Getting the best deal on a contractor

Chances are that in the time you live in your home you’ll want to get at least one home improvement project done where you’ll need to hire someone.  Whether it’s a new roof, new floors, new windows, paint, or a complete gut rehab, you’ll want to find a contractor at the best price to do the best work.  Here are some tips to save you money and get a great deal.

1. Get at least three estimates.  You really won’t have a great idea of how much your improvement costs until you speak with at least three people.  And by talking to more people, the better idea you’ll have of what goes into the project and how much it really does cost.  On that same note, don’t go with a bid that’s way below what everyone else is charging, especially if it’s someone new or an amateur.  You could end up with poor work that needs to be redone.  So make sure the contractor you choose is licensed and bonded and gets all the appropriate permits to do the job.

2. Ask friends and neighbors for recommendations.  They’ll know from personal experience who to hire and who to avoid like the plague.  Also, it’s common when you mention that you got their name from so and so that the contractor may be willing to work out a discount, especially if you pass their name along in the future for a job well done.

3. Negotiate.  Let’s say you hire the contractor that came in at the highest.  Tell him you got two other bids lower than his but you went with him because of his reputation.  Is he willing to match the lower bid?  Will he go down in price if you pay in cash?  Let’s say you went with the contractor that did have the lowest bid.  Did he know that you chose him out of 3 contractors because you liked his estimate the best?  Would he be willing to finish 2 days earlier than you were planning?  It never.hurts.to.ask.  This is not someone you plan to become best friends with.  It’s a business arrangement.

4. Make sure everything is in writing and know what it says.  True story: My relatives had hired someone to fix the roof and had a written contract.  Fast-forward one year later when they had a bad rainstorm and they now have a huge hole in their ceiling because the roof is leaking.  So they contact the roofer who specifically states in his contract that he is not responsible for interior damage.  Um, red flag?  Does he do this because of a previous problem?  My relative is an attorney and even missed this clause.  So make sure you thoroughly go over the contract and understand it before signing anything.  Now they have no recourse and have to pay for fixing their ceiling on their own.

Do you have any other great tips for getting a good deal?  I’d love to hear them.  Please leave me a comment or visit me online.

Couponing coming to real estate

Couponing seems to be the biggest craze now.  Between shows like Extreme Couponing and all the new daily deal sites that pop up, like Groupon and Living Social, everybody is trying to get something for less.  I think these sites can offer some fantastic deals, so I was thrilled when I found out about a new site, HouseTipper.com.

HouseTipper works similar to Groupon sites where you would pay ahead of time to get a discount from a real estate brokerage.  Some deals might include a commission discount, gift cards at closing, or cash back.  According to this MSN article, “In real estate, the deals are often offered for three to seven days rather than for just one day because these are not usually impulse buys,” says Tigue Bonneval, co-founder of HouseTipper.com and a real-estate agent in Baton Rouge, La. “This gives customers time to see the deal, make an inquiry with the real-estate agent and decide if they want to make the purchase.”

Bonneval also says that HouseTipper will refund the cost of the coupon if the consumer doesn’t end up purchasing a house or doesn’t like the particular agent offering the deal.  So it’s really a win-win.  They’re also trying to increase their business, so if you refer someone to the site, you can get a $10 credit to use when the referral purchases their first coupon.

Some states don’t allow real estate agents to give rebates, so you’ll need to do your research before you buy.  

I’d love to hear if you got a deal by using this site or what types of coupons you’ve discovered for your real estate needs.  Please leave me a comment with any info you can share!

 

Create luxury looks on a budget

I found this very interesting and timely article on MSN today.  It talks about adding budget-friendly luxury items to your home.  I think this is great for those of you who need to sell your home but also want to update some things without spending a lot of money.  And instead of remodeling an entire room, you can add bits and pieces to give the look of luxury.  And even if you’re not selling but want to update here and there, there’s some great tips.

1. Create dedicated spaces.  This basically means to create space in your home to do a certain activity, such as exercising, craft space, or having an office.  And you can do this without turning an entire room over.  For example, you can create a nook in your family room with a desk, computer, filing cabinet, etc. to create an office.  A great way to do this without completely separating the room is investing in one of those decorative or wooden screens, one that looks like a trifold.

