Presale inspections for smoother sales

Homes are selling for less. Everyone's trying to cut back. Yet, many real estate agents think it's wise for sellers to provide presale inspections for buyers to review before they write offers. Is the cost, which could run from a few hundred to $1,000 or more, worth the expense?

Last year, a home seller in the hills above Oakland, Calif., did a lot of work renovating a home before putting it on the market. Her agent recommended a home inspection, which involves a more comprehensive investigation of the property. A wood pest or termite report covers damage caused by wood-destroying organisms, and conditions that would be likely to lead to future infestation.

A complete home inspection usually covers the roof to the foundation and everything in between, although this differs from one inspector to another. The seller in the above example was financially exhausted after taking care of the fix-up work and decided against providing a presale home inspection.

The house was priced under market value and showed well. It brought in multiple offers and sold well over the asking price. However, the buyers' home inspection revealed that the foundation needed replacing. The deal stayed together, but only after a much lower price was negotiated.

Changing the price in the middle of a transaction can be a red flag to the lender, particularly if it's a significant price reduction. The lender could require the work be done by closing, which could delay the closing by months. If the buyer's loan commitment expires, the transaction could collapse.

HOUSE HUNTING TIP: One benefit of providing presale inspections on your home is that you have the opportunity to correct defects before marketing the property. This will make your home more salable and increase the odds of a smoother transaction.

Another benefit is that by providing as much information about the property as possible upfront, you decrease the risk of a transaction falling apart when buyers discover information about the property they weren't aware of when they made their offer.

One seller failed to provide a foundation report to the buyers before they made an offer. When the buyers were given the bad news, the transaction fell apart.

If you have reports on your home, make sure that the buyers receive copies of them before they decide whether or not to buy your home, especially if the reports reveal conditions about the property that could influence the buyers' decision to buy or what they would pay.

Sellers often see no good reason to pay for inspection reports upfront because the buyers will want to have their own inspectors investigate the property. Buyers should have the property inspected by their own inspectors.

The purpose of getting presale inspections is not to preclude the buyers from having inspections -- it is to educate the sellers and buyers about the property condition before they enter into a contract.

Sellers are in control of who inspects their home when they pay for presale inspections. Make sure to use inspectors who are well respected in the area. The buyers' comfort level with your presale reports will be higher if their agent can vouch for the inspectors.

Even though the buyers will probably do their own inspections, having presale inspections can cut down on negotiations that can occur after the buyers do their inspections. However, don't be surprised if the buyers ask for something as a concession for removing their inspection contingency.

Recently, buyers of a home in Oakland's Rockridge neighborhood asked the seller to have the garage roof replaced, even though they were given a roof report and replacement proposal before they made their offer. Their offer was based on taking the property in its present condition.

THE CLOSING: The seller said no and the buyers removed their contingency.

 

 

Find property problems before you buy

To avoid a bad experience that could end up in a legal battle with the sellers over property problems, make sure your purchase agreement includes an inspection contingency.

Your mission during the inspection contingency period is to find out as much as possible about the property and surrounding area, insurability of the property, permit history, zoning issues and cost to repair defects. Investigate any issues that could affect whether or not the property will suit your long-term needs at a price you can afford.

Most states have home seller disclosure requirements. If you are buying in a state that doesn't require sellers to disclosure material facts, ask the sellers to disclose in writing any property defects or neighborhood issues they know about.

Also, find out if there are systems that require routine maintenance, such as the furnace, drainage system, skylights and roof. After you clear the inspection hurdle, ask the seller to provide you with contact information for any people who have worked on the property that the sellers would recommend.

Find out when major components were replaced and when the house was last painted. Find out how much the sellers pay for utilities. Ask for copies of proposals and paid invoices for any significant work done on the property.

Basically, you want to know any problems the seller had with the property, what was done about it, by whom and when. If the roof was recently replaced, find out if it's covered by a warranty and if it's transferable to you.

You may feel uncomfortable asking the sellers to provide additional information at the time you make the offer, particularly if there are multiple offers. In this case, ask the sellers for answers to your questions during the inspection contingency time frame. Questions will undoubtedly come up during your inspections.

