Friday, September 23, 2011

pay now or pay later

but either way, you pay! I am referring to home maintenance, specifically those jobs that land on your honey do list but often fall off having never been done turning your home into this.

This recent market correction, while excruciatingly painful, has had some positive impacts on our local real estate market. 

Most notably are the changes to lending practices and the return to proper qualification for loan approval. In the past, as prices soared at a staggering rate, buyers cobbled together all their resources to make home ownership work, and lenders were all too eager to approve a higher loan amount with higher monthly mortgage payments. This left the new owners with little reserves and a lower monthly cash flow to make household repairs and to properly maintain their home. 

As the market corrected down along with the general economy, household cash flow was squeezed even more making dollars even tighter for home repairs and maintenance.

As a result, homeowners turned a blind eye to replacing the rusting hot water tank, repairing peeling window sills, and leveling sinking foundations, not to mention repairing leaning fences, uneven walk-ways and replacing fallen roof tiles. 

A friend in college purchased a shiny new BMW for her graduation present. She had worked three jobs her senior year to come up with the down payment. As she headed off to her first career job and a monthly salary that barely covered her rent, car payment and top ramen (sound familiar?), I asked her how she planned to maintain such a high performance car. Her reply, "I'll skip every other maintenance check-up. That'll save me a ton and I'm sure the car doesn't need them all". You guessed it, within the year her engine seized and she spent thousands to fix it.

So back to the lending practices. Now that the lenders' hands are being forced and buyers are being approved for home loans they can actually afford, buyers now have the monthly cash flow to create a reserve for household repairs. 

I see hundreds of homes every month and I attend close to forty inspections each year. I find it shocking to see how few homes have been maintained with pride. Don't get me wrong, I see many shiny new kitchens  and baths and lots of fresh paint. But what I do not see maintained are those critical working parts of the house that, ahem, are not all that sexy, but man are they necessary for a healthy home. I am talking about furnances, water heaters, foundation, decks, etc.

Perhaps the best way to think of it is what we hear from our dentist each year - preventative maintenance. That's right, brush twice daily, floss and get your annual check-ups. The same is true for your home. Preventative maintenance is the key to maintaining the value of your home. 

Notice I said maintaining the value of your home and not increasing the value of your home. Many sellers think that because they have maintained their home that their home's value has increased. I am sorry to burst the bubble, but that is not true. Think of it like a credit score. When you pay on time and fulfill your credit obligations then your credit scores are higher. But there is no accounting with the Credit Bureaus for paying your taxes - it's assumed that a responsible adult will pay their taxes. Home maintenance is the same. It is assumed you will maintain the home. If you don't keep up with the maintenance however, your home will depreciate in value. I know, life's simply unfair. 

Which leads me to the other fall out of our corrected market - the buyer's attitude. No longer will they buy a home, unless it is priced accordingly, with deferred maintenance. Buyers are demanding more, which is forcing sellers to put a higher quality product on the market. Not bad!

In addition, as sellers weigh the cost of trading up versus renovating, many are taking hammer and nails to their home to make it better....reinvesting in their investment is what I call it. But anyway you look at it, it's good. We see more quality on the market than in the past. 

So, keep your home painted, sealed and water tight. Clean your roof yearly and repair any missing tiles right away, check your foundation periodically. Maintain the home's systems by vacuuming out heating ducts, servicing the furnace and hot water tanks. Repair any water issues immediately.  Prune trees and shrubs as needed to stay away from the roof and power lines.  Have your chimney checked every few years by a mason and make sure there are rain caps on the chimney tops. Keep dirt away from any wood on the house. 

If you would like a copy (available in hard copy and virtual) of my Household Maintenance Check List and/or my 2011 Resource Guide with over 190 qualified vendors, pop me an email. 

Until next week,

la chasse au bonheur