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04 April 2007 @ 11:58 am
House Update  
Carpeting starts Saturday. Conversion of stain in kitchen to white paint starts tomorrow. Sheetrock crew for the basement foyer comes in tomorrow as well.

Gave up on the money-saving thing and asked painting contractor to add two bedrooms to the painting schedule - that makes my life much easier and means I can concentrate on packing and storing furniture and boxes.

ladyat signed the papers today to get the kitchen counters replaced with granite. Don't know when that will happen.

Need to get the plumber in to look at general things like the leaky guest bathroom shower, so we can then paint the den ceiling without worrying about a mess.

We sign the papers with the Realtor on Wednesday.

Renovations are going to run right around 4% of our asking price - about half a percent more than budget (that would be the new countertops) - still reasonable iif we get our asking price.
 
 
 
אליזהkestrels_nest on April 4th, 2007 05:12 pm (UTC)
You're going to have that place looking so fabulous you're not going to want to leave it!
Bill Suttonbedlamhouse on April 4th, 2007 06:11 pm (UTC)
Let's see... after renovations, will the house in Atlanta be:

- Victorian? Nope.
- In Indiana? Nope.

Besides, if we don't sell it we can't afford all these renovations (*grin*)
אליזהkestrels_nest on April 4th, 2007 06:37 pm (UTC)
Details, details. :-)
stevieanniestevieannie on April 4th, 2007 06:26 pm (UTC)
Every house I've ever lived in has been a relative wreck until we've come to sell it, whereupon we've FINALLY done all the work.

One day I'll get to live and stay in a completed house.

Because I'm sure that would be nice, y'know?
Bill Suttonbedlamhouse on April 4th, 2007 07:51 pm (UTC)
Wait - it isn't like a permanent hobby?

Oooohhhh.

Of course, while living in the house you have to do the work yourself. When selling it you can sometimes hire it out. Not as important to you, micktim and SuperNev, of course, as it is to me ("SuperKlutz"), but there you go.
archiver_timarchiver_tim on April 4th, 2007 06:35 pm (UTC)
If this house has to be sold, it will be advertised as 'guilt-free'---no worries about redoing any recent renovations. New owners get to pick everything from kitchen countertops to carpets to wall paint.

-Ryan
Bill Suttonbedlamhouse on April 4th, 2007 07:52 pm (UTC)
You'd think that would be a selling feature, wouldn't you? But, as it turns out, you have to have fresh neutral colors in order for buyers to be able to imagine what they can do with the place. If too much work needs to be done (bad carpets, bad walls, etc.), buyers think there must be even more behind the scenes and also focus on what is shabby now instead of what it could look like later.

Seems silly, as I'd rather have been able to sell the house for a little less (or for the same amount with paint and cosmetic allowances) and not go through this hassle.

It is, however, as true as anything I've seen with my own two eyes can be. The "house sale" do-it-yourself shows don't lie.
Phil Parkertigertoy on April 4th, 2007 08:42 pm (UTC)
I don't think it would be true in a small, sane market, but in today's big urban markets desirable houses don't stay on the market long enough for buyers who actually take time to think it over to have a chance. At least when the market is hot, houses are always sold to people who like them enough the first time they see them to make an offer. And of course, realtors want to keep both buyers and sellers thinking that way. If you put $10K worth of work into the house before selling it and raise the asking price by $10K, the realtor gets an extra $600 in commission.
Bill Suttonbedlamhouse on April 4th, 2007 08:55 pm (UTC)
Cynical a bit?

Desirable houses sell. Undesirable houses don't sell because people think there are always desirable houses out there. In fact, the smaller the market the more likely the supply of houses exceeds demand, so if you are in a big market where houses are selling like hotcakes you are less likely to need to fix everything up. However, the truth of the matter is that it has always been a buyer's market, even when real estate is hot, because the buyer controls the transaction. It's just a matter of how much of a buyer's market it is.

In most markets, it all depends on how long you want your house to be for sale. If you don't mind waiting 6 months to a year, take the risk and see what happens.

