Fixer-Upper – Should You or Shouldn’t You?

Making a house your own by remodeling, moving walls, opening things up is often a dreamy idea. But when you really think about it, what are the factors may impact your decision to delve in the world of Fixer Upper?

6337 38th Ave SW, Seattle | Sold | $470,000

Sometimes a home comes up for sale that is well-below market value for homes similar to it. However, sometimes these homes are priced low because they need a lot of work. It might be tempting to save money on a purchase and transform the home into exactly what you want, especially if the home is in a very desirable area. Before you make the leap, you should ask yourself if this type of project is right for you and the way you live:

What shape is this house really in? Years of neglect don’t always show up in dated wallpaper and stained linoleum. It can show up as a leaky roof, rot, and structural damage. We always recommend getting an inspection before purchasing a property, even if your plan is to gut it. If the initial inspection turns up problems that are concerning, calling in a structural engineer or other experts is a good use of your money so you get an idea as to how extensive problems are.

How much is this going to cost? Although builders and contractors with a lot of experience can look at a kitchen or bathroom and know that x will cost $20,000 and y will cost $30,000, those are very very rough ballpark figures. They don’t take into account a discreet vent pipe that may need to get relocated or a plumbing hidden in a wall that needs to get updated. A contractor may be able to give you a rough estimate in a few hours but ask for a detailed proposal so you both understand the scope of work. Make sure you include a 20% contingency budget to deal with unforeseen problems.

How are we going to deal with hidden problems? Even if you get the home inspected and bring in contractors to give you quotes for work to be done, that doesn’t mean more problems aren’t hidden behind the walls and under the floors. Although you should have a 20% contingency padding in your budget for such situations, what happens if the needed repairs exceed that?

How are we going to live while the repairs are being done? Are you planning on having all the work done before you move in? Or will you be tackling one project at a time? Are you okay with living with a certain amount of chaos, dust, and missing functional spaces? Can you function without a kitchen for weeks on end? Not all people can.

What if the bank won’t give us a loan for this property? Banks want to make sure the asset that is being used to secure the loan is sound. Therefore most banks will have criteria for what types of property they will lend on. Working around this may take some strategy and we may need to shop around to see what options you have.

Buying a home in disrepair and renovating can indeed be a strategic way to build equity or simply have a home you will love and enjoy for years to come. However, before taking the leap, make sure this is a fit for your situation and your personality. If you would like to learn more about this option, let’s talk! Give us a call, text or email any time.

 

The Tax Reform Bill and Real Estate Ramifications

Remember when the Tax Bill was passed a couple months ago? Now that the dust has settled, here are some of the effects that we are seeing on Real Estate. Below is a breakdown, in regular language, outlining what this all means for the housing market.

The Tax Cuts and Jobs Act, otherwise known as the Tax Reform Bill, passed in December. Although accountants and politicians are still working through the details to determine how the new rules and regulations apply to their clients and constituents, the National Association of REALTORS® (NAR) has been on the forefront fighting and lobbying for the rights of homeowners and working hard to make sure homeownership in this country is not adversely-affected.

319 51st St SE Auburn | Pending | $400,000

NAR put together a summary of what the final bill means for property owners. You can read the entire text at: https://www.nar.realtor/tax-reform/the-tax-cuts-and-jobs-act-what-it-means-for-homeowners-and-real-estate-professionals but below is a summary of the provisions, most of which went into effect 12/31/17, and how those apply to real estate:

  • Home Mortgage Interest Deduction – The final bill retained the mortgage interest deduction on mortgages, but limited the mortgage debt to $750,000 for new loans (previously-secured loans up to $1 million are grandfathered in). The mortgage interest deduction for second homes follows the same rules.
  • Home Equity Debt Interest and Second Mortgages– The bill repealed the deduction for interest on home equity debt but not if the loan was used to substantially improve the residence.
  • Property Tax Limits – For those who itemize their taxes, a deduction of up to $10,000 for the total of state and local property taxes and income or sales tax will be allowed.
  • Capital Gains on Home Sale – Although this was looked at closely, the final bill kept the current law in place, allowing for no capital gains tax on primary residence with gains of $250,000 for singles and $500,000 for married filing jointly so long as the homeowners lived in the home two of the last five years before selling.
  • 1031 Exchanges – For those people with investment property, the bill retains the 1031 Exchange rules for exchanging real estate to avoid capital gains tax.

