Home Improvement Month: What Updates are Important When Buying and Selling?

May is Home Improvement Month, but we think giving your home a few upgrades is important no matter the time of year! Making sure your home is in top shape is especially important when you’re putting it on the market in order to get the best return on your investment (and of course, the most money in your pocket). When buying a home, it’s also important to consider what home improvements have been made to the house you’re about to purchase.

Knock advances you up to $10,000 in order to make any home improvements your current home may need in order to get it list-ready. This ensures you can maximize your profits without trying to find the funds right then and there. We understand the importance of showcasing your home in its best light, and we even do the work for you!

Because we employ a whole team of dedicated home preparations and listing experts, we have a wealth of knowledge about what upgrades matter and what you should consider before putting your home up for sale. Read on for tips and tricks of the trade to find out what matters when it comes to home improvement.

Selling Your Old House

Neutralize Your Space

So, what should you pay attention to in your own home when looking to sell? We chatted with Home Preparations Manager Cody Chastain;

Cody Chastain Knock Home Prep Manager
Cody Chastain

“General wear and tear is always going to happen on a home when it’s been lived in. Simple fixes like a fresh coat of paint throughout the house and replacement of old and worn carpeting can go a long way.”

Think about it, if you were going on a tour of your potential dream home, would you want to see stained carpeting and wall colors that didn’t jive with your personal decor? Giving the home a neutral feel helps the new potential homeowner envision themselves there. Of course, decluttering the space and removing your belongings helps as well.

This exact scenario happened with Knock clients, the Fernandez family. Their cheerful personalities matched the brightly painted walls that were present in every room of their old house. Knowing that their unique style wouldn’t be for everyone, they enlisted Knock’s help to neutralize the space.

Knock customers Home Improvement
The Fernandez Family

With 2 kids and thoughts of growing the family, Alex and Jessie F needed a bigger home, and found it in the perfect 4 bedroom with an office space for them to work remotely. Before they could settle into their new life, they needed to sell their current house. With its colorful walls and kitchen, the house needed quite a few updates before it could be ready for a buyer to envision the home as their own. But once they made some stunning upgrades, the house went on the market and received over 12 offers in the first weekend.

Our piece of advice? Put yourself in someone else’s shoes. You may think your bright yellow bedroom is the bee’s knees, but it could be a major deal breaker for another family.

Consider Major Cosmetic Elements

So, what are the biggest cosmetic problem areas you should address? Kitchens and bathrooms. Chastain said,

“In order to get the best ROI, you should consider making upgrades to any outdated kitchens and bathrooms.”

Countertops, appliances, and even tile can go out of style quickly. If a potential buyer sees that you haven’t updated your powder room since the pastel tile days of the 1970s, you might just lose an offer.

Of course, a bathroom overhaul will be more costly than a simple paint job, but the results are arguably worth it. According to a 2018 report from Realtor.com, a bathroom remodel is a top investment when it comes to ROI, yielding a 70% return.

The same report shows a mid-range kitchen remodel yielding around 60% return. But, you don’t need to invest in a complete overhaul if you don’t want to lose that much capital; instead, focus on the details that need the most help, like outdated cabinets and counters.

The Outside Counts, Too

curb appeal

Don’t just think about the space within your home’s four walls. The external curb appeal is what makes a first impression on a buyer. Invest in a landscaping service or go the DIY route to make sure your house is presentable. Consider the age of your siding, the condition of any decks or stairs, as well as the doors and garage. You want to showcase the total package of the home, so consider the bigger picture.

In a recent Knock transformation in Atlanta, we gave one house a major facelift. The outside was in desperate need of new siding; after years of wear, the previous facade looked run down and unimpressive. The house was completely re-sided, leaving it looking good as new! The improved curb appeal helped find a buyer interested in making the home their own; it was sold within four days of going on the market!

before and after of a Knock home with new siding
Before & After - Siding Transformation

Buying a New Home

What to Look Out For

About 61% of people who are selling a home are also trying to buy their next one one at the same time (which is why Knock is the perfect solution for the majority). So, you don’t only have to consider the condition of your current home, but be aware of what the potential new houses offer. Buying a home is a big purchase, and you want to feel confident in the property you’ll be spending the next phase of your life in.

What are the elements you should ask about when doing research and home tours? The structure of the home.

“The quality of the roof and structure are the key things to consider when buying a new home. They’re the most expensive to fix and arguably the most important; the structure holds your house up and the roof protects everything in it.”

