Thursday, September 26, 2013

To spend or nor to spend, that is the question

To spend or not to spend, that is the question

You have found a home plan that you love.  You have found a homesite that you cherish even more.  Now, to close the circle on your dream home, you need to select options.  However, you chose a home that was a bit larger than you had planned for and the lot premium with the killer view was also a bit over the top.  So, with more flies than cash swimming around in your wallet, you walk into the design center convinced that you can put off many of your design selections and just add them to the house later. 

STOP RIGHT THERE.  Think about this for a minute.  It is kind of like buying the Mercedes, but seeing if you can get cloth instead of leather with no sunroof or navigation.  You may have fallen in love with the floor plan and backyard view, but the reality is that you live inside of your home.  The bulk of your time will not be spend staring out the windows, but most likely sitting in your family room or kitchen.  Make sure the areas where you spend the bulk of your time live up to your quality and finish expectations.

I know what you are thinking.  I can either do some of the upgrade work myself or just contract with someone else to do it cheaper later.  This typically sounds good, but, in reality, is usually a bad idea.  First, let’s review the types of things you would normally consider putting off.  Crown moulding, interior paint, backsplash tile, laundry room cabinetry, exterior landscaping, a pool.  You get the idea.  It can be a long list.  I also understand that maximizing your design selections with the builder can really stretch your budget.  However, putting it off is many times an example of truly being pennywise and pound foolish.  First, working through the builder allows you to roll these options into your mortgage.  Spreading the cost of these options over thirty years at 4.5% is really an inexpensive way to pay for these items versus paying in full or putting the expense on your credit card.  Second, having the work done by the builder maintains all your home warranties.  If someone else comes in to do work after the fact and damages something in your home, the repair will not be the responsibility of the builder.  Also, if the work is not done right, getting the contractor back to complete repairs may be more difficult than working through the builder on a home warranty item.  Finally, when selecting finishes during the design process, you typically have a trained designer working with you – for free. 

I know that a home purchase can oftentimes prove to be a more expensive decision than you had originally planned.  However, once you make the decision to get what you want, don’t be afraid to truly go all in up front.  In the end, what you think may be a more expensive decision may instead truly be the move that saves you the most money while also providing the greatest long term satisfaction.

Until next time…

Keep kicking the dirt!

Sunday, September 22, 2013

The Sky is not Falling

The Sky is not Falling

 Grab your favorite adult beverage, get comfortable and kick back.  This may take a while.  It appears that misinformation is being spread far and wide.  There is discussion that rising interest rates will be something akin to the great apocalypse and that the window of real estate recovery will slam shut, never to open again.

Fear not.  I am here to tell you that the sky will not fall, volcanos will not erupt and large winged creatures will not swoop down from the heavens to steal your children.  In fact, a rise in interest rates will be a result of positive economic change, not a reason for economic panic. 

 First, let’s understand the dynamics that keep interest rates low.  Low interest rates are typically associated with a struggling economy.  Low interest rates help to spur investment by keeping the cost of capital low, thereby increasing the opportunity for corporate borrowing and creating an environment for future industrial and economic growth.  This growth, in turn, results in increased hiring, lower unemployment and higher wages.  This is called a blueprint for prosperity. 

 As the economy improves, the demand for investment capital will increase, driving up the cost of borrowing, resulting in higher interest rates.  The key is to strike a balance where interest rates rise at a reasonable rate in response to economic demand.  If they rise too quickly, borrowing and capital investment will slow down and you run the risk of recession.  If they rise too fast, you have the flip side risk of inflation.  I am going to go out on a limb and assume that the governors of the Federal Reserve are smart enough to appropriately manage this process.

 In an improving economic environment, both home prices and interest rates will increase.   However, remember the phrase “A rising tide lifts all boats”.  An improving economy will also result in more jobs and higher wages, increasing your ability to pay more for a home.  Furthermore, if you will be selling a home, you will benefit by selling your home at a higher price as well.  In this environment, an increase in housing values does not mean that a real estate bubble has returned.  It means that economic strength has emerged and should be a reason for rejoicing.  The skies will be sunny, the birds will sing and your 401Ks should be well funded.

