Excerpt
CHAPTER ONE: TO MOVE OR IMPROVE - THAT IS THE QUESTION!
As both an interior designer and a real estate agent, I have the advantage of being able to consider home improvement from two different perspectives. As a designer, I want to be a problem solver as well as to aesthetically improve the appearance of a home. But as a real estate agent, I want to do what makes the most sense from an investment standpoint. As a result, I often find myself trying to resolve conflicts resulting from these two perspectives. So I have compiled a list of questions to ask yourself in order to determine what is the best solution for your specific situation. The answers will obviously be determined by you, your family, your lifestyle, and your future dreams and plans. I have offered commentary to the questions in order to further help you in making your decisions to renovate.
* How long do you anticipate living in your home?
Certainly, plans can change. Yet it is important that you realistically answer this question as best you can. If you decide to proceed with your renovation plans but you also intend to move in a few years, then I may advise you to do things differently than if you were planning on staying in your home for many years. Unless you are planning on living in this home for the rest of your life, it is necessary to give some consideration to resale. At some point, most of us will sell our homes. It should come as no surprise that the homes that take the longest to sell are those that are overpriced, overimproved, and far too personalized for the general public.
A prime example of this is the home across the street from me. Even I could not sell it, and I tried very hard. The problem is threefold. The foyer and dining room floors are black and white granite. Inlaid in the center of the foyer floor is an enormous black granite star. The living room and family room fireplace facades, which extend all the way to the ceiling line, are pink and white marble. The two columns in the family room are also the same pink and white marble. The kitchen countertop is yet another black-, gray-, and rust-colored granite. All of this marble was not only very expensive, but it is also completely out of character for the rest of the neighborhood. And maybe even the rest of the area. As a result, it has put the cost or value of the home far above the others when you consider in the balance the available amenities. Second, the marble touches are highly personalized and do not fit the tastes of many home buyers who have been looking in the neighborhood. Third, our neighborhood is new and still under construction. Which means you can still build the home of your dreams from scratch rather than purchase an existing home on our street. The family that built this marble interior home had planned to live there a very long time. Unfortunately circumstances changed suddenly, and they found themselves moving back to Italy. Their home has now been for sale (and vacant) for two years.
* How does your home compare in price to the rest of your neighborhood?
This is one of the most important questions you can ask yourself. If at all possible, you do not want to have the most expensive home on the block. The most expensive home is reduced in value by the average price of the others on the street. In the real estate market, only the last twelve-month sales numbers count. Most homes are valued by the CMA process - comparative market analysis. This is an average of the price that homes of similar style, size, and location sold for in the past year. This information is public record at your local courthouse. It is also available through any real estate office.
* How does your home compare to the others in amenities?
In other words, how many bedrooms do most homes on your block have? Do they all have basements, attics, garages, large lots, and swimming pools? Or are you the only one considering adding an extra special amenity? Will you end up having the only home with a family room, but no garage or basement? If so, you may have trouble selling. My sister is currently finding it difficult to sell her home. She has one of the few homes in her neighborhood without a basement. It didn't matter to her when she purchased it. However, now that there are eleven homes for sale in her neighborhood, it seems to be a big deal to everyone else!
* Why have you decided to improve your existing home rather than move to a new home?
There are many valid reasons for staying and improving your home. As I said in the introduction, protecting your roots is a very good reason. Speaking of roots, yards are very high on the list of reasons to stay put. Our yards are the windows to the heart of our home. We take great pride in grooming and landscaping them. It's as if our yard is God's little acre to us, and we become very attached to them. Oftentimes, our reason for renovating may be to satisfy a desire for something different. One of my clients nearly doubled the size of their home, knowing full well that it would price them way out of the neighborhood average. But they loved their neighbors, and their children were extremely happy. So this renovation made sense for them. Even after a fire destroyed their home, they rebuilt. When making your own decision, be sure to weigh the pros and cons, based on your own desires and needs. I usually suggest to a client that they at least do a little house window-shopping before actually signing a contract to proceed with a major renovation. It just makes good sense to see what else is available. Most people also find it educational in terms of making good choices and decisions for their own home project.
* How much money will it cost and does it make sense?
Cost is certainly a valid consideration to renovating versus moving. Most people will spend 20 percent more than the value of their current home for a new house. Then you have to add another 20 percent for commissions, attorneys' fees, and moving costs. That doesn't take into consideration the money you'll also spend to prepare your old home for "sale," or the cost of getting the new home to meet your standards and requirements.
Remodeling is not necessarily less expensive, but you may be able to get more for your money than you would by moving. One reason is that the money you would spend on moving can just as easily be spent on improving your existing home. One consideration in remodeling that people forget about is how it will affect their property taxes. One of the reasons a building permit is required for home improvements is to keep track of them and assess them for taxes. As a result, you will have an appropriate rate of additional tax added to your yearly tally. Be sure to include this when calculating your budget for the project. And don't forget the aggravation of living through a renovation! One of my clients became crazed when she realized that we would have to turn the water off completely while renovating her kitchen. She was also surprised that even though we had used heavy plastic to shield the other rooms from the work, dust still accumulated throughout the house. On the other hand, another client took a total house renovation in stride - and she had two teenage daughters living at home! They simply moved to the basement for six weeks. They prepared a minikitchen with living and sleeping quarters and decided to enjoy the ride. The difference was in their personalities. Knowing how you will deal with renovation aggravation is important to your decision.
