What is ENERGY STAR?

Energy-StarENERGY STAR is a joint program of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy designed to help consumers save money, and protect the environment through energy-efficient products and practices.

In 1992, the (EPA) introduced ENERGY STAR as a voluntary labeling program designed to identify and promote energy-efficient products to reduce greenhouse gas emissions. Computers and monitors were the first labeled products. By 1995, the EPA had expanded the label to residential heating and cooling equipment. The ENERGY STAR label is now on major appliances, lighting, home electronics, and has been expanded to cover new homes and commercial and industrial buildings.

Whole Home ENERGY STAR Rating

For an entire home to be labeled ENERGY STAR, it must be built by an ENERGY STAR builder-partner to meet strict guidelines for energy efficiency set by the U.S. Environmental Protection Agency. These homes are at least 15% more energy efficient than homes built to the 2004 International Residential Code (IRC), and include additional energy-saving features that typically make them 20–30% more efficient than standard homes.

The ENERGY STAR label is rapidly becoming more of a selling feature. Home buyers are now very conscious of a potential home’s energy efficiency. The Multiple Listing Service has specific sections where ENERGY STAR rated systems and appliances can be highlighted so that buyers can easily determine if there is ENERGY STAR rated equipment in the home they are considering. However, as the whole-house Energy Star rating is fairly new, it doesn’t yet appear often.  As more and more homes get the designation, you will see it more often and consumers will look for the whole home rating.

The ‘No Cost Energy Assessment’ & Benefits

Locally, the ENERGY STAR program is partnered with a program called Mass Save. This initiative is sponsored by several local energy companies and administered by a company called Conservation Services Group. Through Mass Save you can schedule a no-cost “Energy Assessment” on your home or even your rental property. Depending on the results, homeowners are then eligible for an instant rebate of up to $2,000 for 75% of the cost of installing insulation, and a zero percent interest loan on new heating equipment. The website also contains a wealth of information on saving energy as well as information like current tax credits available for energy efficient home improvements.

As energy costs continue to rise, taking advantage of the Mass Save program, and looking for ENERGY STAR rated appliances will not only benefit you in the short term, but add value to your home when it comes time to sell.

Resources:  www.masssave.com, www.energystar.gov

{Please Comment Here}

Has your home’s value decreased? Buy a more expensive one!

trading-upIf your home has decreased in value and you are thinking about selling it, it’s hard to see any silver lining. However, if you have other resources and have been thinking about buying a larger home, this is, surprisingly, the best time to “trade up.”

Here’s why…

I recommend that homeowners consider home ownership a long term investment in the residential real estate market. Most people plan to “stay invested,” buying and selling several homes in their lifetimes, or stay in the same home for decades. Most people enter the residential market when they first buy a home. They leave the market when they sell their last home or leave their last residence to heirs. People might trade up into a more expensive home or make a lateral move or two to something of similar value before downsizing in retirement as “empty nesters.” If you don’t sell your home and completely step out of the housing market by renting for a long time or traveling the world for few years, you stay invested. Similarly, you are no longer invested if sell your home and move to a completely different market, like moving from Boston to Florida. In these cases, you might want to carefully consider your relative position in each market.

Here is an example of how trading up could look when the value of your home is down:

2006: The value of your home (either just purchased or not) – Home A: $500,000

2012: Your home has decreased in value 15%. Current value Home A: $425,000

2012: You purchase your dream home – Home B: $750,000

2027: 15 years later the market has recovered and gone up a total of 30% since 2012

The value of your home – Home B: $975,000

The value of your old home – Home A: $552,500

You benefit in the long run, because you purchased the more expensive home in a lower market. Your home is down today, but the more expensive home is down more!

The point is that it doesn’t make sense to put off selling your home, because you can’t get what you want for it. Sell when it makes sense in your life to be in a different home. Your investment in the residential real estate market will take care of itself in the long term.

