Question and Answer

Here is a question posed to me last week by a friend of a past client. It touches on an area that a lot of home owners have questions about: how the work the do now (or don't do now,) will impact the future sale of their home. Read on to see my answer.

Q: I am wanting to put a 5' wooden fence in my backyard to replace the 4' chain link. My boyfriend wants us to fence the south side and the back (at the alley), but leave the long section on the north side with the chain link and just plant shubbery.

I understand his desire to save some money in the immediate, but I wonder if when it does come time to sell (not planning on being there forever-prolly only about three more years), I am concerned that a potential buyer might see a partial fence as a job not completed.

Do you think it matters?

A: You pose a really good question. I think I understand the nature of it but just to be clear: you & your boyfriend are weighing the merits of spending more $$ now to enclose 3 sides of the back yard with a fence vs. saving $$ by only enclosing 2 sides with the fence and planting shrubbery to enclose the 3rd, while still leaving the chain link. Is that correct? If so, let me ask a few questions...

1. Are the shrubs already planted on the north side? If not, you need to realistically weigh the costs of the planted vegetation. I'm neither a gardener nor a professional fence-maker (?) but I do know that plants cost money. If your main reason is to save money, make sure you are working with all the figures. You may only be saving a fraction of the cost over the fence (esp. if you are having the shrubs professionally installed.)

2. How is the rest of your house as far as upkeep, upgrades, curb appeal, etc. Please be honest--it's for your sake not mine. Remember that buyers are ultimately looking at a package deal. You may have state of the art kitchens & baths but if the home looks like crap from the street, many buyers might never make it through the door. Likewise, if you spend a ton of money on the outdoor space but the inside shows relatively poorly, you might be limiting yourself to a small pool of buyers.

Without seeing the house (and you are welcome to send me pics,) I'm inclined to say spend the extra $$ and complete the fencing. A common complaint I hear from buyers who reject a property is that the seller's "cheaped out" on a repair or upgrade. If the buyer gets that impression then they are probably going to ask themselves "what else did they cut corners on?"--not a question you want to have to answer when you are trying to sell your home. Also, the buyer will on some level be thinking "if I buy this place, I'm eventually going to want to replace that chain link..." While you will not get a dollar-for-dollar value on your improvements your home will probably show better. That will lead to a quicker sale and, quite possibly, a higher sale price.

Hope this helps.

Smaller may be better

I ran across an interesting article on an emerging trend of building smaller homes. That's right, smaller. No need to adjust your monitor...
I don't know how much we are going to see of this in Chicago. Let's face it, even the newest, biggest McMansions that are built on double-wide lots (50'x125') pale in comparison to your typical suburban monster in the square footage department. Even your typical Chicago single-family home built on a standard lot (25'x125') ranges from about 900-2000 sq. ft., depending on how many levels of livable space there are.
It's interesting to note that many builders are responding to many consumers' concern for more storage space. Is it because we need that much more to keep ourselves happy or is it that we just can't through any of it away?
To read the full article, click here.

Under Contract!!!

For those of you following my own home search story, I have found a home! I just went under contract and we are in the middle of attorney review. We had the home inspection already so things are moving along smoothly.
The contract negotiations went very smoothly. I even found out later that the other agent on the deal is a drummer too! Small world. Seriously, it's nice to do deals with pleasant, intelligent agents. We are of course both trying to get the best deal for our clients but it doesn't have to be an unpleasant experience.
The house itself is a registered bungalow (for more information about Chicago Bungalows, historical designation, how to register and the benefits of registering, visit www.chicagobungalow.org.)
The house is in fairly good shape but the home inspection turned up a few items that we are still negotiating on. I cannot stress enough the importance of getting a home inspection. It's the best way to safeguard your investment from a safety aspect. It also gives you an idea of any hidden costs associated with future repairs. Finally, if nothing else, a good inspector will walk you through "the care and feeding of your new home." It's like an instruction manual on the home, mechanicals, appliances, basic repairs, etc.
Assuming the rest of attorney review goes well, I should close on Aug 1. So...who wants to help me move?

Are you covered?

A few years ago, I came home from a routine grocery run to find that my garage door was left open (perhaps by myself, although I think my tenant with whom I share the garage was the culprit. Either way, it doesn't matter now.) I was horrified to discover that some very valuable drums that I had left in the garage while I ran my errand had been stolen. Horrified? I was downright heartbroken! However, I found out--to my surprise--that my homeowner's insurance actually covered personal property in the detached garage. My insurance company did me right and wrote me a very decent check to cover my loss. I even briefly considered naming my next child State Farm Barclay..."

However, many people aren't so lucky. Unfortunately many people find out after a loss or catastrophe that they were not covered for the damages incurred. I would encourage everybody to review their homeowner's policy and find out if it needs updating and adding or reducing coverage.

Here is a list of points to consider from the National Association of Insurance commissioners.

NAIC's InsureUOnline website offers the following tips:

• Add insurance coverage as you enhance the value of your home, and acquire expensive possessions, such as furniture, computers, stereos and televisions and other electronics. Keep in mind computers and other high-end electronics may require special coverage.
• Alert your insurance company when making any major home improvements that cost $5,000 or more. Update your homeowners insurance policy to reflect the new enhancements and prevent being underinsured.
• Maintain your property by clearing clutter and other dangerous conditions to reduce the potential for liability suits. In many states, you could be held legally responsible for the actions of anyone who drinks in your home and then has an accident in your house or after leaving it. Your policy should protect you against lawsuits due to these types of liability issues.
• Backyard items, such as a trampoline, pool, hot tub or spa may require you to increase your liability coverage through an umbrella policy.
• As you acquire more valuables -- jewelry, family heirlooms, antiques, art -- consider purchasing an additional "floater" or "rider" to your policy to cover these special items. They're typically not covered by a basic homeowners or renters policy.
• It's a good idea to make an inventory of all of your personal property, along with a photograph or video of each room. Also, save your receipts for major items and keep them in a safe place away from your house or apartment so you'll have them if you need to file a claim and substantiate value.

I still haven't found what I'm looking for.

Buyer's market?!? Looks like somebody forget to tell the people selling houses that I want to buy! Seriously, there are some pretty stingy sellers out there who aren't budging much off their asking price. I have made offers on two separate properties now and haven't been able to reach terms with either one.

I am finding out what I already knew about the nature of a slow market. Chiefly, it all depends on the seller's motivation/need to sell. Sellers who have a lot of equity in their home (and thus, more financial flexibility to give on their asking price,) are more able to strike a deal with buyers. Sellers who, for one reason or another, do not have much equity are forced to be stubborn and get the price the need to get whether the market bears that out or not.

In any case, the two properties in question were decently priced but a little more than what I wanted to spend. Still, it doesn't cost me anything to write an offer so I put in a fair but admittedly low offer. Alas, neither seller was in a position to give and, at the end of the day, no deal was to be had.

However, the third time is a charm, right? I've got my eye on a place that is priced very attractively and has what I'm looking for. I am in the process of reviewing comperable sales to determine what I want to offer for the home. Check back soon for an update...

It's so important for buyers to take advantage of the information that is out there. If you are serious about buying a particular property, make sure your Realtor does his/her homework: find out what the home is worth; when did the current owners buy and what did they pay for it? What improvements have been made since they bought? Try to find out why they are moving. Have they had any offer on the property thus far? A good, tech-savvy agent can access many of these answers online. The more info you can get, the better you can negotiate your price!