September 1, 2024

by Stephen Stofka

This week’s letter is about real estate, part of a series on investing. In the past weeks, I have taken an informal inventory of a half-dozen dumpsters parked in front of vacant houses in the metro Denver area. They are full of earth-toned kitchen and bath cabinets, paneling and other home appointments popular during the 1970s. In that decade, younger Boomers threw out the metal kitchen cabinets of 1950s post-war starter homes and the craftsmen cabinets of pre-war homes. Now the Boomers are aging out of the homes they bought forty years ago, and a new generation takes their place.

Many older homes built in post-war America had smaller rooms to accommodate growing families. Newly remodeled homes for sale often feature open floor plans where a wall has been removed between a kitchen and dining room or living room and dining room to connect kitchens with the primary living space. Removing a bedroom wall to create a bigger living room or family room can have the unfavorable effect of reducing the number of bedrooms a house features.

White, pale gray and dark brown cabinets are  popular color schemes now. In the 1970s, white and dark mahogany were typical of cabinets in apartments. Honey oak cabinets in a house conferred a modest upgrade in status. Now it means old and outdated unless there are glass panel insets in the cabinet doors. Formica is so like last century. When investor groups remodel a home for sale, they install quartz countertops, which are more expensive but less maintenance than Corian or granite countertops. Kitchen and baths get the most attention from potential home buyers, so those rooms receive more investment.

LVP plank flooring can simulate the look of real wood or stone and is a popular choice in newly remodeled homes for sale. In some homes the same style and color LVP is used throughout the home, including the kitchen, baths, laundry, living room and bedrooms. Area rugs in each room could be used to give each room a distinctive theme, I suppose, but the uniformity of that look is not to my taste, particularly when the color is dark mahogany.

There are many steps to buying a home, but the first step is familiar territory. What does my family want? A house is a home in a neighborhood. What amenities does the neighborhood offer and which are important? These include schools, public transportation, housing density, crime statistics and environmental risks like fire, wind, and temperature extremes.

There are several types of homes and ownership. In a single-family home, the owner is responsible for the exterior of the structure and the plot of land where the house sits. A townhome is a residence attached to another residence so there is a shared responsibility for the exterior of the structure. Typically, a homeowner’s association (HOA) manages this communal responsibility and each association spells out common and individual responsibilities in their covenants. These include regular maintenance of the grounds like lawn mowing, tree trimming, repairing or resurfacing paved areas within a townhome development. An HOA might be responsible for siding, brick and roof repairs but hold the townhome owner responsible for damage to the rear concrete patio of their home. A townhome owner is usually responsible for repairs to equipment that services only their unit. Examples include a forced air furnace, an AC unit or a hot water heater.

The owner of a condo is responsible only for the space between the four walls of their home. The inside of an outside wall is the owner’s responsibility. The outside of that wall is a communal responsibility. Equipment systems often serve more than one owner and repairs to these systems are the responsibility of the HOA. The responsibilities are spelled out in the covenant, or CCR (covenant, conditions and restrictions).

Today there are several real estate companies that provide free access to the Multiple Listing Service (MLS) of homes for sale. They offer the ability to filter by location, price, the type of house and the number of bedrooms and bathrooms. A real estate agent can usually provide additional filtering criteria that include the quality of schools, zip codes and square footage. However, the filtered results may not pass additional criteria that a family has. Taking notes in a Word document or other software helps to sort out and remember key details about a property so that the homes do not merge into a blur of pictures and facts. Here is a list of features that you can build on.

Address: the street address first, theninclude a nearby major intersection, for example. The price and whether there has been a price increase or decrease. The square footage, the number of BRs and baths and whether the home is subject to a monthly HOA fee. Natural light is important to me, so I use Google Maps to help me identify which direction the front of the house faces.

Status: Initially leave this blank. If you discard, state that and one or two reasons. Don’t delete the property, but cut and paste it at the end of the document in case you want to revisit it later. This will help you identify “gotta haves.” Low rated primary school might be one or the year the house was built. The master BR is not big enough or there is not enough light.

Financial Metrics: the dollars per square foot (psf) calculated by dividing the list price by the square footage. For no charge, propwire.com will allow you to view median selling prices for homes in that area. Enter the address of the home, then click the Market tab in the results.

Exterior: the listing will have a street view, but these often distort distances from the curb to the house itself. Enter the address in Google maps to see what the property looked like in the past. On a computer, Google maps will display the month and year the photo was taken by their truck camera. In the compilation of photos for the listing, note any features like a recently installed roof, siding, or garage door. The fence may need repair or there is a tree growing close to the foundation of the house. There may be a cozy porch leading up to the front door. Taking notes can help train us to notice and categorize details.

Equipment: the text of the listing will list details like a new roof, hot water heater, furnace or AC. Note them here. Recently installed equipment should reduce your expenses in the first decade of owning the home.

Neighborhood: On Google maps you can see features that might be important to you. A grade school is nearby but on the other side of a major intersection. Is that a problem? Note any nearby parks or other green spaces if those are important to you. Later on, if you do an initial drive through the community, note the general condition of the neighborhood. Single family homes governed by an HOA will usually present a more consistent appearance and maintain their landscaping. In a neighborhood without an HOA, that consistency is lacking.

Shopping, etc: note any commercial or government agencies nearby that are important to you. These might include grocery, drug and hardware stores, restaurants, a movie theater or a library. There is a lot of easily accessible information on your computer screen.

As you browse the photos in the home listing, note any details, positive and negative that catch your attention. Later, these short notes will help jog your memory. An example is below:

Kitchen: gray cabs, pale gray wall color. Lots of cabinets. Swing door to rear deck.

Bedroom: Master is 15’ x 12’ OK. No closet doors in smaller BR?

LR: big window, faces south.

This inspection list can be done in front of a computer screen without any visit to the house itself. If there are several properties in a community, a visit to the neighborhood may help you refine your search further to reduce the number of homes that you physically inspect. There are many checklists when you do a physical inspection of the home. Here is a printable checklist from a blog writer at Orchard, a real estate company. I hope that these tips will make your house hunting a bit more organized and save you some time and effort.

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Photo by Phil Hearing on Unsplash

Keywords: house, homebuying