Lifespan for home systems and appliances

Item Expected life (years)

Central A/C 15+
Window A/C 10
A/C compressor 15

Forced-air furnace 15
Gas or oil furnace 18

Gas water heater 11 to 13
Electric water heater 14

Microwave ovens 11
Electric ranges 17
Gas ranges 19
Gas ovens 14
Exhaust fans 20

Refrigerators 17
Freezers 16
Dishwashers 10

Disposal 10
Trash compactors 10

Clothes washers 13
Dryers 14


Source: National Association of Home Builders

Which Improvements Payback?

COST VS VALUE REPORT

According to the Cost vs. Value Report*, replacing your vinyl siding is the least expensive way to add value and increase the selling price for your home. Replacing wood windows and performing a minor kitchen remodel ($17,000 or less) tie for second place on the list of high-impact home improvements to help you sell. The third most profitable home improvement to add value to your home is a bathroom makeover ($12,000 or less).

Project Job Cost Resale Value Average
Vinyl Siding Replacement $9,134 $7,963 87.2%
Window Replacement (Wood) $11,040 $9,416 85.3%
Minor Kitchen Remodel $17,928 $15,278 85.2%
Bathroom Remodel $12,918 $10,970 84.9%
Window Replacement (Vinyl) $13,120 $11,109 84.7%
Two-Story Addition $105,297 $87,654 83.2%
Major Kitchen Remodel $54,241 $43,603 80.4%
Attic Bedroom Remodel $44,073 $35,228 79.9%
Basement Remodel $56,724 $44,685 78.8%
Deck Addition $14,728 $11,307 76.8%

Know Your Neighborhood
Before you decide which home improvement project adds the most house value, do a little competitive research by finding out what features are popular with other homes in your neighborhood. If most houses in your neighborhood are about 15 to 20 years old but have upgraded kitchens with contemporary countertops, tile flooring, and stainless steel appliances, you’ll net a better return if you invest in a minor kitchen remodel. By knowing your neighborhood, you’ll get a better sense of what projects are the best home improvement values for your dollar.

Know Your Region of the Country
Not only should know your neighborhood but you should also know your region. Consider a remodeled basement which, nationally, offers 78.8% ROI; widely popular with buyers in some parts of the country (in the Pacific, it nets a 92.7% ROI), remodeled basements are not as popular in other parts of the country (in
New England, its ROI is only 61.9%). To help you sell now, know what buyers in your area prefer.

According to the Cost vs. Value Report, each part of the country has unique home improvement values.

ROI=Return On Investment

Source Realtor Magazine

Don't Let an Empty House Jeopardize a Sale

More home sellers are leaving their properties completely unfurnished while they sit on the market. Some argue that an empty house lets prospective buyers more easily picture their belongings in the space, take measurements, and examine recent improvements.

However, real estate brokers warn that empty homes must be well maintained, as overgrown lawns could lead buyers to wonder what interior components have been neglected as well. They recommend that sellers keep vacant dwellings clean and in top-notch condition, as flaws cannot be camouflaged by furniture.

Some buyers seek out empty homes because they believe the owner is desperate to make a sale. Sellers unable to generate buyer interest are urged to bring in some furnishings to create a lived-in look.

Source: Virginian-Pilot, Joanne Cleaver (08/18/07)

Need help staging your home? Contact Scott Snyder, I can help!

Home Owners Fight IRS on Foreclosure Tax

When a home owner goes through foreclosure or a short sale, the Internal Revenue Service considers the amount of the loan that was forgiven to be income for the debtor. That bill can come as a sickening surprise for those who believed that they had finally crawled out from under debt.

Some people in this predicament are fighting the IRS — and winning. And even borrowers who still have to pay can negotiate lower payments with the IRS, tax experts say.

The first step is to get knowledgeable legal and tax help, advises Kurt Eggert, a professor at Chapman University School of Law. This is not the time to file your taxes on your own, he says.

In some cases, an experienced tax attorney may able to show that the original loan process was so flawed that the borrower is not liable for taxes at all. Or a borrower who can demonstrate that she is insolvent also may be able to escape the tax, too.

