but the real estate market is smoking HOT!!
but the real estate market is smoking HOT!!
We actually get questions like this all the time from clients, and even though it is not exactly in the realm of real estate, I think it’s very relevant for new homeowners. When someone is new to town, our team makes it a goal to help them get acclimated quickly and make KC feel like “home.” Our metro area has a lot to offer, but I’ve selfishly picked a few spots that I think offer a a unique experience.
Let’s start with a subject near and dear to my heart: food! Dining out is a passion for my wife and me. Having both worked in the food service industry, we appreciate great food and knowledgeable, timely service. That is exactly what we get at The Westside Local. Managing partner Brandon Strick and business partner Lon Booher have created an unassuming and authentic atmosphere coupled with a farm-to-table philosophy that brings you the freshest ingredients possible. The cuisine is sophisticated and exciting yet very approachable. We have yet to have a guest of ours not be blown away by what they have to offer. Booher, who owns the restaurant building, is also an architect and is passionate about preserving the incredible Westside architecture — and it shows!
Our next stop, in the heart of Prairie Village, is an oasis. That oasis is Bijin Salon and Spa. Co-founders Connie Suss and Mary Jane Van de Castle founded Bijin is 1988 in the historic Westport district and then later moved it to its current location at The Village Shops. Bijin’s salon services offer an escape from the pressures of life. Slip away to the lower spa level and experience a full body massage or a facial, and come out a new person. Bijin is not just about customer service. Every employee assists is creating a customer “experience.”
On that note, one of the best examples of customer service that I have experienced in KC is Rydell Tailor Shop in Brookside. Eric Blond, the owner, and his team are magicians with a needle and thread. Eric stays current with fashion trends (which I need and appreciate) and always helps his clients look their very best. I always feel a little like a celebrity with my own personal tailor at Rydell’s — not just like another customer. Kudos Eric!
It is appropriate that Glace Artisan Ice Cream is tastefully concluding this column. Unbelievable flavors and textures created by master artisan Christopher Elbow will knock your socks off. It is almost unfair to just call it “ice cream.” That doesn’t quite do it justice. Glace has two locationsÚ just south of the Plaza on Main and on 119th Street in Leawood.
Photo by: Calebdzahnd in Flickr
Question posed today- “What are your thoughts about writing a low ball offer on home?”
Answer- My coaching to our clients is pretty consistent. You will often hear me say, “It is not where we begin that matters, it is where we end up.” Our clients hire me to negotiate on their behalf and that is what I set out to do when we receive a “low ball offer.” In my experience, it is most important to consider all offers, be thankful for the offer, and then respond. We always want our clients to offer a well thought out response to an offer, rather than their initial reaction. Sometimes your initial reaction to an an offer, especially a low one, is not very pleasant. But again, its about where we end up. So stay positive and work towards more of a “win-win.”
One last thought- as inventory (# of homes for sale) continues to stay low or go even lower, homes will continue to sell more quickly and most seller’s will not have to consider a low ball offer because they may receive multiple offers. Good rule of thumb- in a low inventory market, avoid low balls and consider your offer your one and only chance to get this home. You are never guaranteed a second chance.
Question: What costs are involved in buying a home?
Let’s answer this question in chronological order. A buyer’s first out of pocket expense will be an earnest money deposit (or EMD). This represents some “skin in the game” from the buyer to the seller. Usually we are talking 0.5 percent to 1 percent of the sales price. The check is not given directly to the seller. It is either held by the seller’s title company or the real estate brokerage representing the seller. The EMD will be credited back to the buyer at closing and applied to closing costs and pre-paid expenses that are due. We will get to those in a minute.
Second, a buyer will need to pay for a series of home inspections, which can cost up to $1,000. For $1,000, a buyer will get to know their future home intimately. Inspections may include a whole house inspection, a termite inspection, a chimney inspection, a radon test — and, last but not least — a waste line inspection. In our experience, buyers who see inspections as an investment rather than an expense always get more value out of them. Our philosophy is that the more informed buyers are, the more comfortable they are with their purchase.
Once inspections are completed and both buyer and seller have agreed on the list of repair items, we arrive at step three: the appraisal. To arrange financing for a purchase, the lender will require an appraisal to make sure that the house is worth what a buyer is willing to pay for it. The buyer pays for the appraisal at the time that it is ordered (typically using a credit card). Most appraisals run about $400.
We are getting towards the end — just two steps to go.
Next, let’s talk about down payments. I know this feels like it should be at the beginning, but a buyer’s down payment is not collected until closing. Some of you may have heard about 100 percent financing options that are available. Sounds tempting, right? Well, those days are pretty much gone with two exceptions: VA loans (for those who have served in active military duty) and USDA loans (for rural purchases). That said, there are still great financing options available. The two most popular are FHA loans (which require a 3.5 percent minimum down payment) and Conventional loans (which require a 5 percent minimum down payment). Consult a competent loan officer on which product is best for your financial situation.