Depending on the house value and how long you've owned your house, each month of no sale could be as much as $1-1.5K in interest payments (NOT equity). If your house stays on the market for 6 months, you've just spent $6-9K that you could have used for renovations and gotten rid of the thing sooner.
Phil Parkertigertoy on April 5th, 2007 02:37 pm (UTC)
Cynical? Yeah, usually. The average buyer probably will buy a house that looks like it's in move-in condition for $X + 20K faster than the same house for $X needing $10K of repairs before moving in. The average buyer is a moron. (To back this assertion up, I only need to point to the abysmal construction quality of most of the stuff put up by large developers these days. And don't even get me started on the insane financing arrangements that are considered standard practice these days. I swear, if people put as much thought into buying or refinancing a house as they do into buying a TV, we'd be in a totally different world today.) The seller that recognizes this reality wins economically, but renovating a house to a generic "salable" condition so that the buyer can renovate it again to get it they way he wants it is the kind of waste of resources that makes my skin crawl.
Bill Suttonbedlamhouse on April 5th, 2007 03:44 pm (UTC)
In most cases you are just talking about paint and curtains. The reason our renovations are rather extensive is because we are repairing 15 years of wear from 5 kids and 2-3 dogs (at any given time), plus we are finishing projects we had begun but had not completed. The buyer is not very likely to spend the money we're spending on major things unless and until they need to be done again for other reasons (house needs painting, appliances need replacing, etc.) Heck, the reason we are replacing the carpet is that this is still the ORIGINAL carpet for the house, so it isn't like the house has burned huge amounts of natural resources given one carpet replacement in 22 years.

What we'll end up with is not something that sells for (market price + double cost of renovations) but something that will sell quickly at market price. We're essentially choosing to cut into our equity in order to make sure the house sells at the price we want to get in a reasonable amount of time.

While I'm sure some people have the time, energy, and expertise to do fixup on a house after they move in (or the time and money luxury to wait to move in until fixup is completed), the truth is most people have little free time and even less ability. Especially if they are only going to live in the house for a few years, it is usually cheaper to pay (using your figures) 3 years of mortgage interest on $20K than it is to pay $10K for the renovations. It's a value proposition - consider it yet another feature people are willing to pay for ("I don't have to paint every room unitl I want to? I don't have to put down new carpet until I want to? How much is that worth to me...")

Given that, why not pay a premium for a house that is in move-in condition rather than buy one needing work that, chances are, you won't be able to afford separate from a refinance or second mortgage OR won't have the time to do yourself?

Once house prices in an area get above a certain level, the idea of a fixer-upper becomes much less appealing unless it sells for far less than the local house values - and, especially now that house price growth is stalling (and in an idyllic stable housing buyer's market where prices only rise at most by inflation), the chances are good that the seller can't afford to sell for that much below local values because he or she has too much invested in the house.

Consider it this way - if you need a car that works now, how likely are you to buy a cheap one that needs 5% of its price invested to repair it before you can drive it vs. one that is 10% more but is running well when you buy it? Considering that a non-expert really doesn't know how much repairs are going to be until you're done - on either a house or a car - most people would buy the running yet more expensive car. The only ones choosing the first option are the ones who like working on cars and aren't desperate for immediate transportation, those who can't afford a running car as an alternative, and those who are buying it to fix it up and sell it for a profit.

Bottom line is that once basic needs are met, people buy what meets their wants (and don't tell me that isn't the case for TV's and such - it's even more the case as the item gets more expensive). You want people to see things that don't match what they want as "acceptable", not "unacceptable" - "acceptable" means they can buy it and either live with it or change it themselves. "Unacceptable" means they won't buy it, period.

That's not moronic, it's the reason why they are shopping rather than just taking the cheapest 3BR 2BA house in the listingn.
Phil Parkertigertoy on April 5th, 2007 08:35 pm (UTC)
It's not the way renovations are typically handled that makes the average buyer a moron; I'm saying that the average buyer *is* a moron (grant me a little hyperbole here, I really mean not very savvy or rational), and the industry is tailored to preying on them.

People aren't morons for shopping for the house they want. They're morons for letting themselves be talked into houses so expensive that they can't afford to hang onto the old place for a few weeks while bringing the new one up to scratch. They're fools for buying into a housing rat race where they must make a snap decision because the house they looked at today will have sold next week, forcing them to put less thought into the biggest purchase they'll ever make than they'll put into buying groceries over the next year, and for casually throwing away more money buying the place with the swimming pool they weren't really looking for than they'll save over the full 30 year mortgage by savvy shopping on small day to day purchases.

And just in case you mistook me, I'm not criticizing you for doing what you have to do in the system as it is, and I'm not lumping you in with the average buyer at all.
Bill Suttonbedlamhouse on April 5th, 2007 09:29 pm (UTC)
They're morons for letting themselves be talked into houses so expensive that they can't afford to hang onto the old place for a few weeks while bringing the new one up to scratch.

