Preparing Properties for Sale

As of this date, the tax credit for home purchases (see prior entries) has not been extended and a property must be under agreement in writing no later than April 30, 2010 to take advantage of the credit. This means many of you should be preparing to market your homes. With that said, “fixer uppers” and pristine properties are currently in demand. If you have a property in dire need of repair, make a decision. Either leave the property as is (with minor cosmetic improvements), or invest the time, effort and/or money necessary to transform the property into “move in” condition.

As much as the term is over-used, enhancing “curb appeal” is generally the most effective use of funds:

• Landscaping and outside painting are the most cost-effective upgrades you can make to a property. Landscaping must take into account your target market. For smaller/less expensive homes, focus on ease of upkeep (mulch, stone, perennials, etc.). Higher-end properties (where landscapers will likely be employed) may benefit from more ornate landscaping.
• Driveways should be in good repair, while taking into consideration materials used for driveways of surrounding homes.
• Exterior painting must be clean, neat and in conformity with the neighborhood.
• The roof must be weather-tight and aesthetically pleasing.

Once the exterior features of your property have been maximized, only then should you begin interior upgrades:

• Interior painting adds more value per dollar spent than any other interior improvement. Remember, painting is 90% preparation. What that means is caulking, puttying, patching and sanding are of the utmost importance. (If you do not know how to do these things, hire a professional; it is money well spent.) When it comes to the actual painting, use a semi-gloss on the trim and a satin finish on the walls (these terms may vary, depending on the brand of paint you use. The store clerk should know what you need.)
• If your floors are wood and covered with carpet, expose them. Wood floors should be restored. It is relatively inexpensive. If there are stains or other imperfections, and they can be covered with area rugs or furniture, it’s fine to do so, but make potential buyers aware of the defects. There is a difference between presenting a property in the best light and intentionally hiding flaws.
• For properties that are not marketed as fixer-uppers, the kitchens and bathrooms must be pristine. For higher-end properties, the counters should be composed of a solid surface (many people refer to this as Corian, which is actually a brand name) or granite and the floors are generally expected to be tile or wood.
• Thin out cabinets and closets, leaving only matching settings if possible. This presents well and gives the appearance that there is ample cabinet space. The same goes for closets. Remove 60% of your clothes, and buyers will come away with the sense that there is ample closet space.

Feel free to contact me any time (john@jw-realestate.com or 978-423-9309) for more ideas or for a no-obligation market analysis of your Massachusetts or New Hampshire property.

Anticipating the Market

Economic indicators, and signs of the real estate market in particular, are everywhere. All you need to do is look closely and then extrapolate on what you see.

Are people spending money and, if so, on what? (Consumer staples, luxury products, travel, etc.) Where are they spending? (Home Depot, Marshalls, Tiffany, etc.) What about business spending? (Infrastructure, employees, office equipment, etc.) Where are interest rates? What interest rates are being discussed? Are we going into a period of inflation, deflation or stagflation? Which political party has the momentum and on what platform?

Today's focus: new home construction and government subsidies as they relate to you as a prospective seller.

Many of the national home builders are gearing up for a flurry of activity in the next few months. In fact, even after being caught with excessive inventory at the end of the last real estate boom in 2007, these companies are starting to build spec houses again in anticipation of an early spring market. (Source: WSJ page B1, 2/10/10)

The rush, of course, is predicated on the need for buyers to have a signed contract in place as of April 30, 2010, in order to take advantage of the tax credit. Now let's extrapolate.

If these developers - who follow real estatet market trends and are experts on market cycles - are confident enough in the tax credit's effect to start building without buyers in place, shouldn't you, as a seller, take this into account? After all, many of the large developers teetered on the verge of bankruptcy as the bubble burst and have been extremely cautious since.

What I take from the above is that developers are both excited about the early spring market and concerned by the dearth of activity that will likely follow the expiration of the tax credit. (By the way, I see no indication that the credit will be extended.) With that said, if you need to sell a property any time soon, strongly consider following the lead of the professionals. Do your best to have your property on the market in time to take advantage of the credit. The lower the price point of the property you are trying to sell, the greater effect the credit will likely have.

As always, feel free to contact me any time via e-mail (john@jw-realestate.com) or cell phone (978-423-9309) with any questions regarding your real estate needs.