 2. Add quality features.  I love this idea.  You can easily transform a room to make it look updated by investing a little money and lots of creativity.  Take the kitchen, for example.  You can completely update it without breaking the bank by repainting cabinets (not replacing), updating drawer and cabinet pulls, and buying a luxury faucet.  So instead of spending the money on granite countertops and new stainless steel appliances, choose little items that can use an upgrade.  And as I’ve said before, keeping countertops clean and clear gives the illusion of a larger space.

3. Create an outdoor room.  Increase the size of your living space by focusing on an area in your backyard.  If you already have an enclosed porch or four-season room, you’re one step ahead.  For those of you who don’t, create a space with nice patio furniture and an outdoor fireplace on your deck or in your yard.  

4. Focus on furniture.  And I’m not even saying you have to go out and buy all brand-new furniture.  It’s simple to update your furniture by choosing a new fabric and getting it reupholstered.  You can also make the room pop by choosing new accent pillows to complement an existing colored sofa.  Even consider rearranging the furniture in the room for a change of pace or to create a new focal point, the fireplace, for instance.  

If you have any more tips on creating a luxury look on a budget, I’d love to hear them.  Please leave me a comment or visit me online.

Save money and keep cool

Summer is upon us.  And here in Chicagoland, we’ve already hit days in the high 90s.  So we’re all going to want to stay cool in our homes.  And we’d like to do that spending as little money as possible.  So here are some tips on saving money while keeping your house cool.

1.  If you can stand it, use a ceiling fan.  This circulates the air in an effort to keep you cool.  Just remember that ceiling fans cool people, not rooms.  So if you’re not going to be in the room, turn it off.  And make sure that it’s circulating air downward.

2. Keep your thermostat programmed to save money.  If you’re home and you can stand it, keep it around 78 degrees.  You can turn it up when you’re away.  For every degree over 80, you save 2-3%.

3. Leave at least 90% of the air vents open in your home.  You can create a pressure imbalance by leaving more than 10% closed.  It reduces the effectiveness of the cooling system by doing that.

4. Replace disposable dirty air filters at least once a month and clean permanent ones just as often.  If your air filter is dirty, it causes the air conditioner to work harder, raising your electric bills.

5. If you can avoid it, don’t use the oven during the day.  Instead, use a microwave, slow cooker, or toaster oven.  The heat caused by the oven makes the air conditioner work harder to cool the house.  And use appliances like the dishwasher and washing machine early in the morning or at night, when energy costs go down.

6. Keep the sun out.  If the sun doesn’t get in, the house won’t be as warm to begin with.  Use sunscreens and good blinds/shades in rooms you’re not in.  Close the curtains on south and west-facing windows during the day.  White blinds and drapes do the best at reflecting heat away from the house.  

I’d love to hear your tips for saving money by keeping your house cool.  Please leave me a comment or visit me online.

Tips to maintain a healthier home

Now that spring has sprung, a lot of you have started spring cleaning.  Warmer weather means more open windows and fresh air through homes.  It can also lead to mold, dust, and other airborne particles that can make you sick.  Here are some tips to maintain a healthy home while you begin spring cleaning.

1. Use fans.  Especially in the bathroom, it’s important for warm air to circulate out of the house to prevent mold in your bathroom.  Make sure exhaust fans send air outside and not into the attic or another room.  A range hood above your stove keeps carbon dioxide and carbon monoxide out of the air when using a gas stove.  And you can save money on air conditioning when you use a ceiling fan to circulate air in a bedroom or family room.

2. Use an air filter.  You’d be surprised to find out that indoor air pollution can be 5x worse than outdoor air pollution!  Aside from controlling odors, an air purifier removes pollutants from the air.

3. Make sure you have a ventilation system.  With a lot of new homes built, the homes are sealed very tightly in the name of energy efficiency.  It’s essential to allow fresh air in and stale air out.  If you are buying new construction, check to see what kind of ventilation system is going in.

