associated with a specific real estate broker. Also called an agent. Settlement The conclusion of a real estate transaction where the deed is delivered, notes are signed, and funds are disbursed. Also called closing. Survey A map or plat made by a licensed surveyor showing land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to confirm a building is actually sited on the land according to its legal description. Title A document that indicates rights of ownership and possession of a particular property. Title Abstract A summary of the public records relating to the title of a particular piece of land. An attorney or title company reviews an abstract or title to determine whether there are any title defects. Title Insurance Protects lenders and homeowners against loss of their interest in property due to legal defects in a title. Title Search or Examination A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims. Transfer Tax State tax, local tax (where applicable), and tax stamps (in some areas) required by law when title passes from one owner to another. |
  
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