It’s often said that kitchens and baths sell houses.  That saying didn’t become common because it wasn’t true.  Your Glen Ridge NJ realtor will want to talk to about updating your kitchen if you are selling.  The market is competitive and strategic updates may make a quick sale.

Most sellers think they either have to spend a fortune gutting their kitchen or just leave it to the next owner.  Neither option is really wise these days!  You’ll be glad to hear that there are options for updating that won’t bust your budget or leave your buyers wishing for more.

Paint
It sounds simple but a fresh coat of stain blocking primer followed by a new layer of paint will work wonders in a kitchen.  Degrease any stains and splatters before painting so they won’t show through.

Backsplash
If your backsplash still features barnyard animals, it’s time to update it.  There are many cost-effective options like glass and ceramic tiles or stainless steel.  Stay true to the feel of the kitchen to avoid a style clash.

Sink
A new sink will make the whole kitchen feel cleaner.  Rust stained, chipped or dented sinks bring down the look of the kitchen.  Make a great impression with a new sink.

Hardware
One of the least expensive ways to update a kitchen is with new hardware.  A $50 to $100 worth of stylish drawer pulls and cabinet knobs will give a far greater return on the investment.

Island
If your kitchen has room, consider adding an island.  You don’t have to call a custom cabinet maker.  There are plenty of ready-made pieces of furniture at home improvement and décor stores.  You can make it part of the sale or take it with you.  Just have your Montclair NJ realtor make it clear to the buyer if the island is not included.

Counter Cladding
Few sellers will be surprised to hear that buyers want to see natural stone counters.  Replacing your counters may not be in the budget but cladding them could be.  An installer makes what amounts to a shell that goes over your counters.  You get the look of custom-cut stone at a fraction of the price.

Cabinet Refacing
You can also reface the cabinets at a reasonable rate.  Solid doors can be sanded down and stained while lower quality doors can be painted.  Done well, either option will make the kitchen look new again.

Floors
Pay attention to the floors.  You might need to bleach your tile’s grout or lay new peel-and-stick laminate squares over a damaged “no wax” floor.  Fill in deep gouges in wood floors with wood filler.

These updates won’t cause your budget too much stress but they might make you home the fastest seller on the block.

When you are ready to list your home, one of the first things your Montclair NJ realtor will talk to you about is updating.  Even if your home is fairly new, there is a lot of competition in the market.  Your home needs to stand out for all the right reasons.  A few updates in key areas can make your home the first to sell.

Kitchens and baths are the rooms where buyers have the biggest expectations.  Regardless of price, buyers want to be impressed, especially by the master bath.  Your Glen Ridge NJ realtor can tell you more about what buyers looking at your neighborhood expect to see in your home’s price range.

One of the first places you can give the look of a major update is in the bathroom.  You don’t need a serious renovation to give the impression of an upgraded bathroom.  There are some relatively painless ways to make a bath feel new.

Medicine Cabinets
Replacing an old medicine cabinet will give a bath a fresh feeling.  Hang a large mirror instead, but with an eye for a future buyer.  Be sure your new mirror is large enough to accommodate a wide range of heights and be attractive to many different tastes.

Faucets
New faucets are a great way to update a bath on a budget.  Choose a style that blends well with the style and age of the home.  In other words, don’t go ultra-modern if you have a Victorian.  Follow the directions for installing the new faucets carefully to avoid messy leaks under the sink.

Ceramics
The ceramic fixtures, meaning sinks and toilets, can become stained by age, rust and scale build-up.  If your ceramics are looking tired or outright nasty, replace them.  This isn’t the time to get creative, though.  Buyers will likely prefer a simple white sink over a basin painted with fancy fish.

Counters
It may be cheaper than you think to replace a bathroom counter.  Most baths don’t have huge stretches of counters so you won’t need as much in materials as you would in a kitchen.

Refitting
Tubs and showers can be refitted at comparatively low cost.  A new fiberglass layer is applied over your old tub or shower.  You have a pristine new surface in a day or two.

Talk to your realtor about what updates your bathroom needs.  A few updates might just make your sale happen faster.