4. Clean!  Make sure sponges are sanitized, cutting boards and utensils are thoroughly washed after using them for raw meat and fish.  Clean showers after each use to prevent inhalation of bacteria.

5. Upgrade your vacuum.  And make sure bags (if you don’t have a bagless vacuum) are removed as soon as they’re full or they’ll release dust in to the air.  Vacuums now come with high-filtration filters and can help rid the house of allergens.

6. Be careful when remodeling.  It creates A LOT of dust.  So make sure that your duct system is thoroughly cleaned out (by a certified company if necessary) after a remodeling project.

7. Install carbon monoxide detectors.  It’s now Illinois law that these are located within 15 feet of a bedroom.  For little money, these can go a long way to save lives.

More great tips can be found here. I can be reached online through my Web site.

Hidden savings for home insurance

We all can benefit from saving money.  When it comes to home insurance, you’re probably aware that having a security system in your home will save you money on your premium, as will having smoke detectors and carbon monoxide detectors.  Often you can save money if you use the same company to insure your home that you use for insuring your cars.  Courtesy of Bankrate.com, here’s some other ways you can save money on home insurance:

1. Living in a gated community.  A burglar is less likely to enter your home when you have the security of gates and a person who monitors everyone who enters and exits.  And location plays a key part in the prices you pay.  If you live close to a fire department in an accessible area, it’s likely you’ll pay less than someone who lives 20 miles from emergency help in a rural area that’s hard to access.

2. Having an impact-resistant roof.  It’s obvious that everyone wants a roof that doesn’t allow rain or water (or anything else) to get into their home.  Impact-resistant roofing is graded on a scale of Class 1 to Class 4.  Class 4 is the sturdiest and it’s likely your insurer will give you a discount if you use it on your roof.   It’s also likely eligible for a tax deduction!  So if you need a new roof in your future, consider one that might cost a bit more but will save you money on insurance and taxes.

3. Being claims-free.  It’s common for you to pay less on car insurance if you haven’t had an accident or made any claims in so many years.  More home insurance companies are offering discounts for the same reason.  They not only want their customers to be loyal, but they’re saving money and passing the savings on to you.

4. New home or remodeling work.  First things first.  If you’re planning any remodeling or renovation to your home, talk to your insurance agent to see if they can offer you tips that will save you on your premium.  It makes sense because anything new brings a lot less risk for an item to fail, causing the possibility of filing a claim.  And a new home has everything new, which means it would be very rare for a claim to occur within the first couple of years from damage.

5. No smoking.  Unfortunately, if you’re a smoker or have one living in your home, the chance of a fire automatically increases.  So it’s possible your home insurance premium does, too.  And smoking is the number one cause of fires in homes.  So most companies will offer you a discount if you don’t smoke.  It won’t drop as dramatically as it does for life insurance, but it’s definitely worth asking about.

I hope some of these items will help you save some money on your insurance.  It’s possible that your specific company doesn’t offer them all, but it’s worth asking about.  Please visit me online with any more questions.

Must-notice inspection items

So you found the house of your dreams.  You’re ready to make an offer or you’ve made an offer and now have the home inspection.  Have you seen the movie The Money Pit with Tom Hanks and Shelley Long?  It’s about a couple who get a great deal on a huge house (or so it seems) but the second they move in, everything starts falling apart?  Here are some tips to avoid that happening.  And while you definitely should have a home inspection done, these are items you want to make sure you check out prior to going through with a sale because it can save you a lot of money in the long run.

1. Check out the basement, if the home has one.  If it does, there’s a good chance that your furnace, water heater, and air conditioner are all down there.  You want to get an idea of the age of those systems as well as how well they’ve been maintained.  They’re all expensive items to fix.  The furnace and air conditioner should get routine maintenance checks at least yearly.  If there is a problem, you can always request that the seller fix it, but it’s important for the future to know yourself.  The basement will also help you determine the type of construction and materials used in the construction of the home.

