20 Low-Cost Ways to Spruce Up Your Home

Make your home more appealing for potential buyers with these quick and easy tips.

Trim bushes so they don’t block windows and cut down on light.
Buy a new doormat.
Put a pot of bright flowers (or a small evergreen in winter) on your porch.
Put new doorknobs on your doors.
Put a fresh coating on your driveway.
Edge the grass around walks and trees.
Keep your garden tools out of site.
Be sure kids put away their toys.
Buy a new mailbox.
Upgrade the outside lighting.
Use warm, incandescent light bulbs for a homey feel.
Polish or replace your house numbers.
Clean your gutters.
Put out potpourri or burn scented candles.
Buy new pillows for the sofa.
Buy a flowering plant and put it in a window you pass by frequently.
Make a centerpiece for your table with fruit or artificial flowers.
Replace heavy curtains with sheer ones that let in more light.
Buy new towels.
Put a seasonal wreath on your door.

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What Is Appraised Value?

It’s an objective opinion of value, but it’s not an exact science so appraisals may differ.

For buying and selling purposes, appraisals are usually based on market value—what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.

Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.

Appraised value doesn’t consider special considerations, like the need to sell rapidly.

Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.

Used with permission from Kim Daugherty, Real Estate Checklists and Systems (http://www.realestatechecklists.com).

Understanding Capital Gains in Real Estate

It’s an objective opinion of value, but it’s not an exact science so appraisals may differ.

When you sell a stock, you owe taxes on your gain—the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.

How to Calculate Gain

In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:
- Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.
- Cost of the purchase—including transfer fees, attorney fees, inspections, but not points you paid on your mortgage.
- Cost of sale—including inspections, attorney’s fee, real estate commission, and money you spent to fix up your home just prior to sale.
- Cost of improvements—including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
Add adjustments:
The total of this is the adjusted cost basis of your home.
Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.

A Special Real Estate Exemption for Capital Gains Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:

You have lived in the home as your principal residence for two out of the last five years.
You have not sold or exchanged another home during the two years preceding the sale.

Also note that as of 2003, you also may qualify for this exemption if you meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.

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Does Moving Up Make Sense?

Answer these questions to help you decide whether moving up makes sense.

How much equity do you have in your home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of paying a mortgage, but if you’ve owned your home for a number of years, you may have significant unrealized gains.
Has your income increased enough to cover the extra mortgage costs and the costs of moving?
Does your neighborhood still meet your needs? For example, if you’ve had children, the quality of the schools may be more of a concern now than when you first purchased.
Can you add on or remodel? If you have a large yard, there might be room to expand your home. If not, your options may be limited. Also, do you want to undertake the headaches of remodeling?
How is the home market? If it’s good, you may get top dollar for your home.
How are interest rates? A low rate not only helps you buy more home, but also makes it easier to find a buyer.

Remodeling That Pays

Upgrading your home is always appealing, but which enhancements really get you a good return for your money when it’s time to sell? The 2003 Cost vs. Value Report by Remodeling magazine and REALTOR Magazine has the answer.

To see the complete article, visit www.realtor.org/rmomag.NSF/pages/costvaluedec03.

12 Tips for Hiring a Remodeling Contractor

Get at least three written estimates.
Get references and call to check on the work. If possible, go by and visit earlier jobs.
Check with the local Chamber of Commerce or Better Business Bureau for complaints.
Be sure that the contract states exactly what is to be done and how change orders will be handled.
Make as small a downpayment as possible so you won’t lose a lot if the contractor fails to complete the job.
Be sure that the contractor has the necessary permits, licenses, and insurance.
Be sure that the contract states when the work will be completed and what recourse you have if it isn’t. Also remember that in many instances you can cancel a contract within three business days of signing it.
Ask if the contractor’s workers will do the entire job or whether subcontractors will do parts.
Get the contractor to indemnify you if work does not meet local building codes or regulations.
Be sure that the contract specifies the contractor will clean up after the job and be responsible for any damage.
Guarantee that materials used meet your specifications.
Don’t make the final payment until you’re satisfied with the work.

Jenny Kopriva is a professional Clear Lake Realtor with a focus on Clear Lake Iowa Real Estate and Clear Lake Homes for Sale. Contact Jenny today with questions or to find your next dream home!