Open House Mistakes

If you’ve ever hosted an open house as a seller, you know it’s harder than it sounds.  It seems like it would be an easy job.  Just let people traipse through your home, see how great it is and wait for an offer.  Any Montclair NJ realtor knows there a lot more to it than that.

Great Expectations
An open house can be a great tool to generate leads and interest in your home.  It is not necessarily going to “sell” the house.  Some sellers do get lucky and find a buyer with an offer in hand at an open house, but more often than not it takes a bit more work afterwards.  An open house is a great way to attract buyers’ agents and build some good buzz for your property.  Keep your expectations reasonable.  Remember, this is just one tool of many in your realtor’s arsenal.

Not Ready for the Close Up
Do you think that the worst thing that can happen at an open house is for no one to show up?  It’s not.  The worst thing that can happen is that tons of people show up and house is a shambles.  This will wreck your home’s “reputation” among both agents and buyers.  Make sure your house is spotless from top to bottom, staged to perfection and ready to be scrutinized in every nook and cranny.  This means you have to pack up the clutter and about half the furniture, organize every item and scrub the entire house.  Don’t forget to remove medications and valuables, too.  Open houses sometimes attract more than just potential buyers so be careful with your possessions.

Attracting the Wrong Crowd
Sometimes sellers want to pull out all the stops to attract people to an open house.  They will hold raffles or give out door prizes, put flyers in every corner shop and coffee house and invite all the neighbors.  While a creative approach is great, this kind of marketing blitz may not be the best idea.  A raffle or door prize might get people in the door, but are they really potential buyers or just there for the freebies?  Think carefully about how many people you really want wandering about in your home.  Let your Glen Ridge NJ realtor advise you on how to best market to the right audience.

Insufficient Marketing
A mistake in the opposite direction would be not marketing enough.  If you just pop a sign in the dirt at the corner, you won’t generate interest past your nosy neighbors.  Work closely with your realtor to ensure that the right people are invited to your open house.

An open house can be a great way to market your property.  Ask your realtor if this approach is best for you.

Info for the New Real Estate Investor

Investing in real estate looks a lot different today than it did just a few years ago.  Real estate is still a solid investment, even since the bubble burst, but most investors go about it in ways they didn’t consider even just five years ago.  “Investing” used to be synonymous with “flipping.”  These days when someone asks his Glen Ridge NJ realtor about buying an investment property, he’s usually thinking about renting it.

Renting is a long-term way to make money from real estate.  It’s not as fast a profit as flipping a home could be, but there is more security in renting.  The market is strengthening but it’s no longer at such a peak that a flipped is a guaranteed sale.  Plus, there are benefits to renting that newly minted landlords may not even be aware of yet.

Tax Deductions
There are a lot of ways to maximize the money you make from renting a home and one of them is to investigate every tax deduction available.  Some are obvious and some may not have occurred to you.  Check with your tax professional to make sure you are getting the full benefits from your rental property.  Here is a sampling of deductions to get the discussion started.

Interest
This one is pretty well-known.  Every homeowner can deduct the interest from their mortgage, whether it’s on a rental property or primary residence.  This is quite often a large deduction.  You can also deduct the interest on loans used to improve the property

Travel
Every time you have drive to fix that faucet, you can deduct your travel expenses.  You can use the standard mileage rate deduction (around 55 cents per mile in 2009) or the actual cost of gas, repairs and so forth.  If your property requires you to travel long distances, you may be able to deduct the cost of hotels, airfare, meals and other related expenses. 

Contractors
The wages you pay to contractors and laborers to make repairs on your properties may also be deductable as a business expense.  You can do this whether the worker is your own employee or an independent contractor.

Depreciation
This is definitely an area to discuss with your accountant, but the depreciation of your rental property is deductable.  It’s a complicated formula that allows you to deduct a certain percentage each year for the first 27 years you own the rental.  This deduction can really improve your bottom line.

If you are thinking about investing in a rental property, look into the different types of deduction you may be able to claim before you call your Montclair NJ realtor.  What you learn may just give you the push you need to get back into the real estate market.