{Please Comment Here}

Converting to Investment Property

Sell or Rent HouseRenting Your Home vs. Selling Your Home

Many of the sales I handle are in urban neighborhoods where people consider keeping their condominium as an investment property instead of selling it. This is more common lately as many homeowners become painfully aware that they cannot sell their home for the price they want. They naturally consider holding and renting the property until the value of their home recovers. However, if a home’s value is much higher than what was paid for it, this strategy has serious tax implications.

Capital Gains Tax Rules  – The Basics

According to Federal and State (Massachusetts) tax rules, gains in value are tax free up to certain limits for people who lived in the home as a primary residence for two out of the last five years. A gain of up to $500,000 for a couple or $250,000 for an individual is tax free when you sell the home. Basically, if you rent your home instead of selling it right away, you have a three year window to sell and avoid paying capital gains tax. Gains on homes not sold in the three year window are taxed at 15% Federal and 5% State. Another option is to keep the property for life and pass it on to your heirs. A discussion of this option is complicated and beyond the scope of this post.

The Three Year Plan

If you hold onto a property and rent it, you will have to deal with one unpredictable variable – tenants. In my experience, the presence of tenants usually compromises your ability to get the highest possible price for the property. Tenants are not usually the best decorators and may not have the highest standards of cleanliness. Plus, it is extremely difficult to make improvements with tenants in the unit. To get the highest possible price, you may have to wait for the tenants to leave, make improvements, and then thoroughly stage the unit starting from scratch. With tenants in your unit, you could get anywhere from 3 to 5% off the highest possible price. The discount may be even greater if the home shows badly, or the tenants make showings difficult or are problematic. Being a landlord carries significant risk.

These costs and headaches must be considered against any expected future increase in the value of your condominium. If you decide to sell immediately, many of these costs can be avoided. There is no danger of a tenant causing wear and tear or making showings difficult. If your home is in good condition and well-decorated, you can probably prepare it for sale without making costly cosmetic improvements and can stage it using many of your own furnishings. Ultimately, you may decide to rent your condominium, but it’s important to be aware of what you’re getting into.

Ask The Tough Questions!

Real Estate ConceptThis week’s post is courtesy of negotiation consultant and blogger, Chad Ellis.

During a recent family visit my father reminded me of an unusual house near where I grew up.  It was a lovely house with a good-sized yard next to a pond.  Perfect for a family, and many families happily bought it.  In fact, the house was bought by a new family almost once a year, for what always seemed a bargain price.  Most families sold the house within a year of moving in.

Nothing was wrong with the house, per se.  The problem was that the yard and pond were the summer home for a large flock of geese.  During the warm season they would arrive and spend the next few months defecating all over the yard, turning what looked like a dream into something quite less pleasant.  When the geese had gone, the new owners would look at their mess of a yard, clean things up as best they could, and put their lovely house on the market.

In my last post we discussed the importance of information.  Clearly the buyers of this home lacked a key piece of information.  But why?  Buying a home is a big deal — for most of us it’s the biggest purchase we’ll ever make.  Paying 10% more than you have to is a huge loss as is buying a house you decide you can’t keep.  Even without the Internet making research fairly easy, it would have been relatively easy for home buyers to learn about the history of the Goose House.  So why didn’t they?

In my experience, there are two reasons people enter negotiations without key information.  First, we don’t make a list of what information we’d like to have.  Second, we become extremely reluctant to ask questions.

If anything, this problem escalates with major purchases.  The same person who will check movie reviews before putting $10 and an evening at risk will do little or no preparation when buying a house or negotiating salary at a new position.  Having more at stake sometimes makes us less willing to prepare, perhaps because it’s more frightening to admit a lack of knowledge when it comes to something important.  If this sounds like you, make extra certain that you commit to asking the sorts of questions we discussed last time.  Then, when you consider about how you might go about acquiring that information, be aware of the options that make you uncomfortable — and spell out the costs and potential gains of that option.  An experienced buyer’s agent you trust can help you to identify the tough questions you need to ask and will know how to ask and where to look to get the answers.