-Cody Chastain

The Sooner, The Better

Creating an open and honest dialogue about the home’s condition helps to avoid problems later. And this applies to the house you’re selling as well! Be upfront about any issues or concerns you’ve had so they can be addressed properly. If you fail to disclose information, you can end up with a terminated contract and a delay in either the selling or buying process.

Of course, you’ll also want to consider other elements we spoke about above, like paint, carpet, fixtures, and updates. If you’re not afraid of some DIY projects, you may just want to take these upgrades on yourself in order to negotiate a better purchase price. Or, if you want the work done for you, use it as part of the negotiations with the seller to see if they’ll address (and fund) fixing your pain points before the sale.

The Knock Process

Are you considering a move but know your current house needs some updating before it’s listed? As mentioned above, Knock can help! Our process is unique because we invest our time and money into your home to get it in the best possible shape it can be for the sale.

Kelly and Lauren F Knock customers
Kelly and Lauren F

Having home preparations completed on your behalf is a huge help for many of our customers who would not have been able to sell their homes without Knock. Take Kelly and Lauren F for example. Kelly is a pilot, and his job has him traveling for extended periods of time. Plus, the couple had two small children and one more on the way. They needed a bigger home, but didn’t have the bandwidth to get it ready to list, until Knock stepped in. Knock completed home preparations including a full paint, replacement of countertops with granite, and removal of rotten structure. The house was ready to list and Kelly and Lauren accepted an offer shortly after. Read more about the family here.

So, how exactly does the Knock Home Prep process work? Read on for the step-by-step series of events.

Getting the Lay of the Land

First, we get to know you! One of our team members will reach out to discuss your unique situation, what you’re looking for in a new home, and what you need in order to sell. Once you sign with Knock, that’s when the ball gets rolling.

Our Licensed Local Experts, or full-time salaried agents on our team, will then use their knowledge of the current market and comparable homes in your area to determine what preparations will be most beneficial to you as a seller. We’ll do an inspection to come up with a list of items (and the cost of each) that we believe you should consider fixing in order to get the highest sale price.

We send out a member of our Home Prep team to take a tour of your home, assess the current state of it, and provide feedback to the rest of the team. From there, we generate a report that lets both Knock and you know what areas are in need of improvement.

Of course, as the homeowner, you have the final say on what you want to move forward with. If you don’t believe your home needs a new paint job, we’ll leave it as is. But, we will provide guidance and explain the ROI of each home improvement.

Hitting the Pavement

Once the scope of the work is complete, we send the contract over to you for revisions and final approval. Then, we get to work! Knock will coordinate and schedule all contractors on your behalf and manage the entire process for you, all while you’re comfortably in your new home. You can also choose to use your own contractors, or complete the upgrades yourself if you’re handy. Giving you these options allows you to remain in control to get the job done however you see fit.

Wrapping it Up

Once your home is in tip-top shape, we schedule a final walk through and a photographer to come take your updated MLS pictures for listing. From there, the listing goes live and you sit back and wait for the offers to roll in.

Knock’s mission is to make the buying and selling process as efficient and convenient as possible. This is why we step in to coordinate and execute home prep on your behalf. Moving is crazy enough - let us make it that much simpler!

In Closing

May is Home Improvement Month, but we know that making sure a home is in the best shape it can be is important no matter the time of year. The health of the home should be considered on both sides of the real estate transaction, when putting your old house up for sale and finding a new one to buy.

With the Knock Home Trade-In program, we help you prepare your house for listing, so you can minimize your efforts while maximizing your profit. Looking to make a move?

Knock Knowledge: Everything You Need to Know about Real Estate & Taxes Whether You're a Buyer, Seller, or Homeowner

Tax Day is right around the corner. And although you’ve probably (hopefully!) already filed for 2019, there’s still a lot to learn about taxes when it comes to homeownership that can be useful all year long. We’ll discuss the link between homeownership and taxes, the tax advantages of being a homeowner, and how the Knock Home Trade-In benefits you when it comes to paying Uncle Sam.

Homeownership and Taxes: What You’ll Pay

When buying a home, you should be aware of what you’ll have to pay on top of just the mortgage. With knowledge about what you’ll owe when it comes to taxes, you won’t be faced with any hidden surprises that seem like a blow to your bank account.

The amount of taxes you’ll pay are based in the assessment of your property. A property tax assessment is what determines the market value of your piece of property. Assessments are usually done once a year, but the timing varies by jurisdiction, and properties are reassessed when a home is sold to a new buyer. These assessments are performed by the government and they're most often based on recent sales of comparable properties in the area.