 So, next time you hear that interest rate increases will serve as a new death knell for housing, try not to get caught up in the hype.  Remember that housing prices currently remain relatively low.  Both home prices and the cost of borrowing can only go up at this point.  It is a sign of recovery.  Also, if you are buying a home as a long term investment and find that interest rates are rising above 5% or so, take a step back and look at the historic nature of interest rates.  A spike from today’s rates would still result in exceptionally low historic rates. 

It is now time for another adult beverage.  Pour a full glass and raise it in toast to the expectation of an economic recovery.

Until next time…

Keep kicking the dirt!



Sunday, September 15, 2013

Walk the Walk

Walk the Walk
I have been questioned by numerous people as to why this blog is called The Dusty Shoe.  The explanation is quite simple.  It derives from a marketing tool called a dusty shoe or dusty boot tour.  That is when tours are given of a site that is still under construction, causing you to quite probably get your shoes a bit dirty.  It also provides an opportunity for a developer to give select sneak peek visits to  highly qualified buyers before the home is generally open to the public.

Now, not every dusty shoe tour is the same.  Think about it for a moment. Wouldn’t it make sense for large estate home tours to be different than lower priced production home tours?  With that in mind, I offer up various branded real estate showcase shoe tours:

The Jimmy Choo Shoe Tour.   A tour of a home in a very flashy area where homes are typically overpriced.   The home will have a lot of bling and be very uncomfortable to live in.

The Wolverine Work Boot Tour.  This is a man cave oriented home tour.  You would expect to see flat screens in every room of the house, including a steam proof television in the shower so as not to miss a sporting event after working all day on the Harley in the Gladiator finished garage work area.

The Tom’s Shoe Tour.  A green oriented home tour focused on minimizing your carbon footprint and giving back to the community.

The Croc’s Shoe Tour.  A tour of a slightly out of fashion, but still very comfortable home. 

The Ked’s Shoe Tour.  A tour of a simple, non-descript home.  Nothing really special about it, but everyone always seems to want one of these.

The Rocky Boots Shoe Tour.  A home tour for the outdoorsman.  You will usually find lots of wood, dark leather and possibly a number of stuffed animal heads in the smoking room, next to the gun rack.

The LL Bean Shoe Tour.  A tour of a wannabe outdoorsman home for the ivy educated yuppie.  What they would envision a hunter’s home to be if they were not concerned with getting the Land Rover dirty.

The Penny Loafer Shoe Tour.  A traditional all-American home tour.  Classical and functional, but not showy or innovative.

The Reef Shoe Tour.  A beach house tour.  Lots of water views.  You can expect to see a number of surfboards in the garage with the kitchen refrigerator full of Coronas.

Well, there you have it.  There is no one shoe that fits every home, or every home tour.  That is the beauty of real estate.  Each home ultimately becomes an extension of its individual owner.  You know the expression.  One man’s trash is another man’s treasure.  You should always be able to find that one home that always matches how you walk, or, more to the point, how you live.

Until next time…

Keep kicking the dirt!

Tuesday, September 10, 2013

Oh, Give Me A Home...

Oh, Give Me A Home…

Time for a pop quiz! 

Question:  When selling your home, when is your home no longer your home?

A:  When the Buyer’s deposit becomes non-refundable.

B:  When all documents are executed and funds transfer.

C:  When they pry your cold, dead fingers off the front door knob.

D:  None of the above.

If you answered A or B, you would be considered reasonable.  If you answered C, you should seek immediate psychiatric help.  If you answered D, you would be correct.

You see, you should really consider your home as no longer yours once you decide to put it on the market.  At that time, you need to stop thinking of it as your own possession and start looking at it through the eyes of a buyer.  Let me put it in perspective.  When you sell your car, you wash it, take care of minor dings, maybe have the oil changed and definitely clean off the rust stains on the back seat where your college student put the keg.  The point is, you do what is necessary to make the car, or, in this case your home, attractive to buyers.  In that sense, you need to stop thinking of it as your own.  What you consider as comfortable , others may consider to be junk.  What you consider as memorable, others may consider to be dated.  That cute pink bedroom that you painted when your daughter was four?  You may want to consider repainting it to a more neutral beige to broaden the appeal.  And, please, take down the kid’s drawings on the refrigerator.  Let’s be honest, people looking at your home are not as impressed by your children’s stick figure drawings as you are. 