If the buyers of the Goose House had done that, they might have learned about the house’s history…and avoided a costly mistake.

Chad Ellis
Check out my Negotiations Blog:
www.negotiatewithchad.blogspot.com

{Please Comment Here}

A Tale of Three Roofs

In the course of a day or a week, how many houses do you think you pass and observe? Homes can be unique in their style and architecture, but roofs generally fall into one of three broad categories: gabled, hipped and flat.

The type of house usually referred to as “Gambrel” or “Dutch Colonial,” is a prime example of a house with a gabled roof. The gabled roof is characterized by two or more sloping planes supported at each end by triangular wall extensions, known as gables, which occur at varying angles. The actual “gable” is the part of the wall between the sloping roof lines.

Side Gable Roof
Cross Gabled Roof
Front Gable Roof

 

The key to recognizing a hipped roof is that all the roof surfaces slope downward to the walls.  It usually results in the roof having a pyramid-like appearance.


A hip roof on a rectangular plan

A square hip roof (also known as
a “pyramid roof”)

Flat roof with parapet walls

 

The last major type of roof is the flat roof.  This roof is fairly self-explanatory and is evident in so many of the triple deckers found locally. Flat roofs are normally built with parapet walls or eaves. A parapet wall is a continuation of the side walls, or a separate structure around the perimeter of the roof that rises higher than the roof.

Italianate eave with brackets

Eaves are simply that part of the roof that over hang the supporting walls:

Although there are many variations and combinations of these three roofs, if you look closely at any building, you can easily deduce the basic roof type from which it originates.

{Please Comment Here}

Inspecting Your Home Inspector

inspection2In my last post, I recommended a useful context to make home inspection issues easier to negotiate for both parties. Buyers, however, still need to make sure that they get a thorough and fair home inspection. Home inspectors are subject to a license requirement, a code of ethics, and standards of practice from the Board of Registration of Home Inspectors, but their results still vary widely. In my experience, multiple home inspectors inspecting the same property are likely to find very different issues. How can you assess your home inspector?

Home inspectors often fall into three different categories. First, there is the highly critical inspector. Real estate agents often refer to these inspectors as “alarmist,” while many consumers merely consider them “tough.” A highly critical inspector can be a good choice if the buyer can maintain perspective. If you are somewhat savvy about home construction issues and not easily alarmed, this type of inspector may be fine for you. However, be wary of the home inspector who thinks it is his or her job to be negative. A home inspector who tells you the roof is “fully depreciated,” but fails to give you an opinion on its condition given its age, is doing you a disservice. A roof that is past its normal life span, might still be in reasonably good condition and last a few more years.

The second category of home inspectors falls on the opposite end of the spectrum.  These inspectors tend to minimize issues and accentuate the positive. Real estate agents often regard these inspectors as “easy.” Beware the inspector who just gushes nice things about the home. He is mostly trying to stay in good graces with the real estate agent and doesn’t want to offend anyone.  If you find yourself in the middle of a home inspection with this type of inspector ask him to be more critical and to provide you details and specifics about the systems he is inspecting.

The vast majority of home inspectors fall into the last category. These are the home inspectors that real estate agents regard as “fair.” They will give you a reasonably balanced assessment of the home as whole, yet still uncover critical issues. The key to getting the most value from this type of inspector is twofold. First, ask a lot of questions and figure out what the inspector knows and doesn’t know about the systems he is inspecting, and his experience with those systems. Second, if he finds any issues of more than minor concern, hire a true expert to take another look at those issues. For example, if the inspector raises concerns about the roof, hire a roofer to look it over.  This last tip is important no matter which category your inspector falls into.

Never stop being a good consumer. Hire a home inspector who comes referred by someone you trust, ask lots of questions, and don’t forget to actually read the report.  If you don’t understand something about the report, ask more questions. For more information about home inspectors, click here.

{Please Comment Here}

Home Inspections – A Context Shift

inspectionIn my experience, the home inspection is at the fulcrum of the residential real estate transaction. If a deal is going to sour, it is likely due to the home inspection. Although not required by laws or regulations, home buyers in Massachusetts almost always have a home inspection and the right to cancel the transaction if they are dissatisfied with the results.

