Home Ownership
How can you make a house a home?
A lot of the properties that buyers look at are somebody else’s home when the buyer takes their first look at it and this is the reason that they have a hard time visualizing what the home would look like if it were theirs. Once a buyer closes escrow one of the most difficult things is figuring out how to adapt the property to make it feel homey or comfortable but fear not, there are lots of ways that a homeowner can adapt a property to suit their style. So what are they?
The basic things that can be done to a home are also some of the most dramatic things that can change the overall appearance and feel of the house. Things like repainting the walls and ceilings with light colors, resurfacing the flooring and changing window coverings can take a room from a dungeon to bright and open. Personal preference will dictate what a buyer does to their home but value can be easily and affordably created by tearing out worn or dirty floors and replacing them with clean and durable surfaces that are much more aesthetically appealing than stained and smelling ones. Recent trends are showing that homeowners like to have hard floors whether they are tile or wood is, once again, a personal preference. Colors also play a huge roll on the exterior of the house and in the small details of the home so don’t overlook that possibility either.
Supposing a buyer is still not convinced that their home is open enough they may go so far as to knock out a wall in the kitchen and put in a bar that opens into a dining area so that the the rooms ‘flow’ together. Another common way that space is created is by pushing up ceilings. High ceilings or vaulted ceilings give a very open feeling and can greatly enhance the feeling of a home. A cheaper alternative may be to remove the acoustic ceiling texture on the ceiling, often referred to as ‘popcorn’.
As well as modifying the physical appearance of a property many home owners will customize the homes layout by remodeling bathrooms and kitchens. For a homeowner that loves to cook a new kitchen layout may be the only thing that they need to feel comfortable in their new home whereas another buyer may
What are the benefits of owning a home?
Pride of ownership and achieving a part of the American Dream are often major benefits to buyers but they aren’t the only benefits that a first-time homebuyer can look forward to. Many more benefits exist and vary depending on the owner but here a few of the most popular benefits associated to owning your own place:
Appreciation: The value of real estate may have dipped in the last few years but when you take a view of real estate prices over the last 25 years or more you will see that the general trend is that values have greatly appreciated. In January of 1990, San Luis Obispo County had a median home price of $227,522 in May of 2011 that price is $381,450 or 68% higher than just 21 years ago. The real estate investor or homeowner that is able to hold onto their property for a longer term and continue to build equity in the property tends to see appreciation on their purchase as opposed to devaluation.
Financial: In addition to appreciation financial benefits include tax benefits and the fact that your payments translate into equity and not somebody else’s mortgage. The tax benefits of owning a home can vary and you should meet with your tax advisor to go over the specifics but most home owners can deduct the annual interest paid on a mortgage from income. To find out more about the rules associated with this deduction and to follow the framework to see if you qualify you can visit the IRS website here. Homeowners can also use there real estate property taxes as a deduction. An added bonus that may not be realized initially is a savings in capital gains taxes when a homeowner sells their property. A married couple can earn up to $500,000 in proceeds from a home sale without paying capital gains taxes or $250,000 per individual. Talk about benefit!
Investment: Lastly, a good incentive to buy if you can afford to is that realization that the money that you would be paying as a mortgage payment as opposed to rent is actually an investment in your own assets. The money that you are paying into your mortgage as principal directly relates into equity in the property you own. Compound that with standard appreciation of real estate over time and you can begin to see how each dollar that goes into your property is an investment toward that $250,000 in capital gains you can make later. Now suppose that instead of putting money into a mortgage you pay rent to a landlord every month, that is money that isn’t an investment. Sure, it keeps a roof over your head and keeps you warm and comfortable but it doesn’t have much return on investment beyond that.
Of all of the things you can do to a home, what are the top three that will protect your investment?
1. Get a home warranty! – Having a home warranty in place from a company like Old Republic Home Protection or American Home Shield is a nice way to make sure that your home is protected from unexpected costs associated with normal usage. Generally, this is a one year contract that is arranged by buyers but can be used by existing home owners as well. Items covered by a home warranty generally include heating units, air conditioners, ducting, plumbing leaks, breaks and stoppages, water heaters, electrical components and parts, built in microwave ovens, dishwashers, garbage disposals, ranges and cooktops and their components and trash compactors. Beyond the basic services covered the homeowner can increase their coverage to include things like refrigerators permits and code upgrades and even pools for additional costs.
To utilize a home warranty an owner simply call your warranty provider and place a service request and a contractor will be sent out by the provider representative. The contractor will work with the owner to schedule a time to address the issue and either repair or replace the item of question. The homeowner will pay a service fee to the contractor and the warranty company will take care of the rest. Generally, the service fee is much less than the cost of having a contractor do the work for you. An example of this situation is a homeowner having garage door problems. The homeowner simply calls their warranty company and files a service claim and has a contractor sent to their home. For $60 the homeowner received a new door and opener installed. Granted, not all situations are that simple or that cheap but checking with your warranty company representative is a good way to save some money and protect your new home.