HOUSE HUNTING TIP: Even if the sellers have provided presale inspection reports and disclosures, have your own inspectors give the property a thorough exam. Some buyers hire the seller's home inspector to meet them at the property to explain the presale report and ask questions. This may save you money. But, saving money should not be the primary goal when having a property inspected.

Buyers of newly built homes should ask the sellers for any construction-related documents like the geotechnical report, engineering calculations, and letters to the planning department confirming that the geotechnical engineer monitored the construction and confirmed that the house was built according to his recommendations. Ask the seller to leave the architectural plans, if they're available.

Verifying livable square footage is a big issue in today's cautious mortgage environment. Many lenders won't count additions or renovations that add square footage in the appraised valuation of the property.

If the sellers can't provide the supporting documentation, such as copies of approved permits, the property could appraise for less than you agreed to pay. This might jeopardize the transaction if the lender approved a lower mortgage amount than you requested.

It's a good idea to check the permit history at the planning department yourself if the sellers can't provide copies of permits for work done. This should let you know if renovations were done with permits and if the permits received final approval. You should have this information before removing the inspection contingency.

Many planning departments won't issue a new permit if there is a permit on record that never received final approval. The new owners might incur fees to clear up any outstanding permits before they can move forward with new improvements.

THE CLOSING: With probate and REOs (bank-owned properties) you will receive minimal, if any, information about the property condition. Be extra careful with your due diligence investigations.

Using a Paradise Realtor is the Best way to find your new Paradise home!

It can be very tempting for a Paradise home buyer to try and find homes for sale without a Paradise realtor, but they are not doing themselves any favors. A Paradise realtor will have valuable experience and exclusive information that can make the entire process much smoother. Their expertise and focus on the housing industry will benefit any buyer that they work with.

With all of the resources available on the Internet and in other places, many people think that they can find homes for sale on their own. Looking online is a good way to get ideas, but when it comes time to really begin the Paradise house hunting process, it is always a good idea to work with a Paradise realtor. They will have a lot of information and many resources that the average person would not have access to on their own.

Since they work directly in the industry, a Paradise realtor may have access to some inside information. For example, they may be able to show a Paradise home to a buyer before it is even officially on the market. This means that the Paradise buyer can be the first to put an offer in on the house, which is very advantageous if the owner is looking to sell quickly.

One of the most fundamental reasons to use a Paradise realtor is that they bring years of experience to the table. Even if someone has purchased a home before, it can be a complicated process. The buyer is sure to have a lot of questions along the way and they may not always have simple answers. A Paradise realtor will act as an educated guide throughout the entire process.

A Paradise realtor will never be more valuable than when it comes time to negotiate with the seller. Their experience will come in handy as they will have realistic ideas about what is a reasonable offer and what is not. They will also be able to stand their ground on terms more so than the buyer because they will not be emotionally attached to the situation.

Call me when you need a Paradise Realtor to help you buy your new home.

 

Sellers list right to avoid price reductions

In most areas of the country, 2007 marked a change in the residential home-sale market. Buyers gained clout for the first time in over a decade. Inventories of homes for sale grew to record levels in some places. Price reductions, which carried a negative stigma when listings were easy to sell, came to be seen as a necessary part of the home-sale process.

That is not to say that price reductions are a good thing. They are not. The initial marketing effort is a prime opportunity to attract attention to a new listing.

When the merchandising and pricing are on target, a timely sale occurs. If the opportunity is missed either due to poor planning and preparation, or to a price that's too high for the market, the only hope for success is to lower the price quickly to an acceptable level.

Many sellers balk at the notion of reducing the list price soon after the property is listed. However, the timing of a price reduction is critical. If you wait too long, hoping for the impossible, it could be difficult to kindle enthusiasm for the property.

This is particularly so in an area where there are a lot of new homes coming on the market and where the sales volume is low. This means that the competition from other listings grows as you wait for the unlikely: a knight in shining armor to appear and pay the asking price or more.

HOME SELLER TIP: The best time to make a price reduction is as soon as you discover that your home is priced too high for the market. Waiting too long to lower the price can cost money in the long run if the market is moving lower. Reducing too little, too late can lead to a series of further reductions and ultimately to a lower selling price. Ideally, you should avoid such an unpleasant downward spiral.