2. Look at the foundation.  Tyson Kunz, a contractor and owner of TTK Home in Tomball, Texas, says you need to look at the size of the trees near the home and how close they are to the home.  Over time, the roots of those trees can cause the foundation to crack and break.  Also look for cracks or gaps in any hard-surface floors to tell you how structurally sound the foundation is.  If there’s only carpet throughout, you can look for cracks in the drywall to give you an idea.

3. Look for water damage.  The first place to start is obviously in bathrooms.  Make sure that exhaust fans in bathrooms bring the moisture outside.  I had a couple once who did their home inspection to find out the fan was venting it directly into the attic, which can cause major mold problems later on.  Check that all caulking is secure and there aren’t any leaky faucets.

4. Plan a bad-weather visit. MSN Real Estate also recommends going back to view the home on a non-sunny day.  You’ll be able to see if water is seeping into the home anywhere, how well the windows seal out cold and water, and that all the systems are working properly.  So even shopping for a new home in bad weather can be a good indicator of how well the home stands up to the elements.

If you have more questions, please be sure to visit me online.

Remodeling not worth as much as it used to be

In a not-surprising news story in the Chicago Tribune, it turns out that those homeowners who choose to do some remodeling in their homes will not make as much money in resale value as they would have in previous years.  Most people are under the impression that if you do an upgrade or remodel to certain aspects of your home, you’ll get most or all of that money back when you sell.  Well, not so much in this market.  Unfortunately, more money is going in the contractor’s pocket than will go back in yours at the closing table.  

Remodeling Magazine has just put out their annual cost vs. value report for 2010-2011.  While you’re able to look at statistics and numbers for all areas of the country, I want to focus in on Chicago.  Let’s use a midrange major kitchen remodel for this year.  With the average job cost of $58,367, the homeowner would have a resale value of $40,126.  The percent of it being recouped is 68.7%, one of the highest values of all the remodeling projects.  However, last year that percentage was 72.1%.  So not a significant decrease, but still noticeable.

What’s interesting is that every single category the magazine studied, the percentage in recouped value was a decrease from last year.  Some examples of those categories include a basement remodel, bathroom addition, bathroom remodel, master suite addition, deck addition, siding replacement, window replacement, and others.  They also break it down into midrange projects and upscale ones.

Kermit Baker, director of the Remodeling Futures program at Harvard University‘s Joint Center for Housing Studies said, “A lot of what drove the (remodeling) market in 2003, 2006, 2007 was the notion that you were playing with house money.  You could get 90, 95 percent of your investment back. It was really a no-risk proposition. The mentality has clearly shifted to, ‘What kinds of features do I want in my home?’ given how long you live there and your lifestyle.”

So what does this mean for sellers in today’s market?  Just be smart about what projects you take on.  You might not have to spend the money on a complete kitchen remodel.  Sometimes just painting the cabinets and changing the hardware can make a world of difference.  You might not need to replace them all.   And if you have linoleum, it’s worth the upgrade to ceramic tile or hardwood.  Not every home needs granite countertops, especially those with small kitchens already.  It’s not worth the extra expense.  But do know that kitchens are the best room in the home to remodel.  While you might think you need to spend the money to finish your basement, that’s not necessarily true.  A young couple could come in and have a completely different idea of what they want it to look like.  See what the feedback is from the potential buyers coming through your home before you make any drastic improvements.  Talk to your Realtor about what he recommends before spending all that money.

For more information or to have me give you a market analysis on your home, please visit me online.

For sharing by owner

So I was driving to an appointment this week and noticed a big sign in front of a house.  I was expecting it to read “For Sale” or “For Rent.”  As I got closer, I noticed it read “House to Share.”  I have never seen that before.  I mean, I’ve seen ads on Craigslist and other sites for people renting out rooms or tenants looking to rent one house with a few different people.  But I’ve never seen someone advertise it out front of their home.  While I haven’t seen the signs before, it seems as if house sharing is becoming a lot more popular.  Given the current economy, it’s a great way to save money.

I actually had a neighbor who invited their current neighbors to move into their home after they sold their home, which they were having trouble keeping up with the mortgage payments.  With all the foreclosures these days, people unable to keep up with payments and unable to refinance, this is a potential to save a lot of money.