Although it may not seem like much will change from a property-owner perspective, because the standard deduction will have doubled, it makes itemization less valuable and therefore, homeownership less valuable as well. In fact, homeowners who itemized their deductions in the past may find that it is more beneficial (both from a financial and work point of view) to take the standard deduction.

There are some additional changes to items such as moving expenses and the historic tax credit. If these apply to you, please read the information in the link above, talk to your accountant, or let me know if you have questions.

Some elements of the bill may still be fine-tuned by lawmakers and additional information is forthcoming. I also advise you to talk with your accountant to make sure you have the facts on how these changes affect your real estate investment. Questions? Please contact us any time via Social Media, here on this website, or email or call.

Why you Need a Local Expert

Hi All! Sarah and Shelley here, with a friendly reminder that we specialize in the Greater Seattle area and south. From Downtown all the way to Federal Way, we understand what’s happening here.

 

When it comes to buying or selling what is likely your biggest asset, it pays to have a real estate agent who is not only a professional, but who also has the local expertise to help make sure you are investing your money wisely and that your investment will pay off when it is time to sell.

Photo Credit: kevinandamanda.com

Here are just some of the items that an agent with local expertise can provide you:

  • Information on possible zoning changes and how those might impact future value
  • Historical market appreciation or depreciation data
  • Data on local amenities and services
  • School information
  • Information on upcoming local improvements to streets and thoroughfares
  • Information on big housing or commercial developments on the horizon
  • Updates on businesses moving in or out of the area
  • Information on trends such as population growth
  • Data on regional economic trends as these can have a strong impact on the demand for housing
  • Market information such as listings, pendings, and sold properties
  • Up-to-date notifications of new listings and solds in the neighborhood, and how the updated sold information can affect the value of your property
  • What your neighbors are doing to remodel their homes and how those changes can help their bottom line when it comes time to sell
  • Information on how property taxes are assessed and the relationships between assessed value and sold values
  • Information on developed and undeveloped land in the neighborhood, and what may be built on those.
  • Traffic trends information

And so much more! A local expert truly understands the special nuances of the different neighborhoods – such as those special pockets of parks and trails, the historic homes or businesses and their significance, or important events that have occurred there. Check out our Videos to see this in action.

 

As much as people buy homes, they also buy areas. It is rare that one can buy a home and have it relocated, so it is important to have an appreciation for an area before one buys a home there. And when it comes time to sell, it pays to have an agent listing the home who can explain all the benefits of your home, not just what is behind your walls.

It is easy to hire a generalist in real estate, but remember, we hire medical specialists when we have a unique diagnosis and your asset should get the same specialist treatment. I would be more than happy to provide you with local information and how the changes I have seen affects your home value. Please let me know how we, YOUR local experts, can be of service. Contact us and let’s chat.

Making the most of your Outdoor Space in the Winter Market

What is one thing you can do during the winter to really maximize your listing dollars with the goal of getting the most buyers interested in your property? Really amp up the impact of your outdoor spaces! Here are some photos from our latest listing that really showcase how it’s done.

Regardless of whether a home is in the balmy south or the frigid north, there are things you can do to get the focus on your home’s outdoor potential and get the buyers thinking about the warm spring and summer ahead. What’s even better? Most other sellers don’t take these extra steps, allowing your home to stand out even more!

Below is our list of the top five things you can do in any climate to maximize your outdoor space:

  1. Really focus on the first impression and curb appeal. This means making sure the driveway and walkways are clear, clean, and nicely edged. It means the front door and garage doors look crisp and have impact. This means that all garden beds are raked out and the landscaping is trimmed up. When a home looks great and ready for spring when the potential buyers drive up, it makes a powerful first impression.
  2. Make sure all your windows are clean and streak-free. This way, when the sun is low in the sky, light streams through those flawless windows, illuminating the space and providing a gateway to peeking outside at what awaits them.
  3. Get some green. Include pots on walkways and in the outdoor living spaces that are brimming with evergreens such as boxwoods, evergreen azaleas, or other evergreens such as small cedars. As your climate allows, look for winter-blooming plants such as heathers, hellebores, and crocus to give your beds a punch of color.
  4. Set the stage. Don’t think that just because it is winter that all living should be done inside. If you have a firepit and some all-weather chairs or benches, clean up the area, and when you have a showing and as weather allows, put some throw pillows out there, a few small blankets with a cohesive punch of color to match the pillows, the fixings for s’mores and all of a sudden you have expanded your living space! If you have an external gas fireplace, and it is safe to do so, turning it on may be another great way to get buyers excited and ready to sit down in front of the fire.
  5. Lights, lights, lights! Outdoor hardwired landscape lighting that accents trees and the home really provides punch. So do white party lights, deck lighting, and battery-powered candles in lanterns and hurricane shades. Depending on locales, solar lighting may be hit or miss, but don’t let lack of outdoor hardwiring keep you from illuminating your outdoors!

