Fixing Up Your Home? Here’s What Pays

— By CNBC’s John Schoen
Posted 14 April 2016.

 

As the spring real estate selling season gets in gear, some houses are moving faster getting better offers than others.

Apparently, a lot depends on a short list of key features that home buyers favor in local markets around the country, according to e recent analysis from real estate site Zillow.

After searching for 60 keywords in more than 2 million listings, Zillow researchers found that some of the most popular features helped boost the final sale price and shorten the time a house was on the market. For homeowners considering making improvements, the analysis offers some insight into which upgrades generate the best returns. A listing that included the phrase “new carpets,” for example, had no effect. But “hardwood floors” boosted the sale price by two percent more than expected.

Here are the other features that buyers favored, and the local markets where those features are most popular:

  • Granite Counters -Granite counters are popular across the country. In Dallas, that phrase in a listing helped sell a house 38 days faster than average at a 4 percent premium to the expected price
  • Stainless Steel– When it’s time to replace old appliances, the higher cost of stainless steel may be worth it when you sell your house in Chicago. Listings with that phrase sold 42 days faster than average at a 4 percent premium.
  • Exposed Brick– Exposed brick is hot in New York City. Homes that listed that feature sold for a 5 percent premium.
  • Quartz– Quartz is a popular material for kitchen countertops in Los Angeles. Those listings sold for 6 percent more and 50 days faster than expected.
  • Subway Tile– In Philadelphia, homes that listed “subway tile” sold 63 days faster than average at a 7 percent premium.
  • Farmhouse Sink– Farmhouse features are big in Los Angeles, too. Homes with a farmhouse sink in L.A. sold for nearly 8 percent more than expected, and 58 days faster than average.
  • Shaker Cabinet– When it’s time for a kitchen makeover, you can spend a lot of time trying to choose a cabinet style. In Los Angeles, home shoppers seem to prefer the Shaker style. Listings with that keyword fetched a nearly 10 percent premium.
  • Barn Door: Never mind the barn, home buyers in Phoenix apparently like the look of a barn door — inside the house. Homes with this feature sold 57 days faster than average, and the sale price was more than 13 percent higher than expected.
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Advantages to Buying a Home With Cash

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Buying a home with cash has definite advantages in today’s market. National Association of Realtors® research on cash sales shows that about 30 percent of residential sales are cash transactions. Among investors and international buyers, more than 70 percent of properties are bought outright. If you can afford to buy up front, the advantages are many:

  • Sellers are likely to favor buyers who can pay in cash.
  • The home price may be reduced for those who pay in full up front.
  • All-cash purchases streamline the home-buying process: No loans means less paperwork and no delays for mortgage approval.
  • Cash buyers can save money on closing costs, bank appraisals, mortgage applications and fees, title insurance, and so on.
  • Cash purchases eliminate the risk of loan denial.
  • Cash buyers pay much less for their homes in the long run: No loans means no interest.
  • Cash buyers never have to worry about losing their homes because they can’t afford to repay their mortgage loans.
  • Cash buyers gain full, immediate equity in their home.

Financially and emotionally, paying with cash benefits the home buyer.

Sellers prefer cash buyers Home sellers generally prefer quick, smooth sales. They know that even buyers who have been preapproved for mortgages might be denied by the lender later on. For example, a buyer who is an independent contractor might have difficulty proving two years of regular employment, or a buyer depending on a family member for a personal loan might later opt out (or the relative might). Therefore, when possible, sellers prefer to steer clear of buyers who have to apply for a mortgage. If you are buying with all cash, you have greater negotiating power on price, closing time, repairs, and more. Sellers are often willing to reduce the house’s price for cash buyers.

Cash purchases avoid the risk of low appraisals Home appraisals are notoriously fickle. Lenders determine a home’s worth by weighing it against comparable sales — other homes in the neighborhood that may have sold at low prices for unknown reasons. A low appraisal could lead the lender to reduce the amount of the loan offer, even after seller and buyer have agreed on a price. If the loan amount comes up short, the buyer often cannot afford to buy the home. All-cash buyers sidestep mortgage applications, avoiding the need for a potentially deal-breaking home appraisal.

Cash purchases save money and time Indisputably, cash purchases carry lower costs. Mortgage interest on a 30-year loan can double or triple the original purchase price. Additionally, closing costs are significantly lower when purchases are made with cash. Cash purchases also save buyers valuable time, eliminating the need to gather elusive documents and search for the optimal lender.

Peace of mind is priceless Most importantly, all-cash purchases bring an inviolable sense of security. Owning your home outright means never having to worry about covering your mortgage. In the face of disaster, such as job loss or injury, full ownership eliminates the risk of losing your home to foreclosure. Moreover, if you have paid cash, you will have excellent equity in the house. In case of financial emergency, you can draw on that equity for quick cash.

Figure out how to pay in cash  Buying your house with cash might seem like an impossible dream. Here are some tips to help you achieve it:

  • Set aside unexpected windfalls, such as work bonuses or inheritances.
  • Lock money in a long-term CD to earn interest.
  • Once you have accrued cash, look for a house you can afford without borrowing extra money.
  • Consider moving to a less populated area, further from a big city, where home prices are likely to be lower.
  • Avoid the temptation to waste money. Tell your friends and family about your goal of buying a home; they will help keep your spending on track.

 

Information above can be found on www.Realtor.com

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