Nancy Braam

French Flea Market Meets Driftwood Salvage – Design Trends For 2012

It means that most anything goes in 2012. With the housing market still in the dumps, many people are choosing to update their current home. Here are some tips from top designers.

Emphasis on contrasts… in textures, patterns and colors.

“The basics get bolder: Over the last year, we’ve seen wood finishes getting lighter, rougher and unfinished. As a result, upholstered furniture is fighting back from beige! We are seeing a slow trend towards bright, colorful and bold patterned sofas and chairs. It’s not “grandma’s floral,” but rather rich velvets, silks and chintz with bold patterns and contrast.”  Kelli Ellis Interiors, Orange County, CA

“Layers of silky fabrics and luxurious wool, the combination of velvet and brick, stainless steel and wood design ideas create attractive contrasts.  Mixing decor accessories, made of natural stone and shiny plastic, metal, wood and fabrics are interesting home decorating ideas that add charm and unique character to contemporary interior design.”  Accord Staging – see their blog.

What’s happening on the color front? We continue with deep and bold colors.

“The dominant color is Grey. Warm Grey, Light Grey, Charcoal Grey. On walls, furnishings, window treatments, artwork, grey will be everywhere. Also coming on strong will be Yellow! In addition, know that Orange will still be hanging around; Purple is on its way out and Brown, which had a very long run, is gone.” Stephanie Henley (Stephanie coined the title phrase.)

Remember: Paint is still the cheapest improvement with the most impact. Fresh paint makes everything look new. Pick a  modern color scheme to make your home current.

Supersizing is still in…giant mirrors, large wall art, over-sized graphic scale. On a budget? Try stencils, framed posters or enlarged photographs.

If moving isn’t in the cards for you this year, remodeling and updating can make your current home your dream home.

A Word About Hiring Contractors Your Friends Recommend

Ellen trusts Rudy. In fact, they go to the same church. Ellen needs some work done on her house before she puts it on the market. Rudy recommends Mike. Mike has been a contractor for years.

First Ellen hires Mike do to some odds and ends inside the house and he does a fine job. When they discover the roof needs replacing, she hires Mike to do that also.

I met Mike. He talks the talk. He knows a bunch of the local builders and developers and we swap stories. He completes the work and Ellen pays him. All said and done, about $7500.

The house sells in the next couple of months and the purchaser prudently has a professional inspection. Much to our surprise, the inspector says the roof was “unprofessionally installed”. There were a lot of nails showing and the shingles weren’t even fully overlapped. The valleys were tarred. We had it inspected by a professional roofer and they said that basically it was a hack job done by someone who didn’t know what they were doing.

Since we told the buyer that we just installed a new roof, this made them understandably uneasy, and they were ready to walk.

Luckily, Ellen is a smart woman and knew that if the problem wasn’t remedied with this buyer, it would have to be remedied with the next, or any buyer. Besides, she paid for a new roof and a new roof she would get.

We had a new roof installed by a professional roofing company that warranties their work and saved the sale. In checking on Mike, we found that his contractor license expired in 2002 and naturally he isn’t bonded.

Mike’s story is that the roof was installed okay, although now he is not returning phone calls or emails, and he didn’t bother to talk to the inspector or the roofer. Maybe he thinks the problem has gone away. What do you think?

We are prepared to go to small claims court if he refuses to pay for the new roof. I think it’s a slam dunk win. I love small claim’s court.  I’ll keep you updated.

Moral: Don’t hire people to do expensive repairs who have no way to guarantee their work.

Why Smart Sellers Stage Vacant Houses

Look at the difference in this very nice home in Sudden Valley, Bellingham, WA.

The vacant rooms don’t tell you anything. You can’t tell how big, or small they are. There’s no warmth. There’s no allure. If you were a buyer, which house would you want to see?

Remember that now nearly 90% of ALL home buyers search for homes on the internet. You have to make this first important cut. Your vacant rooms won’t make anyone’s heart beat faster.

A few thoughts about staging vacant homes:

• Don’t use the old furniture you don’t want to take with you. Not the impression we’re going for.
• Hire a stager. They are well worth the money and run about $350 for a consultation where they can visit the house and chose pieces that will best enhance each area. There’s a monthly or quarterly charge for the furniture. It varies widely so you’ll have to check around.
• You don’t have to do the whole house. That would be ideal but it’s not entirely necessary. Do the living room, dining room and kitchen at a minimum. Get advice from the stager on this.
• Think of it as a way to make a buyer respond positively to the first impression of your house.
• Think of this simply as a cost of doing business. Your house is a product on the market and you have to help make it stand out. Pictures of it will be blasted everywhere – make the most of them.

Your effort counts. Showing your house off, means good pictures. It’s hard to take a great picture of a vacant room.

