First-Time Homebuyers Face The Opportunity Of A Lifetime

Today’s first-time homebuyers are presented with the opportunity of a lifetime. Mortgage rates in early December stood near lows last seen during the Truman administration while home prices were well off their peaks of previous years. The combination made housing affordability, as measured by the National Association of REALTORS®, the highest since NAR® launched its Affordability Index in 1973.

Housing inventory is also abundant in many markets, enabling first-timers to secure good homes and pave the way to their financial futures. Indeed, homes and their long-term virtues of shelter, wealth-building and personal and civic pride are available at bargain-basement prices that won’t, or can’t, last.

Naturally, first-timers have many questions about home buying, starting with costs. With research and the services of a licensed real estate professional, these consumers can demystify the process and place themselves on the fast track to homeownership.

Knowledge is power – Nine out of every 10 home searches today begin on the Internet. With just a few mouse clicks, you can peruse neighborhoods, search countless online listings and take virtual tours packed with detailed photographs. The process gives you working knowledge of home availability and pricing in your local markets so by the time you sit down with your real estate sales professional you’re well on your way.

Also visit informative websites such as www.ginniemae.gov, www.realtor.com, prudential.com, and ChipPlumley.com.

Affordability – Costs involved in the purchase of a home – mortgage, down payment and closing expenditures – can be overwhelming to first-time homebuyers. By looking at your income and debt ratio, your real estate professional and mortgage representative can help you calculate how much you can afford each month in mortgage payments. But before determining your price range, you should also take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, insurance, utilities and maintenance. And if your down payment is less than 20 percent of the cost of the home, you will be responsible for private mortgage insurance.

Mortgage payment – In today’s buyers market, you may face competition for your dream home. To establish your spending limit and gain the ability to move quickly on a home, get pre-approved for a loan before you start looking. The fact that your loan has already been approved is of great value to the seller because it shortens the purchase process, and there is less of a chance that the buyer will back out of the sale. This process will also help you identify any credit challenges you must address prior to your purchase.

If you don’t have a specific mortgage lender in mind, ask your sales professional for a recommendation.

Down payment – The down payment amount varies depending on the value of the home you choose and your mortgage lender. First-time homebuyers may also qualify for down-payment assistance programs and grants available through their states and municipalities. Contact your state housing finance authority, county housing and community development office for an application.

Closing costs must be factored in as well. These include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowners insurance or homeowner association fees. All told, buyers should spend no more than 28% of their income on housing costs, according to Fannie Mae. Your real estate professional will be able to explain your options.

Making offers – Make sure you visit several different homes to get a feel for the marketplace. Visit the ones you like again to see things you might have missed. Work with your real estate professional to get all of your questions answered before making an offer. And remember there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction.

Indeed, home ownership remains a sound financial decision for most and a key component of long-term financial planning. First-time buyers who seek homes for all the right reasons – a place to raise a family, build for the future and face life’s opportunities and challenges – can secure their dreams and build for their futures at some of the most attractive values in years.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com

The Value Of Home Maintenance.

Regular home maintenance is key to preserving the value of your house and property.

If you think home maintenance is an unavoidable series of weekend-eating chores, remember the age-old advice of Benjamin Franklin: "An ounce of prevention is worth a pound of cure." The fact is, proactive maintenance is essential to preserving the value of your home-without it, your home could lose 10% of its value. Regular, routine maintenance enhances curb appeal, ensures safety, and prevents neglected upkeep from turning into costly major repairs.

It's the little things that tend to trip up people. Some cracked caulk around the windows, or maybe a furnace filter that hasn't been changed in awhile. It may not seem like much, but behind that caulk, water could get into your sheathing, causing mold and rot. Before you know it, you're looking at a $5,000 repair that could have been prevented by a $4 tube of caulk and a half hour of your time.

Maintenance affects property value

Outright damage to your house is just one of the consequences of neglected maintenance. Without regular upkeep, overall property values are affected.

If a house is in worn condition and shows a lack of preventative maintenance, the property could easily lose 10% of its appraised value. That could translate into a $15,000 or $20,000 adjustment.

