Category Archives: Houston Homes

Norhill Subdivision

Norhill is an area of approximately 1200 homes within the Heights that was developed in the 1920s. It is made up of three sections that were developed at different times: Norhill, Norhill North, and Norhill East. Norhill North and Norhill East are joined by the Norhill Neighborhood Association and has been designated a historic district by the City of Houston. All areas of Norhill are subject to deed restrictions. However, the areas within Norhill Neighborhood Association have more restrictive requirements, especially as they relate to updating the exteriors of the homes. Most of the homes in the neighborhood are Craftsman bungalows with covered porches. Norhill is a highly walkable neighborhood.

Houston SkylineAs with all the areas within the Heights, Norhill is zoned to Houston Independent School District and is part of the City of Houston. The Heights comprises mixed use neighborhoods offering older and newer homes, shopping, and entertainment with easy access to downtown. It is most popular because of its proximity to downtown and because of the numerous historic neighborhoods and homes.

Over the last 12 months, 55 homes have been sold within Norhill with 45 of those homes built before 1930. For the homes built before 1930 and sold in the last 12 months, they averaged:

Listing Price: $496,187

Sales Price: $489,970

Sales Price per Square Foot: $334

Square Feet: 1466

Year Built: 1925

Of the 10 homes built in 1931 or later and sold in the last 12 months, they averaged:

Listing Price: $680,790

Sales Price: $678,750

Sales Price per Square Foot: $316

Square Feet: 2143

Year Built: 1974

If you like walking, a short commute to downtown and entertainment, historic neighborhoods, and a small town feel, Norhill may be a perfect neighborhood for you.

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Downsizing

My Mom just moved from her home to a senior living facility. She cut her space by two-thirds, and she does not plan to move back to something larger. So, her downsizing was extreme and permanent. However, many of us have downsized over the years as we became empty nesters, moved from the suburbs to town, divorced, or tired of dealing with the yard. In many of these cases the change will not be “permanent.” However, in all these situations, there are steps to make the process more agreeable and successful. Broadly, those steps are:

Storage facility – For many, getting a storage facility is a first step. If you are going to attempt a new lifestyle that you are concerned you may regret (e.g., moving to a smaller space in town) or if you have furniture you are saving for your children’s homes, storing the extra furniture and china may make sense for a short period. However, after a relatively short period you will want to reconsider the storage facility and the extra items.

Start at least ninety or more days ahead of the move – Although not always possible, planning and working on the project over 3 to 6 months will help you make it a more successful move.

Think about your new lifestyle – Are you moving to town to be closer to social activities like restaurants and plays? If so, you may not need as much social gear as you had by your former pool or bar. Will you really need a bed in all the bedrooms or could one become office and TV space?

Involving your spouse or partner and others – The old sports gear you now want to trash may be your partner’s most sentimental item. And, an old Teddy Bear or baseball card collection may be something your kids want. Obviously, you and your spouse or partner and family members will have to be involved in the process. Also, make sure the furniture you want to save for the kids is something they will want.

Make a floor plan of your new space – Measure your new space and your major pieces of furniture. Envision where everything will go and map it on a floor plan. All you really need is a tape measure, and a ruler or straight edge. Determine if you will have enough space to add book shelves or other storage pieces.

Only take what fits – This may seem obvious. But, you do not want to create unhappiness with your new space because you are too cramped. If you love your books, but you only have room for one bookcase that will hold 100 books: limit yourself to 100 books. If you have half the cabinets, only take half of what your current cabinets hold.

Start making lists or piles – You will want to start with one closet or one room or one cabinet at a time. To the extent it is possible, go ahead and make it physical. If you can take your extra clothes from one closet to a local charity now: do it. But, if it is too difficult, such as thinking through the furniture in a bedroom, start making lists of where it will go.

Assignment of the items – The types or categories of piles or lists will be gifts to a relative, moving to new house, giving to charity, etc. Very little should go in a trash pile. Somebody will want it or someone needs it.

Heading HomeSentimental items – Some items have a sentimental value but cannot be moved. Maybe others involved will also find it sentimental or can use it. Certainly other relatives or friends may also find the items sentimental or possibly they need them. However, be careful in offering items as others may not find it as sentimental as you do. I have a friend who became a widow. Her husband had collected books, too many to take to her new home. Although she had no desire to sell them, she found selling them individually on eBay made her feel the new owners would love them like her husband had. I find donating items to charity always makes me feel better than putting it in the trash. Even if it creates more work, a solution may be much more satisfying. And, keeping a photograph of the item may be just as satisfying as keeping the item.