Most buyers start the buying process thinking that the home inspector will find all the issues including what is not functioning properly and what may need attention in the near future. Buyers assume they’ll have the agent negotiate with the sellers to fix the problems or compensate the buyer in some way.

Sellers usually have a different perspective. They often feel that the issues are to be  reasonably expected given the age and general condition of the home or should have been obvious to the buyer from the start. In the sellers’ minds, the house comes “as-is” and the price has already been negotiated. After all, the sellers have lived with the issues for some time.

These very different approaches can make for difficult negotiations over issues that actually don’t involve a great deal of money. The solution is a different context for the home inspection.

Buyers will benefit most by using the home inspection to determine whether the home generally meets their expectations and if they want to proceed with the purchase. It is best if buyers focus on specific problems that were unknown prior to negotiating the sale price.  What doesn’t function properly given the age of the renovation, or the home, and the general condition of the house? Reasonable wear and tear is to be expected.  If an item is past its life expectancy and still works, then it is actually functioning better than expected.

The buyers and their agent should present the seller with a reasonable dollar amount for fixing the problems (I generally recommend against asking the sellers to make repairs because the buyers will have to inspect the work and this opens up a new set of problems). The sellers ought to approach the buyers’ requests essentially the same way. If the buyers could reasonably have expected the item to function properly, and it doesn’t, then the buyers request for compensation is reasonable.

There will still be complicated issues to resolve around what is reasonableness. However, if buyers and sellers approach the home inspection from the same context, those issues should be easier to resolve.

{Please Comment Here}

 

Inspirational Design Meets the Accessibility Challenge

This week features my friend, guest blogger and fellow Rotarian,  Karl Damitz, Principal Architect and owner of FourFold Design.

Over the past 10 years of my professional practice working as an architect in and around Boston, some of my most challenging and rewarding projects have involved clients with physical disabilities. The integration of thoughtful design solutions that address the specific needs of a client with limited mobility can have a profound impact on his or her life.

The Americans with Disabilities Act has proven to be an important step in creating more equality for people with disabilities. The act mandates that all public buildings be designed for ease of use by persons with many kinds of disabilities. However, it has also created a stigma around accessible design. The design quality of many, if not most, public accessibility projects is very poor. When considering accessibility for a private residence, the design challenges are completely unique, with little relationship to the ADA guidelines that have been laid out for public work.

In residential design, the challenges of designing a space that meets these far more specific set of challenges and conditions very often means that traditional solutions and guidelines are ineffective. Products and standards that are marketed for accessibility uses are typically more clinical in nature and reflect a ‘hospital surplus’ aesthetic that has little relevance in the realm of residential design. For the residential market, a sterile and clinical renovation that simply addresses accessibility from a functional perspective could result in a reduction of property value and turn off potential buyers, ultimately limiting the pool of potential buyers.

The key to a successful residential design project that accommodates and supports a homeowners’ physical needs, while maintaining or increasing market value, is the integration of specific, design-focused solutions that emphasize the owners’ personality and style, rather than emphasizing their disability. A purely functional and prescriptive approach often results in a space that fails to engage the homeowner and, instead, becomes a constant reminder of their physical limitations. The true value of great design work—the key to a successful, accessible residential project—is to deliver a product that addresses the practical needs of the homeowner, without revealing or highlighting this need to the casual visitor.

This shower is barrier-free (no curb) and has a removable shower head whose anchor can double as a grab bar.

Achieving truly exceptional design in this arena requires a process that considers every component for its practical and aesthetic value. A ramp should no longer be viewed as a functional element that connects two different levels, but as part of the experience of moving through the house. It should fit comfortably and flow naturally.

In the end, the best design solutions for an accessible home must meet the functional design requirements of the project.  The most successful project is one that seamlessly integrates design solutions and emphasizes the identity and style of the homeowner far more than the disability that it has been designed to accommodate.

