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Thatboyofmine

HGTV/real estate question...

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I hope this makes sense...

On House Hunters, the buyers will frequently say something like, "well, it's under budget, so we could do the changes we want" (i.e. Changing carpet, paint, tilework, etc). I know they aren't all paying cash, so what does this mean exactly? Does it mean they're budget is, say $100k, and the house is $90k, so they have that $10k in cash do to renos? Or does it mean they're taking out a higher loan to pay for the house with the renos? How would that even work? Don't banks only loan for the appraisal amt?

My mom and I were watching tonight and the couple said this and my mom asked me what it means, but I'm stumped. Where does that "leftover/under budget" money come from?

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I take it tonmean that they're taking out a higher loan amount so the cost of the renovations can be rolled into the mortgage payments.

 

I think that is an approach that may work a little better on tv than in real life, when you're talking about significant expenses (like some of these shows depict). After all, the house still has to appraise at a high enough value for the mortgage company to make the loan in the first place.

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You can get a house and renovation loan where the cost of the repairs (usually only by a licensed contractor) is included.  The house in current condition does not have to appraise at the value of the full loan instead the house AFTER reno is estimated to appraise at the full loan value.  I sort of did one of these when I worked for a mortgage broker, lady refinanced at what the house would appraise at after reno was done.  I had to get a special appraiser (none of the locals would do it) and it took the bank over a month to approve it (more because of delays on the home owners side).  Another thing they may be considering is that they have a certain amount in cash for a down payment that plus max loan amount equals $300,000. Anything less than $300k can be saved back from the cash down (still maxing out loan amount) and used for reno.

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I always wondered that too. I also often wonder why people have to spend heaps of money on what is a perfectly nice house before they move in. And how often they regret decisions made before they tried living in the house.

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I think half the couples discussing how they will need to update, say, a kitchen or bath that looks perfectly fine to the rest of us is scripted to help encourage the viewer to think "Gee, maybe I better update MY kitchen/bath or at least spring for a new counter-top!"  

 

I took a class in grad school and part of it covered how the companies that made building supplies, furnishings etc. in the 1930s/40s "encouraged" the movie studios to include the latest furnishings etc. in the films the average housewife went to see (all those Crawford/Davis etc woman's films, plus think of the lavish rooms seen in the Astaire/Rogers musicals, for example).  I suspect the HGTV shows are little different.   For example, ever notice how every fix-up-the-house show seems to push the same tile work for back splashes, and it seems everyone HAS to have granite countertops?  And any appliance not brand-spanking new is "dated" and must be replaced - no discussion of whether or not it still works perfectly fine. 

 

What I want to know, is where do they find these people able to shop for a house or apartment that is usually more than our mortgage and health insurance combined!

 

And if I ever (not likely) move to Paris, I want that quirky real estate lady to help me find a place to live!  You know who I mean.

Edited by JFSinIL
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I think half the couples discussing how they will need to update, say, a kitchen or bath that looks perfectly fine to the rest of us is scripted to help encourage the viewer to think "Gee, maybe I better update MY kitchen/bath or at least spring for a new counter-top!"

 

I took a class in grad school and part of it covered how the companies that made building supplies, furnishings etc. in the 1930s/40s "encouraged" the movie studios to include the latest furnishings etc. in the films the average housewife went to see (all those Crawford/Davis etc woman's films, plus think of the lavish rooms seen in the Astaire/Rogers musicals, for example). I suspect the HGTV shows are little different. For example, ever notice how every fix-up-the-house show seems to push the same tile work for back splashes, and it seems everyone HAS to have granite countertops? And any appliance not brand-spanking new is "dated" and must be replaced - no discussion of whether or not it still.

This is very interesting, and makes perfect sense. I'm always struck by how the sets in tv shows and movies are not like the homes that anyone I know live in. You see schoolteachers and cops living in remodeled bungalows that would go for twice as much as any cop or teacher around here could ever hope to afford. Middle class homes are depicted as having furnishings I wouldn't expect to find in my friends homes. And shows that are twenty years or more old have sets that look more like today's average living space. (or shows that are meant to be dated, like Stranger Things.)

