Lynn Fogleman

New Decade Realty

110 E. Third Street

Pittsburg, CA 94565
(925) 252-1977

Q. We are considering remodeling to increase the value of our home before we put it on the market. What are the best options and the most attractive add-ons for home improvement before sale?

A.  Use some basic math before you invest in a home that you are about to sell. The American Homeowner’s Foundation estimates the total cost of moving to be at least 10 percent of your home’s current value. If your projected remodeling costs go beyond that, it would make better sense to put your money in your new house and not your old one.

Even if you make a stunning transformation of your once tired-looking property, don’t expect to push your home’s value past 20 percent of its current selling price. If your neighborhood has varied property values, target your selling price just under the most expensive and best looking home in your neighborhood. The adjacent “showcase” homes will quietly reinforce your potential asking price.

As a primary rule, be practical about your choice of upgrades. Don’t try to turn your 60’s or 70’s style home into Cape Cod mansion. Upgrade only the details that define the house’s original style. Make your home look like it has been well maintained. Be sure the lighting, plumbing fixtures, and hardwood floors are in top condition. Many buyers will see past any “quick fixes” and wonder what isn’t right with the rest of the house.

    The best remodeling can be made to the kitchen because it usually suffers the most wear and tear. Sometimes a good-looking, highly functional kitchen will be your “deal maker.” Adding a bathroom can also add value to an older home. Design touches such as a skylight, glass block windows, and ceramic tile on the floor and walls make it even more attractive to buyers. Be sure to upgrade your existing bathroom with matching paint, tile, and fixtures.

Q.  I am thinking of refinancing my home to take advantage of lower interest rates but I want to shorten the mortgage loan length. What are my options?

A.  Refinancing a 30-year mortgage does not necessarily require that you commit to paying for another 30 years. You can substantially shorten your repayment period by paying just a little extra each month or each year.

     For example, let us look at a $150,000 loan made at 7 percent interest. A 30-year amortization will give you a monthly payment of $997.95, and you will pay $209,263 in interest over the term of the loan. However, if you increase your payment about $165 per month (to $1,162.95), you can pay off your loan in 20 years, and you will pay $129,108 in interest over the term of the loan – an interest savings of over $80,105 (money that you could invest!).  Increase your payment to $1,348.24 (just another $185 per month) and you’ll pay off the very same loan in just 15 years, with accumulated interest paid of $92,684 – an interest savings of another $36,424.  

      New Decade Realty will search out lending institutions that have loans programs that meet all of your needs.

 If you thinking of purchasing a home, or refinancing your current mortgage; please call our Loan Specialist, Melissa Wildman.

Q.  What Is The Best Time Of Year To Sell My Home?

Q.    How do we know when we should consider refinancing our home?  Can you give us some guidelines?

 A.    I’m presented with this question often, and there’s a fairly simply answer to the question.  It’s an easy 3-step analysis you can do in a snap:

Step #1:  Add up ALL the costs you will incur when refinancing.  You’ll need to include loan application fees, appraisal costs, loan origination fees, and any points to be paid.  You may also need to include items such as inspection fees and mortgage insurance charges.  For example, let’s say you’re considering a new $150,000 home loan and the total cost of obtaining the loan is $3,250.

Step #2:  Calculate the difference in your monthly payment (principal and interest only) between your current loan and your new loan.  Continuing with our example, let’s assume your current monthly payment at 8 percent (principal and interest) is $1,100.65, and the monthly payment of your new loan (at, say 6.5 percent) is $948.10.  Subtract your new loan payment from your existing loan payment, and you save $152.55 each month.

Step #3:  Divide your monthly savings (from step #2) by your total cost of obtaining your new loan to achieve your “break-even” term.  Using our example, divide $3,250 by $152.55, and you get 21.30.  You must plan to live in your home at least 22 months for the savings to pay off.

The verdict?  If you plan to live in your home at least 22 months, then go ahead with the refinancing.  But if you’re planning on living in your home less than 22 months, or aren’t sure, its best NOT to refinance.