But that's not really it. Unless you are a glutton for punishment, saving the down payment for a house twice (once for the house you own, once for the one want to buy) is a little ridiculous. After the first house, most people use the money from the old house as down payment for the new one. There's also a concern that if you stretch yourself and go ahead and buy the new house first, what happens if the old one doesn't sell? Come on, even a cheap house in a cheap area is the equivalent of at least a year's salary - how many people have 10-20% of that as pocket change (particularly after having already invested 10-20% of it in the house they already own) and can afford 1% of that a month in addition to what they already spend for housing?

ladyat and I don't fool ourselves that we are extremely lucky to be able to afford two house payments at once while we wind up affairs here in Atlanta. Even at that, after a year it is getting a little more onerous than we would like. We certainly have better places to put the additional money.

I don't deny that some buyers of houses are idiots, just like some buyers of cars and TVs and computers are idiots. I disagree with you that the majority are idiots - if they were, we could just slap some paint on the place and sell it for whatever we want.

Even during the boom, the only houses here snapped up within a week were the ones well worth the bargain. No one I know selling a house here was able to get foolish offers - wherever those dummies making snap decisions were, they sure weren't around our area.

Add that to the fact that it usually takes 14-30 days to complete the sale on a house and that it is fairly easy to get out of a contract earnest money intact, it could be said that it is harder to make a stupid decision on a house than it is to make a stupid decision on a car (where you walk on the lot, get your ridiculous financing, and drive off the lot within a couple of hours).

It makes me think you dealt with a really bad real estate agent on one or the other side of your housing transaction(s), which can skew your perceptions of the market and the process.

However, if I am wrong and you have a ready source of housing morons, please let me know where they are and I will gladly act as an Agent of Natural Economic Selection, gleaning them from the spending pool and financing my retirement at the same time...
Phil Parkertigertoy on April 6th, 2007 01:05 am (UTC)
The reason you can't "just slap some paint on the place and sell it for whatever we want" is that mortgage companies require professional appraisals and inspections are required by law in some places and by realtors who don't want to get sued when the buyer falls through the rotten floor.

My own experience with a realtor was very positive, but that was 16 years ago before things got anywhere near this crazy. What I speak from now is what I hear from people I know and what I pick up in the media. What I hear in the media is probably not really representative because only extreme stories make the news -- but I remember hearing interviews about people trying to buy houses in hot (California I believe) markets where houses routinely sold the day they were listed for 20% above the asking price.

Perhaps I'm being a bit harsh on the typical buyer -- but the reason our economy is probably about to fall off a cliff is the huge number of people who stretched themselves to the absolute limits to buy houses because they became convinced that they had to own houses that cost 5 times their income or because they actually believed that it was finanically sound to assume that interest rates would stay very low while housing prices continued to appreciate way faster than inflation.
Bill Suttonbedlamhouse on April 6th, 2007 02:17 am (UTC)
As in many things, you can't judge the rest of the country by California. Prices there are truly a matter of supply and demand - there just isn't anywhere else to build that is close to where people work because there's this huge bay in the way or because there are these mountains hemming in the cities.

You may be too harsh on the buyers. I am personally convinced that most of the bad mortgages are from people refinancing in order to pay off their runaway credit card debt - the house in and of itself would have been fine.

But, yes, some mortgages are ridiculous. On the other hand, we could be like certain other countries where you actually have to re-qualify for your mortgage every few years and if you don't, even though you are making the current payments, bye-bye house.

All of this said, a house is still the best investment anyone can make. People just need to be realistic about what they can afford and where markets are going (which, for all the fuss, is still up - just up more slowly than before).
Phil Parkertigertoy on April 6th, 2007 03:04 am (UTC)
There are other markets where the prices are as insane as California -- Boston for instance. I don't know if the pace of buying is that crazy.

I'm not convinced that a house is that great an investment in the long term. Real estate in general shouldn't be able to outperform other investments over the long haul when capital can move freely. It's gone up hugely in the last decade, but I'm convinced that the best we can expect over the next decade or two is that prices stay roughly flat in dollar terms while inflation catches up. If housing prices actually drop and stay down, the economy (which is not nearly as healthy as people who only look at GDP numbers think) could easily tank. A full-on depression is quite possible; people who bought more house than they needed to live for an "investment" could easily be caught with more house than they can pay for on the jobs they can manage to get in such an environment. Of course, I haven't managed to figure out what the right way to plan to weather bad economic times is. I'm pretty sure that the strategy I was using from two years ago until last June (draw down a fairly healthy savings balance to almost nothing trying to find a job) wasn't the best, though.