The 5 Most Important Tips To Negotiating Real Estate Deals

Are Americans Wimpy Negotiators?

In the international arena of negotiation, Americans are considered wimps because we believe in fairness, so we tend to “split the difference” a lot. In many cultures, fairness is not in play at all…which is another whole story. Splitting the difference is not negotiating and the only time you should do that is when the price difference has been whittled down to a puny amount and negotiations have faltered.

This is straight from the top negotiators. Some of it is common sense.

1. Know the strength of your Plan B option. That means, what will you do if you don’t make this deal work? You’ve heard it said that the person most willing to walk away has the most power.

• If you are a buyer and have three other houses you like, you have a strong Plan B and therefore can negotiate from a position of strength. If you have 3 days to find a house or you will be in the street, your Plan B is not so strong.
• If you are a seller and you’ve already made an offer on another house – not much strength. If you have multiple offers – you are in a strong position to negotiate.

2. Inventory your bargaining chips.

• People tend to think only in terms of price, but there is a lot more. For buyers – maybe the seller would like 3 weeks to move out or they really love their refrigerator. Think about giving them that to get the price you want.
• Sellers can negotiate appliances, lawn mowers, extended closings or the deck furniture.
• Earnest money, title company, closing date, performance dates are all negotiating points you can use. Read the rest of this entry »

Can’t Make Your House Payments? Don’t Move Out!

Why are so many short sale houses vacant? Someone needs to explain this to me. If you can’t afford to make your house payments,
what sense does it make to move and pay rent?

There are only two reasons to move: 1) Job transfer.2) Medical problems that make living in the house unrealistic.

Some owners feel if they can’t make the payment, they should leave. In reality, that doesn’t help anyone. It’s not like the bank
can rent it out and re-coup some money. They can’t because they don’t own it. You’ve heard the stories – it can take a year to actually foreclose your house. And there it sits in the meantime, vacant, and you pay rent.

Stay Put! It’s a bad situation all the way around, but don’t make it worse. Use the time to plan and re-group. Use the “extra” money from not paying your house payment to pay down high interest rate credit cards and catch up on other bills. At the same time maintain the house and yard. Get the house on the market to find a buyer. Cooperate with the sales effort by keeping the house clean and available for showings on short notice.

Have your short sale packet ready to go, updating it monthly. Go to your bank’s website and root around for the short sale information. Most banks have a list of what they want to see.

It’s sad that you are upside down and it’s come to this. But don’t panic and move out – it is not in your best interest. Contact me if you want to talk. Confidentiality is promised.

What Are Valid Expenses For Investment Real Estate?

When you are looking to buy real estate as an investment, one of the most important numbers you need to know is the Net Operating Income or NOI. That is the actual income after expenses (not including the mortgage payment).

Here are the some common expenses:

• Property Taxes
• Insurance
• Management Fees
• Utilities paid by the owner
• Repairs
• Maintenance
• Advertising
• Supplies
• Lawn care
• Cleaning & Janitorial
• Legal and accounting
• Licensing
• Vacancy

Sellers love to leave out Management Fees, repairs, maintenance and especially vacancy rates.  In fact, it is quite common when you look at an investment property listing, the only fees the sellers include are Taxes, Insurance and Utilities. Then they work the Cap Rate or Cash on Cash return based on the NOI that is not realistic. They argue that you might do your own management or yard care. I say, if you do, you should be paid for it by a larger bottom line. These are valid and standard expenses and should be included to determine a realistic value.

It’s important for you to work your own numbers and determine your own Cap Rate and Cash on Cash return. Ask for the seller’s last couple years of his or her Schedule E. This is what expenses they deduct on their taxes. Granted, there are some write-offs for taxes that you aren’t going to use to determine an offer price, like travel expenses if the seller lives out of the area or depreciation. The most important item on the Schedule E is the true Gross Income. Don’t just take the seller at their word when they say, “It’s always rented.” The Schedule E will also show you what they are spending on repairs, lawn care, cleaning, etc.

There is no substitute for doing your own investigation! If you need help, contact me.

Why Home Seller’s Should Never Talk To Buyers

Pure and simple – please hear this: You Give It Away!

You give away the price, your motivation, the fridge and the lawnmower.

You don’t mean to, I know it. You are just not a trained negotiator and when I’m representing the buyer…we’re going to use it against you.

The other day I showed a house and the seller was home (another big mistake). The buyer said, “If you don’t mind my asking, why are you moving?”

Here is exactly what the seller said, “My wife hates it here. She missing her family and friends. She hates the weather. She said if she has to spend another winter here, she will either kill herself or me.”

Many times we mistakenly assume that price is the most important thing to sellers. In this case, his wife’s happiness far out-weighed price.

