Monday, December 29, 2014

Winter Projects to help your get your home ready to sell in the spring.

I recently was asked by a past client what things they needed to do now during the winter that would let them get a jump on and have their home ready for sale in the spring.  This is not an unusual question for those of us who live in colder clients – we tend to have our big “selling season” in the spring, summer and into the early fall.  It’s not that people don’t buy and sell houses in the winter, but most people tend to think about selling in the early spring with the nice weather.

So here goes, some projects that you can tackle in the winter to help you get ready to sell in the spring…

  • A really good project is to tackle the overflowing closets and cabinets.  IF the kids have outgrown (and it’s not just the kids) the clothes from last school year, now’s a good time to clean out the closets and get rid of them …. Donate them to a local charity or give them to family and friends who have smaller children.  No need to keep them and it will help to make your closets look bigger.
  • Another project is to start the de-clutter process.  We all tend to do special decorating for the holidays … if that’s the case just pack up the “clutter” and get it stored away – unfortunately we realtors are always telling people to de-clutter so that a possible buyer can see the full space.  So when January 1st comes around and you take down the holiday decorations, think about what you don’t necessarily need to put back out. 
  • Another good winter project is to make an assessment of those little items that all us home owners know we need to get fixed but that we have learned to live with. You know what I mean, that front door that always “sticks” or that light switch that doesn’t always turn on.  I personally have a bath fan that squeaks!!!  If you start making your list of items that you know need to be repaired now and just tackle one item every week or so you will be on the road to getting your home on the market.
One thing that I’d like to mention however is if you have a big project to tackle, now is also a good time to check with your realtor of choice. They will be able to help you prioritize those items that will bring a return on your repair/renovate investment. 

So if you are thinking that the right time to move will be this spring, now is the time to tackle some of the projects that will help you present your home in the best light. You should put some time and money into making the necessary repairs and alterations to your home now to make it appealing to homebuyers in the spring. You want potential buyers to imagine themselves living in your home. You don't want buyers coming into your home and trying to imagine how nice the home will be after all of the chores have been done.

Tuesday, November 18, 2014

Your Journey Home ---- the last few items

All’s been approved, repairs have been done and the appraisal has been completed and sent off to the loan underwriter by your lender for final approval.   All that’s left to do is to pack …. You hope.

In your haste to pack … do not pack any important financial documents.  TRUST ME, the lender will be calling and asking for some document that you know you have already provided.  But even more important than that is under no circumstances should you incur any new debt.  While it may seem like a good idea to go out and buy that new refrigerator so it can be delivered the day you move in, it isn’t.  I promise you the lender will pull your credit report 24hrs prior to closing and any new expenses can and will derail the closing.  My advice to buyers – especially to a first time buyer is if you cannot pay for an item in cash … don’t purchase it, wait till after closing and funding.

One other thing that you will need to do just before closing is your final walk-thru.   What is the final walk-through? It's your last chance to identify any problems before you move in. The walk-through generally takes place 1-2 days before the closing – once the seller has moved their belongings out of the house, if possible.  Here's a checklist of items to look over on your final walk-through:

-Check to make sure that all agreed to repairs have been completed and that you have copies of any receipts for those repairs.

- Electrical fixtures. Turn switches on and off to make sure everything is functioning properly.

- Plumbing. All the faucets in the kitchen, bathroom, and the exterior of the house should be turned on to make sure they are connected and there is decent water pressure. Flush the toilets to make sure they are draining properly.

- Exhaust. Test fans in the kitchen, bathrooms, and laundry room to make sure they are functional.

- Windows and doors. Do they close properly? Are they latching correctly? Do all of the locks work?

- Appliances. Run a check of the stove, oven, dishwasher, garbage disposal, trash compactor, refrigerator and freezer, washer and dryer, and any other appliances that the previous owner left behind.

- Environmental controls. Are the heating and air conditioning working properly? Check the furnace and make sure the water heater is providing adequately hot water.

- Safety. Are the smoke detectors and carbon monoxide detectors plugged in or are their batteries charged?

- Damage. Is there any evidence of disrepair, including leaks and water damage, that wasn't noted in your inspection report? Be especially vigilant to make sure that floors, walls, and door frames haven't been damaged during the removal of furnishings. Examine both the interior and exterior of the home for anything that needs to be repaired.
Make sure you haven't been left with any trash or belongings that the previous owner neglected to remove. Verify the presence of all items (appliances, window treatments, etc.) that were supposed to be part of the transaction.

- Keys. Make certain you have keys to all doors, outbuildings, and mailboxes as well as the garage door opener.

- Documents. Ask that the seller leave behind manuals for any household systems or appliances that will remain with the house. If there are home blueprints, records of modifications or renovations to the house, or other information that would be useful to have when you move in, make sure that you ask for them.