The goal is to sell without having to reduce the price. To do this, you must accept current market conditions. You also need to recognize that no matter how wonderful you think your home is a buyer will find fault with it.

To be a successful seller in this market -- and to some extent in any market -- requires separating pride of ownership in the property from the task as hand, which is to sell for the highest price possible. It's not easy for most sellers to put their emotional feelings about their home on ice. It helps to stop thinking of the property as "home" and to start looking at it as a commodity you want to sell.

Before listing a property for sale, sellers should seriously consider their motivation. Successful sellers in today's more difficult marketplaces have a compelling need to sell. They don't simply want to sell if someone will make it worth their while. Many of today's prospective home buyers have a wait-and-see attitude about the market. They are looking, but it will take a fabulous home offered at a great price before they'll commit to buy.

Sellers should also check out the temperature of the local market. Residential real estate is a localized business. Even if you live in a city where prices are down, that might not be the case in your neighborhood. The supply of homes for sale and demand for housing are critical variables, as is the local employment picture.

There is a common theme to the listings that sell well now. These listings look great, are in good condition, don't have incurable defects and are priced right for the market.

THE CLOSING: Being realistic about what to expect is half the battle.


Home Buyers | Home Sellers

Hanging Pictures 101

A home is a place where we create precious memories with those that we love, which is why photos are a big part of what makes a house into a home.  Pictures have a way of transporting you to another time and place through memories that are forever recorded and can be framed for all to see.  If you are hanging pictures in your home, make sure that you keep in mind a few simple tips to keep your images picture perfect. 

Keep It Together

Group similar photos together for a customized collage look.  When you put photos with the same theme or pattern together, you give the appearance of a framed print collection.

The Significance Of Support

When hanging photos, the hooks that you use should be able to hold a minimum of four times the weight of the frame.  This will help ensure that the hook is strong enough to hold up over time, plus you won't have to worry about the accidental breakage of your glass frames.

Be Level

Use a level to make sure that your photos are straight and look pleasing to the eye.  In addition to a level, there are a number of tools that various manufacturers have designed to help ensure that your photos are perfectly straight.

Nail Knowhow

If you don't want to put holes in your walls, which is an unavoidable result of nails, consider a popular alternative to hanging your photos traditionally.  With the creation of peel 'n stick hooks that are designed to simply stick onto your walls, you will not have to place a nail everywhere you want to display a photo.  Plus, if you ever decide to sell your home, you won't have to worry about patching holes and potential buyers won't be turned off by unsightly nails in the wall.

Measuring Your Space

If you are hanging multiple photos in one area, such as a collage, make sure to space each photo evenly.  For instance, if you include a two-inch space between two photos, make sure that all others in the same group are spaced exactly the same.  This will create a flowing design that looks as though a lot of thought has gone into the decorating process.

Get Creative

If you have a lot of small photos that you want to display, but are unable to find a frame or the wall space to fit them all in, consider purchasing a very large frame and using it to create a collage of photos.  You can do this by attaching the individual photos to the frame with a dab of glue or transparent tape.  The best thing about this approach is that anything goes.  Your photos will not have to be perfectly placed inside the frame and you will always have an attractive wall-hanging that grabs the attention of your guests.

Home Buyers  |  Home Sellers

Pros, cons of buying a home in today's market
Fixer-upper not necessarily best investment for first-timers

When the housing market slows down, buyers often wait on the sidelines for a clear sign that the market has recovered. The only problem with this strategy is that you can only know for sure that a market has turned through hindsight. In other words, you can't time the market.

A slow market is perceived as an opportunity by some buyers, as it takes longer for listings to sell. The inventory of unsold listings tends to grow, giving buyers more choice than is the case in a hot seller's market when listings sell quickly.

In a high-inventory market, there are usually fewer multiple offers so buyers can cut a better deal with the seller. However, it pays to be careful about what you buy and how you finance the purchase.

HOUSE HUNTING TIP: The least expensive home in an area may not be the best investment. Unless you are a contractor with years of experience fixing up properties, you should hire the best inspectors you can find to look carefully at the condition of a property before you buy.