The winter can really be an advantageous time to list your property and buy another with less competition if that is your plan. Get an edge over other listings by making your outdoor spaces positively shine! We can help you make a plan when it is time to list.

 

What’s Up 2018?

Each year we take time to review what has happened during the year and to look forward to predict what is in store for real estate. Below are predictions for the 2018 real estate market, straight from Denise Lones, Real Estate Mentor for the best agents around, based on data that was available at the time this was written:

From Denise Lones:

Interest Rates – With the Tax Reform Bill and new infrastructure, I expect interest rates to rise. A climb to 4.0%-4.5% is probable but it is possible that if the economy grows at a good clip next year, we could see rates as high as 5%. I believe the average for the year will be about 4.6%. Although this rise will cause some buyers to regroup, it will not be enough to make a strong market shift and cause buyers to leave the market in droves.

Home Price Growth – With double digit percentage price increases in many markets across the country in 2017, I believe we will move back to price inclines below 10% in those busy markets. In fact, I foresee that the average for those areas that did see such strong increases in 2017 will scale back to about 4-7% gains in 2018. Nationally, I expect prices to increase about 3.2%. Although we still have significant challenges with our inventory, incomes cannot sustain the rapid price growth we have seen regionally over the last few years, and therefore, prices will not rise as quickly.

New Construction – There is still a severe shortage of new construction. Our country needs about 1.5 million new starts per year to maintain inventory, but since 2009, we have been short a cumulative almost 6 million units. This is one of the primary causes of our inventory shortage and what is driving prices up – demand outweighs supply. Local issues

 

in many areas such as zoning and water rights are also capping new construction opportunity. In addition, the cost of building supplies is causing problems for our builders and I expect this problem to worsen in 2018. Since the market correction, we are still not back up to the 1.5 million starts needed (2016 projection is 1,173,800 units), so our new construction inventory crisis will continue until we can replace the six million units we are short AND get back on track to 1.5 million starts per year. I don’t foresee us making gains in this category in 2018.

Housing Inventory – Although there are improvements in this category because we areadding some new housing units, it may take years or more for inventory levels to get back to a balanced level. Our inventory shortage was caused by a shortage of housing starts that began during the recession as outlined above. We will continue to see inventory challenges until new construction picks up even further. Additionally, I predict that more buyers will be entering the market for a home as our economy is strong with low unemployment, which I suspect will get even lower due to our economy. According to the Bureau of Labor Statistics, the national unemployment rate stands at 4.1% for November 2017, which is the lowest it has been since December of 2000. I predict unemployment to be in the high 3% range by the end of 2018. High demand and low amounts of new construction means a continued inventory crunch, although a rise in interest rates may relieve this demand a touch.

Furthermore, I am often asked when the bubble will burst or we will see another crash. I do not foresee this in the upcoming year. Although we are seeing prices rise quickly, the conditions that our national market is facing now are not the same as what we saw just a decade ago. There isn’t the easy access to credit as was before the last crash when banks were more de-regulated. There aren’t enough new or resale home to satiate current demand, unlike the building boom of the mid-2000s. Buyers are not overleveraged and, in many cases, have to put more cash down to compete in multiple-offer situations allowing buyers to start in a higher equity position. Based on our history and the facts that are in front of us, I don’t believe another crash is likely at all.”

We are excited for what 2018 has in store! For additional information and predictions on our local market, please contact us and we can geek out over real estate.

Straight from our Closets: How we will Help “Dress for Success”

We are going to take a break from our regularily scheduled programming of All Things Real Estate and focus on something else that we are passionate about…..clothes (ahem, maybe a guilty pleasure) and boosting other women, lifting them and helping achieve their goals for a brighter future.  Whatever we can do help someone become a #girlboss, we are IN.