In addition, a house with chipped, fading paint, sagging gutters and worn carpeting faces an uphill battle when it comes time to sell. Not only is it at a disadvantage in comparison with other similar homes that might be for sale in the neighborhood, but a shaggy appearance is bound to turn off prospective buyers and depress the selling price.

It's simple marketing principles. First impressions mean a lot to price support.

Prolonging economic age

To a professional appraiser, diligent maintenance doesn't translate into higher property valuations the way that improvements, upgrades, and appreciation all increase a home's worth. But good maintenance does affect an appraiser's estimate of a property's economic age-the number of years that a house is expected to survive.

Economic age is a key factor in helping appraisers determine depreciation-the rate at which a house is losing value. A well-maintained house with a long, healthy economic age depreciates at a much slower rate than a poorly maintained house, helping to preserve value.

Estimating the value of maintenance

Although professional appraisers don't assign a positive value to home maintenance, there are indications that maintenance is not just about preventing little problems from becoming larger. A study by researchers at the University of Connecticut and Syracuse University suggests that maintenance actually increases the value of a house by about 1% each year, meaning that getting off the couch and heading outside with a caulking gun is more than simply a chore-it actually makes money.

It's like going to the gym,you have to put in the effort to see the results. In that respect, people and houses are somewhat similar-the older they are, the more work is needed.

A 1% gain in valuation usually is offset by the ongoing cost of maintenance. Simply put, maintenance costs money, so it's probably best to say that the net effect of regular maintenance is to slow the rate of depreciation.

How much does maintenance cost?

How much money is required for annual maintenance varies. Some years, routine tasks, such as cleaning gutters and changing furnace filters are all that's needed, and your total expenditures may be a few hundred dollars. Other years may include major replacements, such as a new roof, at a cost of $10,000 or more.

Over time, annual maintenance costs average more than $3,300, according to data from the U.S. Census. Various lending institutions, such as and LendingTree.com, agree, placing maintenance costs at 1% to 3% of initial house price. That means owners of a $200,000 house should plan to budget $2,000 to $6,000 per year for ongoing upkeep and replacements.

Proactive maintenance strategies

Knowing these average costs can help homeowners be prepared. It's called reserve for replacements or capital reserve fund. Commercial real estate investors use it to make sure they have enough cash on hand for replacing systems and materials.

A similar strategy for homeowners, setting aside a cash reserve that's used strictly for home repair and maintenance. That way, routine upkeep is a snap and any significant replacements won't blindside the family budget.

Other strategies include:


Play offense, not defense. Proactive maintenance is key to preventing small problems from becoming big issues. Take the initiative with regular inspections. Create and faithfully follow a maintenance schedule. If you're unsure of what needs to be done, a $200 to $300 visit from a professional inspector can be invaluable in pointing out quick fixes and potential problems.

Plan a room-per-year redo. Pick a different room every year and go through it, fixing and improving as you go. That helps keep maintenance fun and interesting.


Keep track. Having a notebook of all your maintenance and upgrades, along with receipts, is a powerful tool when it comes to sell your home.vIt gets rid of any doubts for the buyer, and it says you are a meticulous, caring homeowner. A maintenance record also proves repairs and replacements for systems, such as wiring and plumbing, which might not be readily apparent.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com

8 Tips for Adding Curb Appeal And Value To Your Home

Appraisers and real estate agents offer advice for adding curb appeal that both preserves value and attracts potential buyers.

Curb appeal has always been important for homesellers. With the vast majority of today's homebuyers starting their search on the Internet, the appearance of your property is more critical than ever. You only have a few seconds to catch their attention as they scroll through listings online to get them to stop and take a closer look.

But the role of curb appeal goes beyond just making a good first impression. The way your house looks from the street can impact its value. It can also shorten the time it takes to sell your house.