“When there is a transaction, the property taxes get reassessed based on the purchase price. You have to report what price you bought the home for, and the property tax is assessed from there.”

- Jamie Glenn, Knock Co-Founder & COO

Of course, when it comes to purchasing a home, a major factor is the area you choose to buy in. Many states, counties, and municipalities have their own laws and regulations when it comes to taxes.  Be sure to research the tax requirements of the area you’re moving to and consider the current property taxes there.

Knock Property Accountant Tiffany Scott said, "I would advise for buyers to become as familiar as possible with “SALT” (state and local taxes) in the area that they would like to complete their real estate transaction. Great savings are out there if you know where to look."

Here are some tax fees you can expect:

real estate and taxed key terms

Property Taxes

Property taxes are typically paid either twice or four times a year and are paid in advance. Because of this, as a buyer, you will reimburse the seller for the property taxes they already paid from the date of the sale until the end of that tax period. You’ll see these property taxes as part of your overall closing costs. Keep in mind that you can deduct up to $10,000 in property taxes from your income tax filing, as long as they are itemized.

Real Estate Transfer Tax

It may be required by your state, county, or municipality that a tax is added onto the cost of a home when the property is transferred from one owner to another. Typically, this will be a percentage of the purchase price of the house. For example, in Knock market Atlanta's state of Georgia the transfer tax “is based upon the property's sale price at the rate of $1 for the first $1,000 or fractional part of $1,000 and at the rate of 10 cents for each additional $100 or fractional part of $100.” Although the seller is liable for this payment, the buyer typically picks up the cost.

When it comes to selling a home, although you typically won’t pay sales tax, you could face taxes on your capital gains.

Capital Gains

Capital gains are defined as the difference between what you pay for an asset and what you sell it for. When tax time comes, you are allowed to exclude up to $250,000 if you’re single ($500,000 if you’re married) from your gains, as long as you’ve lived in the home for more than two years. Note that if your home isn’t your primary residence, these exclusions don’t apply.

Homeownership and Taxes: The Benefits

Now we may have got you nervous thinking about the taxes you’ll have to pay, but don’t worry – there are definite benefits to being a homeowner. Owning your own space and building equity along the way are obvious perks. But, there are also advantages when tax time rolls around. Below, we’ll discuss some of the ways you can save money as a homeowner when it comes to filing your annual income taxes.

Interest on Your Mortgage Loan

Did you know that you can write off the interest on your mortgage? As long as your loan is $750,000 or below, you are entitled to receive a deduction on the entire interest payment you made within that tax year.*

Property Taxes

As mentioned above, you can deduct property taxes from your income tax, up to the amount of $10,000, as of 2018. Both your main residence and other owned real estate properties are eligible.

A Home Office

If you have a space within your home that is designated as an office, or is a storage space for business-related items (like merchandise), you may be able to claim a deduction.  

Energy Efficiency Improvements

Although you typically can't benefit from home improvement costs at tax time, being energy efficient can help. Making changes to your home like adding solar power or wind energy can not only help your energy bill (and the environment), but also come tax time.

"Taxpayers who make energy-saving improvements to a U.S.-based primary residence may be able to take a credit to offset the cost of repairs if the work is completed in 2018," writes Jerry Gaddis, founder & CEO of Tropical Tax Solution in U.S. News & World Report.

Make sure you take advantage of these homeownership benefits when filing your yearly income taxes.

*If you took out your mortgage prior to December 16, 2017, your interest deduction limit is for a loan of up to $1 million. The Tax Cuts and Jobs Act (TCJA), effective 2018-2025, has lowered the limit by $250,000.

What You Can’t Deduct at Tax Time

Although there are various ways you can claim deductions as a homeowner, there are some things you can’t add to that list. Keep these items in mind when you’re considering a new home purchase:

Taxes and the Knock Home Trade-In

Now you know what you can expect when it comes to taxes associated with owning, buying, and selling homes. So let’s discuss how using the Knock Home Trade-In program can help you financially when you are selling one home and buying your next – at the same time.

Selling Your Old House

Selling your old home with Knock means that we’re prepping your house and listing it on the open market in order to get you as the seller the best price possible on the sale. When it comes to pricing your home, Knock has a dedicated team of data scientists, home valuation specialists, and licensed real estate experts that help value your house. We also have a proprietary algorithm that incorporates current homes for sale, recent transactions in your neighborhood, and our 200-point on-site inspection to ensure any improvements and unique features of your home are used to price it accurately. Because you are not selling your home directly to Knock, you’re able to entertain all offers to maximize your profits.