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This is very interesting, and makes perfect sense. I'm always struck by how the sets in tv shows and movies are not like the homes that anyone I know live in. You see schoolteachers and cops living in remodeled bungalows that would go for twice as much as any cop or teacher around here could ever hope to afford. Middle class homes are depicted as having furnishings I wouldn't expect to find in my friends homes. And shows that are twenty years or more old have sets that look more like today's average living space. (or shows that are meant to be dated, like Stranger Things.)

 

Except for The Middle.   Their house looks like real people live there  :laugh:

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A few thoughts, as I sip my Diet Pepsi and wait for my 11yo to finish his breakfast:

 

1. I guess they are either paying full cash price, with a certain amount set aside for reno OR they've financed the renovations into in the mortgage loan.

2. In certain markets, mine included, I know that if I want to flip a house, I need at least 3br, 2 ba, 2 car garage, granite countertops, and stainless steel appliances. More to the point, I know that there is a certain kind of granite here that nearly every home has, as do many of the restaurants.  My personal color preference palette (beachy blues and greens and washed out woods) does not fit into the local market. It's no different than knowing that in NYC, having in-condo laundry machines is a big deal.  You have to know your market.

 

 

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Except for The Middle.   Their house looks like real people live there  :laugh:

 

Yes, but they have a very nicely sized ranch.  

 

I would love to replace my fridge and dishwasher just based on how they function.  But, they work, so they stay.

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higher loan amount.

My daughter did about $20K worth of work on her house before she moved into her house. 

last summer she replaced her deck - which needed to be done when she bought the house, but other things had higher priority.

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I think half the couples discussing how they will need to update, say, a kitchen or bath that looks perfectly fine to the rest of us is scripted to help encourage the viewer to think "Gee, maybe I better update MY kitchen/bath or at least spring for a new counter-top!"

 

I took a class in grad school and part of it covered how the companies that made building supplies, furnishings etc. in the 1930s/40s "encouraged" the movie studios to include the latest furnishings etc. in the films the average housewife went to see (all those Crawford/Davis etc woman's films, plus think of the lavish rooms seen in the Astaire/Rogers musicals, for example). I suspect the HGTV shows are little different. For example, ever notice how every fix-up-the-house show seems to push the same tile work for back splashes, and it seems everyone HAS to have granite countertops? And any appliance not brand-spanking new is "dated" and must be replaced - no discussion of whether or not it still works perfectly fine.

 

What I want to know, is where do they find these people able to shop for a house or apartment that is usually more than our mortgage and health insurance combined!

 

And if I ever (not likely) move to Paris, I want that quirky real estate lady to help me find a place to live! You know who I mean.

As I understand it, House Hunters is all fake. I still watch it, but I know that the people on the show have already purchased a home before they are accepted to be on TV, and that the other two houses they tour are sometimes not even available for sale when they look at them. When you watch the show regularly, you hear the scripting -- the same stock phrases, the same complaints, the same concerns about "entertaining," and similar comments from the real estate agents.

 

I agree about the remodeling shows being very obvious about pushing the same "looks" and often the same exact products. The thing I'm noticing lately is that now that they've gotten everyone to choose stainless/chrome/brushed nickel cabinet door handles and faucets... now every show is magically super-excited about brass.... which they said was totally outdated and hideous last year. It's the same way with wallpaper -- it all had to be ripped off the walls because it was awful and dated, but now they put wallpaper in almost every house, and it looks suspiciously like that same old 70's stuff that they used to hate.

 

I love the Paris lady, too! She's so confident and she has her own sense of style that really works for her! I also like her attitude and her sense of humor. It seems like she is smart, hardworking, and knows her stuff, but she's still a lot of fun.

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This was a few years ago, but I read that about 1/3 of home purchases are cash sales now.   The mortgage interest even as low as it is, is still quite a bit more than investment income can get.  It could be that when these shows select people to be on the show, that they prioritize those with cash.  