If the previous owner has been diligent, the home should be clean and you should be able to move right in with a minimum of extra work.

You will need to make sure that you have switched out utilities and have service turned on in your name – especially critical utilities such as gas, electricity & water – you don’t want those services turned totally off.  If they get turned off, it will most likely result in a reconnection fee which could be more costly than a name change on a bill – and let’s not forget that in cold temperature climates, turning off the heat  (be it gas or electric) can result in frozen pipes and broken water lines ….

It’s best to try and schedule your closing in the morning – that way funding can most likely occur in the early afternoon and you can get the keys to your new home and move in.  This is especially critical with new construction. Most builders will not turn over the keys to a property until they have their funds in the bank.  Sometimes the seller will have negotiated that they have a day after the closing to move out if this is agreeable to you that’s OK – but remember if that is the case you may not be able to do an empty home final walk-thru. 

BUT YOU HAVE MADE IT!!! You are now HOME!   All you need to do now is move in your boxes, decide where to place your belongings.

Monday, November 3, 2014

Your Journey Home – almost there!

You're almost to the finish line. You've found the home of your dreams, secured financing, and your offer has been accepted. You've been thru inspections and negotiated any repairs with the home owner. Now all’s that left to do is pack and wait till the day of closing.

The next few weeks should be pretty quiet, but there will be several things going on.
Quickly, after inspections have been done and all repairs items negotiated, the bank will order an appraisal.  An appraisal is an independent look at the property that the bank orders to determine the value of the property in relationship to the neighborhood. Your lender will require an appraisal as security for your loan.  Don't confuse an appraisal with a comparative market analysis, or CMA.  Your  real estate agent probably used some version of a  CMA when you were first considering making an offer on the property.   Realtors use CMA’s to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraisal price with their CMAS, but an appraiser's report is much more detailed--and is the only valuation report a bank will consider when deciding whether or not to lend the money.  There are several ways that an appraiser will look at your new home.

Sales Comparison Approach

The appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area (within about a 1 mile radius). The properties used are called comparables, or comps.  Since no two properties are exactly alike, the appraiser must compare the comps to the subject property, making paperwork adjustments to the comps in order to make their features more in-line with the subject property's. The result is a figure that shows what each comp would have sold for if it had the same components as the subject. 

Cost Approach

The cost approach is most useful for new properties, where the costs to build are known. The appraiser estimates how much it would cost to replace the structure if it were destroyed.

So What Does the Appraisal Mean to You?

Your personal loan approval is accomplished early in the loan process, but final loan commitment usually hinges on a satisfactory appraisal. The bank wants to be sure its investment is covered in case you default on the loan.  If the property appraises lower than the sales price, the loan might be declined, but that isn't the only hurdle it must pass. Other facts on the appraisal can be a problem, too: if the appraiser notes some building defects, the underwriter can call for additional inspections.   If during inspections a price reduction was agreed to, and it was noted that the price reduction was in lieu of repairs being made, the underwriter can request the inspection report and ask for any of the items to be corrected before closing.  Those are just a few examples of negatives that could stall your purchase.

An Appraisal Isn't a Home Inspection!

Appraisers make notations about obvious problems they see, but they are not home inspectors. They do not test appliances, look at the roof, check the chimney or do any other typical home inspection tasks. Never count on an appraisal to help you determine if the home is in good condition.

If the Appraisal Comes in Low

Don't panic if the appraisal comes in low, because there are often steps you can take to make the deal work. If the appraisal uncovers other problems, remember that most problems are correctable. Try to keep your cool and work through issues one step at a time.

At the same time you are waiting for the appraisal the bank is finalizing your financial approval – there are still some loan questions that you will probably encounter.  In your haste to pack … do not pack any important financial documents.  TRUST ME, the lender will be calling and asking for some document that you know you have already provided.  But even more important than that is … under no circumstances should you incur any new debt.  While it may seem like a good idea to go out and buy that new refrigerator so it can be delivered the day of closing, it isn’t.  I promise you the lender will pull your credit report 24hrs prior to closing. Any new expenses, especially big items, will become a disaster, and could derail the closing.  My advice to buyer – especially to a first time buyer is if you cannot pay for an item in cash … don’t purchase it.

It’s getting close to closing time … so keep you cool and you will soon be in your new place. 

Monday, October 13, 2014

Your Journey Home – Getting a Home Inspection.

Home buyers are often clueless about home construction and its components, and getting a Home Inspection is the first step to understanding how your new home works. 