Do you really need it? – Empty-nesters moving from a suburban home to a patio home no longer need a mower or all the tools taking up space in the garage. Many people have 3 kinds of pots, 2 kinds of china, and 3 sets of knives. Over the period you are going through this downsizing process track what you actually use and get rid of the rest. Even if you think you are going to use something, can you borrow it or rent it later?

Decluttering – I have way too many files related to tax returns that are past the audit period, paperback books that I think I may read again, boxes of work documents from years ago, old electronics equipment, etc. that I would need to shred, give away and throw away. This may take longer than some of the other steps.

At your new home – Does the space work as you planned or do you need to “downsize” and “declutter” more? It probably makes sense to make one last try at your new home. If you have collections, it may make sense to store them under your bed and rotate a few pieces for showing. For kitchens and bathrooms, it may help to have shoe boxes or larger plastic containers to hold the items that used to cover the counters. The containers can be moved into and out of the cabinets when needed.

Multiple use furniture – In your new home, it may be beneficial to have a couch that makes into a bed, a coffee table that has drawers or other storage, and eating arrangements that can also work as office space.

We all have too much. Even if you are not downsizing to a new home, some of these steps may help you live a more comfortably. Best wishes for your new life.

Quickly Estimating the Value of Your Home

You want to know what your home is worth but you are not ready to sell. You may be considering whether to upgrade your kitchen or move. You may be completing a financial statement for the bank. Or, you may just be curious. But, you do not know a Realtor and do not want to go to a lot of trouble. Automated Valuation Models (AVMs) produce answers which may be useful to you.

AVMs use tax records which include information such as location, square feet, number of bedrooms and bathrooms, and property tax valuations. They also use sales prices where available.

Nationally, AVMs are most accurate where the creator of the model has the most information, where home prices are lower, and in newer subdivisions where few homes have been updated. They are less accurate where less information is available, more expensive or custom homes are involved, and in older neighborhoods where significant differences exist because of remodeling and updating.

Inspecting the Home

Inspecting the Home

Historically, AVMs were used by industry insiders such as mortgage companies. However, more recently some national home search sites provide these tools as part of their effort to supply useful information to consumers and leads to Realtors. The most famous sites are Zillow and Trulia. However, if you search on the internet, there are other sites that advertise their services. I found a product from Chase using an internet search. I have paid for a proprietary AVM for over a year. And, because I am a Realtor, I have access to another AVM provided by the National Association of Realtors.

Of primary importance with these products is accuracy. In my review, Zillow was most transparent about accuracy. See their comments here. The “Los Angeles Times” recently produced an article discussing the issues with accuracy at Zillow. The other AVMs use price ranges or disclaimers or both. Homes in Texas present a unique issue in that the sales price of a home is not public information. So, while Realtors have access to this information through the MLS, the public is generally not aware of sales prices. This also means the local taxing authorities do not have access to this information and may not have access to information on remodeling if the remodeling is not done in a taxing authority where building permits may not be required (e.g., outside a city limit.) So, for example, the taxing authorities may not be aware of a pool or a completely remodeled kitchen and bathrooms. Both taxing authorities and the AVMs may become aware of sales prices and updating if the owners or Realtors input or provide the information to the AVM (e.g., Zillow or the Harris County Appraisal District – HCAD.) However, most owners and Realtors do not provide this information. As a result, the accuracy of AVMs is compromised.  In the Zillow accuracy disclosure, Zillow indicates their accuracy for Houston is one star out of four stars.

However, even with those limitations, based on my testing for my own home and recent transactions, AVMs may provide useful information, especially if taken in combination with information from other AVMs and HCAD. And, it may be fun or interesting to search these sites and others for the values. I have not identified specific AVM sites with my results because they all can be close or nowhere near right depending on the properties. My home is more difficult to value for an AVM, even if it were not in Texas, because it is an older home in a 1950s neighborhood that has new houses, extensively remodeled homes and homes that have had no major work since the 1950s. My results were:

Price per HCAD is within 20% of my market value.

Site 1 produced a range that was 19% below to 9% above my market value.

Site 2 produced a price that was more than 40% below market.

Site 3 produced a price that was 5% below market.

Site 4 produced a range that was 30% below market to 6% below market.

Site 5 produced a range that was 14% below to 11% below market.

I also looked back at my most recent transactions representing buyers and sellers. Using one of the AVMs, the actual sales price differed from the value estimated by from 14.8% lower to 27.0% higher, averaging a 12.8% difference.

