Trudy Conley's Blog
Many of us will move home several times throughout our lives. Whether it’s relocating for work, needing a bigger house for children, or a quiet place to retire to, it’s likely that the home you live in now won’t be yours forever.
As a result, many homeowners wonder what they can do to ensure their home will have a high resale value when the time comes to move on.
The good news is that there are a lot of things you can do now that will give you a good return on investment when it comes to selling your home later. However, there are a few factors that affect a home’s valuation that are out of your control. We’ll talk about all of those factors below. So, read on for a list of the factors that affect your home’s resale value.
The age of your home
Your house may not complain about it, but it isn’t getting any younger. Homes tend to slowly decrease in value over time. A home built in the late 1970s, even if it’s well taken care of, most likely won’t sell for the same price as a 15-year-old home.
There is one exception to the rule, however, and that is historical houses. Homes that are a century old can sell for top dollar because of the craftsmanship and history that the house contains.
Admittedly, this is a niche market, as many people just want a safe and efficient home to live in. However, there are some homebuyers who will put in a bit of extra work around the house for the chance to live inside of a piece of history.
When you’re upgrading your house it’s important to remember how that upgrade will pay off years down the road. Some renovations will almost always give a good return on investment such as a finished basement or attic and improving efficiency via added insulation or replacing windows.
Renovations that match a very specific decorative taste or style could come back to haunt you. This includes bathroom sinks, kitchen cabinets, countertops, and other expensive projects that are subject to the next owner’s taste. While these upgrades can give a good return on your investment, they’re more likely to be successful if they fit the current trends of style and craftsmanship.
Neighborhood and town
One of the factors of home valuation that you have little control over is the town and neighborhood the house is located in. If there are closed down businesses, foreclosed and deteriorating homes then potential buyers might be turned off to the neighborhood.
Similarly, the town you live in has a lot to do with how much people are willing to spend. If you have easy access to interstate highways and large cities, highly rated schools, and good local infrastructure, then buyers are likely to take these into consideration when making an offer, as the average cost of a home in your town is likely higher than some surrounding towns.
House title search fees, mortgage application fees, mortgage insurance, homeowners insurance, property taxes and homeowners association fees are only a part of the cost of owning a house. There is also the mortgage principal, home appraisal fee, closing costs, home inspection fees and mortgage interest to pay after you buy a house. Facing all of these and other costs takes thought.
Three simple steps to home ownership and lower mortgage payments
By preparing to buy and maintain a house, you could save big over the short and the long term. Get creative and you will see that there are many ways to save for your home. Three simple ways that you can save for your home are to:
- Open a home savings account. Do this at least two years before you buy a house. Set up an automatic deposit so that money goes into the account each time you receive your payroll check.
- Use money from your bonus check or tax return to invest in your house down payment. Start doing this early, as soon as you graduate from high school, and you could save several thousand if not tens of thousands of dollars.
- Work a second job or freelance. Invest all of the earnings from this work into your home savings account. You could sharpen your talents by using these abilities to generate income. For example, if you have design skills, you could start your own web design or marketing design company and use earnings from sales to build a down payment on a house.
Splitting the down payment with another adult you buy a house with is another way to make smart house buys. Hold yourself and other adults who will be living in the house responsible for making their portion of the monthly mortgage. Split house maintenance costs as well.
Get serious about saving money to buy your first house
As soon as you decide to buy a house, start taking steps to save for your home. For example, if you know that you want to buy a house two years after you graduate from college, start saving for a down payment while you're still in college or as soon as you graduate.
Learn how to build and manage a budget. Depending on how disciplined you are, you might benefit from working with a line item budget. If you live at home, slowly work your way up to saving enough each month to cover the mortgage on the type of house you want to buy.
Do this for two years and you could save a healthy down payment on a house. Focus on what it takes to get your monthly mortgage payments down to where they only require 25% or less of your total net income and you be financially comfortable throughout the home buy and maintenance process.
You might even have enough money to add one or more rooms onto your house, increasing the total value of your property. This single step could position you to yield a profit should you decide to sell your house.
Carefully document your incomeWhen you sit down with a lender and hand them your proof if income, you want to make it as obvious as possible that you're earning money in a reliable and predictable way. Lenders will want to see multiple documents that can help paint a better picture of your income and finances, including:
- Bank statements
- Schedule C tax forms
- Profit and loss tax forms
- Completed tax returns
- Credit score (they will run a credit check)
Separate your business and personal financesIf you own your own business, you likely have business banking accounts you use for expenses and invoices. But freelancers and contract workers often simplify things by just using their personal checking and savings accounts for income. To make things clear for lenders, you should put your income and business expenses into a separate business account. Not only will this make it easier for lenders to quantify your income, but they can also use this information to see that your expenses are for helping your business rather than personal spending.