A poll conducted by the National Association of Realtors in 1996 listed the following top ten reasons for moving:
1. 83 percent wanted a house they liked better within their price range
2. 79 percent wanted to live in a better neighborhood
3. 46 percent wanted more space
4. 41 percent wanted to live closer to their work
5. 38 percent wanted to send their children to better schools than were available in their neighborhood
6. 23 percent wanted to be closer to friends and family
7. 18 percent wanted to be closer to parks and recreational areas
8. 17 percent wanted shopping areas close by
9. 12 percent wanted to live in a planned community
10. 5 percent wanted better access to public transportation
Unfortunately, to really make an informed decision about whether to move or renovate, it will practically require going through the entire process of planning the renovation to properly make a choice. In a nutshell, you will need to talk to real estate agents, study property values, and talk with remodeling contractors. You will also need to make precise lists of all specifications and finish materials, including appliances and fixture choices. Finally, you will need to get a contractor to give you a rough estimate for your plan. Below is a table that will provide some insight to cost averages for the most common home-improvement projects. It also includes the added investment value used for selling a home and the percent of gain recovered. This can be helpful to making a decision to move or stay.
So Where Do You Begin?
Let's assume you are fairly certain you want to stay where you are and renovate. As I suggested earlier, do some house window-shopping first. Take several weekends to attend open houses in new developments. This will give you an opportunity to see what the newest trends in your community include. Home shows are another good resource for finding out about new products and contractors. It gives you an opportunity to interview several contractors face-to-face, to see how your personality and style fit with theirs.
By now you should be beginning to develop an idea of what you want. It's time to begin drafting your rough list of "wishes." Be as precise as you can. I usually suggest two lists. One that details all of your goals, and another to address specifics like size, location, etc.
An example of the "goal" list would be: a place for a computer, more storage, a music space, a home office, or more room for the children to play. The second list could include more specific things such as: a larger kitchen with an eat-in area, new cabinets and appliances, a larger master bath, or adding a garage or a screened-in porch. Sometimes we just know we need more space, but we are not sure exactly what kind of space would be most effective, or where to put it.
Whom Should You Consult?
The answer to this question will depend on whether you are a DIY (Do-It-Yourself) person or an HAP (Hire-A-Professional) person. If you are a qualified DIY person, then consider the size of the project and the amount of time involved to complete it. You may want to break the project down into bite-size pieces to determine exactly what you can or are willing to do yourself. Even the most qualified DIY person will need to work with good resource people. My mother has been in the kitchen and bath remodeling business for years. Her knowledge and instincts combined with her experience make her a very good choice as a resource. She works for a well-established shed company that supplies bathroom and kitchen fixtures (sinks, tubs, etc.) to both the retail and wholesale trade. In addition, they have cabinetry available for most areas of the home. The knowledge and information available from a company of this nature is invaluable for the DIY person. With hundreds of catalogs at their fingertips, they can supply information on such things as brand differences, sizes and specifications, installation instruction, and maintenance issues. If you are a DIY person, then a reputable firm of this nature can be a tremendous help.
If the scope of the renovation requires a project manager, and you are thinking about acting as the manager yourself, then considerable thought must be given to the realistic possibility of you being able to handle the project without it interfering with your normal workload. A general contractor can help work your own ideas into a practical plan for construction. Many contractors are quite capable at designing creative and economical ways of doing most anything. In most cases, they are willing to work with you in such a fashion as to allow for your own participation in some of the work. The contract would need to be written with specific language that spells out exactly who will be doing what. I'll go into further detail on choosing and working with contractors later in this chapter.
If you are not the DIY type, then the next step in the process should be to get a professional involved to help you. A professional can be one of several people: an architect, a designer, or a contractor. I prefer using a designer or an architect as my first reference point. These are what I consider the "idea" people. Because they will not profit from the actual construction, they can be more objective and attentive to your structural and financial needs. However, I know several contractors who either employ designers full-time or bring them in as consultants when needed. One of my favorite builders often hires me on a single-project basis. I have found working with his staff to be a good experience. Of course, I do have an advantage - I am a designer. Which may make it easier for me to understand certain concepts and details than someone without the experience or visualization skills of a designer. Nonetheless, the builder's home designer has been very helpful and creative with design plans and solving problems. The job of a designer or architect is to help you determine and visualize how to meet your goals in the most effective way. They have the ability to give you options that will ultimately allow you to work with a couple of different budgets. Because they have enough knowledge about products and specifications, they can guide you to low-, mid-, and high-end ways of doing things.
How do you locate these people? I always suggest getting recommendations from friends, neighbors, and family. The Better Business Bureau can give you a list of local members, as can the Building Industry Association (BIA). Ultimately you should still interview and check references of anyone you are considering. One of the key points to consider is whether or not you are compatible personalities. No matter how accomplished a designer is, if you do not like her, she cannot please you! I recommend interviewing at least three people. At least one should be an architect. When first calling to set up an interview, ask how large or small a project do they usually consider. Also, be sure they specialize in residential construction and home improvement. You do not want someone whose area of expertise is in commercial construction who just happens to need some extra work!
Here is a list of some basic questions to ask:
1. How do you determine your fee schedule? Is it flexible?
2. Will you "manage" the project, and if so, how is this priced?
3. How long have you been involved in renovation? Do you have a portfolio?
4. Ask for a list of references and diligently follow up on several of them (see below).
5. Ask if they have ever had a client bring a suit against them.
Continues.