Many home buyers, particular first-timers, don't give enough attention to the cost of maintaining a home. Home maintenance is a necessary part of home ownership. It can be expensive, particularly if you need to hire others to do the work.

Some homes require more maintenance than others. A good inspector should be able to give you a good indication about how much work a home needs now and how much it will need on an ongoing basis. Buying a well-maintained home that will also have relatively low ongoing maintenance is one way to keep your overall housing costs down.

Inexperienced home buyers should resist buying a fixer-upper just because it's offered at a cheap price for the neighborhood. It's difficult to get a firm grasp on renovation costs during the inspection contingency period, particularly if it's a big job.

Remodeling projects can run over budget because of unanticipated problems like faulty electrical or plumbing, or an old furnace that goes bad. Or the city inspector could require that you do additional work to correct non-code-complying improvements done by previous owners. These sorts of costs can mount up so that you end up with far more invested in the property than it's worth on the market.

Try to avoid buying a home that has an incurable defect. This is something that you can't change, like a location next to a freeway. These homes don't hold their value well when the housing market softens.

A risk of buying in a slow market is that the value of what you buy might drop before it rises. Or, prices could stay flat for some time, which means that you won't build equity unless you pay down principal on your mortgage. If you should have to move during a time when prices are soft, you might not be able to sell for the amount you paid. To decrease this risk factor, don't buy for the short term.

Give careful consideration to how you finance your purchase. Stay away from mortgages that have short due dates and balloon payments. If the market in your area stays soft for longer than anticipated, you don't want to be caught having to refinance at a time when your home might not appraise for the price you need to complete the transaction.

THE CLOSING: A benefit of buying in a soft market is that you have the opportunity to buy at a reasonable price, without having to compete with other buyers. But, it makes no sense if you put yourself at financial risk.

Home Buyers  |  Home Sellers

 

Not all buyers are worth a counteroffer

After mustering the emotional energy to make an offer on a listing, it can be devastating if you hear nothing back from the seller.

In most cases, if the offer isn't what the sellers are looking for, they will issue a counteroffer detailing the price and terms they can live with. When a seller doesn't respond at all to your offer, it's usually because the offer is so low that the seller thinks it's a waste of everyone's time.

Ask your agent to talk to the listing agent to find out why the seller didn't counter your offer. Then, make another offer if you think the house warrants a higher price. If the sellers want too much for their house, take a breather. Let the listing sit on the market awhile before you make another offer.

The risk of this approach is that another buyer could come into the picture who is willing to pay the sellers' price. Nothing is lost if you wouldn't have paid that price.

Your agent should keep in touch with the listing agent during your wait-and-see period. Ideally, you'd like to know if the sellers are going to reduce the price before it shows up on the multiple listing service. A price reduction to market value could elicit interest from multiple buyers.

Risk-averse sellers can be skittish about working with buyers who have a low cash down payment. It's wise to include a mortgage preapproval letter with your offer. Also, some sellers aren't in a position to accept an offer that's contingent on the sale of the buyers' home.

Another reason buyers don't receive counteroffers is because there were multiple offers. The sellers can accept only one offer in primary position. If there were five offers and yours was the lowest, you're not likely to receive a counteroffer.

Multiple offers are occurring in low-inventory, high-demand markets. Buyers were out early this year due to lower home prices, low interest rates and homebuyer tax credits.

HOUSE HUNTING: A typical reaction from buyers who lose in a multiple-offer competition is that they would have paid more. When you're competing against other buyers, you need to make your first offer your best offer. This seems counterintuitive because you run the risk of paying more than you might need to.

One way to ensure that you don't pay too much is to include an appraisal contingency in your purchase offer. Generally, an appraisal contingency allows the buyers to withdraw from the contract if the house doesn't appraise for the purchase price. In today's wary lending environment, lenders are requiring appraisers to be conservative on appraisals, particularly in declining markets.

Be aware that some buyers in a competitive situation will not include an appraisal contingency in their contract. If they have a large enough cash down payment and the appraisal value is less that the contract price, the lender may still approve a loan amount that will enable to the buyer to proceed with the sale.

THE CLOSING: Buyers who want a house badly enough will often pay more than the appraised value if they have enough cash to make up the shortfall.