There is a saying in real estate: “In the absence of proper pricing, no amount of marketing or advertising will sell your home.” You could have the most beautiful home in your community; have hundreds of buyers come through it; and advertise it all over the internet and in magazines and newspapers.  But, if the buyers do not perceive value at your asking price, unfortunately, they will not make an offer.

Of all the steps involved in selling real estate, pricing a home correctly is truly the most important.  And a well-priced home will always sell - in any market – because the buyers perceived value at the right number, and almost no value at the wrong number.  What I mean is, they won’t make any offer at all if they think the price is too high… not even a lowball offer.

Perception of Value Works
When you have created a perception of value with price, the home will also sell more quickly and at a higher number than if you didn’t.  Statistics show that the fewer number of Days that your home has been on the Market (DOM), the more money you’ll get for the property.  Conversely, the ultimate sale price goes downward the longer the property sits on the market.

I am not saying that you should under price or give your house away. Actually, I’m talking about strategic pricing. I am also saying that the pricing process has never been more complicated and home buyers in this economy are avid comparison shoppers. They will compare every detail of two similar homes priced in the same range.  If the buyers feel that the two properties are just about equal in most ways except in price, the odds are that they will put an offer on the lower priced home. 

How To Price
I’m sure you’ve heard of Comparables or, “comps” as the most popular tool used to price a home. Comps are listings of other homes which are similar to your in style, condition and location. I can perform and interpret a Comparable Market Analysis (CMA) for you.  But let me explain here how they work.

There are three types of comps:
Currently On the Market:  Those homes currently or actively on the market. Many, but not all, of these homes are available to see on the internet.

Under Contract But Not Yet Closed:  Transactions which are pending or which have gone under contract but have not yet closed. Until these transactions close, the under-contract price is usually privileged information and can only be gotten through private contacts or Realtors who keep themselves in-the-know.

Closed: These are transactions which have sold or closed. The sale price is now public information and is accessible to anyone. To be relevant, sold comps should not be more than about one year old and, even then, they may be irrelevant depending on how much the market is fluctuating.

Other Factors in the Selling Process
Other factors to consider when selling include staging every square inch of the home - including closets; broad exposure of the home to the entire pool of motivated and qualified buyers (with a big global brand name like RE/MAX; and having a very strong realtor with good negotiating skills to lead the deal all the way to the closing table.  Look for future blogs on these issues!

I get this question ALL the time.  I have clients who call me over to their home and ask what I think.  I also have buyers who ask if they should buy a smaller house and build an addition later.  I’ll discuss both scenarios – and tell you what I plan to do with my own living situation this year.

If You Already Own and You Need More Room

There are many questions to ask but the first and simplest is, ‘Do you love your location?’  If you don’t, forget the addition and just buy a bigger house.  It’s a huge investment to add on – not to mention the inconvenience.  Why bother investing in a spot that you may want to leave before the equity has increased enough to justify the expense?

But, if you do love it, that’s a good motivator for improving.  You can change just about everything about a house except the address. It’s possible that you might not find another location as good as the one you already have.  And if you have great neighbors and your kids have loads of friends on the street, it’s even harder to leave.

Structurally Speaking

Is a doing an addition structurally prudent?  If all the homes around yours are about the same general size, it could be a huge mistake to build a big addition – making your home the largest on the street.  Most buyers are hesitant to purchase the largest house in the neighborhood.  In fact, buyers often lean the opposite way and purchase the smallest home on the best street they can find.  It’s important for resale value that your home be ‘amongst its peers’ and not stick out like a sore thumb.
How Much Does an Addition Cost?

A local contractor recently told me that the cost of building an addition in the Montclair, New Jersey area is $120 – $140 per square foot.  For a 1,500 sq foot addition, that’s $180,000 – $210,000.  And that’s before you pay for appliances, light fixtures, sinks, tubs, toilets, flooring and carpeting.  Financially, the cost of borrowing money right now – to buy or to build – is extremely low.  However, if you will owe more than 50-60% of the new value or worth of the home after you put an addition on, be very careful about moving forward.  You may need to stay in the house a very, very long time for the renovated house to appreciate enough to sell and not cause you to lose money.  This scenario was one of the major cautionary tales of the subprime crash.  Over-improving caused millions of Americans to go into foreclosure or to declare personal bankruptcy.

