Saturday, April 28, 2012

Bidding Wars Are Back; Next Stop Martha's Vineyard

The headline in the Wall Street Journal reads Home Buyers Find Bidding Wars Are Back

I’ve been cautioning Buyers that this will be the natural evolution of a market reversal and now it is being reported in the Journal. Although the focus is on the states that were hit the hardest from California to Florida, and I have said that Martha’s Vineyard lagged behind when the bubble burst and it will lag behind in the recovery, bidding wars are coming.

Actually, there have already been some bidding wars for the better properties but there is still a lot of inventory to choose from. Once the inventory starts to be absorbed and prices are still at their lowest point in years there will be a whole lot of competition. Buyers who say they are not going to engage in a bidding war may not have a choice if they really want to be here and not one of the classic ‘would have, should have’ club.

Friday, April 20, 2012

To Improve or Not To Improve, That Is The Question

‘What to do’ is a question constantly bandied about by sellers and not having the right answer can cost you the seller a whole lot of money – money you will not recoup at the closing table.

I’m always telling my clients after they have made a purchase to keep whatever improvements they make in neutral colors in proportion to the quality and value of the home and with an eye for resale. However, in fairness I must say that as long as you know what improvements you will and will not get a good return on your investment you should be able to enjoy your home; it’s your castle after all. I was visiting with a former client just the other day and she showed me all the improvements and remodeling she just completed. She likes the color black and she used a lot of it throughout the house. After we had finished the tour she looked at me and said, “I know my decorating is not for everyone and it will pay for it one day when I want sell but it makes me happy now”. She was right and as long as she knew that her expensive black mica marble countertops and mirror backsplash would probably turn some buyers away and she would not get back what she paid for her kitchen remodeling, I support her decision. It’s the sellers who put disproportionate sums of money into esoteric personalized improvements and then expect a buyer to pay them back when they decide to sell that I’m concerned about.

Before any seller decides on improvements or upgrades they need to look at the other homes in the neighborhood. Are they modest simple homes or large, fancy million dollar homes? Any improvements or upgrades a seller decides to make to their home and property should be in line with the rest of the homes in the neighborhood. Buyers shop neighborhoods first, then homes in the neighborhood. Having an overbuilt more expensive home in a neighborhood is usually a challenging sell.

Selling in this market can be very frustrating for a seller so let’s talk about what to do to get ready. The first thing a buyer looks at is the condition of the home starting on the outside at the front door and then inside. Is the front door cracked, rotten or showing rust spots? Is the stoop falling apart? Is the trim rotten and the paint peeling? If the roof is fully depreciated and the siding cracked, cupping or falling off indicating it is at the end of its lifespan, replacing it is a good way to start. Cracked and missing roof shingles are an immediate turn off to buyers. If the house has dated single pane windows or double glazed windows that have lost their seal and are fogged, replacing them is a good investment. Buyers look at all these things and if the first impression is not a good one they assume it is just the tip of the iceberg. Taking care of deferred maintenance can save a seller thousands of dollars at the closing table.

When thinking about adding features to an existing home, on Martha’s Vineyard I find most buyers are looking for two things that seem to have become standard areas for most homes, a screened-in porch and an outdoor shower. Those are not expensive areas to add but once again keep the construction in proportion to the home.

One last word about outside improvements; on Martha’s Vineyard landscaping is not a priority for most seasonal visitors and hiring a service to maintain lawns and gardens can be very costly. So landscaping should be kept to a minimum going with native plants and shrubs when possible. Buyers are not going to pay extra for that ornamental Japanese Maple or that Koi pond. It’s more important to get rid of accumulated junk and debris that has piled up over the years so the yard doesn’t look unkempt.

On the inside, starting in the basement, nothing will make a buyer turn around and walk out the front door more quickly than a damp musty moldy smelling basement. Sellers need to make sure they have proper foundation drainage and landscape grading around their homes. More buyers today are converting basements to finished living space so a dry basement is very important. On Martha’s Vineyard, which is a perpetually moist climate, running a dehumidifier has become necessary for the health of most basements.

Moving into the main living areas, many sellers get overly creative with color, painting rooms bright colors like purple, pea green and Tahitian blue. Fresh paint on walls as well as over dated dark stained wood trim and doors in decorator white or a very light neutral color will make a big difference and the rooms will look larger and lighter.

What to do with the two sexiest areas in the house is question worth careful consideration. I am not talking about bedrooms; it’s the kitchen and bathrooms. According to Remodeling Magazine the return on investment when selling can well exceed 100%, but keep improvements in proportion to the value of the house.

For example, you can spend tens of thousands of dollars upgrading fixtures, cabinets and countertops, but you won’t necessarily get those dollars back when you sell. If you install a $9,000 Viking range in a house you are hoping to sell for $400,000 you can rest assured that you won’t get your money back. Re-facing or painting cabinet doors and replacing old fixtures and appliances with basic energy efficient modern appliances from Sears in neutral colors along with modern countertops will go a long way.

