Buyers
Whether you’re a first-time home buyer or a veteran buyer, buying a home is a complex process. Here are a few tips Nadia Colucci recommends to assist you as a future home buyer. These tips will help you prepare and understand the process; determine which amenities are most important to you; and how to estimate your price range.
5 Tips for Buyers
There’s no “I” in team:
In your transaction: your Realtor is the main communicator between:
| Buyer | Seller |
| Loan Consultant | Bank |
| Other agents | Escrow Company |
| Title Company | Appraiser |
Look at this group as a large team.
There is one common goal for everyone when a new transaction is open – that is a smooth experience from beginning to end. Nadia Colucci is an effective communicator and skilled negotiator. Many times her clients have referred to her as “the glue” that held a problematic transaction together. Unfortunately, not all transactions run smoothly due to the complexity of the banks involved and their ever changing regulations, inflexible parties, and time constraints of the escrow process. Not only is it important to have someone representing you that is experienced and knowledgeable, but someone like Nadia who can anticipate issues that arise and prepare all parties so there are no surprises. The path of communication must stay open throughout the transaction. And the key is selecting the right Realtor, like Nadia Colucci.
Get Pre Approved:
You may be tempted or advised to borrow as much money as you can. However, there is nothing worse than getting in over your head. Your lender may even say you can afford to buy the home you adore, but are you really comfortable with the monthly payments you’ll be obligated to make?
- Make sure you can afford to live comfortably in your home and are able to set money aside, especially for those unexpected home repairs while still allowing for other bills, and savings.
- Once you’ve looked at these numbers, you should be able to fully understand what you can afford to expend towards your mortgage costs every month.
- Pass this number and logic off to your Lender. They can back out of that figure and give you a purchase range for a realistic price.
- Sellers today are being very picky about a buyer’s pre-qualifications and they have every right to ensure a buyer is approved before accepting a contract and starting escrow. So you want to make sure you are well qualified before you move forward.
- It is also important to remember a few key things:
- Is the down payment within your means?
- Will you have enough cash to pay transaction costs and moving expenses?
- If the house needs major repairs, remodeling or redecorating, can you save the necessary funds within a reasonable time period?
- Did you factor in HOA and/or Mello Roos fees?
Many of these factors will affect your purchasing power and monthly payment, so it is important to take these into consideration when shopping for a home.
Nadia recommends buyers speak to their lender and Realtor simultaneously before shopping online, as many buyers do. With so many changes within the lending institutions and their parameters for qualifying buyers, it is important that buyers do their homework first!
Buyers may not want to “bother” their banker quite yet and may still want to browse the internet before going through the qualification process. However, most lenders will give you a soft qualification based on a quick conversation where you give them some accurate and basic information. This is better than doing nothing at all and takes little time to do so. Nadia has worked with many experienced lenders that have her similar work ethic and dedication. She can recommend one for you that specifically fits your criteria. Just ask!
List of Needs and Wants:
Before shopping for a home, it is important to know what is a “must have” and what is a “would like” in your ideal home.
- Start by making two lists:
- The first should include items you must have, such as, number of bedrooms, bathrooms, garage space, etc.
- The second list are your wishes, things you would like to have, such as a pool, den or media room; but that are not absolutely necessary
This will make it easier when comparing homes and prices, as well as narrowing down your search criteria. By having a better understanding of what the buyer is looking for, Nadia will be able to locate the perfect home for you.
Determine Location:
Determining the location of where you want to live involves many factors. These are a few things you may want to consider when shopping for a new home:
- Proximity to employment, schools, shopping, freeways, beaches, and parks
- Quality of schools (see our section on School Reports)
- Neighborhood and trending property values
Having an experienced Realtor who understands the areas of San Diego is key to finding the right home. Nadia Colucci is a native to San Diego and has been able to point her clients in the right direction based on their optimal lifestyle. She has been able to make recommendations of areas most buyers had not even thought to consider and – many years later – are still happy with their home and neighborhood.
Time to make the offer:
Be prepared and ready to write an offer.
When you find the right home, Nadia will help you understand the comparable sales in the area and value affiliated with that specific neighborhood. In addition, she will discuss with you any necessary repairs or improvements to the home that you may like or need to make in order for that house to fit your needs. Together, you will approach that specific home with more knowledge, write up the offer and she will walk you through the contract and negotiation process. Nadia has helped hundreds of clients achieve their dream of home ownership and she can do the same for you!
Below are some articles that you might find useful in the home buying process. Please feel free to click on one of the links below to read more.
Buyers Articles
- Advice for First-Time Buyers
- How to Negotiate with Sellers
- Types of Mortgages
- Getting the Best Mortgage Rates Online
- Surviving Escrows
Sellers
The longer a home is on the market, the less attractive the home becomes to buyers. The best home selling tricks are to price it right from the start, prepare it for sale, hire the best listing agent and attract that excited home buyer who will offer top dollar in record time. Piece of cake, right? It can be with the right agent supporting you. See why Nadia Colucci is that agent for you.
5 Tips for Sellers
No “I” in team:
In your transaction: your Realtor should be the main communicator between the buyer, seller, loan consultant, bank, other agents, escrow and title companies. Look at this group as a large team…and every team needs a good leader.
There should be one common goal for everyone when a new transaction is open – and that is a smooth experience from beginning to end. Nadia Colucci is an effective communicator and skilled negotiator. Many times her clients have referred to her as “the glue” that held a sticky transaction together.
Unfortunately, not all transactions run smoothly due to the complexity of the banks involved and their ever changing regulations, inflexible parties, and time constraints of the escrow process. Not only is it important to have someone representing you that is experienced and knowledgeable, but someone like Nadia who can anticipate issues that arise to prepare all parties so there are no surprises. The path of communication must stay open between this team and part of that is selecting the right Realtor, like Nadia.
