Tag Archives: renovation

Remodeling in California

To get their dream home, many California homeowners still have work to do after they close escrow.

California is the third state most likely to do a home renovation project. For homeowners in our state, a full remodel after purchasing a house is fairly commonplace.

For those remodeling, the average cost of a full-home renovation is $263,384, probably due in large part because 93% of homeowners enlist (and pay for) professional help. But, as you might assume, fully renovating your house adds value; the average home value after a full-scale remodel is $725,000.

Have you done a full house renovation?

Homeowners renovating your home

This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS at CAR.org.

Home Renovation Projects Can Have Unexpected Costs

Budgeting for a home renovation project is not an easy task because a variety of unexpected costs can crop up to the point that you may break your budget before you’re even close to finished. Protecting yourself from unforeseen costs can make all the difference in ensuring your remodeling budget stays on track, so get a grip on hidden costs in the early planning phase of your project with these tips.

To start, you might want to assume that you’ll have to add 10 to 20 percent onto your budget to account for those hidden expenses that will develop as a project progresses. This will financially and emotionally prepare you for the headaches created by those tricky budget-crushers.

Below are examples of just a few items to watch out for that could add major costs to your budget:

home repair toolsRotten Flooring
If you’re remodeling a kitchen or bathroom, then be sure to keep in mind that leaks from a toilet or shower can cause serious damage and can go undiscovered until a remodel project gets underway. The leaking can cause such expensive damage because the entire floor and sub-floor may need to be replaced to address the rotting.

Wall Removal
Taking down a wall might seem easy enough, but if you have to reroute electrical wires or plumbing pipes, refinish flooring, or patch and paint the ceiling where the wall used to be, then the costs can really add up. If you are removing a load-bearing wall, there are even extra costs to consider, as jacking and shoring and building temporary walls can all be involved in the process.

Pest Control
What you can’t see behind your walls, including insects and other pests, can make your project all the more expensive once critters are no longer concealed by a home’s walls and floors. Pests can cause significant damage, not to mention the additional expense of using an exterminator.

Asbestos Removal
If you own an older home, then the insulation, flooring, and wall materials that comprise the building blocks of your home may be riddled with asbestos. As a result, you can face huge costs to remove this hazardous material. To start, you will need to hire a licensed inspector for testing purposes. If removal of materials needs to take place, then you must hire a remediation company, which could cost a few thousand dollars or even more than $20,000 if asbestos is everywhere.

Which of these surprises have come up when doing your own home improvement projects?

Review your homeowner’s policy

It’s that time of year again: time to review your homeowners’ insurance policy.

Wait—you don’t typically do that? There are many reasons why you should give this important policy an annual review, particularly if you made changes to your home during the past year.

Here are some tips regarding what to look for when you do your review. Continue reading

Tips for Trimming Remodeling Costs

fixer upperWhen it comes to home improvement it is easy to think big. As you look into your yard you can already envision the perfectly manicured lawn, breathtaking landscaping, renovated patio area, and a new outside BBQ area. However, when you look at the budget you have to work with your vision starts to slowly fade away and you begin to concentrate on more realistic goals.

How is it possibly for you to create that dream home on a tight budget? In many cases you are going to need to make some small sacrifices in square footage, quality, and special features. The following tips should provide you with plenty of ideas on how you keep your home improvement budget on track without compromising results: Continue reading

Factoring energy efficiency into a home’s value

Under the SAVE (Sensible Accounting to Value Energy) Act, estimated energy-consumption expenses for a house would be included as a mandatory new underwriting factor.

When you apply for a mortgage to buy a house, how often does the lender ask detailed questions about monthly energy costs or tell the appraiser to factor in the energy-efficiency features of the house when coming up with a value?

Hardly ever. That’s because the big three mortgage players — Fannie Mae, Freddie Mac and the Federal Housing Administration, which together account for more than 90% of all loan volume — typically don’t consider energy costs in underwriting. Yet utility bills can be larger annual cash drains than property taxes or insurance — key factors in standard underwriting — and can seriously affect a family’s ability to afford a house.

energy efficientA new bipartisan effort on Capitol Hill could change all this dramatically and for the first time put energy costs and savings squarely into standard mortgage underwriting equations. A bill introduced Oct. 20 would force the three mortgage giants to take account of energy costs in every loan they insure, guarantee or buy. It would also require them to instruct appraisers to adjust their property valuations upward when accurate data on energy efficiency savings are available.

Titled the SAVE (Sensible Accounting to Value Energy) Act, the bill is jointly sponsored by Sens. Michael Bennet, a Democrat from Colorado, and Johnny Isakson, a Republican from Georgia. Here’s how it would work: Along with the traditional principal, interest, taxes and insurance (PITI) calculations, estimated energy-consumption expenses for the house would be included as a mandatory new underwriting factor.

For most houses that have not undergone independent energy audits, loan officers would be required to pull data either from previous utility bills — in the case of refinancings — or from a Department of Energy survey database to arrive at an estimated cost. This would then be factored into the debt-to-income ratios that lenders already use to determine whether a borrower can afford the monthly costs of the mortgage. Allowable ratios probably would be adjusted to account for the new energy/utilities component.

For houses with significant energy-efficiency improvements already built in and documented with a professional audit such as a home energy rating system study, lenders would instruct appraisers to calculate the net present value of monthly energy savings — i.e., what that stream of future savings is worth today in terms of market price — and adjust the final appraised value accordingly. This higher valuation, in turn, could be used to justify a higher mortgage amount.

For example…

Read the rest of this article is by the Los Angeles Times: “Factoring energy efficiency into a home’s value“.