In fact, there’s even national organizations that help with this.  One is the National Shared Housing Resource Center. They are the place to visit find or to help start something in your community to match people looking to share housing.  One of their board members is quoted as saying, “Whenever I talk to somebody either back east or in the midwest, I mean, we pretty much have the same kinds of issues throughout the country, where people can’t afford their housing, whether it is someone who is seeking housing or if they have a home, you know, they really are looking for somebody who can help share those costs and share those utility costs as well.”

So for those looking to save money, it’s a great way to do it.  You can split housing payments and utilities.  For those with pets and kids, it’s even a way to have someone else available to help out while the other one shares with the chores, for example.  There are some risks, of course.  If you don’t know a possible tenant (or even if you do), it’s important to do a full background check including credit report, possibly criminal background check, get references.  You want to make sure they’re going to pay you each month.  You’ll also want to have an executable contract in place, like a lease.  That way if they don’t live up to their end of the bargain, you can follow the proper procedures for eviction.  While it’s hard to do that for family or friends, it’s just as important.

I’m curious to know if you know someone sharing a home or are thinking about doing it yourself.  I can imagine that it’s becoming a lot more common, especially among family members.  Those taking in an aging relative or combining households with a sibling.  But what about you readers who have done it with complete strangers or even just acquaintances?  Please leave me a comment or contact me online to share your stories.

I can imagine that the MLS might open up a new category for just rooms available in the near future, given what the economy is doing to people’s bank accounts and the housing situation.

Refinancing is not as easy as it looks

At least there’s some good news coming out of this recession.  Interest rates for home purchases are at a record low.  You can save a lot of money in your monthly payment by having a rate at 4.5% as opposed to what it was a few years ago, 5.5 or 6 or 7%.  So many homeowners are trying to take advantage of these low rates and save some money each month by refinancing their current mortgage.  Some have adjustable rates that can get a fixed rate and others just want to drop their monthly payments.  However, it’s a lot more troubling these days than you would think.

Case in point.  I had a past client tell me her story about trying to refinance her home.  Both her and her husband had really good credit scores.  Hers was about 750 and his was just under 700.  They wanted to refinance their current 5.75% rate to something around 4.5%.  Unfortunately, the program they qualified for required a credit score of at least 700.  So in order to make it work, they had to drop her husband from the loan and do it just in her name.  This is only one of many problems arising from these bad bank loans that got us into this mess in the first place.

The Chicago Tribune just put out a great article about the troubles people are having with refinancing.  Aside from needing an excellent credit score these days to get anywhere with a loan (including a home purchase), one other huge problem includes low appraisals.  Obviously, multitudes of foreclosures and short sales have really contributed to decreased home values.  Appraisers aren’t always comparing apples to apples anymore.  They’re using ALL sales when coming up with their value, especially in neighborhoods where it seems like there’s only foreclosures and short sales.  Homeowners are now bringing significant chunks of change to the closing to pay down the rate if the appraisal comes up short.  That can be a lot of money out of pocket.  There’s always closing costs associated with a refinance, but it’s typically not tens of thousands of dollars.

Individuals who are self-employed (like Realtors) are also having a tough time.  The lender will want to see previous tax returns.  If an individual has a decline in income or a ton of write-offs that will show a lot less than they typically make, they might not qualify.  In the case of my past client, her husband was self-employed, too, and it did make sense for them to drop him off the loan.  But if you’re one single person, that can be a big drawback.

So how can you avoid these pitfalls?  For one, make sure you’re home when the appraiser comes through.  Walk them through the house and show them significant improvements you’ve made or ask your Realtor to print up some comparable sales data to present.  And a lot of lenders will charge you the appraisal fee even if your refinance isn’t approved.  Ask if that’s how your lender does it.  Better to know beforehand than to find out later.

If your bank or lender turns you down, it’s worth consulting another one.  You might want to talk to a mortgage broker that deals with a lot of different lenders.  Depending on your situation, he or she might be able to find a program that will work best for you.

For more information, please visit me online or e-mail me at noah.seidenberg@cbexchange.com.