The best advice you can get is to call in a realtor before you make this momentous decision.  Let him or her tell you whether or not it’s advisable and what it might be worth when the addition is complete.  Best of all, the realtor’s advice is free so you have nothing to lose by doing your homework.

If You’re Looking to Buy a House and Add on Later

First, congratulations on buying a home right now.  We will probably never have a better climate  in which to buy real estate than today.  It’s a virtual candy store out there with loads of inventory to choose from.  That said, the market is improving in Montclair, Glen Ridge, the Caldwell’s, Verona and other towns in Essex County, New Jersey.  The window of opportunity will close.  Interest rates are already bouncing back up over 5% and expected to climb steadily throughout 2010.  A fraction of point climb can make a big difference in your monthly mortgage payment.

What I’m Going To Do in 2010

So, what size home should you buy?  Should you purchase small and add on later or – buy as big a house as you can find?  I’m actually a potential buyer myself right now so let me share my plans with you as a way of answering the question. I currently own a home and am looking to trade up this year and am planning on making location my #1 consideration and size the #2 factor.  I am much less concerned with the interior condition because I know that I can always improve it over time.  Personally, I’m not really interested in dealing with the hassle of an addition.  I don’t want to spend the money to move walls around and spend months living amid debris and dust – or worse, spending thousands of dollars on a short term rental to move into while the work is being done.

I want a bigger house in a fabulous location and I’ll save loads of money for two reasons. First, I’ll buy my ‘forever’ house at a record low interest rate and second, I’m not going to pay a premium for someone else’s ‘move-in condition’ home.  I’ll make the interior upgrades myself, even if they are somewhat inconvenient. But, they won’t be nearly as inconvenient as building an addition.  So, bring on the old kitchen and bathrooms!  Just give me size and location – and let the contractors go build an addition for someone else!

You might think that real estate grinds to a halt as the holidays are approaching.  It’s not true.  In the last month alone, Montclair had 25 homes go under contract.  Verona had 10.  South Orange and Bloomfield each put 13 properties under contract.  And, West Orange homeowners accepted offers on 28 homes.

What Kind of Buyers Are Actually Shopping For a Home Now?

Motivated buyers; that’s what kind!  The buyer pool does indeed get a little smaller at the holidays but it does not disappear.  But what’s most noteworthy is that those who are still out there shopping are very serious buyers.  Many of them want to (or must) close by the end of the year.  Beginning in November, it’s very common for sellers to receive offers with a designated closing date of December 28th or 29th.  And January is statistically the most popular month for relocations.

Many sellers think that their home will not sell over the holidays.  It’s true that sales slow down in the second half of December but that is mostly because the real estate industry has – over the years - come to think of Christmas and Hanukah as ‘down time’.  In other words, it’s really the realtors who – historically – have advised sellers to just wait until January to introduce a new listing.  So, ‘new’ inventory coming on the market at holiday time can be scarce.  With January only  a couple of weeks into the future, most sellers don’t mind waiting to list then when buyers begin to return to the market in greater numbers.  But then again, new listings flood the market in greater numbers, too.

Another upside of being on the market over the holidays is that, because inventory shrinks, there are fewer homes for these very serious buyers to look at.  Those homes on the market really get noticed and considered.

Note to Sellers

There is one scenario where – as a seller – it is wise to withdraw a property at the holidays and re-list in January or February.  That is when it has been on the market for a few months without selling.  The holiday season is a natural break period to remove it and re-introduce it as a ‘new listing’ (hopefully at a new lower price and with an improvement or two) after the New Year. Even though the real estate community will remember the property, it will begin the New Year with zero Days on Market (DOM) on the listing sheet.  A high DOM signals buyers that, either the property is way overpriced and they can make a lowball offer or worse, that the sellers are unrealistic and inflexible.

Note to Buyers

The next 4 months will be very active in real estate because so many buyers are trying to take advantage of both the U.S. home buyer tax credit which requires that the buyer be under contract by April 30, 2010 and close by June 30, 2010.  They will also be motivated by the last few months of the fed buying down interest rates.  We don’t know exactly when this will end, but it will end.  Afterward, it is possible for rates to climb at an accelerated pace.  Most experts agree that inflation is coming at some point in the not too distant future.