It’s very important that Home Buyers get a home inspection – this is not the place to try and save money.  Sometimes Buyers begin to think with their eyes – and not their heads.  Don’t let a shiny clean home lure you into believing that there are no issues.  Remember it’s the job of the home inspector to report on the condition of the home, and as I like to say “it’s their job to find issues.”  That does not mean that the issues that an inspector will find are what we like to call “deal breakers.”   A home inspection is just that a means for a buyer to have a neutral 3rd party look at the condition of a home. Home inspections are not just for existing homes either; Builders' make mistakes, too.  So even with new or newer homes having the unbiased eye of a home inspector is very important. 

All home inspections are different and can vary dramatically from state to state, as well as across counties and cities. Much depends on the home inspector and which association, if any, to which the home inspector belongs.  In my marketplace the most prominent home inspection association is ASHI (American Association of Home Inspectors.  For a while the State of Kansas was requiring that all Home Inspectors become licensed and registered by the state and that licensing requirement followed the ASHI standards.

What does a home inspection report disclose? Inspection reports can be pretty intimidating.

General Home Inspection Checklist Items
Structural Elements including Garage-
This portion of an inspection covers the construction of all walls, ceilings, floors, roof and the foundation. It also covers the fascia, trim, doors, windows, lights and exterior receptacles.   The inspector might also comment on wall coverings (typically cosmetic, but can become an issue with a lender). Also included are landscaping, grading, elevation, drainage, driveways, fences, sidewalks, garage firewall, garage door, garage door openers and exterior windows.
Roof and Attic -
This portion will covers the framing, ventilation, type of roof construction and materials, flashing and gutters.  This part of the inspection is not a guarantee of roof condition nor is this a roof certification.  If an inspector feels that the roof is getting towards it’s useful life they may call for an inspection by a roofer.
Plumbing -
This portion will try to identify the type of pipe materials used for potable, drain, waste and vent pipes. It will also include the condition of toilets, showers, sinks, faucets and traps. It does not include a sewer inspection.  Understand however the inspector will not open up the walls to see what’s behind the sheetrock.
Systems and Components (Mechanical Items)-
This portion focuses on water heaters, furnaces, air conditioning and duct work.  Often it does not include chimney, fireplace and sprinklers (either lawn or fire suppression).
This portion will include the main panel, circuit breakers, types of wiring used, grounding, exhaust fans, receptacles, ceiling fans and light fixtures.
Appliances -
This portion covers the dishwasher, range and oven, built-in microwaves, garbage disposal and, yes, even smoke detectors. Typically however it will not cover washing machines, dryers, refrigerators or freezers.

However, a home inspector's standard practice typically does not include the following, for which a specific license to inspect and identify may be required:

Items typically not covered in a General Home Inspection
Radon, Methane, Radiation and Formaldehyde
Wood-Destroying Organisms & Rodents/Pests
Mold, Mildew and Fungi

I have rarely seen a perfectly clean inspection report, so don’t be surprised to see a 30+ page report.

Home Inspection Checklist Items Sellers Should Fix
So while Home Inspection Reports do not describe the condition of every component if it's in excellent shape, these reports should note items that are defective, needing service, or not operating in the manor that they were intended to operate. 

The serious problems are to look for are those that affect
 -Health and safety issues
 -Roofs with a short life expectancy
 -Furnace / A/C malfunctions
 -Foundation deficiencies
 -Moisture / drainage issues
Typically these are major components and are expensive to correct. So these are the items that you want to consider asking to be repaired or replaced.
Most contracts allow for a renegotiation time frame and use this time to discuss which items are minor, and which items are serious.  Every home will have issues noted or flagged in a home inspection, even in new and newer homes.  A repair issue that will be a deal breaker for a first-time home buyer, causing the buyer to cancel the contract, will not faze a home buyer versed in home repair. Talk to your agent, family and friends about the inspection report. 

Before issuing a formal request to repair, consider the seller's incentive to hire the cheapest contractor and to replace appliances with the least expensive brands.   So, if you have a choice, it might be smarter to hire your own contractors and supervise repairs.  In my marketplace this is typically done by asking the seller to pay some closing costs (as long as the amount you are asking for is not more than the amount allowed by the lender – this may not be an option if you have already asked for the maximum amount allowed in the original negotiations).  If you have already asked for the max closing costs to be paid for, your next option is to ask the seller to reduce the sales price.  If your only option is to have the Seller make repairs, such as repair requirement for some government loans like FHA or VA, ask that the Seller provide you with paid receipts for work done and the names of the individual who did the work.  Sometimes if the repairs are minor it can be acceptable for the seller to make the repairs - perhaps a simple solution is available such as replacing a $1.99 receptacle, which can resolve many outlet problems, and can be done by a seller.

So pat yourself on the back, for getting a home inspection. Once your inspection is done, and you and the Seller have agreed to repairs you all you need to do is to gather boxes and start packing …. Well maybe??