Learn more about FourFold Design.

{Please Comment Here}

Tub/Shower Combo vs. the Walk-in Shower

As with my last post, this question may not be of immediate concern to you, but it is likely to come up sometime in the future if you are a homeowner.

If your bathroom needs remodeling or you are putting in an entirely new bathroom where there wasn’t one before, should you go with a walk-in shower or the tub/shower combination? I think the answer is clear: get rid of the existing tub (in the case of a remodel) and go for the walk-in shower. If you already have a tub somewhere else in your home, this decision is a ‘slam-dunk’. Why would you ever need more than one tub in your home?  In my experience of over 16 years in residential real estate (I actually do talk to people about these things), adults don’t take that many baths. Unless you have several very young children in your home who all need baths at the same time, don’t hesitate to convert one tub/shower combo to a walk-in shower.

The tougher question is what to do if you are renovating the only bathroom in your home and there is not enough space for both a walk-in shower and a tub. Here again, I think the walk-in shower is the answer.  Many people’s biggest concern is about resale. “If I don’t have a tub, won’t that hurt resale?” The answer is ‘no, you will lose some buyers, but you will gain more.’ Those people who just have to have a bathtub won’t buy your place, but the “wow factor” that your walk-in shower creates will substantially help your resale. Even those who thought they had to have a bathtub, may easily change their minds when they see your beautiful walk-in shower.

Why a walk-in shower is just better:

  1. More room in the shower generally.  The sloped walls and thick sides of most tubs make the actual floor space of a tub relatively small compared with a walk-in shower that occupies the same floor space.  With more floor space in the shower it is easier to make room for two!
  2. Tiled walk-ins can be fit into oddly shaped areas or areas too small for a tub.  If you take out your tub, you might be able to make room for a small walk-in shower and a new linen closet.
  3. They are easier and safer to get in and out of – no side wall to step over.
  4. Not as dangerous.  Cast iron, porcelain, and fiberglass tubs are slippery. Most walk-ins have tiled floors which are generally less slippery.  Look for tiles made out of materials that are known to be less slippery.
  5. They can easily be made to look great with glass doors and good tile work.  You can put glass doors on a tub, and nice tile as your tub surround, but it never looks as good as it does without the tub.
  6. Less expensive and a wider choice of great looking fixtures than the tub/shower combination fixtures.  As I noted in my last post, there is a wider choice of fixtures when the fixture doesn’t have to divert the water between the tub and the shower (tub/shower diverters).
  7. No shower curtain.  I know they make pretty ones but there is a big downside.  They are highly susceptible to mold, they don’t stay in place easily, and they just always seem to be in the way.

Tell me what you think!
{Please Comment Here}

How Small Is Too Small?

After writing about enormous over-the-top penthouse condos in the city, I thought it might be nice to mention the other side of living in the city.

“Micro Condos”

I have sold some pretty small (but still nice) homes in my time.  My personal record is a 330 square foot studio apartment at 56 Commonwealth Ave. in the heart of the Back Bay that I sold 3 times as follows!

October, 2002         $229,000
July,  2004               $214,000
August, 2006           $245,000

A 340 square foot renovated studio on the third floor of 56 Comm. Ave. just sold for $281,000 in case you wondering how much it might cost you to own one of these babies today.

The most amazing micro-condo that I could find is in Hong Kong.  It is 344 square feet of hip environmentally friendly space that transforms through the use of sliding walls and slide-out furniture:

“Tiny Houses”

While I have never sold one of these, I recently learned that there is a new movement dedicated to living in exceptionally small houses.  These are not mobile homes but real houses that are typically between 100 and 130 square feet in size and are very often illegal because they are not even large enough to meet local building codes.  In Massachusetts, for example, a home that houses one person must have at least 150 square feet of habitable space.

For a fascinating and detailed discussion of tiny houses, check out this article from a recent New Yorker.

And if you still want more, go to Tinyhouseblog.com

{Please Comment Here}