How is the market?  This is a certainly a loaded question these days.  But, I do get asked this constantly so look for this topic to be a regular blog entry.  Let’s look at the national picture first and then, in my next blog, we’ll drill down to New Jersey and Essex County. 

The National Picture

Perhaps the most popular or commonly quoted national real estate measurement is Standard & Poor’s/Case Shiller Index which measures home prices and the pace of home sales.  It’s a three month moving average and they reported earlier this week that existing home sales are up 10.1% – most likely due to the first time homebuyer credit (now expanded to existing homeowners, too).

The home price index measures 20 metropolitan areas and that index rose only .03%.  At least it rose.  However, nine cities including Boston, New York, Charlotte and Seattle fell.  I want to take a moment to note something.  The Case-Shiller Index measures only about 45% of the market and does not even measure condos, co-ops and townhomes, at all.  This is significant as these are largely entry level homes. Statistically, for every entry level (or “starter” home) that sells, four more sell as a result.  So, an argument can be made that the Case Shiller Index is overly pessimistic. I’m not saying that the index is not reflective; only that it should be noted.

The National Forecast

The New York Times reported on 11/25/09 that there is some pessimism about a second potential dip, leading to what’s known as a “W” shaped recession which has two lows.  A traditional recession is “V” shaped.  The pessimistic forecast pointed to an abundance of inventory, continued unemployment and a traditional slow-down of real estate sales in winter. 

Jeffrey Otteau, New Jersey’s foremost valuation expert, disagrees. For one thing, a “V” or “W” shaped recession implies a steep or rapid decline followed by a steep or rapid recovery.  Everyone agrees that we did not have a rapid decline in real estate (it took four years, beginning in June 2005) and certainly no one expects to see a rapid recovery. Rather, he forecasts a boat shaped recession which began with a long, slow steady decline after which the market will skip along the bottom for some time and then conclude with a long, slow steady recovery.  While the market will recover in fits and starts, Mr. Otteau does not forecast another major dip due to the extension of the home buyer credit, the fed continuing to buy down interest rates and job losses continuing but leveling off.

Additionally, he says that the point of view about loads of pent up inventory should largely be offset by loads of pent up demand among untold numbers of buyers who have put off a purchase – some for years - while waiting for the market to hit bottom.

New Jersey

Compared to the rest of the nation – and certainly the most deeply affected states of CA, NV, MI and FL – New Jersey is well ahead of the curve in terms of recovery and is showing significant signs of stabilization.  With the exception of Cape May County and a few southern areas, the numbers show that the worst seems to be behind us.  In other words, in most of the state, prices are no longer falling.  Most of the recovery is in the lower price ranges, where it always begins and where the homebuyer credit is having the greatest impact.

While lower priced homes are beginning to stabilize, the luxury market is still in trouble, in New Jersey and elsewhere.  Older existing luxury homes in blue chip communities are faring better than new construction (‘McMansions’) with over 3,000 square feet on 2+ acres.  Their perception as a commodity is greatly diminished due to the sheer number of them available and the use of less expensive building materials compared to those used in older existing luxury homes.  With the last of the 80 million baby boomers trading down at an accelerated rate and only 50 million Gen X’ers to buy them (who earn 17% less than their parents did at the same age), they may be in permanent decline.

Despite the aging population, adult 55+ communities may be in the most trouble of all due to their very high maintenance fees and exclusivity which seriously reduces the potential buyer pool. Look for some possible federal legislation down the road to rescue and reclassify them as garden variety condo communities.

I will cover Essex County in particular in my next blog.  The good news, if you’re thinking of buying or selling in Essex County, is that it’s always going to be an area with tremendous resale value due to it’s great housing stock, beauty, culture, proximity to Manhattan and mid-town direct train access.

It was an interesting summer, weather-wise, in the Montclair, New Jersey region.  We had a lot of rain causing some wet basements and some major heat and humidity in August. It’s the time of year to think about getting your home ready for the winter.  While it’s great to pull out the big sweaters and to see the leaves change, homes in the Essex County, New Jersey region can take a beating between October and April. Here are some ideas to help you protect your investment and prolong the life of the structure and systems of the house. 