It is all about how you pay particular attention to the staging of your home.  Instead of showcasing those items that reflect who you are, you may want to consider minor changes (paint is a great equalizer) to give your home the greatest appeal to the broadest base possible.  Also, don’t limit your efforts to the interior.  Remember, your yard and entrance are the first impression a buyer will have of your home.  Spruce up the landscaping, pull the weeds, pressure wash the walkway and make sure the exterior paint is sharp and clean.

Remember, it does not matter if your home looks good to you.  You have to think how good it looks to others.  At this point, it is no longer your home, even if your cold dead fingers are still wrapped around the doorknob.

Until next time…

Keep kicking the dirt!

Wednesday, September 4, 2013

The Ballad of the Developer

The Ballad of the Developer
I am driving along and what do I see
A for sales sign, 1,000 acres more or less, stuck on a tree
What good fortune I think, the location is great
A community to build, I now just can’t wait
New homes, parks and schools, all sorts of new places
How great for the town, I envision smiling faces
I engage engineers, planners, consultants galore
This place will be great, my spirits do soar
I meet with the city, to build a special place do I strive
But here come the locals, with fire in their eyes
Your development is not wanted
We don’t want you here
I try to show drawings, but am met with more jeers
I eventually settle, less homes and more trees
I want to work with the neighbors, a vision to please
It soon comes to pass, that all is approved
I have taken my lumps and my bruises, but now dirt will be moved
And the community does grow
It becomes part of the city
The townsfolk now love me, even think I am witty
Then along comes another, to add more of their own
Causing the new homeowners to now let out a groan
How dare you come here, we are fine as we are
To add to the city will just cause a scar
And I grin to myself as the circle is complete
At these new council hearings where I now have a seat
The past becomes present
We all deal with the sentiment
Everyone seems to forget, you can’t thrive without development

Until next time…

Keep kicking the dirt!



Sunday, September 1, 2013

The Nose Knows

The Nose Knows

Who among us hasn’t looked around our home and thought about changes, renovations or additions that you would like to undertake.  Whether it be a kitchen or bath re-do, room reconfiguration or home addition, we have all, at one time or another, felt that we have the desire to upgrade our personal castles. 

Now here is the trickier question.  When considering these changes, have you also given consideration to how they will blend into the existing fabric of your home?  I like to call this observation the “Nose Job Effect”.  Follow me on this for a minute.  A good nose job will enhance someone’s appearance and seem like it has always been there, that your nose now takes the appearance that it was always intended to have.  A bad nose job, however, will look like your evil brother in law has played a cruel joke on your face.  Home improvements can be like that.

When getting ready to do home makeovers, it is critical to understand how the changes will blend into the remainder of the home.  Let’s say you want to upgrade your kitchen appliances and countertops.  Great idea!  However, what will your cabinets look like afterwards?  How about your flooring?  Don’t forget about the windows, too!

The same thing goes with a home addition.  However, in this case, the consequences can be even more severe.  In my prior example, you can always go back and add flooring, cabinet or window upgrades.  When making a home addition, it is more difficult to fix mistakes.  Let me explain.  You want your home improvements to look like they have always been there.  If your room flow looks off, or you have a home built with classical lines and add an addition with modern theming, you may find yourself with a problem.  Everyone will notice your nose job.  They will smile politely at you, tell you how wonderful you look and how brave you were for getting it done.  Then they will go home and wonder among themselves if you can get your money back.  You get the idea.

So, before you undertake that next big home project, think of it as a nose job.  Will the change look natural, or will you find yourself wondering what plastic surgeon you will need to call to fix your newfound problem.

Until next time…

Keep kicking the dirt!