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This was a few years ago, but I read that about 1/3 of home purchases are cash sales now.   The mortgage interest even as low as it is, is still quite a bit more than investment income can get.  It could be that when these shows select people to be on the show, that they prioritize those with cash.  

 

I'm surprised to read that many homes are bought with cash, considering how often I read that the average American can't come up with $1000 to cover an emergency. 

 

I make more off investments than the going rate for a mortgage.   But I don't count things like my money market account or CDs as investments...they are placeholders for cash that I will need within a shortish period of time.  But yeah, mortgage rates are higher than the going rate for CDs and money market accounts. 

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Couple thoughts...

I love Paris Lady, too! She's cute as a button!

Mom and I were thinking the buyers must be doing it with cash they have readily available and maybe lowering the down payment like another poster mentioned. We didn't realize you could buy a house and tie the renos into the mortgage without taking out a home equity loan.

Also, a relative's house will be on one of those shows next year. It's already been taped, and won't air for another year.

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A few thoughts, as I sip my Diet Pepsi and wait for my 11yo to finish his breakfast:

 

1. I guess they are either paying full cash price, with a certain amount set aside for reno OR they've financed the renovations into in the mortgage loan.

2. In certain markets, mine included, I know that if I want to flip a house, I need at least 3br, 2 ba, 2 car garage, granite countertops, and stainless steel appliances. More to the point, I know that there is a certain kind of granite here that nearly every home has, as do many of the restaurants. My personal color preference palette (beachy blues and greens and washed out woods) does not fit into the local market. It's no different than knowing that in NYC, having in-condo laundry machines is a big deal. You have to know your market.

You’re my color twin. I’m going to have a serene and beachy house even if I live in the Midwest, darnit. I don’t need no stinkin’ ocean to have good taste :p

 

I’ve discovered that unless it’s purely a flip that MANY people like pale neutrals and a slight rustic edge to their modern or traditional decor. Just look at what has been trending for the last five years. Having something different but still well done (and not dated or heavy) will usually sell even when it isn’t typical for the area.

Edited by Arctic Mama
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As I understand it, House Hunters is all fake. I still watch it, but I know that the people on the show have already purchased a home before they are accepted to be on TV, and that the other two houses they tour are sometimes not even available for sale when they look at them. When you watch the show regularly, you hear the scripting -- the same stock phrases, the same complaints, the same concerns about "entertaining," and similar comments from the real estate agents.

 

 

I don't think it was always like that.  if I recall correctly - they had a couple on who still wouldn't buy a house and it was a disaster.

 

My neice was on one of these diy fix-it up shows with her house.   very very scripted.  they had them filming one thing - and the conclusion of the scene was something completely different.  they'd already ripped out their counters - but the show wanted them so they had to have fake counters for them to rip out.   they did a lot of filming in one day.  

they wanted them to have to call a contractor to help  them (the  scenes were cut) - so that was her dad and her brother (both engineers. very diy). they were instructed to bring multiple changes of clothes for their scenes.

the show . . .. complained my neice was TOO competent.

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I think it generally means the family has money in the bank (and/or from sale of current home) to cover the new expenses in cash.

 

I.e., they planned to spend 300k on a house, putting in 100k downpayment/closing costs from sale of prior home and getting a 200k mortgage. Now, they are buying a 270k house, so they will use their 100k from sale of prior home to fund 70k of the downpayment and 30k in improvements, taking same 200k mortgage. So, no problems. 

 

This sort of flexibility is generally rare among first-time-home-buyers who are taking the maximum mortgage on their first home, but is pretty common among folks who have already owned homes/made profits, and/or are just older and have cash reserves/savings that they can dip into as desired. This is why "starter homes" often need to be "move in ready" to sell easily.

 

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I don't think it was always like that. if I recall correctly - they had a couple on who still wouldn't buy a house and it was a disaster.

