Mission Viejo and Orange County, California Real Estate Blog

If you're planning to sell a home in 2008, it's time to start thinking about how to make that home stand out from the rest.

But beware: Homeowners aren't able to recoup as many improvement costs as they did in recent years, according to a recent study by Remodeling magazine. In selling a home, "it's more important that it's neat, it's clean and it looks spacious, rather than making sure it's the top of the line," says Cheri Kuhn, owner of Waters Realty in Minnetonka, Minn.

"The thing I find with sellers -- if they do a lot of remodeling -- they will take the cost of the remodeling and add it to the cost of the home and ask the buyer to pay for it," she says. But often they're not going to get that higher price.

To keep costs down and remodel wisely, consider the following tips:

Ask for advice. When Ms. Kuhn first meets with clients -- sometimes six months before listing the home -- she'll make a list of improvements that will make a difference. Cleaning the carpets, painting the walls and removing wallpaper are common fixes -- if they're needed.

But prior to any remodeling, declutter your home and rent a storage unit if necessary to hold extra stuff while the home is on the market, says Shannon Aldrich, a Realtor in Maine and New Hampshire with Keller Williams Coastal Realty.

Dig deeper. It also could pay to look below the surface by getting a home inspection before listing the property. That way, problems that could hold up a sale are addressed in advance, says Dan Steward, president of Pillar to Post, a Tampa, Fla.-based home-inspection company. Some estimate that for every dollar of perceived defect, buyers want a $2 to $3 discount, Mr. Steward says. If that's true, it might pay to spend $2,500 replacing an old furnace.

If there's a problem with an essential element of the house, Ms. Kuhn says, a buyer might think "if that was neglected, what else was?"

Look outside: Pay attention to exterior details such as the condition of siding and windows, Ms. Aldrich says. According to Remodeling magazine, a wood window replacement recovers an average 81% of cost at resale and a siding replacement recovers an average 83%, some of the best payoffs in the survey.

Spend time in the bathroom. Freshening up the bathroom doesn't have to be expensive, but can be important. "People will put up with a lot of cosmetic challenges in a house if they know they could use the bathroom right away," Ms. Aldrich says. It's important for the bathroom to be clean, but also consider replacing cracked tiles, as well as the sink and the toilet -- if they need it, she adds. A toilet, for example, can cost less than $250.

Keep it small in the kitchen: Remodeling magazine found that homeowners could recover 83% of the cost of a minor kitchen remodel at resale compared with 78% of a major kitchen remodeling. Ms. Kuhn cautions her clients not to replace refrigerators, stoves or dishwashers. Buyers considering remodeling the kitchen will likely have their own preferences.

Along those same lines, replace a countertop if it's crumbling but not if its only fault is that it's outdated, Ms. Kuhn says. Even then, seriously consider material costs -- there's no need to update to granite unless the competition has granite countertops as well.

By Amy Hoak
From MarketWatch

In a significant victory for REALTORS® and homeowners across the country, the U.S. Senate on Dec. 14 approved legislation designed to modernize the Federal Housing Administration’s (FHA) mortgage insurance program by increasing loan limits and helping troubled borrowers with subprime loans refinance into federally insured mortgages. The Senate’s approval followed an aggressive call to action by C.A.R. urging REALTORS® to contact Sen. Barbara Boxer seeking her support in passage of the bill.

The FHA Modernization Act, approved in a 93-1 vote, would increase loan limits for FHA-insured loans from $362,790 to $417,000, to mirror current conforming loan limits Fannie Mae and Freddie Mac may purchase.  In addition, the Senate bill would allow the FHA to insure refinanced loans for borrowers who are delinquent on their mortgages due to ballooning payments on subprime loans.

“This is a tremendous victory for REALTORS® and C.A.R., and I want to thank REALTORS® who responded to our ‘Calls to Action’ and urged their elected officials to pass this bill,” said C.A.R. President William E. Brown.  “The Senate’s action is a milestone in our efforts to provide safe alternatives for financing a home mortgage, not only for those borrowers who are facing foreclosure today, but for future homeowners as well.”

The bill, which has the support of the Bush administration, also would reduce the required minimum down payment for an FHA-insured loan from 3 percent to a flat 1.5 percent of the appraised value of a home. 

The House passed a separate FHA overhaul measure in September, but there are several differences between it and the one passed by the Senate.  The House bill, for example, would increase the FHA loan limit to $729,750, or 175 percent of the Conforming Loan Limit.  The House bill also is pushing for a 0 percent minimum down payment, compared with the Senate’s 1.5 percent.  The house bill would allow risk-based pricing for FHA mortgage insurance premiums, while the Senate version opposes it.  Both bills would categorize all condo units as single-family units.

Both the House and Senate measures will now be carefully scrutinized by a conference committee for comparisons and reconciliation of their differences.  Once a final bill can be crafted, it will be sent to the President for signature.

Meanwhile, C.A.R. will continue its efforts to work with California’s congressional delegation to ensure the final version of FHA reform passed out of conference committee has as high of a loan limit as possible.