Of course, these sites should not be used if you plan to sell your home. The best answer if you plan to sell your home is to find a Realtor who can use information from the MLS about prior sales and insight into the current market to help you come to an accurate estimate of the value. I would be happy to provide valuation information for your home without any obligation.

Buying a Condo

There are many advantages to buying a condo, including: security, amenities, views, social community and included maintenance. However, there are also some potential negatives to consider before deciding to buy a condo. Some of the matters on which to focus as you consider a condo are discussed below.

Ownership Interest – Instead of owning the building and the land as one would in a single family home, the ownership interest is the space inside the condo and an undivided interest in the building and common areas. As a result, the condo owners will share substantial costs to maintain and insure the building and common areas, and others will have a say in the operation of your home outside your owned space.

Condo Owners Association – Similar to a homeowner’s association, the condo association will be responsible for enforcement of bylaws and collection of fees. However, because of the greater importance of a common building, maintenance, and amenities; the Condo Owners Association will likely have more “intrusive” rules and significantly higher fees. One will want to ensure the bylaws are in line with their expectations of the level of Association control. In addition, one will want to review minutes to ensure there are no issues, and the board functions in a professional manner.

Houston SkylineCommon Areas – Common areas include the land, floors, lobbies, elevators, common services infrastructure such as air conditioning and water, and amenities such as pools and exercise facilities.

Maintenance and Common Area Fees – As compared to a single family home, a condo will have significant fees for the maintenance of the building, common areas, security and amenities. When buying a condo, a consideration of the fees will be significantly impact the total price one is willing to pay for the condo.

Social Aspects – One of the advantages or disadvantages of living in a condo, depending on one’s perspective, is the social aspects of the building. Are there many organized activities? Do the activities reflect your lifestyle? Do the common areas support interaction?

Insurance – The Condo Owners Association will have insurance on the building and common areas. The unit owners will need insurance on their space, including furnishings and liability. Ensuring the Association and you have proper insurance will be important to you and your bank as you obtain financing.

Financing – Historically, banks have had greater losses financing condos than single family homes. As a result, financing rates are generally slightly higher than for single family homes and required down payments are generally higher. Most financing for condos will require 50% of the condos be owner occupied, monthly dues for nearly all units to be up to date, and other ownership requirements. In addition, the bank will insist on certain requirements for the Association such as: appropriate insurance, adequate budget reserves and no pending litigation.

Miscellaneous Considerations – With respect to parking, one will want to consider security and walking distance. For overall security, is the level of security and cost appropriate for your needs? In a condo, space is at a premium. So, is there adequate storage for your needs?

Living in a condo provides many benefits one may not have in other living arrangements. However, one will want to be sensitive to the associated issues.

All Those Fees

There are many payments, costs and fees associated with buying and selling a home. Some are paid by the buyer and some are paid by the seller.

Costs and Fees Generally Paid by Buyer:

While there are a number of categories of costs and payments, the most significant buyer fees are related to financing.

Inspection fees – In the Houston area, these are generally mechanical, structural, foundation, termites and pool.

The warranty deed and deed of trust, if applicable, will be recorded with the County.

Escrow Fees are paid by both the buyer and seller to the title company for the services the title company is providing.

Survey cost is generally paid by the buyer. However, the seller may have an existing survey, which may be acceptable. Or, the seller could pay if that is negotiated.

Having Fun at Home

Having Fun at Home

Homeowners’ Association Dues and Fees are generally paid at the beginning of the year. As a result, the buyer will reimburse the seller for that remaining portion of the year for which the buyer will own the home.

Property taxes are paid at the end of the year. As a result, the seller will owe the buyer for that portion of the year for which the seller owned the house.

Optional Owner’s Title Policy additional coverage for discrepancies and shortages is negotiable but generally paid by the buyer, if purchased.

Homeowner’s Insurance and Flood Insurance may be paid directly to the insurance company if there is a cash transaction. If a loan is set up with an escrow account (meaning the bank pays these costs on behalf of the buyer), they are paid by the bank.

If financing is involved, there will be Lender Fees and Charges:

  • Lenders typically set up an escrow account to directly pay the buyers property taxes, homeowner’s insurance and flood insurance (if applicable). To set up the initial funding for that account, the bank will generally require a payment for three months’ insurance and at least a year of the estimated annual property tax amount.
  • Other lender fees and charges are loan origination, appraisal, document preparation, credit report, and mortgage insurance premium, if applicable. Mortgage insurance is paid if the down payment does not meet specific levels or on some government supported loans.
  • Interest for the period from closing to the date of the first payment.
  • Although not paid to the bank, the buyer will pay Title Insurance covering the bank for the amount of the initial loan.

