6 DIY Home Projects That Could Kill Your Home Value

Weekend TV lineups are filled with Do-It-Yourself home improvement programs. One home inspector used to call the results “six-pack projects.” While not all DIY projects end in disaster, some projects can harm home sales because buyers see these “improvements” as changes they will need to make once they buy the house. If you are planning to sell soon, it’s important to realize that potential buyers may not be as impressed with your handiwork as you are.

6 DIY Projects that Can Kill Your Home Value

1. Garage Conversion – Homebuyers love extra square footage, but they don’t want it in the garage. Most buyers will plan to “unconvert” a game room back to space for their cars or storage.

2. New Doors – New doors can add beauty to a room, but if they are not mounted properly, they land on a new buyer’s list of things to fix.

3. Uneven Hardware – If you are trying to update cabinets with new hardware, make sure they are level and line up evenly.

4. Crown Molding – Seems like an easy upgrade but adding elegant crown molding is very difficult and ends up looking sloppy.

5. Painting to Hide Problems – Cracks, gaps, and surface defects only look worse when covered with fresh paint.

6. Kitchen Cabinets – Old, worn cabinets should be replaced if possible. As with the walls, a fresh coat of paint only accentuates the dated look.

Every seller knows they need to freshen their home and add curb appeal to list their home. Before launching into a frenzied weekend of DIY projects, speak to a professional agent or stager and make sure you don’t make things worse in the eyes of your potential buyers

Should I Use My 401k to Buy a Home?

Buying a home can be a financial stretch. With soaring home values and rising interest rates, many potential first time home buyers find saving for a down payment increasingly difficult. For many people, the main source of savings is in the form of a 401k and tapping into this resource for a home purchase is one way to find the down payment necessary to finance a new home; but should you use your 401k to buy a home? Experts are conflicted.

A 401k is a retirement savings plan offered by employers which takes pre-tax earnings and deposits it into an investment account for use in retirement. The money in a 401k account can be accessed by either taking out a loan against the balance or by a straight withdrawal. A withdrawal before the age of 59.5 is also subject to a 10% penalty.

Taking out a loan from a 401k account may be a viable option for potential home buyers. For one thing, a loan from your 401k should not count against your borrowing power. You also don’t need to qualify because you are borrowing from yourself. The amount you can borrow is limited, for example 50% of the balance, and typically must be repaid within 5 years. The other option is a simple withdrawal; the 10% penalty is incurred, but the value is not usually limited.

Saving for a down payment can be challenging. Using your 401k to help may be a great option. Speak with your financial advisor and see if this is the right financial move for you.

Can an Expensive Home Still be Affordable?

Real estate prices across the country have increased dramatically in the past year. With increases in the 10-12% range, many potential homebuyers have given up and decided that homes are just too expensive to consider. While homes have become more expensive, it does not mean they are unaffordable.

Would you believe that we are experiencing a historically favorable market for buyers when it comes to affordability? Why? This is because affordability involves more than just the purchase price of the home. When considering whether you can afford a home, you must include wage growth and interest rates.

Interest rates are among the lowest we’ve seen in decades. In addition, wages are increasing at a staggering 7% rate year-over-year. For example, a median household income of $68,000/year with a 7% wage growth, will see an extra $400/month.

The median home price is about $325,000. If we add a 10% growth factor to this, that same home would sell for $357,500. At a 3.5% interest rate, the monthly payment would increase from $1313/month to $1444/month, an increase of only $131/month. In terms of affordability, today’s market offers homebuyers more for their money.

Many homebuyers indeed have sticker shock; homes are getting more expensive. But for many homebuyers, other economic factors combine to make homes more affordable than ever before.

Don't Get Represented by a “Yes-Agent”!

We all know the type. The person who just says “yes” to anything, never challenging or questioning an opinion or strategy. These people-pleasers agree with anything suggested; while they may be nice friends, in real estate a yes-man or yes-woman can actually cost you money. Often a lot of money. No one likes to leave money on the table, but having an agent who doesn’t challenge unrealistic expectations is not serving the client. So, how can you spot these yes-agents? These yes-agents can take many forms. On the seller side, they could be the agent that lists a home at an unrealistic price. Well-priced homes are selling quickly, but that does not mean that a seller can add 10% or more to recent sales and expect to sell the home. Over-pricing a home can cost precious time as potential buyers forgo viewing the property in favor of well-priced options. As the home lingers on the market, the seller must eventually lower their price to market value. Buyers often assume the seller is desperate to sell and offer lower prices than they might have at the beginning of the listing. Buyers represented by a yes-agent could find themselves writing unrealistic offers as well. There is danger in writing a low-ball offer just to “see if it sticks.” The yes agent might be willing to send over the offer, but the seller is just as likely to assume the buyer isn’t serious and move to more realistic offers. The yes-agent just cost the buyer the home. Spotting a yes-agent, and avoiding them, can save real estate clients time and money, and ensure they achieve their real estate goals.

Landlord Deductions from Security Deposits

A rental deposit against damage is a standard part of all housing rental agreements. The purpose of the security deposit is to protect the landlord from loss in the event the tenant does not take proper care of the property. Most renters don’t even think about it when they sign a new lease, assuming they will get their entire deposit back when they move out. So, it often comes as a surprise when the refund amount is lower than they paid when they signed the agreement. Many renters are surprised to find out what the landlord can deduct from their deposit.

Here are some common items that the landlord can charge to renters when they leave:

• Non-Payment of Rent – This should seem obvious; if the tenant leaves before the lease is up or simply owes back rent, the landlord can deduct or keep the deposit to compensate.

• Unpaid Utilities – Utility companies will hold the landlord responsible for unpaid bills, so if the water or electric bill has been unpaid, they will deduct this from the security deposit.

• Unusual or Excessive Cleaning – While normal wear and tear are not deductible, excessive cleaning can be charged to the renter.

• Damage – This also should be obvious. This was the main purpose of the deposit.

• Trash and Other Items Left Behind – Renters should think twice about leaving that old patio furniture behind. Any cost to remove and dispose of anything left in the property can be charged against the deposit.

Finally, breaking the lease for any reason could put your deposit at risk. Renters need to educate themselves about the risks to their deposit and read the lease carefully for any specific terms included by the landlord. This can help renters avoid the shock of a smaller-than-expected refund check.