“Because we’re selling your home for fair market value instead of buying it directly from you at a price below what it’s worth, you’re able to get the most capital gains from the sale.”

- Jamie Glenn, Knock Co-Founder and COO

Knock currently operates in six markets across the United States. And moving across state lines may help you save even more come tax time. With the new tax reform laws, as mentioned above, you can only deduct up to $10,000 in property taxes ($5,000 for a single filer). Therefore, considering a new location with lower property taxes could help your wallet.

Buying Your Next Home

home with two car garage brick exterior real estate

The costs associated with buying and selling at the same time add up, and most people have the majority of their funds tied up in the home they are selling. With the Knock Home Trade-In program, Knock first buys your new house on your behalf with our cash so you can move in as soon as possible. Our all-cash offer is attractive to sellers, and typically gets us an average 3-5% discount off of the list price of the home. To illustrate, let’s say the house you love has a list price of $300,000, but Knock’s all-cash offer allows us to secure it at a price of $285,000. That’s a significant savings that can help offset some of the other costs of buying and selling at the same time, like taxes. If you didn’t leverage Knock’s all-cash buying power, you may have paid asking or above asking price for the home. By saving on the purchase price, Knock helps you maximize the amount of money in your pocket.

Even in a situation where competition is pushing bids up on the new home and Knock cannot get our typical discount, there are still tax-related benefits to using our Home Trade-In program. For instance, say you are trying to move into your new home in a different school district before the academic year starts, so you can enroll your children in their new school on time. On your own, you may not be able to afford and time getting into your new home before your kids need to start at their new school. With the Home Trade-In, Knock covers all costs on the new home, like property taxes, until your old home sells, and then settles with you at closing. By covering these costs upfront, Knock makes it possible for you to afford moving into your new home before the old one sells. That way, you can focus on what’s most important to your family’s timeline.

Summing It Up

filing taxes calculator

Buying or selling a home is a major life event that requires decision-making, effort, and patience. There are plenty of exciting elements of being a homeowner, which is why at Knock, we strive to make the entire process of buying and selling easier than ever before. Of course, homeownership comes with major responsibilities, like paying required taxes. Luckily, the Knock Home Trade-In program helps you on both ends of the spectrum, to maximize your profits when you sell and save you money when you buy. Get started today at knock.com, and reap the benefits come tax time next year.

This article is meant to provide a high-level overview of select points tied to taxes and homeownership, home buying and home selling, and should not be viewed as comprehensive. Any and all questions should be directed to an accountant or financial advisor for details and clarification.

Make sure to speak with your lender about any additional questions you may have about your mortgage and taxes.

Many tax laws are based on state, county, or municipality. Research your specific location’s tax laws and requirements.

Are These Three C's The Key To The Real Estate Revolution?

As we head further into the fourth quarter of the year — a year that has seen rampant inventory shortages, rising mortgage rates and sellers bombarded with offers within hours of listing — we are beginning to experience the usual winter season cool-down. So this is a perfect time to look ahead, and I find myself reflecting every day on what the real estate industry will look like in the years to come. For an industry that has historically remained stagnant, the pace at which technology is evolving will expedite change at an unprecedented rate. As such, this is an exciting time for consumers and agents alike, but we need to adjust our mentality and approach to real estate transactions accordingly.

You’ve likely heard of the four C’s of buying a diamond. Well, in order to directly address consumer demands, we as an industry need to modernize real estate by embracing three pillars: certainty, convenience and cost-effectiveness — our own three C’s, if you will.

Certainty

Until now, most aspects of a real estate transaction have involved a high level of subjectivity. Consumers find this frustrating because they aren’t familiar with the process and want concrete answers, and agents are challenged by the lack of consistency. Some websites offer a wide swath of information for consumers, but they lack depth. Today we have the power of data science at our fingertips — this is a game-changer.

For example, my data science team has developed algorithms that take into account hundreds of data points, including list prices, interior features like marble countertops, historical sales transactions and individual agents’ track records, and then apply machine learning to rank the quality of each listing price. When real estate companies use this kind of information, it empowers consumers with insights they can trust. But perhaps more importantly for everyone involved, it reduces time and friction by adding a level of transparency that reduces the high-emotion subjectivity involved in the traditional process. When sellers and buyers have a more accurate and realistic point of view heading into a deal, there will be less need for negotiating and price drops that extend days on market.

The insights of local, on-the-ground experts will remain important, but when paired with this kind of data, the combination of high-tech and high-touch gives you the recipe for certainty.