Miscellaneous fees like courier fees are also charged.

Costs and Fees Generally Paid by Seller:

While there are a number of categories of costs and payments, other than debt payoff, most sellers’ payments, fees and costs are related to transaction commission to the broker, title insurance premium paid on behalf of the buyer, and property tax credit to the buyer.

Basic Title Policy for buyer – Although negotiable, this is almost always paid by seller.

Proration of Property Taxes – Property taxes are due at the end of the year. As a result, the sellers are charged for the portion of the year they owned the home. This amount is credited to the buyer who will be responsible for paying the tax at the end of the year (or their bank if there is an escrow account.)

Home Warranty –Typically, the seller pays an agreed amount for a substantial portion of a one year warranty on mechanical items in the home such as sprinkler systems, heaters and air conditioners.

Homeowners’ Association Dues and Fees are generally paid at the beginning of the year. As a result, the seller will be credited for the portion of the year related to the period of the year in which the buyer will own the home.

All commissions are the responsibility of the seller.

The payoff of all loans and liens will be charged to the seller.

Escrow Fees are paid by both the buyer and seller to the title company for the services the title company is providing.

Miscellaneous other fees and costs are related to recording the release of liens, document preparation fees, and homeowner’s transfer fees.

Getting Your Home Ready to Sell

In our current market, where we keep reading about how fast houses are selling and how prices are still rising, one could easily decide to list a home without doing anything to get it ready. However, the home’s appearance can significantly impact both the total time it takes to sell a home and the amount for which the home will sell. It only makes sense to spend a little time and a little money to maximize your return.

The exterior is important because of curb appeal and first impressions. The most obvious first step is to ensure the address is clear and can easily be seen from the street. I cannot tell you how difficult it is to figure out addresses for some homes. Other suggestions include:

  • Buy a new front door mat
  • Keep grass freshly cut and edged
  • Remove all yard clutter and pet waste
  • Weed and mulch flower beds
  • Clean windows
  • Pressure wash exterior, driveway and sidewalks
  • Tighten and clean all hardware
  • Clean gutters and downspouts and ensure they are attached
  • Store garbage cans, hoses, toys, etc.
  • Replace burned out bulbs
  • Caulk around windows, etc.
  • Clear out and clean garage
Inspecting the Home

Inspecting the Home

In thinking about all storage areas (garage, closets, pantry, cabinets, etc.), go ahead and get ready for the move. You should throw away anything that will not be moved, organize the space, and make enough room that someone could easily see storing more in that location. The hall closet should only have a couple of coats. It should not have all your winter clothes. The two car garage should have room for two cars and additional room to see where items could be stored. Obviously, this may also require renting temporary storage.

Actually, the garage example is a good way to think about the interior as well. Every room and closet should show there is plenty of room and be organized. If a room is crowded, remove furniture until it is not. And, de-clutter. You should put away toys, clothing, dishes, towels, etc. If you have children or pets determine how you will have a 10 minute de-clutter process for showings. For the adults, this 10 minute de-clutter process probably applies to all bathroom and kitchen counters. Shoe boxes to be put under the cabinet will probably work for the bathroom. A toaster oven can go in a kitchen cabinet. Other interior items include:

  • Clean ceiling fans and light fixtures
  • Repair grout issues
  • Replace bedding
  • Consider buying new shower curtains
  • Add or replace accent pillows (a good way to add color)
  • Add a throw in the living room
  • Replace rugs for updating or to add color
  • Hide trash cans
  • Repair all plumbing leaks and drips
  • Keep toilet seats and lids down
  • Add light by keeping curtains open and, subject to fixture limitations, increase bulb wattage
  • Clean walls and shampoo carpet
  • Paint should be taken to a neutral color
  • Remove items from the front of the refrigerator
  • Consider adding fresh flowers to add color

In my experience, the key issues which negatively affect first impressions are:

  • Inadequate lighting (natural and interior)
  • Clutter and disorganization
  • Cleanliness
  • Too much furniture, knickknacks, personal items (the accumulations of our life)

Texas Realtor magazine recently published a list of the mistakes sellers make during the process of selling their home. The ones most applicable to this discussion are not making cosmetic repairs, failing to remove pets, leaving personal items and decor in place, not maximizing natural light, and letting emotions get in the way. We get attached to our homes. The longer we have been there, the more memories and attachment we have to the home. However, to the extent possible, you need to start thinking of your home as an investment in a building and land. It is going to be somebody else’s home. They need to see themselves in the home and not you.  You will need to de-personalize the home. Your knickknacks may be somebody else’s clutter. You should consider removing family photos, especially those of younger children. And, religious symbols may be inappropriate for the buyer who may be from India or Asia.