So many women have big dreams to find a job, make money to support their families, build their future. Unfortunately, many do not have the resources to begin the process with their first impression. The Job Interview is one of the occasions that can make or break someones chances of getting their foot in the door.

Dress for Success is an international not-for-profit organization that empowers women to achieve economic independence by providing a network of support, professional attire and the development tools to help women thrive in work and in life.

Since starting operations in 1997, Dress for Success has expanded to more than 150 cities in 28 countries and has helped nearly one million women work towards self-sufficiency. Check out their website here.

Cloud City Homes is excited to announce that we will be hosting a clothing drive to contribute to this fantastic organization. We will be collecting items from friends, family, and clients in the Seattle area to donate to Dress for Success.

On Thursday, February 15th, we will host a small party at the Windermere Real Estate West Seattle Office from 6-9 PM. Here, you will be welcome to try on some of these items and keep what you like in exchange for a small donation. All remaining items as well as funds collected will be donated to Dress for Success.

Please consider collecting and donating the following items, some straight from your closet:

Plus sized (size 18 to 32)
Designer clothing
Accessories
Handbags
New items with tags
New Spanx
Umbrellas
Winter Coats

Please contact us to coordinate pickup, dropoff, or details of this event. We really hope you can make it and promise you will feel great, knowing that your gently used clothing is going to a good cause. Bonus points for having a newly cleaned out closet!

 

 

Photo Credit:

thecurvyfashionista.com

blogs.uww.edu

stylediscussions.com

 

Your Home’s Memorable Features Could Mean Money in the Bank

Take a look around your home. What are the special things about it that give it character? What do people comment on? An antique stained-glass window? An amazing fireplace? A high-tech faucet? Memorable features like these give your home character and they are the things that make buyers fall in love with a home when it comes time to sell.

This garden shed could also be used as an Artist Studio

Did you know that a good rule of thumb is that for each 500 square feet of home, you should have one special, memorable feature? For example, a 2500 square foot home should include five special items that give the home character.

If you look around your home and can’t find enough special things for your square footage, here are some ideas to get the creative ball rolling:

  • Custom shelving around the fireplace
  • Upgraded laundry room with baskets and shelves
  • A chandelier that makes a statement
  • Kitchen backsplash with amazing tile
  • Backyard entertaining area with built-in BBQ or gas firepit
  • Art alcove
  • Antique built-ins such as a reclaimed pantry door
  • Pot fill faucet behind the stovetop
  • Built-in breakfast nook
  • A stone veneer wall or some other textural treatment such as shiplap or wood mosaic
  • Steam shower option in the master
  • Smart home features such as Ring or self-closing blinds
  • Outdoor accent lighting
  • Stamped concrete hardscapes
  • Epoxied garage floor
  • Garage storage solutions
  • Wine fridge
  • Wine cellar or storage
  • Hot tub
  • Laundry chute
  • Heated bathroom floor
  • Pull-out storage for stand mixer
  • Beamed ceiling
  • Secret storage such as a wall safe behind a painting
  • A big window strategically placed to let in light or take advantage of a view
Look at that yard! Huge fenced in property for you to do whatever you’d like!

This list includes both big dollar items but also small improvements you can make that really give your home character. We know you will appreciate the changes now but your buyers will also enjoy them when it is time to sell. We would like to talk with you more about your plan to add character and special features. Give us a call or text any time. shelleyg@cloudcityhomes.com or sarahgc@cloudcityhomes.com

Why it’s Important to have the Right People on Your Homebuying Team

Public Service Announcement: NOW (November and December) is a great time to buy a house. Though inventory is low, your competition is distracted. Here is how to prepare for this time of year and any time you are thinking of purchasing a house or condo.

When you are getting ready to buy a home, it’s important to make sure you have the right team in place to get the job done. Having a group that is ready, willing, and able to work seamlessly on your behalf is imperative. It isn’t enough to just have your agent at your side (although we will be more than happy to help you assemble this team when the time comes) you’ll need a squad. Fortunately, we can help with all of this, we have a team to choose from, or you can do your own thing. Either is great, but here are the members you should have at the ready.

Lender – Getting pre-approved with a lender is one of the most important steps you can take to make yourself buyer-ready. The lender you choose should have a reputation for being a problem-solver and for getting the transaction to close. Someone local that specializes in the current market, someone that is available to take calls and texts, and who wants you to be successful is extremely important. We have a number of lenders that we trust and are happy to share.

