Updated: Friday, July 01, 2016
Home Automation Evaluation: Will Automating Your Home Increase Its Value?
Many people are inundated with commercials and advertisements that try to sell home automation to them. For individuals who plan to stay in their houses for their entire lives, the decision to purchase a system depends solely upon their wants. However, people who want to sell their house need to decide if a home automation system is appropriate. Making the wrong decision can lead to the house staying on the market for a protracted period of time or to a lower sum of money offered for the property. Considering the benefits and drawbacks of home automation and house value is important.
Actual House Value
You must understand that the precise definition of value and the abstract definition of value are not the same. When you first consider home automation systems, you likely feel that they add a greater level of security to your home, which, in abstract terms, is added value. However, when appraisers come to your house, they are unlikely to add the home automation system in to the appraised cost. They may provide you with extra value for your security system. Therefore, in a literal sense, the system might not add value to your house.
Attachments and Costs
When you sell a house, anything that is physically attached to the house is included, unless your sales proposal and contract call for something else. Knowing that the home automation system will remain can help to draw buyers to the property. Also, they may be willing to spend more money because they want the system. On the other hand, that means youll need to purchase a new home automation system when you move to your new house. You have to weigh the costs of buying a new system in comparison to how much more money you will make from installing one in your current house. If you dont currently have one, you are essentially installing the system twice, so you need to make sure that you have the money to do so.
Monitoring and Safety
Most people searching for new homes do make safety a priority. They want to check to see what the surrounding community is like, but they are also concerned about the house itself. A home automation system absolutely adds a layer of security. People can monitor their houses from virtually wherever they are. For some, that is a benefit. However, others view constant monitoring as a drawback. They may have privacy concerns and wonder if anyone else has access to their personal lives. Also, they may feel uncomfortable that you were the previous owner of the system and question if your access is enti>
Aesthetic Appeal and First Impressions
When people first walk into a house in which they are interested, they immediately begin to make assumptions about it. Therefore, if an element of your home automation system greets them at the door, you are making a first impression that says your house is modern and up-to-date. Many buyers will enjoy that appeal, but that isnt true for everyone. Some people might actually see your use of the automation system as a ploy to make them ignore other problems that may exist in the house.
Your Target Buyers
You have to consider what makes your house appealing to you, but if you are selling, you also must think about what your target buyers want to see. Your target buyers are the people who are most likely to buy your house. For example, if you have a small two-bedroom house, your target buyers are likely singles, couples or couples with one child. No matter who the targeted group is, you must consider if a home automation system is what they want. Some people, for example, are more interested in butcher block countertops or brand new bathrooms than home automation systems. However, others are interested in if your home automation system can save them money on homeowners insurance or other security systems.
A home automation system can also attract buyers and add value in terms of saving money. Make sure that prospective buyers know how a home automation system could help to save them money on energy bills. Buyers generally want to save money; however, you will have some buyers who are concerned about how much the home automation system costs to maintain and run.
Whether or not a home automation system adds value to your house varies. Each element has two sides to it, and getting to know the current market in your area can help you make the right decision.
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Why Get Involved In Your Community Association?
Question. I have lived in my community association for a number of years. Unlike the horror stories we occasionally read about regarding bad Boards or illogical enforcement of covenants, our community seems to be working fine. We have a good board of directors and a competent manager. One of our long time board members plans to resign for personal reasons, and a number of residents have encouraged me to "throw my hat into the ring." I am seriously considering this possibility, but seek your guidance.
Answer. You have lived in your community for a long time, and are pleased with the way it is working. Do you know why? Most likely it is because there is a conscientious, hard-working board of directors, who are concerned about the welfare -- financial and otherwise -- of your association.
A community association does not function -- good, bad or otherwise -- without leadership. Often, as you have read about, boards of directors are on ego trips. Even though they may care about the welfare of the association, they are more interested in preserving and fostering their own personal agendas. Indeed, I know of one association in which the outgoing Board President seriously considered putting his picture in the social room, as a reminder of his long-term service to the Association.
But the great majority of board members are hard-working and honest. Service on the Board is not fun; the hours are long and the pay is zero. Budgets have to be planned to meet the needs of the association while at the same time satisfying the pocketbooks of the owners. Rules have to be adopted -- and then enforced. Delinquencies have to be addressed, and it is often difficult -- if not embarrassing -- to have to approach your neighbor or your friend to remind him/her there is a delinquency.
I do not know how many owners there are in your community. But regardless of size, boards must understand they are running a business -- and some of these businesses have budgets which are as large or larger as corporations trading on the New York Stock exchange.
