Category Archives: Real Estate

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.

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.

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.

Having Enough Money During Retirement

According to a recent Bankrate.com survey, 36% of the people in U.S. have no money saved for retirement. Even if you are saving, unless you are in the stock market, you are earning nothing on those savings. And, some of us are just cheap. So, whether you have no money, or have some money but want to make it last, this is information to help you have enough.

Work –

Of course, the best solution may be to keep working. The longer you work; the less money you will take out of retirement accounts or social security. I have also noticed, if I am working, I do not have time to shop.

Financial –

Social Security – Deciding when to start taking social security can be complicated. For a healthy single person, with no dependents under 18; delaying the start of social security increases the lifetime benefits you will receive. If you are married, disabled, have life threatening health issues, or dependents under 18; the answer is more complicated, and you should consult your local social security office. Also, there is also a very high marginal tax rate on social security payments if one works and takes social security. So, if you plan to work, it may be best not to start social security.

Medicare – Even if you are not taking social security, you can get on Medicare at 65. You should start the sign in process 90 days before the 1st of the month in which you will turn 65. Again, broadly, unless you never need a doctor, most people will save money by also buying a Medicare supplement plan and drug coverage.

Debts – You should plan to pay off all debts by the time you retire, especially a mortgage. If you have not paid off your mortgage, plan to keep working.

Early Withdrawals – If you have a deferred compensation plan or savings bonds or CDs, there are penalties and sometimes taxes associated with early withdrawals. And, they reduce how much you will have when you retire. They should be avoided.

Meeting Neighbors

Meeting Neighbors

Longevity Annuities If you have enough money for now, but are worried about outliving your money, consider a longevity annuity. In a longevity annuity, if you buy it at say 65 and do not take any payments until you are say 85, and set it up where your only returns are the payments after 85; the payments after 85 could cushion you from running out of money. Besides earning some rate of interest on the money, you earn a return on the “gamble” by the insurance company you will not live until 85. If you die before 85, you will not need the money. If you die after 85, you can depend on a cash flow.

Reverse Mortgage – After you turn 62, you can do a reverse mortgage which allows you to get money out of the equity in your home or buy a different home, and you never have to make a payment. One negative is interest rates are higher than a standard mortgage. Your heirs can assume the mortgage at your death or decline to take the home and the mortgage.  This may be best used by those who are not worried about their heirs inheriting the maximum amount of money.

Housing –

Size matters – The size of your home obviously impacts the cost of your home. But, it also impacts utilities, insurance, property taxes, maintenance and many other costs. Moving to a smaller home, can free up capital from the sale of the home and reduce all those costs associated with home ownership. And, there is a deduction of up to $250,000 on the gain from the sale of a home when you downsize or move to a rental. In Houston, just reducing water, electricity and property taxes can offer substantial savings.

Location in the US – Living in small towns is cheaper than living in big cities. MSN Money and AARP have recently had articles listing the least expensive cities. Their lists include smaller cities and towns with no big cities. The suburbs are also cheaper than the inner city. The state in which you live also impacts your costs because of taxes and other living costs. Inman News recently calculated tax per person with the states on the coasts being higher than the states in the middle of the country. The National Association of Realtors recently listed the cheapest states relative to price of total home ownership cost as a percent of total income by state based on Census Data. All the least expensive states (lowest percentage) were in the Midwest and South.

International locations – Many people are opting to live overseas to lower costs. You can easily Google several lists of the best places for expatriates to live. Most of the lists which consider price and quality of life have Latin American, Asian and Central European countries. There are many of the countries that have a thriving expatriate community, with low costs and good healthcare.

Property Tax Deferral – In Texas, if you are 65 or over, you can request an indefinite property tax deferral (not pay property taxes until death or you sell the home.) In Harris County, you submit the request form to the Harris County Appraisal District. However, the interest rates are high (8%). So, this will reduce the amount you plan to leave your heirs.

Renting – It may be cheaper to rent than buy. Go ahead; add up all your costs of home ownership. In most places it is cheaper to rent, if you just look at cash flow.

Miscellaneous –

Go Carless – Once you retire, especially if you live in a smaller town or area conducive to walking, it may be easier for a couple to get by with one car.

Bargains – You have time now. So, travel, eat and buy when it is cheaper. Accumulate discount cards.

Good Luck.

 

 

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.

 

ANNUAL PROPERTY TAX APPRAISAL

Your property taxes may go up significantly this year. If your only home is your homestead and you made no improvements, the increase in the taxable value of your home is limited by law to 10% per year. However, the taxable value on second homes and investment properties which is based on market value may have increased by 20% or more in Harris County from 2013 to 2014.

Whether your homestead makes the 10% limitation applicable, your market value is determined in area counties by appraisal districts who must perform an appraisal annually. The Harris County Appraisal District (HCAD) has almost completed the process for 2014. They have created several interactive maps which identify the average percent change in market value by area, new construction by area, and million dollar homes by area. See http://www.hcad.org/2014Values/

Houston SkylineThe biggest increases in Harris County were in the western half of the county with the areas inside the West Loop and just south of I-10 showing the most change.

You may protest your valuation through June 2nd this year. This is an HCAD document that explains the process http://hcad.org/pdf/forms/GTA-IAD-001.pdf. And, this is the form that must be filed to protest your valuation http://hcad.org/pdf/forms/2014//41-44.pdf.

–          If you live in Montgomery County, your appraisal district can be found at http://www.mcad-tx.org/

–          If you live in Fort Bend County, your appraisal district can be found at http://www.fbcad.org/Appraisal/PublicAccess/

–          If you live in Brazoria County, your appraisal district can be found at http://www.brazoriacad.org/

And, if you just moved into your home in 2013, you have until April 30 to file for the homestead exemption, which, as you can tell, is even more important this year. For Harris County residents, it can be found at http://hcad.org/pdf/forms/2014/11-13.pdf.

Clearly, our good fortune to be in an area booming with the energy industry has downsides including the need for more roads, other infrastructure and services to accommodate the wonderful people moving here to help us develop and process our energy needs. This need for infrastructure and services will be paid by taxes on their new homes and additional taxes on the increases in value our housing market has seen. As you are grumbling about the new taxes, try to remember how lucky we are to live in the Houston area. If you have any questions about the property tax process, please let me know.

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.