Convenience

The selling side of real estate functions essentially the same way it did in 2008, or even in 1998 — almost entirely paper-based, laborious and opaque. In a world of Ubers, Airbnbs and Carvanas where instant gratification is status quo, that’s just crazy.

Consumers are increasingly showing interest in — and will soon demand — a digital transformation of the transaction of home buying and selling that is more simplistic, transparent and consistent. A digital real estate marketplace has started to take shape over the past several years, with companies facilitating transactions online and agents bidding for clients, for example. Some sites and apps take a step back from the transaction to help consumers find the right neighborhood first. And new players have begun the transformation of the buy side, providing the convenience and instant gratification many consumers desire. However, none of these models solve for the 360-degree problem. I believe the ultimate way to provide that is by facilitating an end-to-end marketplace that considers the customers’ needs for selling and buying over the course of their entire homeownership life cycle.

Overall, it is essential that the modern real estate process is consumer-centric, which can only happen when it is grounded in data and the correct balance of technology and human insight.

Cost-Effectiveness

As I look at other global markets, what jumps out at me is their ability to offer the same services to their clients at a lower commission rate. For example, average commissions in some regions of Australia can be as low as 2%, and even lower in the U.K., where they average about 1.5%, compared to the typical 6% here in the U.S. In some instances I see commissions around 4.5%, but not consistently enough.

Working toward a future where homebuying and selling is more affordable to consumers is advantageous for everyone. Agents will benefit from an influx of buyers and sellers, consumers will save their hard-earned dollars and we’ll see increased fluidity in the overall market. Eventually, I envision a sort of real estate dating service, where consumers are matched with agents based on preferences, budgets and more, ultimately lowering commission rates. But with no one real estate company — or even type of company, for that matter — dominating the industry at this point, it is nearly impossible to see quick and impactful change.

If we are going to truly evolve and improve the transaction as a whole, transforming the standard commission structure as a collective industry will be a turning point, and it’s one of our biggest opportunities. By finding the right combination of tech and human touch for each consumer’s unique needs and budget, we can both bring down the average cost of homebuying and selling and deliver a more premium service to those who want it.

I believe these three C’s have the potential to double market momentum in the U.S. If certainty, convenience and cost-effectiveness are optimized simultaneously, the number of homes bought and sold every year could double at a time when inventory shortages are only being alleviated at a slow rate and buyers are increasingly frustrated. For consumers, I consider these the keys to unlocking a process that eliminates much of the stress, frustration and opacity often associated with real estate transactions.

After all, the home is most people’s largest asset, and they deserve the same level of innovation they’ve come to expect from so many other industries. The sale of one home and purchase of a new home is a momentous occasion that should be enjoyed, and it is our job to deliver that for consumers.

*This article originally appeared on Forbes

3 Regrets Homeowners Should Not Carry Into 2018

As we prepare to welcome 2018, we reflect on the highs and lows that occurred this year.

What were your triumphs? Any regrets?

More than half of homeowners are feeling remorseful this year. In a Trulia survey, 51% reported they have regrets about their current home.

Their top three sorrows? (more…)

The School of House Knocks: Let’s Hear it For These Unique Bathrooms

A good bathroom can be life-changing.

Seriously. Bathrooms are where our deepest, most poignant thoughts occur. It’s where we go when we seek comfort and relaxation. (more…)

The School of House Knocks: ‘Maroon is Not For Everyone’

Oh, if these walls could talk …

Guess what? They can, and I am speaking out.

“This carpet (and paint) has taken its toll on me.” (more…)

Fixin’ to Sell? 3 Tips to Get Your House in Order

Selling a house is always easier when the property is in good shape, but let’s be honest: Prepping and making repairs prior to your house hitting the market can be a major headache. (more…)

Knock Case Study: Darcy from Alpharetta

At Knock, our mission is to provide certainty and peace of mind to people selling their properties. While we have many happy clients, some people are skeptical about straying from the traditional relationship with their real-estate agent. (more…)

The Fed, Interest Rates and Mortgages: What You Need to Know

interest-rates

You may have heard a little something earlier this month about the Federal Reserve and its 0.25% interest hike. As it was only the second time the bank raised rates since 2006, the move made massive headlines. (more…)

Don't Let These Issues Keep You From Selling Your Home

home selling

Ah, 2016 – a year so chaotic that even the Pantone Color Institute is trying to bring some zen back into our lives.

If you experienced a life change this year—say, in family size, financial situation or career—there might be more transition in the cards for you in 2017. (more…)