Source: The New York Times, Geraldine Fabrikant (08/20/07)

You Are NOT Alone

YOU’RE NOT ALONE IF YOU’RE HAVING
TROUBLE PAYING YOUR MORTGAGE

The housing boom led to a record homeownership rate of
nearly 70 percent, but some homeowners now face problems
making their mortgage payments and can’t refinance their
loans. Over the last few years, lenders invented new types of
mortgages to help families buy their first homes and refinance
their existing mortgages. Many of these mortgages helped
families without cash for a down payment, or with less-thanperfect
credit, qualify for loans known as “subprime” loans.

Subprime loans have a higher interest rate and higher costs,
such as prepayment penalties. A very popular, widely available
mortgage product is the hybrid adjustable rate mortgage
(ARM). Hybrid ARMs have an initial period with a lower
interest rate (“teaser rate”) followed by significant increases
over the remainder of the loan. The hefty payment increase is
often called “payment shock” because the borrower is surprised
by the size of the increase and can’t afford the new payment.

If you are having trouble paying your mortgage for any reason,
or expect problems, you should work with experts and your
lender to find a solution now. If you fall behind and don’t take
action, the lender will foreclose on your home. If that happens,
you may lose your home and all of the money you have already
invested in it. The sooner you act, the better the chances you
will avoid foreclosure.

The Center for Responsible Lending estimates that 2.2 million
American households with subprime mortgages have lost or
will lose their homes as monthly payments rise on high-risk
mortgages. These families stand to lose as much as $164 billion
of equity in their homes.

MORTGAGES WITH “PAYMENT SHOCK”
Mortgages like these can give you a “payment shock”:
• 2/28 and 3/27 Mortgages. A 2/28 or 3/27 adjustable rate
mortgage gives the borrower a fixed payment for the initial
two- or three-year period before adjusting the mortgage up as
often as every six months. After the initial “teaser rate” period,
your mortgage payments typically adjust up every six months.
• Interest-Only Mortgages. An interest-only mortgage lets
you pay only the interest on the loan for the first 5 or 10
years and nothing to pay off the loan amount (principal).
After the interest-only period, the mortgage requires much
higher payments covering both interest and principal that
must be repaid over the remaining years of the loan.
• Payment Option Adjustable Rate Mortgages. Payment
option mortgages let the borrower decide how much to pay
each month. You can even pay less than the interest, and add
the unpaid interest to the total amount of principal you owe.
Or you can pay just the interest or an amount sufficient to
pay off the loan in 15 or 30 years. These mortgages can have
an especially big payment shock.
Be careful if your mortgage has any of the following features:
• A “teaser rate” or “no interest” period that expires and leads
to a big jump in your monthly payment.
• An option to pay less than the full interest due in any given
month. Taking that option makes the amount you owe go up
instead of down, since the interest you don’t pay is added to
your loan balance.
• An adjustable interest rate with very high or no limits on the
amount your payment can go up.
• A payment that doesn’t include an amount for paying
property taxes and homeowners insurance. This means
you may be hit with big bills you didn’t expect.

If you’re in trouble, call 888-995-HOPE

Source: National Association of Realtors®

What Buyers are Shopping For

NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.

Priorities for today’s home buyers include:

• Air conditioning: three out of every four respondents surveyed ranked this as “very important.”
• Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.
• Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.
• Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.
• Energy efficiency: especially among new-home buyers — 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.
• Home buyers in the Midwest viewed central air conditioning as a priority.
• Two-thirds of buyers in the Midwest valued an oversized garage.

Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.

More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.

Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.

Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says.

— REALTOR® Magazine

U.S. Farmland Prices Set Record Highs

The price of U.S. farmland has risen to a record high of $2,160 an acre in 2007, up from $1,900 in 2006, the Agriculture Department reports.Land prices rose the most in the West and the South, rising 17.8 percent in the Mountain states and 17.6 percent in the Southern plains. The Midwestern Corn Belt rose 13.1 percent and the Northern Plains jumped 14.4 percent.In the Northeast, the average cost per acre reached $5,000, up from $4,500 a year ago.States with the largest increases were:

Wyoming: 24.4 percent
Utah: 23.2 percent
Nevada: 22.2 percent.

The USDA attributed the increase in farm real estate values to strong commodity prices, outside investments, favorable interest rates, and continued commercial and residential development.

Source: Reuters News (08/03/07)