Q.  We Are Considering Purchasing A Home And Are Uneasy About The Negotiation Process. Can You Help?

 A.     The goal of a positive real estate negotiation is to result in a win-win agreement.  This is an agreement where both the seller and buyer feel they have received an equitable deal.  Here are a few simple tips to help ensure that you negotiate fairly. 

First, make sure that you offer a fair price.  Nothing turns a seller off faster than a “low-ball” offer.  Likewise, don’t get into negotiations on a grossly overpriced home.  This can leave you feeling taken advantage of and exhausted.  Both the asking price and your offer should be based on current and factual comparable sales in the area. 

Second, always respect the priorities of your counterpart.  Try to identify the other side’s motivations.  Then, examine your own.  If some items prove to be a sticking point in negotiations, offer to meet half way.  This may require you to pay half of some expenses or modify your closing date, but in the end you will feel as if you have fairly compromised.  If you have addendums to your main agreement, it may be helpful to solidify the purchase agreement and then deal with the addendums later.  

Q.    How Much Can I Afford To Pay For A New Home?

A.     When you’re interested in purchasing a home, the mortgage company or your REALTOR® will usually determine the amount you can afford by using one of two formulas. 

The Payment to Income Ratio is a fairly simple formula.  It adds your future mortgage payment, property taxes and insurance together to get what is called a “PITI” payment.  This amount is divided by your total household income to produce a percentage.  Most loan companies consider anything under 28 percent an acceptable ratio and the loan is granted. 

   The Debt to Income Ratio is not as simple.  It not only adds the PITI payment, but all monthly payments.  This includes auto loans, credit card payments, investment payments, and other fixed monthly bills.  The acceptable percentage using this method is usually higher than the standard 28 percent, but varies by lender.

The easiest way to figure out what you can afford is to figure out your Payment to Income Ratio using a monthly payment that produces a final percentage slightly under 28 percent of your income.  Then using a loan amortization chart, which can be found from your REALTOR®, you can identify the appropriate price range for your future home.  Of course, the overall price range also is affected by the amount of your down payment, current interest rates, and the term of the loan. 

Most REALTORS® work with mortgage companies and offer professional consultation to help you determine how much you are qualified to purchase.  

A. There are several steps you can take to not only shorten the sale time of your home, but help it sell for greater value. The one “mistake” sellers often make is failing to see their home from the perspective of a potential buyer.

Here are a few helpful tips to think about:

•   First, make your home available for showings. This sounds obvious, but one of the most frequent    complaints of REALTORS representing buyers is they can’t get proper access to the home.
•   Next, realize that “first impressions are lasting ones.” Drive up to your home as a prospective buyer would. What does the home look like from the street? Is the front yard manicured? Are trees cut back? Pay particular attention to your entry area.
•   Next, get rid of clutter. The way you live in a home, and the way you sell a home are two very different things. So eliminate those knick-knacks, ceramic thimbles, and other distractions from the true features of your home. The less “clutter,” the better.
•   Next, remember that buyers are attracted to your home because of the “lifestyle benefits” they perceive they’ll get living there. They’re looking for a “home” not a “house.” So highlight those special features. A few areas to think about are the entry impression, the kitchen, master bedroom, and the master bath. Make sure everything is light and bright.
•   Next, fix problems ahead of time. Consider getting a home inspection before you list or show the home. This will root out any problems and give your home a documented “clean bill of health” to speed the sale.

A. When choosing a contractor, it’s important to gather information from several sources. You should ask for recommendations from a variety of friends. Also, call 1-800-440-NARI for a remodeling brochure and listing of qualified contractors. On the web, you can visit homestore.com or homecenter.com for a list of contractors in your area. First, verify that they are in good standing with the Better Business Bureau and they have a current contractor’s license. From these qualified applicants, get at least three bids. Don’t automatically go with the lowest bid. Compare the bids carefully to ensure they have the exact same specifications. Then check references. Ask any contractor you are considering to provide you with names and contact information from previous clients. Call and/or visit these references and ask questions. Remember, the chosen contractor will be spending time inside your home. Be sure you choose someone who is not only competent, but is also trustworthy.