In the bathrooms new fixtures would be a good investment, especially if the existing ones are avocado green but keep it simple. A steam shower enclosure is a common feature in a multi-million dollar house but adding one to a $400,000 would be foolish from a standpoint of investment. You won’t get your money back when you sell. If the bathtub is in good condition, cleaning up the ceramic tile grout or caulk. If the bathtub needs to be replaced think about converting the space to a walk-in shower enclosure as they are becoming very popular these days. But overall getting rid of mold and mildew stains is most important. In humid areas like bathrooms, if you have baseboard radiant heating and the metal covers that are rusted and looking nasty, paint or replace them. It is more important for a bathroom to look neat and clean than have fancy expensive fixtures. Many older homes on Martha’s Vineyard are bathroom shy; they lack that necessary extra bathroom. In cases like that spending money on adding a bathroom instead of a $10,000 remodel of an existing bathroom is a better investment.

I haven’t mentioned flooring but if the house has wooden flooring and the finish is worn off, refinishing can do wonders for improving the appearance of the house. The same goes for bathrooms with dated vinyl floor covering. Replacing a vinyl floor covering with stone or ceramic can cost roughly $25 a square foot. Also, 1960’s vintage shag carpeting in sunflower yellow or bright green can really distract a buyer so get rid of it and replace it with neutral carpeting.

I was previewing a small ranch for sale recently located on a quaint in-town street where all the homes were pretty much the same. I had seen the home before the current owner purchased it and it was nice, but now it was so much nicer. A heavy partition wall was removed opening up the newly remodeled kitchen to the living room area and a bathroom was added to the master bedroom making it an ensuite. All these improvements are very positive and were not over the top. However, because we are in a down market I was relieved to hear the seller agent say that the seller knows he won’t get back all the money he invested. Normally, I would have to say he would get a good ROI and his chances of selling the property had greatly improved but since he bought it at the top of the market and then immediately made improvements I had to agree. Make sure before you make any improvements or upgrades you have clear expectations. If it is strictly for your own enjoyment then go ahead and have fun, but if it is with an eye toward future ROI sales potential then do your homework and consult with a real estate professional. In real estate there is wise saying: “Timing is everything”.

Friday, April 13, 2012

Is This Really The Time To Be Thinking About Your Fireplace?

Yes it is, and this is also a good time to have your chimney cleaned, but that is not what I want to talk about.

With the price of cord wood averaging $300.00 along with the mess associated with operating and maintaining a wood burning fireplace, people who still love the ambience of a fireplace maybe thinking about converting to a Propane fueled fireplace.

Did you know you have three options to choose from? Let me first explain that we do not have ‘natural gas’ on Martha’s Vineyard; we use Propane which does not burn as hot and does not create the same type of ‘big flame’ that natural gas does. To retrofit a gas fireplace to Propane is a simple matter.

The three types of Propane fireplaces are the vented Propane fireplace kit, the vent-free Propane fireplace, and the Propane fireplace insert.

The vented kit is the Propane log type we see so often that you can purchase for around $1000. If you don’t want to control the flame remotely you can safe a couple hundred dollars. The Propane log fire has a very realistic open fire look. The only disadvantage is that the damper in the chimney has to be removed because it is a state code requirement to guard against someone lighting a fire and forgetting to open the vent, which in turn could pump lethal carbon monoxide into the living area of your home. Another disadvantage is heat loss. Without the damper only about 15-20 percent of the heat is returned into the living space. This is about the same as with a wood burning fireplace, but the way to solve the problem is to install tightly fitting glass doors. Adding the doors could add as much as $1500 or more to the price of the installation.

The vent-free fireplace can be installed for under $1000. Vent free means there is no exhaust going up the chimney and therefore the chimney damper does not have to be removed. All the heat remains inside the living space. Health problems have been associated with these fireplaces among people suffering from respiratory ailments like asthma and allergies. Vent free fireplaces should not be operated for more than a few hours at one time which means they are not good sources of heat.

The logs in a vent free fireplace are more economical using less gas than those of a vented fireplace but the flame produced by vented logs looks more realistic.

Finally, we come to the Propane fireplace insert. I have a Vermont Casting wood burning fireplace insert and like the wood burning inserts, the gas insert is costly with an average price today or around $3000. As with the wood burning fireplace inserts, the look of the fa├žade of your fireplace is retained. Inserts are meant to be airtight so you won’t be able to have an open fire. The exhaust fumes are vented outside the house which means the air inside the house remains healthy and you can run the insert indefinitely as there is Propane to fuel it.

Regardless of which option you choose don’t try to install it yourself, call a professional like the people at Vineyard Hearth Patio and Spa in Vineyard Haven. Here is a link to their website: