Which Home Improvement Projects Offer the Best Returns?

Daily Real Estate News | Friday, December 16, 2011

When it comes to remodeling, exterior replacement projects have routinely rewarded home owners with more bang for their buck. This year is no different: REALTORS® recently rated many exterior improvements as among the most valuable home investment projects as part of the 2011-12 Remodeling Cost vs. Value Report.

“This year’s Remodeling Cost vs. Value Report shows the value of putting your home’s best façade forward, so to speak,” said National Association of REALTORS® President Moe Veissi. “Inexpensive exterior replacement projects are not only crucial to a home’s regular upkeep, but are also expected to recoup close to 70 percent of costs. Specific exterior projects such as siding, window and door replacements are part of regular home maintenance, so many homeowners are already undertaking them. These projects also do not require expensive materials and they have the added bonus of instantly adding curb appeal.”

HouseLogic.com, NAR’s consumer Web site, includes dozens of remodeling projects, from kitchens and baths to siding replacements, which indicate the recouped value of the project based on a national average. According to the Cost vs. Value, seven of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. REALTORS® judged an upscale fiber-cement siding replacement as the project expected to return the most money, with an estimated 78 percent of costs recouped upon resale.

Two additional siding replacement projects were in the top 10, including foam-backed vinyl siding, expected to return 69.6 percent of costs, and upscale vinyl siding, expected to recoup 69.5 percent of costs. Three door replacements were also among the top exterior replacement projects. The steel entry door replacement is the least expensive project in the report, costing little more than $1,200 on average and expected to recoup 73 percent of costs.

The upscale garage door replacement jumped seven spots to number six this year, primarily due to the average cost of the project declining more than 15 percent nationally. The upscale and midrange garage door replacement projects are expected to return more than 71 percent of costs. One window replacement project — upscale vinyl — rounded out the last exterior replacement project in the top 10, expected to recoup 69.1 percent of costs.

The 2011-12 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels, and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 14th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood LLC, was completed in cooperation with NAR.

Source: NAR

 

Is septic inspection really necessary?

Some buyers say ‘water test’ is enough to assess condition

By Barry Stone
Inman News®

DEAR BARRY: When we bought our home, we did not have the septic system professionally inspected. Instead, we ran water at the sinks, bathtub and shower for more than an hour. There were no backups, so we thought everything was OK because our water test exceeded normal use. Recently, the system was serviced, and we learned that the septic tank is substandard and will soon collapse if not replaced. Are the sellers and real estate agent liable for their failure to disclose this condition? –Ryan

DEAR RYAN: The sellers and agent were required to disclose the problem only if they knew about it. It is highly unlikely that the agent knew the condition of a buried tank. The sellers, on the other hand, may or may not have known, depending on whether there was a septic inspection during the time they owned the property.

But regardless of who knew, your agent and the sellers’ agent should have recommended that the septic system be inspected. That would have been normal procedure in the course of the transaction. There was simply no excuse for letting that go by. If you were advised to have a septic inspection but declined to have one, that was a decisive mistake.

It was also a mistake to think that a water test would provide an adequate evaluation of the system. There are many kinds of septic problems that are undetectable by merely running water down the drains. A proper septic inspection involves opening the tank and draining the contents to expose the condition of the interior. The fact that sinks and showers were draining had no bearing on the condition of the tank. A septic tank can be collapsing and still allow water to drain. Someone should have advised you accordingly.

DEAR BARRY: When we bought our house, the home inspector said he suspected a gas leak in the crawlspace under the building. The seller hired a plumbing company to find the leak. According to the plumber’s invoice, all gas lines were checked and no leaks were found. He determined that the house had been vacant for months and the dry drain traps were allowing sewer gases to enter the building. But after we moved in, the gas smell persisted, so we called the gas company. They found a gas leak that was so dangerous we were ordered out of the house immediately. Do we have recourse with the seller or the plumber? –Becky

DEAR BECKY: The sellers apparently acted in good faith. They hired a licensed plumber to repair the gas leak that was discovered by your home inspector. They appear, therefore, to be free of liability. The plumber, however, appears to have been professionally negligent, having failed to discover the gas leak or its source. What we don’t know is how the plumber tested the system for leaks. A common method, after checking all fittings and fixtures, is to turn off the supply valves at all fixtures and then to observe the gas meter to see if the reading changes. Unless the gas leak was intermittent rather than continuous, the plumber should assume some responsibility for the repair costs.

To write to Barry Stone, please visit him on the Web at www.housedetective.com.

5 tips to stay on top of home maintenance

Where to find reliable contractors

By Dian Hymer
Inman News®

You’re not alone if your roof is leaking and you’re kicking yourself for not having called a roofer during the summer months. Most people have a limited concept of preventative maintenance. This can lead to big problems that end up being more expensive than if you had routine maintenance in place.

Many buyers don’t understand that home maintenance goes with homeownership. When you rent, someone else usually pays for repairs. As a homeowner, you’re responsible for keeping your home in good condition.

Unless you’re handy at home repairs, it can be costly to maintain a home properly. But there is a benefit at the end of the line. Buyers pay more for homes that are well-maintained and show a pride of ownership.

It can be a hassle to properly maintain your home unless you organize and prioritize the projects that need to be done. You also need to set a schedule and stick to it.

Most home maintenance can be done annually: roof maintenance (including gutters and downspouts); sealing exterior cracks; weatherproofing; a furnace and air conditioning inspection; and inspecting and cleaning the drainage system.

Mark these events on your calendar so that they can be scheduled for about a month before you’d like to have the work done. If you wait until just before the rainy season to start your annual maintenance, you could have trouble finding good contractors to help you.

Don’t wait until your roof is leaking to repair or replace it. There will be collateral damage to the interior of the house. Your homeowners insurance company might pay to repair the interior damage, less the amount of your deductible, but it won’t pay to replace the roof. Too many claims could be grounds for not renewing your policy.

HOUSE HUNTING TIP: Assemble a crew of contractors and tradespeople who can help you with your home maintenance. It’s not always easy to find reliable people who do good work. You’ll end up frustrated and having to do more oversight if you work with people who don’t show up or do the job right.

Ask your real estate agent or acquaintances who own homes in the area to recommend tradespeople to you. If the seller is happy with people who have worked on the property, ask for a list of names and contact information when you close the sale.

Homeowners who haven’t the time or expertise to determine what needs to be done to keep their home in good shape could ask the home inspector that inspected the house for them to do a reinspection periodically to point out areas that need attention.

One of the keys to good home maintenance is to take care of critical items as soon as they become apparent. For instance, don’t postpone repairing a plumbing pipe leak. Have it repaired as soon as you notice it.

Don’t assume that because your house is new that you won’t have any maintenance issues. If the gutters back up on any house, even a new house, water can leak into the house or down the inside of the walls. This, left unchecked, can lead to a major repair to the framing. If repaired right away, you may just need to seal and touch up the paint.

Likewise, even though you just had the exterior painted, you still may have areas that will need touch up every year or so, especially if they receive intense sun exposure.

THE CLOSING: Don’t go for the cheapest contractor or building materials just to save money. If an inferior-quality job has to be redone sooner than anticipated, your savings will dwindle.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

What’s new for taxes in 2012? The good news and bad news

Real Estate Tax Talk

By Stephen Fishman
Inman News®

Several tax changes will go into effect on Jan. 1, 2012 — some good, some not so good. Here are the most important changes you should know about:

Tax breaks that have been reduced for 2012

Several tax breaks will be reduced, but not eliminated, for 2012.

1. Bonus depreciation: During 2011 taxpayers can deduct in one year 100 percent of the cost of most types of personal property they buy for their businesses and place in service during the year. This amount is scheduled to lower to 50 percent for most types of property placed in service during 2012. However, it is possible that 100 percent bonus depreciation will be extended through 2012.

2. Section 179 expensing: For 2011, the maximum Code Section 179 deduction is $500,000, the highest it has ever been. The maximum Section 179 deduction will be reduced to $139,000 for 2012. Moreover, the 2012 limit will have to be reduced dollar for dollar by any amount by which the cost of Code Section 179 property placed in service during 2012 exceeds $560,000.

3. Employee transportation benefits: For 2011, an employer can provide up to $230 per month in tax-free transportation benefits — this includes transit passes or reimbursement for commuting to work by vanpool. Starting in 2012, the limit will be reduced to $125 per month.

Tax breaks that have been eliminated for 2012

Three widely used tax breaks will be eliminated entirely starting in 2012:

1. State and local sales tax deduction: For 2011, taxpayers can elect to deduct as an itemized deduction on their Schedule A (itemized deductions) state and local sales taxes, instead of state and local income taxes. This deduction is eliminated starting in 2012. This is bad news for taxpayers who live in states with no state income tax.

2. $4,000 education expense deduction: For 2011, taxpayers with modified adjusted gross income of $65,000 or less ($130,000 or less for joint returns) may deduct up to $4,000 of qualified education expenses paid during the year for themselves, their spouses, or their dependents.

Such expenses include tuition and mandatory enrollment fees to attend any accredited public or private institution above the high school level. This deduction is eliminated entirely for 2012.

3. Charitable Contributions: IRA (individual retirement account) owners age 70 1/2 and up can directly transfer up to $100,000, tax free, to eligible charities during 2011. This option, created in 2006, is available for distributions from IRAs regardless of whether the owners itemize their deductions. This provision is eliminated for 2012.

Tax breaks that have been expanded or extended

A couple of tax breaks have been expanded for 2012:

1. Hire a veteran, get a tax credit: If you hire an eligible unemployed veteran for your business during Nov. 22, 2011, through Dec. 31, 2012, you’ll qualify for an expanded work opportunity tax credit. This is a tax credit against income tax of up $5,600 (more for disabled veterans).

2. Reduced Social Security Taxes? During 2011, Social Security taxes are reduced to 10.4 percent up to the annual income ceiling, instead of the normal 12.4 percent. The U.S. Senate passed a two-month extension of the 2 percent reduction, but the House rejected the Senate bill.

However, most people believe that — one way or another — the 2 percent reduction will be extended through the end of 2012.

Stephen Fishman is a tax expert, attorney and author who has published 18 books, including “Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants,” “Deduct It,” “Working as an Independent Contractor,” and “Working with Independent Contractors.” He welcomes your questions for this weekly column.

3 tips for staging your home to sell

Decluttering has financial upside

By Dian Hymer
Inman News®

Today’s buyers are looking for turnkey homes. That is, they want to move right in without having to do a lot of work. Buyers with busy lifestyles pay a premium for listings that are in prime condition. Staging can make the difference between a listing selling or not, the time it takes to sell, and the ultimate sale price.

Sellers who are financially strapped often have a hard time accepting that they’ll need to invest in preparing a house for sale even though they may sell for less than they paid. Fix-up costs can mount up; your agent can help you prioritize so that you don’t waste money. It’s important to keep your goal in mind, which is to sell your house in a difficult market.

Recently, a home in Piedmont, Calif., an affluent city neighboring Oakland, came on the market in “as is” condition. It had been lived in for decades without much upgrading. Although located in a desirable area, the listing was vacant, dark and showed poorly. The sellers refused to do any work to improve its appeal.

After months on the market with no significant interest, the sellers pulled the house off the market and made improvements. The wall-to-wall carpet was pulled up to reveal hardwood floors that were then refinished. Painters lightened the interior and a professional stager was hired to bring in furniture, artwork, house plants and accessories. The listing was put back on the market with a fresh look and sold right away.

HOUSE HUNTING TIP: Although listings staged by a good decorator show well and often sell quickly, you don’t need to spend a lot to put your home into shape for marketing. Most homeowners have too many personal possessions in their home from a sale standpoint. Decluttering is something most sellers need to do.

This can generate uncomfortable emotional responses. One seller, who was cleaning out the family home of 50 years, found a packet of love letters his father sent to his mother. Of course, he had to read all of them, which delayed his fix-up schedule.

Consider hiring someone to help you sort, pack, donate and recycle items that you no longer want. You may be able to take a tax deduction for things you donate. Make sure to get a receipt. Your real estate agent should be able to recommend someone who can help you clear your house of clutter if you are overwhelmed by the project.

Your agent, or stager, may ask you to put away collections of art, personal photos, etc. This can be difficult for most sellers because, for them, it’s part of the emotional appeal of their home. Your house won’t look like your home after you’ve removed personal possessions and moved what’s left around to display the house to its best advantage.

That’s the point of the preparation process. You don’t want prospective buyers focusing in on your personal property; you want them to focus on the house. Keep in mind that how you live in your home and how it should look when it goes on the market are not the same.

Some sellers complain that their house looks too stark without all their possessions. Even so, it helps you to detach yourself emotionally from the property. Also, less personal property usually gives homes a more spacious feel. When buyers are looking for the most for their money, bigger is usually better.

To close the deal, a listing should be spotless and inviting. Bring in new house plants to put in strategic locations, like orchids in the bathrooms. In dark spots that need a dash of warmth and color, use bromeliads.

THE CLOSING: If you can’t pull this together yourself, or with the help or your agent, hire a good stager for a consultation or a proposal for full or partial staging.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

Open Houses: Saturday and Sunday, December 10-11, 2011

There are many, many open houses this weekend!!! The following properties will be holding open houses in the Brandywine Hundred, North Wilmington, Newark, Hockessin, Pike Creek, Newark, Bear, and Middletown, Delaware areas on Saturday and Sunday, December 10-11, 2011:

Can’t make the open house? No problem! Contact Brian Doreste today at 302-753-6398 to schedule your own private showing.

The most current open house list for New Castle County, Delaware can always be found at: http://deerhurst.net/category/upcoming-open-houses/, and is usually published every Thursday morning.