And, finally, a buyer will have closing costs and pre-paid expenses (taxes and insurance) due at closing. As an example, a buyer purchasing a $200,000 home would pay $4,000 to $4,500 in closing costs and pre-paid expenses. In our market, however, it is not atypical for a seller to cover some or even all of a buyer’s closing costs depending on the price range.
photo by: 401(K) 2013
What repairs are most commonly requested of the seller during the inspection process? Is it just another “bite at the apple” for the buyer to get the price that they originally wanted? Do I have to do everything?
All three are great questions — and ones we hear often! It is funny how the word “inspection” becomes a dirty word when it comes to real estate. The buyer feels scared that their new dream home is going to turn out to be a lemon, and the seller is worried that the house that they have called home will be ripped to shreds.So let’s take a look at “The Big Three” most requested repairs. In 2012 the top three repairs requested from inspections were — drum roll please — roof repairs, plumbing repairs, and electrical repairs. I would add foundation repairs as a close fourth. Especially in northeast Johnson County and northwest Jackson County where you are dealing with a lot of 50-plus year-old homes. A good rule of thumb is 1 percent of your sales price should cover your inspection repairs, depending upon overall condition of the home.
The process of selling a home these days is exactly that — a process, not an event. There are several steps a seller can take that will help bullet-proof the sale of their home once it is under contract. One option is a pre-inspection. If the thought of a buyer inspecting your home keeps you up at night, this may be the way to go. Most professional inspection companies offer a pre-inspection. Some companies even offer a more concise pre-inspection (less than $300 in most cases) that will cover only the bigger ticket items such as the roof, foundation, electrical panel, and major plumbing. In my experience, the aforementioned are typically the items that will cause a contract to come apart during the inspection period. Remember the “lemon” and the “second bite at the apple?” That is what I meant.
Our team has an inspection mantra when it comes to setting the expectations of both buyer and seller. It goes a little something like this: “Inspections are an opportunity to discover any unforeseen safety issues, health concerns, structural issues or active problems that could cause further damage to the home.” Clear and realistic expectations are crucial in all aspects of real estate.
Finally, sellers do not have to make all repairs that are requested by the buyer. Inspections simply open a re-negotiation period. When both parties are looking for a “win-win” and stay focused on the mantra above, the negotiations over inspections should be painless.
Question: Is it worth updating my home before I sell it? What will I get out of it?
With the spring market quickly approaching, we are already doing some business planning with clients who are ready to take advantage of the limited inventory. Less competition equals fewer days on market and a higher net. That is a fun combination!
However, even with low inventory our market is still a “price war AND a beauty contest!” Buyer’s today are very educated (meaning they are online watching prices and new listings daily) and are still looking for a good deal. When I say that most sellers cringe a little. So let me be clear: List price can be a “good deal.” Great listing agents know the value of pricing in-line with market value or sometimes slightly below. Therefore, full list price can meet the buyer’s criteria of being a “good deal.”
Bathroom upgrades can be tempting — but homeowners may not recoup as much as they think on the investment when they sell their homes.
Okay, so we have touched on pricing. Now let’s talk about the beauty contest. A good rule of thumb is that updating your home is always a good idea. Today’s HGTV generation has high expectations when it comes to condition. That said, there is a difference between painting and staging a home for sale and remodeling a bathroom. Both could be considered updating, yet both will have a different return on investment. We see our clients investing (not spending) 0.5 to 1 percent of their list price on staging and conditioning on average.
This includes, but is not limited to: painting, new light fixtures, replacing cabinet hardware, etc… You get the picture. In these cases, the sellers typically get their money back by achieving a higher sales price. Statistically, 89 percent of homes in average to poor condition receive offers much lower than list price. Conversely, 93 percent of homes in above average to excellent condition receive offers very close to list price. Knowing these stats, most sellers choose to improve the overall condition of their home.
“So, what about major improvements like the bathroom remodel?” you might ask. Major improvements will almost always help a home sell more quickly and for more money. However, when it comes to return on investment, in the KC market a major bathroom remodel will only get you back approximately 55 percent of your cost. So the conversation becomes, “Do we remodel the bathroom to help us sell more quickly, or do we price accordingly to overcome the potential objection to an older bath?” If you are going to live in the home for another year before selling, the remodel may be worth it. If you are selling in three months, strategic pricing may be your answer.
Email me today if you are considering a major project and would like more information about the average ROI in Kansas City for certain upgrades.