When asked, real estate agents, appraisers, home stagers, landscape designers, and home inspectors which curb appeal projects offer the most value when your house is on the market, both in terms of its marketability and dollars. Here is what they told us:

1. Paint the house.

Hands down, the most commonly offered curb appeal advice from real estate pros and appraisers is to give the exterior of your home a good paint job. Buyers will instantly notice it and appraisers will note it on the valuation.


Just make sure you stay within the range of accepted colors for your market. A house that's painted a wildly different color from its competition will be marked down in value by appraisers.

2. Have the house washed.

Before you make the investment in a paint job, though, take a good look at the house. If it's got mildew or general grunge, just washing the house could make a world of difference.

Before putting a house on the market, pros often do recommend exterior makeovers on clients' homes, a service that pays for itself to get higher selling prices. Overall, the goal is to spend less than $5,000, with a goal of generating an extra $10,000 to $15,000 on the sale price.

Pressure-washing is a job that should be left to professionals. Pressure washing makes the house look bright and clean in addition to getting rid of unsightly things like cobwebs, which may not be seen from the yard but will detract from the home's cleanliness when seen up close.

The cost to have a professional cleaning should be a few hundred dollars--a fraction of the cost of having the house painted.

3. Trim the shrubs and green up the yard.

Put a lot of emphasis on landscaping, such as cutting down overgrown bushes and replacing them with leafy plants and annuals mulched with beautiful reddish-brown bark. It could run from $50 to $1000. Do you get a return on your money? Absolutely. It sucks people in.

You also don't want bare spots. Take the time to fertilize the yard, throw out some grass seed, and if need be, add some sod.

4. Add a splash of color.


It could be a flower bed of annuals by the mailbox, a paint job for the front door, or a brightly colored bench or an Adirondack chair. You can get a cute little bench at Home Depot for $99, spray paint it bright red or blue and set it in the yard or on the front porch.

It's not a bad idea, but don't plan on getting extra points from an appraiser for a red bench. It's difficult to quantify, but it does make a home sell more quickly. Maybe yours gets sold a couple weeks faster than the house down the street. That's the best way to look at these things.

5. Add a fancy mailbox and house numbers.

An upscale mail box and architectural house numbers or an address plaque can give your house a distinctive look that stands out from everyone else on the block. Make them a part of her exterior makeovers A nice one runs you $40 to $50. Architectural house numbers may run as high as a few hundred dollars.

6. Repair or clean the roof.

The roof is one of the first things people look at in assessing the condition of a home. Appraisers look at other houses in the neighborhood to see if there are a lot of replaced roofs and see if the subject house has one as well. If not, he'll look for curls in the shingles or missing shingles. They're looking at the roof for end-of-life expectancy.

You can pay for roof repairs now, or pay for them later in a lower appraisal; appraisers will mark down the value by the cost of the repair. That could knock thousands of dollars off your appraisal. According to Remodeling Magazine's 2009-2010 Cost vs. Value Report, the average cost of a new asphalt shingle roof is more than $19,000.

Stains and plant matter, such as moss, can be handled with cleaning. It's a job that can often be done in a day for a few hundred dollars, and makes the roof look like new. It's not a DIY project; call a professional with the right tools to clean it without damaging it.

7. Put up a fence.

A picket fence with a garden gate to frame the yard is an added feature. A fence has more impact in a family-oriented neighborhood than an upscale retirement community, but in most instances, appraisers will give extra value for one, as long as it's in good condition. Expect to pay $2,000 to $3,500 for a professionally installed gated picket fence 3 feet high and 100 feet long.

8. Perform routine maintenance and cleaning.

Nothing sets off subconscious alarms like hanging gutters, missing bricks from the front steps, or lawn tools rusting in the bushes. It makes even the professionals question what else hasn't been taken care of.


A house is worth less if the maintenance isn't done. Those little things can add up and be a very big detractor. When people say, "I'd buy it if it weren't for all the deferred maintenance" what they're really saying is, "I'd still buy it if you reduce the price."

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635.
Prudential Fox & Roach is an independently owned and operated member of
Prudential Real Estate Affiliates, Inc., a Prudential Financial company.
Equal Housing Opportunity.

ChipPlumley.com