First-Time Home Buyer? Don’t Forget the Maintenance

Buying your first home is filled with excitement, anticipation, and plenty of tasks to keep you busy.

While it’s always fun to shop for, design, and create your own space, be careful that it doesn’t completely overshadow the not-so-fun parts, like the maintenance and upkeep you will need over the years. If you’re accustomed to renting, the price tag for your first major repair as a homeowner could come as a shock. Inevitably, appliances fail, pipes leak, and roofs fade. So make sure your bank account is ready when you need a handyman fast.

A popular rule of thumb says to set aside about 1% of your home’s cost for maintenance each year. For example, if you paid $240,000 for your house, plan to spend about $2,400 a year (or $200 a month) on maintenance, repairs, and general upkeep. That number will vary depending on the age and condition of the house and whether any items are covered by warranties, but, chances are, it won’t be much less on average.

You can try to keep the costs under control by making minor repairs yourself. With plenty of how-to videos on YouTube and great websites for homeowners, small stuff shouldn’t make you sweat. But unless you can replace an entire HVAC system or rewire electrical systems, you will need an expert at some point.

Consider setting aside a small amout each month to soften the blow when something major goes haywire. If you just bought your $240,000 house, try setting aside $200 a month in a separate account for home maintenance. Because the plumber won’t care that you spent all your spare cash on new furniture; he won’t work without being paid.

Getting Inside the Seller’s Mind

Last time we reviewed what today’s sellers need to know about today’s buyers. Now it’s time to view the sale from the other side of the front door.

While the housing market is making a steady comeback, it’s not the same as years past. Home prices are inching up, and interest rates remain low. Sellers are finally seeing some relief after years of tumbling prices and stricter lending to potential buyers. So what do buyers need to know about today’s seller?

The worst is in the past. Buyers shouldn’t expect to swoop in and make a rock-bottom offer to sellers grateful to have someone–anyone–looking at their house, especially in the Hampton Roads area, which was largely insulated from the massive crash of real estate values felt elsewhere. True, some sellers may be in a desperate situation, but with the market strengthening and financing available, another solid buyer may soon emerge. Things aren’t as bleak and uncertain as they once were, so many otherwise stable sellers don’t need to cash out for a big loss to avoid further instability.

Find out their motivation. If sellers are willing to share, buyers can find out a lot about their reasons or motivations for selling. Is it a short sale? Are the sellers retiring and ready to downsize? Do they own the house free and clear? Are they underwater? Are they relocating? Are they buying a different house? If they are moving soon, or need to tap their equity for a new purchase, the sellers may want a quick closing and could value that over the highest price. If they’re retired, don’t have a mortgage, and are flexible, they may hold out for a higher price or better terms.

Sellers are usually also buyers. Often, sellers are listing their home to buy a new one. So they know the general state of the market, and are often in the same position as their buyer, especially if they’re looking in the same area. They know the overall feel of what’s reasonable (especially if they’re working with a good realtor!), and know what it takes to close a deal. Don’t try to pull a fast one over on them.

The recent market has placed buyers and sellers on more equal footing. Both sides should expect a reasonable deal with some negotiation, especially as the market continues to stabilize.

Getting the Biggest Bang for Your Buck

It’s no secret that renovations will help a home sell faster and for a higher price. But what’s the quickest way to increase your home’s value without decreasing your bank account?

Thanks to Remodeling Magazine’s new 2013 Cost vs. Value Report, you can figure out. The report, which breaks down the country by region, details how much homeowners can expect to recoup on major home improvement projects. This can be a particularly helpful list to watch if you’re considering making some cosmetic improvements to list your home.

In the Hampton Roads area, the top five value-adding projects will earn you a lofty return on your investment:

Entry door replacement (steel): 92.2%. A new steel front door will almost pay for itself with an average cost of $1,096 and an average return of $1,010.

Deck addition (wood): 83.4%. Add a new deck for your pleasure, but enjoy a substantial return on your investment too.

Basement remodel: 79.7%. With a sizable pricetag (an average job cost of $56,432), you can also get a sizable return of almost 80%.

Siding replacement (vinyl): 79.0%. Give your home a fresh new look and recoup nearly 80% of the cost.

Attic bedroom: 78.8%. Another high-price job will not only let you advertise an additional bedroom, but collect more than three quarters of the cost back!

Some of the projects to avoid: sunroom additions and home office remodels, each of which will return you less than 50% of your investment.

Increasing Optimism About Home Prices

According to results from Fannie Mae’s December 2012 National Housing Survey, Americans are gaining confidence in the housing sector. The survey shows that people are feeling positively that home prices will continue to rise, and 2013 purchasing activity will be up.

The growing confidence is due in part to several factors. Doug Duncan, senior VP and chief economist of Fannie Mae said, “Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way.”

With home prices increasing, more home owners will be motivated to sell, and with rental costs increasing, more people will be motivated to buy. It looks like it could be shaping up to be a very good spring in the housing market.