TIP: Home Improvements That Pay Off

Dian Hymer is a nationally syndicated real estate columnist, and author.

The temptation is strong: Clean up the yard, declutter the house, and put it on the market without spending time and money sprucing the place up for sale. This is especially the case if you anticipate losing money on the sale.

Some real estate agents recommend you do little if anything to get your home ready for sale. This could work if you price the listing to look like a bargain. However, most buyers in today's market are nervous and picky. They aren't in a hurry and they want a house that's move-in ready.

An agent who is looking for a fast sale might steer his or her clients away from doing any fix-up work. It takes a lot of time and coordination, not to mention money, to get a home properly prepared for sale in today's market. Some agents don't want to take on the effort, or haven't the vision to see the home's potential. This could cost you on the sale.

One agent told his clients that they needn't do anything to get their house ready for sale. True, the house had inherent charm and good bones. But, the seller's furniture was much too big to show the rooms off to advantage. The dogs had damaged the hardwood floor and the beautiful garden was overgrown.

The house didn't sell until the sellers found another agent who recommended a laundry list of items to take care of before selling, including moving most of the seller's furniture out and having the house staged.

Unfortunately, market values declined between the first and second times the home was listed. Even though the house sold quickly with multiple offers the second time it was listed, it sold for less than it would have if it had showed well the first time it hit the market.

HOUSE HUNTING TIP: Choose an agent to work with who has experience helping sellers prepare their homes for the market. Ask an agent you're thinking about hiring for references. Call past sellers and ask them how effectively the agent helped them get their home sold and whether they made back the money they invested getting the home ready for sale.

A good agent should be able to supply you with a list of tradespeople who can help you paint, change outdated floor coverings and light fixtures, etc., at reasonable prices. And your agent ought to be able to provide access to the home for the people you select to help with the fix-up if you are out of town or at work.

Ideally, you should work with your agent who will help you prioritize the things that should be done to bring about a timely sale. For example, an outdated kitchen can usually be improved considerably by painting, changing light fixtures, refinishing or replacing a worn floor, and changing cabinet pulls.

It might make sense to change extremely old appliances and counters. However, it's not a good idea to gut the kitchen and completely remodel it for sale. You won't get that money back when you sell. The aim is to make cost-effective improvements that make your home appealing to the broadest number of buyers possible.

Painting is the least expensive improvement you can make that is likely to return more than you invest, provided you select the right colors. One seller repainted the exterior of his home before he selected a real estate agent. He painted it the same dowdy colors that adorned the house for decades. The first thing the buyers wanted to change was the exterior paint color.
THE CLOSING: For the best result, talk to a color consultant before you paint.


TIP: Contact Comet Realty's team of professionals. They have the local knowledge, expertise, feng shui certifications and staging experience to help you decide what to do to get YOUR house ready to put on the market. 


805.546.9925, Info@CometRealty.com

Top 10 Tax Tips for Sellers According to IRS

If you are thinking of selling, the first thing you should do is call Comet Realty to find out how they can market and sell your property! 

The second thing you should do is look at this list that the IRS has published for sellers. (http://www.irs.gov/newsroom/content/0,,id=104608,00.html.)

Here are the IRS's top 10 tax tips for home sellers (taken from their website August 2011):

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.


2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).


3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.


4. If you can exclude all of the gain, you do not need to report the sale on your tax return.


5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.


6. You cannot deduct a loss from the sale of your main home.


7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.


8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.


9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.


10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

And the hottest tip of them all: Call Comet Realty for a wonderful experience in selling or buying real estate on the Central Coast. All of our agents are standing by ready to assist you ... 805-546-9925. 

Four Ways On-line Real Estate Valuations FAIL

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.


Q: Knowing that I would be selling my home, I have been following price ranges for comparable properties to my home on a couple of major real estate websites. Now that I am ready to list, all the agents I've talked to say that the websites are so out of line that their recommendations are worthless. What a shock!

A: Real estate websites have transformed the whole experience consumers have of home buying or selling -- they have made public what used to be private and difficult to get to -- namely, listing and sales data about homes across the country.
Several of these sites offer nearby recent sales, with the promise that savvy sellers like yourself can simply go online, input your address and find out what specific homes in your neighborhood have sold for lately -- some even go so far as to take the leap from what those homes have sold for to placing an estimated value on your home.

These sites try hard to do a lot of the work for you -- surfacing the homes they see as comparable to yours.

However, these are, at bottom, computer programs.

So, what's involved is a computer taking the description of your home from the public records (which usually reside at the county recorder's office and in their databases) or from a recent listing (if your home has been sold in the past few years), in terms of the number of bedrooms, bathrooms and square feet, primarily, and pulling out the closest homes to yours that have sold recently that have similar data on record.

However, the computer can't necessarily distinguish nuances in a property's condition or aesthetics, nor does it always correct for whether the house two blocks over was a short sale or a foreclosure.