 

My neice was on one of these diy fix-it up shows with her house. very very scripted. they had them filming one thing - and the conclusion of the scene was something completely different. they'd already ripped out their counters - but the show wanted them so they had to have fake counters for them to rip out. they did a lot of filming in one day.

they wanted them to have to call a contractor to help them (the scenes were cut) - so that was her dad and her brother (both engineers. very diy). they were instructed to bring multiple changes of clothes for their scenes.

the show . . .. complained my neice was TOO competent.

Now I'm trying to figure out which show it was! :laugh:

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Now I'm trying to figure out which show it was! :laugh:

 

one I had never heard of before her mother started telling everyone she was going to be on it.

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As I understand it, House Hunters is all fake. I still watch it, but I know that the people on the show have already purchased a home before they are accepted to be on TV, and that the other two houses they tour are sometimes not even available for sale when they look at them. When you watch the show regularly, you hear the scripting -- the same stock phrases, the same complaints, the same concerns about "entertaining," and similar comments from the real estate agents.

 

I agree about the remodeling shows being very obvious about pushing the same "looks" and often the same exact products. The thing I'm noticing lately is that now that they've gotten everyone to choose stainless/chrome/brushed nickel cabinet door handles and faucets... now every show is magically super-excited about brass.... which they said was totally outdated and hideous last year. It's the same way with wallpaper -- it all had to be ripped off the walls because it was awful and dated, but now they put wallpaper in almost every house, and it looks suspiciously like that same old 70's stuff that they used to hate.

 

I love the Paris lady, too! She's so confident and she has her own sense of style that really works for her! I also like her attitude and her sense of humor. It seems like she is smart, hardworking, and knows her stuff, but she's still a lot of fun.

 

This drives me nuts about fashion, too.

 

I have no real issue with these things being cyclical, though I do think it's sped up so as to create artificial demand.

 

But I wonder, when these people are saying how hideous the stuff was in the last cycle - do they really have that little consciousness?  Can they really be that shallow, living in the now? 

 

If it's real, if people really can have that level of denial or cognitive dissonance, no wonder we're messed up in more important area of life!

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This drives me nuts about fashion, too.

 

I have no real issue with these things being cyclical, though I do think it's sped up so as to create artificial demand.

 

But I wonder, when these people are saying how hideous the stuff was in the last cycle - do they really have that little consciousness?  Can they really be that shallow, living in the now? 

 

If it's real, if people really can have that level of denial or cognitive dissonance, no wonder we're messed up in more important area of life!

 

I thought the 70's was a particularly hideous decade - WHILE I was living through it.  I cringe when styles that were popular then, start showing up. I still think they're ugly.

 

 

and given my mil painted a bunch of mahogany furniture avocado green - all someone has to do is mention it and dh is set off.   more so than me about that particular shade of green.

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I thought the 70's was a particularly hideous decade - WHILE I was living through it.  I cringe when styles that were popular then, start showing up. I still think they're ugly.

 

 

and given my mil painted a bunch of mahogany furniture avocado green - all someone has to do is mention it and dh is set off.   more so than me about that particular shade of green.

 

Me too.  I remember thinking everyone was nuts as a kid in the 70's.   As a kid at about 4th grade, I declared that I would NOT wear green or brown.  It kept mom from getting pissy from having hurt feeling when I rejected every piece of clothing she wanted to buy me.  That, and NO WOOL were my only rules.  At some point in the late 80's my father pointed out that almost all my clothes were green and brown, and he remembered my insisting none of those.  I said I'd really meant no 70's green or brown.   But, Emerald Green and Chocolate Brown were lovely colors.  

 

There is one home fad I did a 180 on.  The gold veins in fake marble.   I loved those the first couple of times I saw them.  

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I thought the 70's was a particularly hideous decade - WHILE I was living through it.  I cringe when styles that were popular then, start showing up. I still think they're ugly.

 

 

and given my mil painted a bunch of mahogany furniture avocado green - all someone has to do is mention it and dh is set off.   more so than me about that particular shade of green.