2. Maintenance – Maintenance of your new home will greatly increase the lifetime of the property. Regular maintenance of gutters, windows, drains, landscaping, floors, walls and roofs can help to keep your home in the condition that you bought it in. Gutters are important to keep clean of debris and organic matter so that they can properly work to channel water from the roof down and away from the home. Standing water can lead to water intrusion in your roof and walls which can lead to rotting, cracking and leaking (all are serious issues.) Keeping your windows cleaned and operating properly can be as easy as wiping out the tracks of the windows so that dust doesn’t collect there and store moisture that can lead to mold and mildew. When you see moisture in between the panes of the window it is a good idea to have a window company come out and service the glass so that the moisture doesn’t lead to a cracked or foggy window that is unsightly.
As a home sits throughout the year debris and dirt don’t just sit there with it, they move with the forces of gravity and wind and oftentimes collect around drains and curbside gutters. Not only does this present a mess; it can lead to plugged drains and gutters that will cause pooling during rains or even from watering the landscaping. Pooling that can lead to water intrusion at the foundation of the home and cause moisture and mold under the home or even cracked foundations and sidewalks. Speaking of sidewalks, keep your landscaping under control too. Overgrown shrubs, trees and damaged hardscape can cause rubbing on the siding of the home and rooflines as well as dangerous trip hazards. As trees grow their roots expand and can push up sidewalks and cause uneven surfaces that over time can get worse and lead to poor drainage. Maintaining flooring and walls is also important to ensure that the surfaces are clean and in not worn. When guests and potential buyers look at a home and see dirty matted carpets, worn out hardwood, chipped tile and holes in walls they immediately devalue the property. That can all be prevented by regularly cleaning the floors and being careful while moving furniture and items that can damage hard floors and walls. Even something as putting an area rug below a dining room table and chairs will preserve the life of a floor and future resale value.
Roofs may be one of the most important components of maintaing your home as this is the most exposed part of your home and covers the remaining parts. The roof is exposed to sunlight, rain, snow and wind all of which erode the composition of the building materials. As a homeowner it is important to check on your roof regularly to make sure that the shingles along the top of the roof (ridge-line shingles) haven’t blown off in the wind, that the rain has not washed away the granules on composite shingle roofs, tiles aren’t broken or missing on tile roofs and that the nails and flashings of the roof are in place and haven’t come loose. As roofs age, nails can work themselves loose and create a place where water can pass the roof and enter the sheeting and interior of the house and cause much larger problems. Just like nails flashing can work loose and the sealant around the flashing can corrode and deteriorate causing water intrusion. By hopping up on the roof every so often and verifying that the materials look good and that sealant is in place the homeowner can prevent many problems that result from a faulty roof.
3. Getting homeowner’s insurance – This is something that most first-time homebuyers don’t have much choice in. If an owner is obtaining a loan, it can be almost guaranteed that they will have to get a homeowner’s policy for at least the value of the loan for the home. The insurance company makes the loan on the condition that the property is collateral in the case the owner defaults on the loan. In that case they want the home to be protected, repaired or replaced in the case that home is destroyed from a number of different disasters. The policy will often cover perils such as fire, damage by aircraft, damage by car, explosion and vandalism or riots even. When you obtain insurance make sure that the policy will cover the replacement cost of the home in it’s current value and not of what was previously.
Another good consideration to have is to video tape the home inside and out to verify it’s condition. While you’re at it record the belongings and furnishings of the home as they will be protected as well. Items like jewelry, precious rugs and art should be documented in detail as well. In your video make sure that you have a current newspaper or other method to prove the date that the video was shot and then store the video in a safe place where it cannot be destroyed in the case of a catastrophe.
What is this tax bill that nobody told me about?
Every year a homeowner can expect to receive a bill from the county tax assessor’s office for property taxes on their residence. The tax can vary anywhere from 1% to 3% of the purchase price of the property. Supposing the purchase price of the home was $100,000 and the county it is located in assesses a tax of 1.25% the total annual tax would be $1,250. It can be guaranteed that every year a homeowner will receive this assessment from the tax collector, whether or not the mortgage is paid off or not, for the entire time that the owner owns the property.
The property taxes vary from area to area and as such it is something that a homebuyer should ask their REALTR® about in regard to what the current and local property tax amount is. It would not be a good feeling for a homeowner to receive an assessment for a higher than expected amount and not be able to make the payment. That being said, it is possible for homeowners to appeal the assessed value of their home and they can get detailed instructions and corresponding documents to do so on their county tax assessor’s website. Not all homeowners will receive a reduced assessed value and may even receive a higher value so they should use their own discretion in deciding if that process is worthwhile.