This is a serious responsibility, which cannot be taken lightly. Many years ago a Court ruled in the State of Maryland that Board members only have to exercise good business judgment in carrying out their board responsibilities. This means that unless someone can prove fraud, cheating or stealing, a court of law will not second guess the decisions of a board of directors -- even if their decision turns out to be the wrong one.
Despite this "good business judgment" rule, I still maintain that a member of the board has a fiduciary duty to the owners who elected him/her to the board. This means that a board member must act fairly, honestly, openly and -- of most importance -- use common sense in making decisions which impact on the entire community.
Many years ago, the President of a large association gave his "state of the community" speech at the annual meeting. I take the liberty of quoting some of his remarks:
For the past two years, I have served as your President. You have called me at all hours of the day and night; you have pushed me into the swimming pool, and have poured molasses into my gas tank. The hours are long, and the pay is zilch.
But, if I would not have served, you [expletive deleted] would have screwed it all up.
I cannot add much more to this erudite speech. You have an investment in your association, and service on the Board of Directors is a way -- perhaps the only way -- of preserving that investment.
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How The Internet Isnt Changing Real Estate
"This is going to change the way real estate is purchased forever" Thats a claim I hear about once a week at the real estate magazine that I edit. Usually its for a new app or website that provides a nifty way of doing something >
But does it change the industry? Not really. Yes, most buyers now do their real estate searches online and they use the Internet to gather mortgage information and maybe compare interest rates. Its not like the old days when only real estate agents had access to listings of homes for sale and only banks and mortgage brokers could explain the ins and outs of getting a mortgage.
But when it comes down to actually buying a house and arranging a mortgage, a large majority still turn to real live people to help with the transaction, rather than taking a do-it-yourself path.
When first-time buyers are looking for a real estate agent, half of them pick one based on a personal recommendation from family for friends, according to the 2016 Mortgage Consumer Survey by Canada Mortgage and Housing Corp. CMHC. The survey also found that family members and real estate agents have the most influence in consumers choice of which mortgage broker or lender they will use.
When looking for advice, 64 per cent of first-time buyers spoke to a real estate agent, the same number that asked family members for guidance. Others contacted for advice were lawyers, mortgage lenders and mortgage brokers.
For specific mortgage advice, a survey of adults under the age of 40 who dont currently own a home but plan to do so, conducted by Mortgage Professionals Canada, says that 66 per cent consulted with a bank first, followed by mortgage brokers 36 per cent, financial advisors 36 per cent and friends or family 33 per cent. Twenty-two per cent first went to a mortgage comparison website, while 20 per cent consulted other websites. The survey found 21 per cent asked their real estate agent for mortgage advice.
Entitled The Next Generation of Homebuyers, the survey found that despite the talk of real estate bubbles in Vancouver and Toronto, and much publicity about the high debt levels of Canadians, young people still want to buy a home.
"The majority believe in a recovering economy and feel that Canadian real estate is a good long-term investment," says survey author Kyle Davies. "Much like generations before them, most dream of homeownership."
The survey says 76 per cent of respondents think that real estate is a good long-term investment, and 72 per cent said mortgages are "good debt".
Davies says that historically, "Canadians have viewed mortgages as good debt compared to other forms of debt, which typically carry a range of negative emotions."
Why are Canadians so interested in buying a house? Again, the reasons are likely the same as their parents and grandparents cited: starting a family, getting a promotion or a raise, getting married and moving to a new job were the most common responses.
And like their parents, 80 per cent are hoping to live in a low-rise dwelling rather than a condominium. Fifty-nine per cent are looking for a detached home, 18 per cent a condo and 13 per cent are looking for a semi-detached property.
Davies says a nice neighbourhood and safety are the most important features the next generation of home buyers is seeking in a home. Next on the list are potential for resale value, type of home and a short commute.
"There are long-held beliefs in real estate concerning what buyers will pay a premium for when deciding on a home purchase," says Davies. "We decided to investigate this, and presented 26 features to respondents in an exercise to determine the must-haves as well as the nice-to-haves."
He found that neighbourhood, short commute, safety, type of home and potential for resale were most commonly cited as things for which the potential buyers would pay a premium. They were willing to sacrifice smart technology, rental units, finished basement, quality of schools and age of building if it was necessary to stay within their budgets and timelines.
Most of those who plan to buy a home 73 per cent will use personal savings as the source of their down payment. Thirty-three per cent will use a loan, 33 per cent a TSFA and 29 per cent an RRSP. Although an estimated 750 billion is expected to be inherited by Canadians in the next 10 years, only 21 per cent expect to fund their down payment with a gift from family, with 15 per cent planning to use a loan from family.
When it comes time to renew a mortgage, the CMHC survey found that 81 per cent of respondents stay loyal to their current lender.
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