Appraiser – Although the appraiser will be assigned by the lender, doing a great job of choosing your lender is a good indicator of the strength of the appraiser in terms of getting the job done in a timely manner and utilizing great local data to make sure your investment is a sound one.

Inspector – You are able to choose the inspector who will be conducting the inspection on your home. You want to find someone who is thorough, provides you with a written report and photos, charges market rate, and who can be scheduled within a few days of your offer.


Escrow – Escrow makes sure that all the documentation is correct, timelines are met, and all the details are adhered to in the transaction. They will also make sure all parties sign the correct forms and that all monies are distributed correctly. In our market, the buyer usually requests the escrow company in the purchase and sale agreement.

Title – Title will review the property history, verify legal description matches what is being sold, make sure the seller has the right to sell the property, identify other possible lienholders, identify easements, codes, covenants and restrictions, and more. You want to make sure the title company has a reputation for identifying all potential problems.

The more team members you can secure up front, the better. Often, once you make an offer, things can get fast and furious in a hurry. During the transaction is not when you want to be checking online reviews of an inspector and hoping for the best. Do your vetting up front.

We have several great candidates for all these categories and would be happy to help you find team members to meet your needs. Let us know if you would like to start building your team now and I will send you some referrals. Contact us anytime and we can help get you started.

The Holidays are a GREAT Time to Buy or Sell

Yep, we are right in the middle of it, but if you are waiting until after the holidays, it’s not a bad idea to sieze the moment. Here’s why….

Many sellers take their homes off the market for the holidays and buyers who have been out looking all year may take the rest of the year off. So why would it be a great time to buy or sell if there are fewer buyers and sellers in the market? For a lot of reasons:

Less competition for both buyers and sellers – Less competition benefits both buyers and sellers. Fewer homes on the market means homes that are listed will be noticed by buyers (which is great for sellers!). And with fewer buyers in the market, that means less competition for those homes (which is great for buyers!). Especially in markets with very high buyer demand coupled with multiple offers, a holiday lull may be just the break that buyers need to make an offer and get a house under contract.

Motivated buyers and sellers – People who buy or sell during the holidays have a different mindset. They aren’t looky-loos or sellers just trying to test the market. Buyers and sellers have a goal and are serious about the process. Take a look at it from both sides: if you are a seller, wouldn’t you want to work with a buyer who is pre-approved, knows what market price is and ready to buy? If you are a buyer, wouldn’t you prefer to work with a seller who has priced their home at market and is ready to negotiate?

Buyers are pressed for time – Searching for homes can take a lot of time! But competition for that time from other holiday activities means that home searches are usually much more efficient and buyers are ready to make a decision quicker. Both sides may be less willing to drag negotiations out for fear of interfering with holiday plans.

Getting your next move squared away before the end of the year – The looming New Year’s date is often a great motivator on both sides as people want to have their plan in place before the calendar changes to a new year.

Holiday décor – Some homes show best when all decked out for the holidays! Full of light and greenery, homes that exude coziness can really stand out to nostalgic and motivated homebuyers.

Everyone is motivated to close – From lenders, inspectors, closers and more, getting your transaction done by the end of the year (if possible and as per the purchase and sale agreement) is important to all involved! And, with fewer transactions competing for their time, the fewer hang-ups there may be!

However, buying or selling during the holidays does take strategy which needs to begin as soon as possible. Are you thinking about making a move? Let’s talk and make a plan! Contact us here. We will take a closer look at your market opportunities and outline a plan to achieve your goals and timeline.

We are so Grateful for You, our Beautiful Friends and Clients

Each year, through all of the hustle and bustle of our lives, Thanksgiving asks us to pause and take a moment to reflect; A moment to be thankful for our families, loved ones; to be thankful for our health and talents in addition to the many wonderful events and people in our lives.

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Though, we can’t help but think of this as our lifestyle and motto [at Cloud City Homes] throughout the year. Practicing gratitude is something we aspire to consistently execute. Being thankful allows us all to store up all of the good experiences of the past. Just as the French proverb states, “Gratitude is the heart’s memory”.
Our clients are not just “customers”, they are our friends and confidants. For that, we are continually grateful and wouldn’t be where we are today, without them. We love being a part of their journey through the home buying or selling process and are grateful that we are allowed the privilege to experience this major life moment with them. Our ‘heart’s memories’ are with all of our friends this season…
Love, Sarah, Shelley, and Claire