Often when asked about home building vs. purchase and remodeling, I like to think about castles. In many parts of Europe, it’s possible to buy a real castle! And, often, these amazing structures and properties can be had for the price of a 25 year old American vinyl sided colonial! But, it isn’t the cost of the purchase that is the major hurdle, but the cost of fixing the property, rebuilding its infrastructure, bringing it up to current codes, and, then after all that, the annual maintenance of a building built, well, like a castle. So, this is true also of many homes- the purchase price is reasonable, but the cost of making the home your own, conforming with current codes, and, then, maintaining it can often be daunting. I try to see if the changes a specific purchaser wants to make are major or minor, if the home was well made in the first place, and how far off current codes we really are to begin with. Some homes are worth the update no matter what, and some really aren’t. Some buyers are into that kind of project, and some aren’t. It’s a balance. Hoepfully, though, when you’re done, you’ll have your own “castle”- http://www.bloomberg.com/news/2014-11-05/crumbling-castles-haunt-east-germany-25-years-after-wall.html
I recently had a chance to talk to a reporter from the Wall Street Journal about construction lending to smaller builders. It’s interesting for me to hear what’s happening around the country and talking to Ken gave me a window on what’s happening in other areas. In general, though, business post-recession hasn’t returned to “normal” for custom builders-especially when it comes to banking relationships. Myers Homes used to have open lines of credit that we used to finance our projects for our customers – today, we need to help our customers navigate the borrowing world and can’t offer that service as the banks won’t establish those kinds of lines of credit for us. I’m lucky to have been able to establish a new banking relationship when our previous banking relationship hit the rocks-but others haven’t been so lucky. Ironically, it appears that banks are getting more comfortable making vastly larger, infinitely more risky, loans than those to builders like Myers Homes. Here we go again!
While I don’t think smallish custom builders had much, if anything, to do with the banking woes in 2007-2012, we have paid a relatively heavy price. Fortunately, today we have great resources for our customers to use and are able to fund whatever kinds of projects come our way. And, someday, maybe the banks in general, will come to remember what they used to know without a second thought- custom builders are in the business of servicing clients- those they build for, and those they build with- and weren’t the ones that would cut and run when trouble started! Here’s a link to the WSJ story- enjoy! http://m.us.wsj.com/articles/lending-for-construction-grows-4-in-2nd-quarter-1409247736?mobile=y
I came across an article in Bloomberg this morning about a lawsuit in CA in which a buyer claims that a Realtor inflated the square footage of a home that the buyer wound up buying. This is one of the oldest issues in real estate transactions- how big is the home? Different areas have different customs for what is included in these calculations. Here, in OH, it is customary to include only the main living levels, not outside porches, basements, or garages. In Florida, I’ve noticed two numbers- the square footage “under air” and a total that may or may not include outdoor spaces. In the case at hand http://www.bloomberg.com/news/2014-08-20/chinese-millionaire-roils-brokers-over-shrinking-mansion.html , a California community seems to have actually changed, by statute, what is included, and the Buyer and Realtor were not only from different countries, speaking different languages, but on different pages altogether as to what each thought the square footage of this home included.
A much more interesting part of the lawsuit, though, is that the Realtor represented both Buyer and Seller- so-called Dual Agency. When you are hiring a Realtor in a given instance, it is wise to ask who they represent. In Ohio, they can represent either Buyer or Seller, or both. While the Realtor is required to disclose that Dual Agency to you, in a case like this one, it would have been better for this Buyer to have had his own fiduciary representative to explain the issues to him, maybe. It is customary in our state that the Seller pays the costs of the commissions out of the proceeds of the sale- Realtors, unlike lawyers, accountants, or other advising professionals, aren’t compensated for actions taken or services rendered, but by the size of the transaction. So, even a Buyer’s agent has an inverse incentive relative to their client- they get paid more the higher the cost of what the client buys. While the Realtors I know don’t let that influence their service to the client, it isn’t really a very good set up for consumers. I thought when, in OH, they created the Buyers Agency relationship that the industry would move more to a pay-for-service model, but so far that hasn’t happened. Maybe lawsuits like this may re-start the discussion-
Considering the time of year, I thought that this article would be helpful. And, yesterday, when I got word that one of our customers had their home broken into, it became more so. By the way, the alarm our customer had installed chased the would-be burglars away empty handed- of course, the damage they did breaking in will need to be fixed, but the event could have been much worse! –http://cannonchristian.realtytimes.com/advicefromagents1/item/29274-how-to-prepare-your-home-before-traveling
This spring we’ve had a flurry of calls all related to the same thing-things people have known about and wanted to change/fix/enhance are now at the top of their to-do list and it’s time to get things done! Bathrooms, garages, basements, landscaping, walkways, driveways- all of these things (well, maybe not the bathrooms) are sort of the drudgery part of home maintenance. We know it’s important to follow through on it, but not so much fun. And, when you let those things go, it can get way more expensive to fix them later/ Yet, when those things are taken care of, day to day living in your home feels so much nicer-and you’ve enhanced your investment in the home. Even just cleaning and painting the garage can be a big “pick me up” when you fist pull into the garage. How about a facelift for your fireplace? It’s your home- make it nice for yourself!