5933455 $197,000 10 E Galloway Ct Newark DE Abbotsford
5804746 $189,900 3653 Naamans Dr Claymont DE Ashbourne Hills
5912982 $289,900 41 Phoebe Farms Ln New Castle DE Bayview Manor
5970445 $255,000 1200 Wynnbrook Rd Wilmington DE Bellefonte
5974980 $215,000 16 Glezman Dr Newark DE Belltown Woods
5960090 $229,990 1112 Braken Ave Wilmington DE Berkshire
5973040 $179,900 3511 Haley Ct Wilmington DE Birch Pointe
5979454 $299,900 4 Briar Rd Wilmington DE Briarwood
5974973 $417,000 203 Marjoram Dr Bear DE Calvarese Farms
5919117 $139,900 78 W Stephen Dr Newark DE Chestnut Hill Ests
5978648 $123,500 1123 Clayton Rd Wilmington DE Cleland Heights
5945381 $189,900 9 Cobble Creek Curv Newark DE Cooches Bridge Far
5976477 $359,000 391 Union Church Rd Townsend DE Country Meadows
5953328 $324,900 208 Timber Knoll Dr Bear DE Country Woods
5956731 $259,900 1109 S Dolton Ct Wilmington DE Darley Woods
5952761 $249,900 2 Neponset Rd Wilmington DE Dartmouth Woods
5973835 $330,000 105 Peirce Rd Wilmington DE Deerhurst
5971288 $349,900 140 N Gabriel Dr Bear DE Ests Of Red Lion
5964319 $640,000 1003 Oriente Ave Greenville DE Fairthorne
5902481 $419,900 29 Hempstead Dr Newark DE Farmington
5899648 $519,900 103 Ruth Dr Middletown DE Greylag
5968843 $199,900 323 Marsh Rd Wilmington DE Hillcrest
5935473 $149,900 2438 Hammond Pl Wilmington DE Kirkwood Gardens
5978445 $209,900 4631 Bailey Dr Wilmington DE Limestone Acres
5979390 $254,900 145 Shinn Cir Wilmington DE Limestone Hills We
5945210 $315,000 4703 Mermaid Blvd Wilmington DE Linden Heath
5945091 $225,000 211 Wooddale Ave New Castle DE Llangollen Estates
5837905 $239,000 1109 Stonewood Ct Wilmington DE Longview Farms
5970282 $364,900 113 Portside Ct Bear DE Mariners Watch
5891184 $409,900 12 Bordeaux Blvd Newark DE Meritage
5963135 $310,000 30 Eliot Ct Middletown DE Middletown Crossin
5896555 $488,900 654 Salem Church Rd Newark DE Millers Reserve
5899237 $454,000 662 Salem Church Rd Newark DE Millers Reserve
5899240 $559,000 676 Salem Church Rd Newark DE Millers Reserve
5899241 $429,000 650 Salem Church Rd Newark DE Millers Reserve
5975586 $449,900 720 Elizabeth Ln Bear DE None Available
5977012 $249,000 1428 Foulk Rd Wilmington DE None Available
5890795 $275,000 33 E 6th St New Castle DE Old New Castle
5961607 $249,750 119 Harmony St New Castle DE Old New Castle
5973377 $299,900 201 Harmony St New Castle DE Old New Castle
5937135 $210,000 313 Derose Ct Bear DE Porter Square
5965033 $207,000 10 Riverside Dr Wilmington DE Riverside Gardens
5959257 $229,500 4545 Roslyn Dr Wilmington DE Rolling Hills
5963705 $214,900 129 E Rutherford Dr Newark DE Rutherford
5969359 $175,000 12 Silview Ave Wilmington DE Silview
5960532 $340,000 451 Stella Dr Hockessin DE Stoneridge
5927742 $250,000 912 Waterlilly Ln Middletown DE Summit Pond
5745423 $798,000 111 Sunway Dr Newark DE Sunset Valley
5873935 $305,000 1423 N Clayton St Wilmington DE Trolley Square
5936576 $204,000 241 Becks Woods Dr Bear DE Village Of Becks P
5932025 $355,000 1101 Shipley Rd Wilmington DE Welshire
5949634 $129,000 225 W 34th St Wilmington DE Wilm #02
5896646 $159,900 2510 W 7th St Wilmington DE Wilm #13
5968862 $449,000 1003 N Bancroft Pkwy Wilmington DE Wilm #13
5979700 $230,000 1100 N Clayton St Wilmington DE Wilm #14
5929918 $119,900 618 N Rodney St Wilmington DE Wilm #15
5962663 $169,000 202 Garfield Ave New Castle DE Wilm Manor
5977994 $134,900 10 Stevenson Way Newark DE Woodland Trail
5823820 $250,000 2318 Patwynn Rd Wilmington DE Wynnwood
5879746 $295,000 2214 Patwynn Rd Wilmington DE Wynnwood

Come out and see these houses this weekend!