With respect to cosmetic repairs that may cost some money, key items would be:

  • Painting the exterior or interior
  • Replacing damaged siding
  • Replacing wallpaper
  • Eliminating popcorn-style ceilings
  • Replacing light fixtures
  • Painting cabinets
  • Replacing hardware in kitchen and bathrooms (handles and faucets)
  • Taking out half-walls or turning them into bookshelves or storage

A professional stager can help you in suggesting additional steps which will get your home ready to be viewed by the public, including changes in color, de-cluttering and room arrangements. In my experience, stagers are worth the money.

One last item to consider is to ensure the safety of expensive or personal items in your home. Checkbooks, bank statements, tax returns, etc. should be stored in a safe place. Prescription drugs, jewelry and other valuables should be stored in a locking cabinet.

 

SELECTING A PRICE

The vast majority of homes sold in the Houston area go through the Houston Association of REALTORS’ MLS, which means a real estate agent was involved in the transaction. For each home listed, the REALTOR had proposed a price at which to list. When you list, how do you evaluate the REALTOR’s proposal?

You want to use Goldilocks pricing. Not too high because you will make the home sit longer, and possible buyers will start wondering what is wrong with the house. Not too low just to get a quick transaction. But, price it just right. Factors you may want to consider in evaluating the REALTOR’S proposed price are:

  1. The market sets the price. You and your REALTOR are not driving the process. The market is. So, what you paid for your house, how much you have spent on upgrades, or how much you need to net from the transaction have no impact on a possible selling price.
  2. Supply and demand will impact the price. A market equilibrium exists if there is a 6 or 7 months’ supply of homes on the market. The number is calculated using homes for sale divided by number of homes sold in the prior 12 months. If there are 50 homes on the market and 100 sold in the prior twelve months, there exists a 6 months’ supply. If there are fewer homes on the market, it is generally helpful to the seller in pricing the home. And, when there are more homes on the market, it is generally helpful to the buyer.
  3. Prices are very local. In calculating the months’ supply, one would want to use your neighborhood or subdivision. And, if there is a significant difference in size or pricing in the neighborhood, the calculation would need to be modified for relevant or comparable properties.
  4. Compare your home to the homes that are for sale. You can search homes for sale in your neighborhood and study how relevant the homes that are for sale are to your home. You can also visit open houses. The relevant homes you select are the competition, and your home will need to be priced in line with the competition. Relevancy can be determined by relative:
    • At Home

      At Home

      Size – For both the home and the lot. The larger the size, the larger the price.
    • Number of bathrooms –  The more bathrooms, the higher the price
    • Location – Are the homes on a corner (higher), busy street (lower), views (the better, the higher the price), near noise (freeway or a nearby entertainment area will reduce the price.)
    • Age – Many neighborhoods in Houston are mixed with older and newer homes. Your relevant homes should be from the same generation.
    • Condition – Well maintained homes will obviously improve the price comparison.
    • Flooding and foundation issues – In Houston, many homes have had water in the structure. A history of water will reduce the price. The status of the need to repair the foundation will impact the price.
    • Quality of remodeling – Poorly done remodeling or additions will reduce the asking price.
    • Uniqueness – A home that is different from others in the neighborhood (e.g., all bedrooms down and living area up, or a much larger home than others in the neighborhood) may make a home more difficult to sell, lengthen the selling process, or reduce the possible selling price.
  5. Staging can help. Having a professional stager or using a list of steps your REALTOR provides (e.g., plant fresh flowers and put mulch in the flower beds) can both speed the sale and improve pricing.
  6. Appraisals can be a limit on the price. Even in an excellent market for the seller, most homes will need to be financed. As a result, the appraisal for the bank may limit your ability to pursue a higher asking price.

When you select a price, there are three basic theories:

  1. Odd pricing – Pick a price like $236,475. It will make people curious and get a conversation started.
  2. Grocery or gasoline pricing – Price your home at $299,999 as it may sound less expensive than $300,000.
  3. Internet pricing – Many homebuyers or their agents use round prices to search for homes. If the round numbers are $290,000 to $320,000, they are going to miss your house priced at $289,900. With all the technology in use today, I prefer the round or internet pricing theory.

Although you can rely on your REALTOR to propose reasonable pricing, you will want to use these guidelines to evaluate their suggestion. Good luck.