These are some of the things I’ve heard sellers say:

• “Here’s the price, but we’d take less.”
• “We’ll fix anything that’s wrong.”
• “We have to sell because we’ve bought another house.”
• “We could probably leave that.”
• “Everything’s negotiable.”

Think of it this way – Anything you disclose about your motivation is asking the buyer to offer less. In fact, pretty much any time you open your mouth you are letting out clues that you don’t even hear. Clues that tell the buyer more than they should know about how to get the upper hand in negotiations.

To put more money in your pocket, follow these rules:

1. Don’t be around the buyer. Leave the house for showings. This solves the whole problem.
2. If asked if you will leave something or fix something say, “I’m not supposed to say anything, you’ll have to talk to my Realtor about that.”
3. If asked about why you are moving, the best answer is it’s too big or too small. Don’t outright lie, but brain-storm a non-loaded reason with your Realtor that is the truth but doesn’t disclose desperation.

Again – it’s best to just not be there.

You are paying good money to a professional who has sales and negotiating skills that you just don’t have. And even if you think you’re a good negotiator – all bets are off when it’s your own property. Staying out of the way is the best way to preserve what negotiation advantage you have.

The Single Most Important Question To Ask BEFORE You Make Home Improvements

New kitchen, build that deck, add an extra room, convert the garage. Whatever it is that you want to do to your home, the big question to ask yourself is… 

Is it for your own enjoyment or is it to increase your home’s resale value? Ideally, it would do both but that is generally not the case.

Whenever someone is ready to sell, they want to bring out the receipts of everything they’ve done and add it to the price. “We spent $6000 on that new deluxe furnace.” or “That deck, kitchen, or sprinkler system cost us $20,000.” Sorry, but it doesn’t work that way. There are ways to improve value, but most people don’t do the necessary research before they forge ahead.

You are assuming that the next buyer will value what you value. Trust me, they almost never do. If you like green, they like blue. You put it in, the next guy rips it out.

You are also assuming it retains it’s original value. Also, not so. Think of it like a new car. We all know what happens the minute you drive that new car off the lot, don’t we? The same thing happens when you drive that furnace or carpet off the lot. What’s a used furnace worth on the open market?

Separate maintenance from improvement. Some things are just expected by any buyer. They expect a functioning roof. New roofs, while appreciated, are not improvements. That’s a maintenance item. A new roof can certainly be an incentive to the buyer. It could edge your home in front of the competition without new roofs and create a quicker sale, but don’t expect to recoup the cost.

Sometimes enjoyment is your only repayment. Is that so bad? You always wanted a big deck and a hot tub. The three key words are “you always wanted”. You can’t assume the next buyer “always wanted”.

One of my favorite things about homeownership is that you can make it your home. You can make it reflect what you most value. It could be comfort, peacefulness, drama, or playfulness. It’s your choice. It’s your home.

If everyone examined their “why” before they spent money I think there would be a lot of different decisions being made.

How’s The Market? Video Update For March 2011

Watch this short video to see how the market is in Bellingham and Whatcom County for March.

Determining My Home Basis – Not As Dry As It Sounds

It just takes a minute!

Since it’s tax season, now is a good time to make a new file called Home Basis.

Here’s what you put in it:

1. The HUD-1 (closing statement) from when you bought your home.
2. Receipts for anything you do to improve your home.

In Washington State, a married couple can have a tax-free profit on the sale of their principal residence up to $500,000, a single person can have $250,000. While that might seem like more profit than you might have or hope to have, things can change and make a big difference if, say a couple now becomes a single, or if the home has been owned a long time and seen a lot of appreciation.

What counts as an improvement?

The IRS definition of a home improvement is that it meets one of the following:

• Materially adds to the value of your home
• Prolongs its useful life
• Adapts it to new uses

You can’t add any value for your labor. If something was replaced twice, like a water heater, you can only claim it once. And it seems obvious, but the improvement has to stay, you can’t include a hot tub in the basis and take it with you when you sell.

There is a difference between an improvement and a repair, and it can be a little gray. Painting the first time is an improvement, painting the rest of the time is maintenance and therefore a repair.

Some improvement items:

• Any addition – bedroom, bath, studio, etc.
• Lawns and grounds, sprinklers, fences, walkways
• Heating and air-conditioning
• Lighting, wiring upgrades
• Plumbing – water heater
• Finishing the basement or other space
• New roof
• Paving the driveway
• Fireplaces, central vac, flooring upgrades
• Satellite, dish, security system
• Insulation -floor, attic, pipes
• Patio, deck, porch, spa, pool

This is one of those things that is easy to do and easy not to do. If you have a file, it’s easy to throw any improvement receipts in it and then don’t worry about it until you sell.

You don’t know what changes could take place in your life or in the real estate market, that will make it extremely important for you to have this information. Go make the file!