Once you have chosen a contractor, you need to solidify your specifications in a formal contract. This contract should describe the work that will be done, a start and completion date, terms of payment, and any guarantees. It should also specify what type of insurance the contractor is carrying. If someone gets hurt on your property during renovation and the contractor does not have the appropriate insurance, you could be held liable.

Don’t allow work to be done without the proper building permits and don’t make the last payment to the contractor until final inspections are completed. Never pay a contractor in cash to avoid paying taxes. This will legally void any agreements if you are forced to go to court about unsatisfactory workmanship.

A. When moving to a new city, it’s often difficult to know your ideal area to live. Many personal factors contribute to the “right” home or neighborhood. They include schools, housing costs, home styles, population density, crime rates, convenience of location to your workplace, recreation, and more.

The first step is to start with the big picture. Some families like to live in rural areas, others like the city. Don’t forget to consider proximity to your work. Once you have decided what is important in your surroundings, you can contact local school districts for information about schools, libraries, recreation, and local law enforcement agencies for crime rates. This will help narrow the general parameters of your ideal area to live.

You also can research specific cities or neighborhoods at www.realtor.com. The site will help you search for a neighborhood similar in characteristics to your current neighborhood, or search by specific criteria such as home pricing and specific features or styles of homes.

It’s also a good idea to spend time in areas that interest you and see where you feel most “at home.” Talking to long-time residents of the city where you are moving is always helpful. They usually have insights about housing style, amenities, schools, and other factors.

Your REALTOR® is a great resource and can help you find a home that meets your personal criteria.

A. Condominiums are often the answer to finding a low-cost, low-maintenance home. However, there are a few downfalls to consider.

First, you’ll have to be comfortable with the idea of being in close proximity to your neighbors. Chances are you’ll share at least one common wall with another family. So you’ll need to decide whether you’re willing to lower your noise level and deal with the occasional noise made by your neighbor.

Second, most condominiums require tenants to pay special assessments for common items such as roadwork or roof repairs. Generally, the tenants vote on these items, which means you’ll want to become involved with tenant meetings association projects.

Condos can be an attractive option because they are generally kept in good repair by enforced rules called CC&R’s. You’ll need to become familiar with these rules and agree to follow them before buying a condominium. If you like the benefits of CC&R’s, but decide you want a single-family residence, you can look for a subdivision with a homeowner’s association that enforces such rules.

If you aren’t turned off by the downfalls, condos can offer some great perks. Besides being less expensive, they also allow you to share maintenance and repair responsibilities. Most complexes also offer pools, clubhouses, and other amenities.

A. The decision to sell or remodel requires several considerations. First, ask yourself if you are you happy in your current home with the exception of the space constraints. If you answered “no,” then you should definitely consider a larger home. If you’re unhappy with your home now, it’s doubtful the remodeling will significantly improve your outlook. If, however, you’d like to stay in your current home, you’ll need to weigh a few other considerations.

There are three factors to consider when deciding whether to remodel or expand your home. First, how long do you plan to live in your home? The longer you plan on living there, the more time you have to recoup your remodel investment. Second, what’s the growth rate of home prices in your area? The faster homes appreciate in your area, the faster you will recoup your investment. Third, and most importantly, know how much you can spend on your remodel without exceeding the market value of your home. A good REALTOR can access reliable statistics you’ll need to address these factors. Here’s a general formula that will help in the process: 1) Ask your REALTOR for a current Comparable Market Analysis (“CMA”) of your home; 2) Subtract how much you paid for your home when you purchased it; 3) The “net” of these two values will “approximate” how much you should budget for your remodel without going “upside-down” on your home’s value. Of course, the longer you live in your home and/or the faster it appreciates, the more you can allocate for a remodel.

It also is a good idea to look at the cost of new, larger homes. You can determine what your monthly payment will be and then how it compares in price to your old mortgage plus the remodeling loan.