Depending on where you live, how similar homes are to each other in your area, the level of sales activity near your home and the level of accuracy found in the public records for your house and nearby homes, these sites can offer very comparable "comps" -- or comparables that aren't really comparable at all.

If you live in a fairly cookie-cutter subdivision where several homes just like yours have sold very recently, you're likely to get a good set of comparables, and a value estimate that's at least in the ballpark. But in many areas, lots of fairly common scenarios can come between you and a good set of automated comps:
• if your home is older and has had a lot of improvements and even additions that are not in the county records, you're likely to get bad comps;
• if homes in your area are very different from each other, you might get bad comps;
• if you live in a neighborhood very nearby another neighborhood where homes have a much higher or lower value than your area's (say, because they belong in a better school district or even on the other side of the city limits), you're prone to getting bad comps;
• if your home is in an area where homes are dense, the algorithm might jump over many very nearby properties to get to a relatively dissimilar one even a half-mile away, and that can give you bad comps.

The listings provided by the sites can be very useful for homeowners trying to stay on top of what homes around theirs are selling for -- not listed for, but actually selling for. They are less useful, in my opinion, at placing values on properties; the sites that do this usually have their accuracy rates listed somewhere on the site, and I haven't yet seen one that's impressive.

But when it's time to actually list your home, or figure out what it is worth, no computer -- no algorithm -- is as accurate as a living, breathing local real estate professional who sees and sells all the different specimens of homes in your neighborhood and sees firsthand what ready, willing, qualified buyers actually pay for them, day in and day out.

I think it's important for sellers interviewing listing agents to discuss the online comparables with prospective listing agents, but not as a counterargument to what the listing agents recommend you list your home at.
Rather, it's a smart way to see what the agents know -- and what you can learn -- about the other properties in your area.

If you are considering selling your home, or just want to see what your home would be worth in today's market, please call one of Comet Realty's professionals at 805.546.9925. 

First impressions are lasting!

by Dian Hymer

Imagine walking into an important job interview looking like you just dragged yourself out of bed. You'd be unlikely to make a good impression and diminish your chance of securing the job. 

The same goes for selling a home. First impressions are lasting. Some buyers won't even look at the inside of a listing that doesn't have good curb appeal.

Today's buyers are picky. There is no sense of urgency in the market, so buyers are holding out for the best home they can find that will work for them for years to come. In some areas, there are a lot of homes for sale. It's important to make sure that buyers will be attracted to your home before they even walk through the front door.

Fortunately, exterior improvements needn't be expensive. The recent Remodeling Cost vs. Value Report 2010-2011 found that the improvements that yielded the highest return on the investment when sold were a new steel front door and a new garage door. 

The average cost nationally for a new front door was $1,218; the return was 102 percent. The average cost for a new garage door was $1,191; the return was 83.9 percent. The top nine of 10 most cost-effective improvements nationally were for exterior projects. Curb appeal is as important as ever, and may be more so in this market.

The Remodeling Cost vs. Value Report is a collaborative report done annually by Remodeling Magazine and the NATIONAL ASSOCIATION OF REALTORS®. It compares construction costs with resale values, which are based on estimates from more than 3,000 REALTORS® and appraisers. 

Sprucing up the front yard for sale needn't be costly. Clean out weeds and dead plants. Add flowering plants for color and mulch to tidy up areas that aren't heavily planted. Replace a lawn that has seen better days with less lawn and a border bed of flowering shrubs. 

Do in-ground planting well in advance, if possible, so that plants have a chance to get established before your home goes on the market. If you have no choice and must plant at last minute, be sure to remove the ID tags from the nursery.

A deteriorated fence should be removed, repaired or replaced. Any peeling paint on the front walk and steps and house exterior and trim should be refreshed. The side of the house that gets the most exposure needs the most maintenance. If you've let it go, you'll be docked dollars by the buyers unless you repaint where needed before you sell.

HOUSE HUNTING TIP: The amount returned on home improvement investments varies from one location to the next. It's important to consult with your local real estate agent before you embark on an upgrade to make sure that you don't overpay on an improvement that won't generate the desired result.
Most homeowners assume they'll get their money back and more when they sell. In fact, most upgrade investments often don't return 100 percent of the amount invested, particularly in a down market.

A minor mid-range kitchen remodel returns 72.8 percent nationally, according to the 2010-11 Remodeling Cost vs. Value Index. In the Pacific region of the U.S., you're likely to recoup 84.1 percent.

However, a major upscale kitchen remodel pays back only 59.7 percent nationally and 66 percent in the Pacific region. It makes sense to take on a major remodel project only if you're staying in your home and can enjoy the use of the improvements before selling.

A deck addition ranked high on the list of popular exterior improvements. Although, nationally the cost recouped is only 72.8 percent, it may be an essential enhancement if your home has no outdoor living space and all the homes for sale in your neighborhood do.

THE CLOSING: Supply and demand in your local area will also impact how much you'll recoup from your fix-up investments. 


Give Comet Realty a shout today to find out how to improve the value of YOUR home! 805.546.9925