How a Coat of Paint Can Determine Your Home’s Sale Price

An inexpensive can of paint holds a lot more power than you think.

From the time of year to the neighborhood, a lot of factors come into play when you’re selling a home. But here’s one variable you might not have considered — color.

During open houses and online searches, the colors of your home are constantly working for or against you. That’s according to Zillow, a real estate and rental marketplace, which examined over 32,000 photos from sold homes around the country to see how certain paint colors impacted their average sale price compared to homes of similar value with white walls. Here’s what they found.

A Change of Trends

The colors that added value to your home just a year ago can now be hurting its sale price. In 2016, painting your kitchen a shade of yellow could help your home sell for $1,100 to $1,300 more. However, this year, a yellow kitchen could lower your home’s value by an estimated $820, according to Zillow.

Some color preferences remained consistent, with terracotta walls still devaluing a home. Just last year, homes with terracotta walls sold for $793 less than Zillow’s predicted selling price. This year, that number more than doubled, with homes with terracotta walls selling for $2,031 less.

The takeaway: If you’re looking to sell your home, you may want to avoid a terracotta shade. Also be cautious in general when choosing dark and bold colors.

Keep it Light

“Painting walls in fresh, natural-looking colors, particularly in shades of blue and pale gray, not only make a home feel larger but also are neutral enough to help future buyers envision themselves living in the space,” said Svenja Gudell, Zillow’s chief economist, in a statement.

In fact, homes with blue bathrooms, including lighter shades of blue or periwinkle, sold for $5,440 more than expected, Zillow found. Kitchens with light blue-gray walls sold for $1,809 more than expected, and walls with cool, natural tones like soft oatmeal and pale gray also had top-performing listings.

Light, simple walls performed best among sellers, however, walls with no color had the most negative impact on sales price. Homes with white bathrooms or no paint color, for instance, sold for an average of $4,035 less than similar homes, Zillow noted.

Head Outside

As if it isn’t stressful enough worrying about your rooms’ colors, your home’s exterior color can also impact its sale price.

To that end, buyers typically enjoyed a pop of color, with homes featuring dark navy blue or slate gray front doors selling for $1,514 more. Buyers also responded positively to trendy mixes of light gray and beige, or “greige,” exteriors versus basic tan stucco and medium-brown shades.

If you’re trying to sell your home, a can of paint can be a wise investment — so long as you choose the right color. Keep these findings in mind before you head to the paint store. Likewise, just as color impacts sale price, know that selling your home can impact your credit. Don’t forget to check your credit report card before you start picking out paint chips.

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5 Ways to Find Extra Money for a Down Payment

Here's how to find money for a down payment.

In order to buy a home, you need to have a balance of good credit, manageable debt, stable income, and sufficient savings. Maintaining a balance between these four categories is challenging enough on its own, never mind coming up with enough cash to close on your potential new home.

If you’re worried about the credit part, you can see what you can potentially do to improve by viewing your free credit report summary, updated every 14 days, on Credit.com. And, if cash flow is your issue, here are some ways you can find extra money for a down payment.

1. Move in With Family

Having a nearby family member that will let you move in for a little while is a great way to save money on rent. It’s nice to live alone, but saving that $2,500 per month is a financial home run. In exchange for a little less privacy, you can start saving big money in a shorter amount of time than you would have by continuing to pay $2,500 per month. This can yield huge dividends for you in the future and could be the means of collecting the down payment for your new home.

2. Retirement Funds

Did you know that some retirement accounts let you draw from your reserves early in order to pay for your first home? Every retirement account is different, so it is a good idea to contact your human resources department to review your 401K, or a bank/financial adviser to review the terms of withdrawal from your investment account. In most cases, if it is a first home (i.e., you have not owned a home in the last three years), you can borrow from yourself to finance your down payment or cash to close. There can be tax penalties for withdrawing early, so be sure to review your terms.

3. Cash-Out Refinance

If you already own a home, it might be worth considering a cash-out refinance on your current home in order to pay for another one. Fannie Mae and Freddie Mac have recently taken kindly to this approach by changing the equity position in a departure residence to purchase a new primary home. Completing a cash-out refinance on your current home to purchase another is a form of leveraged debt and will allow you to purchase with a stronger offer. Just be sure this makes sense for your finances before you apply.

4. Sell a Home

In a similar scenario, by already owning a home with equity, you can sell your home in order to buy another one. For example, if you have $150,000 of equity in your current home, you can sell and use that equity as a down payment to acquire another. The challenging aspect of this is that these scenarios are contingent upon one house selling. If the buyer backs out of the deal, your ability to secure the house you are in contract for will be at risk.

This method should be approached with caution and only with a real estate agent who can walk you through the ins and outs. Education is key to a successful dual transaction like this.