 

My mom had a cherry cabinet that came painted the 70s yellow as a dining room accent piece.  She stripped off the paint in the 90s and the wood was gorgeous!  Why why why would someone do that to beautiful wood?

Edited by bethben
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My mom had a cherry cabinet that came painted the 70s yellow as a dining room accent piece. She stripped off the paint in the 90s and the wood was gorgeous! Why why why would someone do that to beautiful wood?

I love painted wood! People who love the natural look are always horrified by this admission.

Edited by Zinnia
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Me too.  I remember thinking everyone was nuts as a kid in the 70's.   As a kid at about 4th grade, I declared that I would NOT wear green or brown.  It kept mom from getting pissy from having hurt feeling when I rejected every piece of clothing she wanted to buy me.  That, and NO WOOL were my only rules.  At some point in the late 80's my father pointed out that almost all my clothes were green and brown, and he remembered my insisting none of those.  I said I'd really meant no 70's green or brown.   But, Emerald Green and Chocolate Brown were lovely colors.  

 

There is one home fad I did a 180 on.  The gold veins in fake marble.   I loved those the first couple of times I saw them.

 

I was fortunate in that my mom was very fashion-conscious and she knew that she and I only looked good in cool colors, so no ugly green or brown for us! :laugh: It's funny when I see some of the styles coming back, though -- I remember my mom always said that if you were old enough to have worn the trend the first time around, you might be too old to wear it again when it comes back into style (or old and wise enough to realize how awful it was,) and that concept seems to work out pretty well for me. :)

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This is very interesting, and makes perfect sense. I'm always struck by how the sets in tv shows and movies are not like the homes that anyone I know live in. You see schoolteachers and cops living in remodeled bungalows that would go for twice as much as any cop or teacher around here could ever hope to afford. Middle class homes are depicted as having furnishings I wouldn't expect to find in my friends homes. And shows that are twenty years or more old have sets that look more like today's average living space. (or shows that are meant to be dated, like Stranger Things.)

 

 

Keep in mind too that the remodeling shows on HGTV like Fixer Upper stage the house with furnishing and knick knacky stuff that is NOT included in the final price.  Those things that the Gaines decorate the home with are generally put in their for TV and then the homeowner has the option to buy them.

 

I think it's the same with Property Brothers, but I can't find the link so I won't claim that for sure.

 

Most homes I actually go into look nothing HGTV, but that makes sense as most of us aren't staging are homes for sale or TV.  I can guarantee if my house was going to be on TV it would look different than it does right now. 

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My mom had a cherry cabinet that came painted the 70s yellow as a dining room accent piece.  She stripped off the paint in the 90s and the wood was gorgeous!  Why why why would someone do that to beautiful wood?

 

 

99% of the time, I don't like to see wood painted. I can also be found yelling, "No! don't paint that brick/stone," if I watch one of those remodel type shows. 

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Both my first home and this home appraised higher. We married late and bought our first home when we were 28 so we had more than the 20% down payment saved up after three years of full time employment. We could have take a loan of 80% of sale price which was $40k lower than appraised value. The sale price was also $130k lower than we budgeted for as we didn’t like any homes (all bigger than we want) for sale near my husband’s sister or my parents. We were given money for renovations by my relatives as a marriage and housewarming gift. So I had $10k from relatives to be used on our home. My relatives gives cash as gifts usually. Very little renovations needed to be done so we spent most of the money on furniture and wants.

 

We put 5% down payment on our 2nd home and have some cash left for minor renovations. The bank loan us based on 95% of the sale price and not on the higher appraised value. The renovations that we were thinking of would cost around $5k if done by the developer and less if done by Lowe’s or Home Depot. The units were selling at $470k which we would have a hard time affording the mortgage payments at that time but we bought a close out unit for $400k which was lower than we budget for. So we did have cash in hand since we opt for 5% down instead of using all our cash for down payment.

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I love painted wood! People who love the natural look are always horrified by this admission.

 

alder?  fine.  beat to death?  fine.

cherry or mahogany in good condition?  -desecration.

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