Air Conditioning Systems

If you have central air, don’t forget to close the vents in your air returns in every room before you turn the heat on. It’s easy to forget that those little buggers are open and that they can allow heat to escape into the attic.  Next, make sure to cover the condensers outside to prevent leaves and debris from building up inside them.  If you do not have a cover from the manufacturer, tape some plastic sheeting over the top.

If you have window units, it’s not a great idea to leave them in over the winter.  I know it’s a pain to remove them but leaving them in will cause you to lose energy. If they cannot be removed, at least cover them tightly with thick plastic.

Heating Systems

Before you turn on the heat for the first time – MAKE SURE YOUR CARBON MONOXIDE DETECTORS ARE IN WORKING ORDER!  Dangerous gases can escape from you furnace which can only be detected with these devices.   Check the battery or replace the unit if they’re not in working order.

The best idea is to have the heating system serviced each fall by a professional.  Don’t forget to bleed steam furnaces once a week in the cold months.  Ask the plumber to show you how – it’s easy and will seriously prolong its life. If you have a forced hot air system, you might want to invest in a humidifying system.  And have filters checked, too.

Fireplaces

The fireplace is another location where dangerous gases can escape into the home atmosphere.  Before you settle into winter, have the flue cleaned out and check for cracks in the lining.  Your home is much more airtight in winter and ventilation is difficult to achieve.  Also keep an eye out on the outside of the home for chipped or falling bricks.  Re-pointing them gradually is much cheaper than re-building.

Windows

Raise or remove screens and drop down storm windows.  Feel for little drafts and apply weather stripping.  You can hire a professional to assess the energy efficiency of your home.  Improving this area (including new insulation) might get you a federal tax credit, too.

Gutters

If you enter the winter months with clogged gutters, water will not be able to travel down the leaders and into the earth.  It will eventually freeze in the gutters which can ultimately create serious leaking issues and expensive structural damage inside your home.

Garden Hoses and Outdoor Pipes

Don’t forget to turnoff water to outside, draining the pipes (a two-man job) and disconnect the hoses so they won’t freeze and crack over the winter.  While you’re at it, bring those ceramic planters inside, too.  They will freeze and then crack in the thaw.

Attic

Check to see that all windows are closed up there.  It’s easy to forget about them and a small opening can cost you quite a bit in escaped heat.  If you have a whole house attic fan, make sure the louvers are closed.  Add some insulation to the back of the attic door for extra energy conservation.

Radon in the Basement

Radon is an odorless and deadly gas that is dangerous for everyone but especially for young children and people with asthma or other lung disorders. Ventilation is the solution to radon.  If you have very low levels of radon and do not have a radon remediation system, the gas can build up in the basement because ventilation is difficult to achieve as you close and lock up windows for the winter.  Every homeowner should test for radon in the basement.  The EPA says that 4.0 picocuries or above should require a remediation system, while recommending a system for over 2.0 picocuries.

On warmer winter days, I like to open the windows up for an hour or so – and run a portable fan – just to air out the basement recreation room.  This is NOT the way to remediate radon and is in no way a substitute for professional testing and remediation.  I like to do it just to get fresh air in the house on the regular basis. 

Underground Oil Tanks

As the water table rises in the Essex County, New Jersey area, more and more underground oil tanks are decomposing – allowing oil to leak into the surrounding earth.  In the more serious cases, it can contaminate the water table itself and travel onto other nearby properties.  Many professionals in real estate and in the New Jersey state government recommend removing them whether they are leaking or not.  In fact, there may be some state sponsored programs to assist you in this.  You can install an indoor tank or convert your heating system to gas.

If you have an underground tank, it is critical to have it tested for leaks and to have oil tank insurance in place.  An oil tank spill on your property can cost tens of thousands of dollars to clean up and, in some extreme cases, can cost well over one hundred thousand dollars.  Testing is best done in spring, summer or fall when the soil is not hard and/or frozen.  Begin by contacting your oil company for information.