5. Sell Personal Property

As much as we like our things, it is nice to have a roof over our heads we can call our own. If you have any toys or big-ticket items like a boat, motorcycle or novelty, those can be sold to generate cash for buying a home. In order to use these funds, you need to keep all documentation while selling the item. If you do not have supporting documentation, the cash cannot be used.

If you are looking to see what it takes to buy a home, we recommend talking to an experienced licensed mortgage professional. If you do not have the necessary means to acquire cash quickly or efficiently, talk to your mortgage professional about programs that require little to no down payments or lenders who have down payment assistance available. And, of course, be sure to determine how much home you can comfortably afford (more on how to do that here).

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The Trick That Can Help You Sell Your Home Faster

buyer-incentives-real-estate

In some areas of the country, it’s a sellers’ market, but if you’re not so lucky and you need a competitive edge, you might consider offering buyer incentives, which can work in a couple of different ways depending on the homebuyer’s financing.

We tapped a couple of experts to explain how this might look in practice, and here’s what they said.

Mortgage Deals

Mortgage lenders tend to be finicky about seller concessions, says Heather McRae, a senior loan officer at Chicago Financial Services. Concessions can be limited to certain percentages based on the buyer’s down payment, and the lender will want to see how it’s phrased in the contract to ensure only one incentive is provided. The incentive itself must go toward closing costs or prepaid items.

“You can’t have a seller giving you $10,000 to put a new carpet in,” McRae said, by way of example.

Among the closing costs — incentives buyers can offer are funds to cover a bank’s origination fee, a title company fee or a transfer tax from the city or county (most counties charge a recording fee to record the mortgage, McRae explains).

For prepaid items, sellers can offer a credit for, say, the buyers’ nonrecurring closing costs, i.e. those payments paid on a one-time basis at closing, like loan origination fees. Just keep in mind lenders have restrictions on how much sellers can credit to buyers at closing, and amounts tend to vary by lender.

Cash Deals

With cash deals, sellers can offer whatever incentives they want, although, as Mark Keppy, a real estate broker also based in Chicago, pointed out, “there’s not a lot that buyers really desire in this market, they’re just trying to secure the property.”

Often, sellers choose to offer a home warranty, Keppy said, although the “best thing is for sellers to be more flexible on timing and close quicker.” Coming down on price doesn’t hurt either, he added.

Looking to Buy?

If you’re selling your house and looking to buy a new one, it’s a good idea to make sure your credit score‘s in tip-top shape before you start house hunting, in addition to figuring out your budget. (You can see how much house you can buy using this free calculator.) Your credit score can determine not only whether you can get a mortgage, but what percentage rate you’ll pay. You can view your credit scores for free, updated each month, on Credit.com.

More on Mortgages & Homebuying:

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The Thing That Can Add $5K of Value to Your House

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Becoming a homeowner is still the American Dream for many people. You apply for a 15- or 30-year mortgage and add as many home upgrades and improvements as possible. In addition to hoping it’s a seller’s market when you put the ‘for sale’ in your lawn, those home improvements determine how much profit you stand to make from your investment.

One of the best investments you can make is fireplace installation, according to a recent study from Angie’s List. The company surveyed 100 real estate agents on home values in relation to fireplaces and 2,000 homeowners/homebuyers and found that fireplaces are a pretty hot commodity.

The majority of potential homeowners in the market today see fireplaces as an asset. They top so many homebuyers’ must-have lists and are in such demand, in fact, that fireplaces increase over 76% of homes’ value anywhere from $1,000 to $4,999. The study has one caveat – electric fireplace inserts aren’t nearly as desirable as wood-burning or gas-burning fireplaces.

Without much variation, the wood-burning option was favored by all age demographics. Specifically, of those aged 22-29, 58.82% preferred wood burning, with those aged 30-39 close behind at 57.89%. Meanwhile, those in the 40-49, 50-59 and over 60 age groups favored wood-burning fireplaces at 63.04%, 65.35% and 67.31%, respectively.

Adding a fireplace may add value to your home, but it will come at a price too. If you’re looking to make a home improvement, make sure you understand your financing options. Home equity lines of credit (HELOC), personal loans and/or credit cards are often used to help homeowners with remodels, but they all come with different terms, benefits and pitfalls. For example, a credit card may have a higher interest rate than a HELOC, but if you default on the credit card debt, your home won’t be in jeopardy like it would with the HELOC. No matter which option you pursue, you can check your credit score for free on Credit.com beforehand to see which options and interest rates you’ll qualify for. And if you spot errors on your credit, disputing them can get them fixed quickly.

[Offer: If you’re trying to buy a home and are worried credit report errors are holding you back, you can hire companies – like our partner Lexington Law – to manage the credit repair process for you. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Mortgages & Homebuying:

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