Timing is everythingThere are a number of factors that go into choosing the right time to apply for a mortgage. Being self-employed only complicates the matter since your income might not be as steady as your average wage worker. You'll want to commit to a mortgage at a time when you've had at least two consecutive years of good, reliable income. You'll need to prove this with the aforementioned documents (bank statements, tax forms, etc.). Part of this planning could be to avoid large business expenses in the two years leading up to your mortgage application. This isn't always possible, of course, but it could be enough to boost your apparent income to get you approved for a better loan.
Seek specialized lendersSome lenders are aware that there is a large portion of the country made up of self-employed workers and small business owners. They go out of their way to work with people who are self-employed so they can give them fair deals on their mortgages. To find specialized lenders, you'll have to do some research online, but it could make all the difference when it comes to getting approved for the loan you're looking for.
Old doesn't mean decrepitLet's go back to our book analogy from earlier. If you have a book from the late 1800s that has been stored in a dry place, hasn't been thrown around much, and always had conscientious owners who respected it enough to repair the binding when needed, your book will be in great shape. The same is true for old homes. Oftentimes, it only takes a quick glance around the home and a peek at the foundation to see if the home has been taken care of. Just because a house was built in the 1800s doesn't mean it hasn't been renovated periodically and maintained properly.
Warning signsIf you are thinking of buying an old home, here are some things you should look out for before you sign the dotted line. Don't forget to have the home inspected by a professional as well, since they will give you a much more detailed analysis of the problems a home might have.
- Ancient HVAC. Aside from being prone to malfunctioning, old heating and ventilation systems could also prove to be dangerous and inefficient. Be sure to have a professional inspect the entire system.
- Pests big and small. Over the years homes begin to develop vulnerabilities to ants, termites and other pests. Similarly, don't be surprised if you find mice, bats, or other furry creatures around if the home has been empty for a while.
- Hazardous materials. The builders of yore were excellent craftsmen, but they were using (unbeknownst to them) dangerous materials like lead and asbestos. If you have small children, even more of a reason to make sure the home is free of hazardous materials. Part of this check should also be for mold growth.
- Inefficiencies. Old windows and poor insulation walls also tend to be issues with some old homes. Find out what the monthly utility bills cost to see how much work you'll need to do to bring them up to date.
- Foundation issues. Eventually, nature prevails. Foundation cracks and deterioration are common problems in old homes, especially in climates like the Northeast with freezing temperatures and lots of snow, rain, and wind.
The average American knows little about the origins of the architecture that surrounds them on a day-to-day basis. Yet one name that most Americans have heard is that of Frank Lloyd Wright, one of the most celebrated architects in American history.
Wright was known for the style of organic architecture, which attempted to find a sense of harmony between human dwellings and the nature that surrounded them. Wright designed the Fallingwater home in Pennsylvania, built atop a waterfall and surrounded by natural growth.
In New York, Wright designed the Guggenheim Museum over a period of sixteen years. This and many other works have solidified Wright as an architect of great repute who built large and illustrious structures. However, Wright had other pursuits that he would devote much of his time to.
Coming out of the Great Depression, there was a need in America for an affordable single-family home. When approached to design such a home in 1936, Wright jumped at the opportunity.
The style of Wright’s houses reflected a vision he held for the future of American neighborhoods, something he would call “Usonian” architecture.
Elements of Usonia
At its core, Usonian architecture was meant to be affordable, mass-produced, and in harmony with its surrounding natural elements. What many of us know to be “mid-century modern” architecture and “ranch” homes are both heavily influenced by Wright’s Usonian vision.
Wright’s designs were of small, single-story homes with a carport. There were no attics and no basements. Homes were designed with little ornamentation and had open floor plans. This openness, combined with large windows and natural lighting, gives Usonian homes a sense of spaciousness that even today’s large suburban homes can’t match.
The Usonian homes themselves were only part of Wright’s grand scheme. Ultimately, Wright’s vision for America (or “Usonia” as he thought it ought to be called), was one of the suburbs. Small, modular homes that coexist with their habitats on plots of land that were crossing into one another, rather than today’s square plots, were what Wright hoped the future would hold.
Late in life, Wright had begun work on such a neighborhood. In New York, just 30 miles north of Manhattan lies the town of Mount Pleasant. The neighborhood became known as Usonian Historic District and to this day is occupied by homes designed by Wright and his apprentices. In all, 43 buildings make up the district.
Wright’s continuing legacy in American home architecture
Though Wright’s vision for America has never been fully realized, much of his ideas are alive and well. The ranch home drew elements from Wright’s style, and ranch houses are now ubiquitous across the country.
With growing land costs and a culture shifting towards minimalism, many people today are opting to live in smaller dwellings. The “tiny house” movement has gained traction in the United States. In some places, neighborhoods of tiny houses are putting down roots and forming small communities centered on having a minimal environmental impact. Frank Lloyd Wright would likely see this as a net gain, though he might have a few pointers for the architects of today’s modular homes.