Understanding Value:
The truth is it doesn’t really matter how much money you as a seller think your home is worth. The person whose opinion matters is the buyer who makes an offer, and the appraiser. Pricing homes is part art and part science. It involves:
- Comparing similar properties that have recently sold.
- Making adjustments for the differences among them.
- Tracking the market movements.
- Taking account of the present inventory.
- Ultimately comparing current inventory to your home.
This is all done in an attempt to come up with a range of value. This method is the same way an appraiser evaluates a home. And no two appraisals are ever exactly the same; however, they are generally close to each other.
In other words, there is no hard and fast price tag to slap on your home. It’s only an educated guess and the market will dictate the price. That is why it is important to be reasonable and flexible when pricing your home.
Nadia Colucci is very upfront and knowledgeable when it comes to selecting the comparable homes for value (commonly referred to as ‘comps’) for you to begin with. She will not waste your time or give you an unrealistic value just to have you select her as your listing agent. She will be honest in giving you a realistic value of the home and market it at a range that will bring you a qualified buyer. By understanding and knowing the market and value so well, she is able to explain this to the perspective buyers and other agents when effectively negotiating the sale of your home..
Disclosure:
Material Facts are commonly referred to as anything that would affect the buyer’s decision to purchase the home, or the price and terms the buyer is willing to offer. In other words, if you have knowledge about a defect or material fact, it should be disclosed. A lot of times, sellers have lived in the home for many years and may forget they even needed a plumber to fix a broken pipe 7 years ago! Nadia recommends keeping a file called “home repairs/fixes” to keep track of all your receipts and repairs. This will make it a lot easier when it comes time to sell.
The more you disclose the better off you will be in the long run. Don’t be afraid of disclosing too much. Protecting yourself from any legal implications in the future is key. If you are wondering whether you should mention something or not – the answer is – yes, you should!
Staging:
Home staging is about illusions. It’s how David Copperfield would sell a house. It’s beyond decorating and cleaning. It’s about perfecting the art of creating moods. Staging makes your house look bigger, brighter, cleaner, warmer, and best of all, it makes home buyers want to buy it!
Here are a few of Nadia’s recommendations to make that happen:
Make Minor Repairs:
- Re-caulk tubs, showers and sinks.
- Consider painting your walls neutral colors, especially if you have grown accustomed to purple or pink walls. (Don’t give buyers any reason to remember your home as “the house with the orange bathroom.”)
- Patch holes in walls.
- Fix doors that don’t close properly and kitchen drawers that jam or are hung incorrectly
- Replace burned-out light bulbs.
- If you’ve considered replacing a worn bedspread, why not do so now?
Make the House Sparkle:
- Wash windows inside and out.
- Rent a pressure washer and spray down sidewalks and exterior.
- Clean out cobwebs.
- Polish chrome faucets and mirrors.
- Wax floors/Clean Carpets
- Dust furniture, ceiling fan blades and light fixtures.
- Bleach dingy grout.
- Replace worn rugs.
- Hang up fresh towels.
- Bathroom towels look great fastened with ribbons and bows.
- Clean and air-out any musty smelling areas. Odors are a no-no.
Nadia Colucci has worked with a variety of staging professionals and designers. Vacant homes are the number one candidate for professional home staging, especially with a very large home. In most cases, it is easier for a buyer to visualize themselves in a home that is partially furnished and decorated.
Should you not be able to hire a staging company or need one, Nadia will come into your home to help you and make any necessary recommendations. She knows what works and has truly seen it all!
Bottom line – Less is definitely more!
Marketing your property:
Marketing homes has changed extensively over the years…and will continue to do so. Long gone are the days of throwing an ad in the newspaper and having open houses as your primary way of selling.
Today it’s crucial to have a Realtor that understands the importance of internet and social media marketing to get your house sold in the least amount of time and at the right price. Most buyers start their home search on the internet. Nadia Colucci is on the cutting edge when it comes to giving your home maximum exposure. Based on your specific home and location, Nadia will effectively market your home for sale combining methods of internet exposure and traditional media to maximize your return.
Below are some articles that you might find useful in the home selling process. Please feel free to click on one the links to read more.
- Risks of Remodeling Without a Permit
- Traversing The Pitfalls of Home Inspections
- What is a CMA and Why Do You Need One?
- The Home Sale: Securing The Deal
Buyers Articles
Advice for First-Time Buyers
- Pre-Qualification: Meet with a mortgage broker and find out how much you can afford to pay for a home.
- Pre-Approval: While knowing how much you can afford is the first step, sellers will be much more receptive to potential buyers who have been pre-approved. You’ll also avoid being disappointed when going after homes that are out of your price range. With Pre-Approval, the buyer actually applies for a mortgage and receives a commitment in writing from a lender. This way, assuming the home you’re interested in is at or under the amount you are pre-qualified for, the seller knows immediately that you are a serious buyer for that property. Costs for pre-approval are generally nominal and lenders will usually permit you to pay them when you close your loan.
- List of Needs & Wants: Make 2 lists. The first should include items you must have (i.e., the number of bedrooms you need for the size of your family, a one-story house if accessibility is a factor, etc.). The second list is your wishes, things you would like to have (pool, den, etc.) but that are not absolutely necessary. Realistically for first-time buyers, you probably will not get everything on your wish list, but it will keep you on track for what you are looking for.
- Representation by a Professional: Consider hiring your own real estate agent, one who is working for you, the buyer, not the seller.
- Focus & Organization: In a convenient location, keep handy the items that will assist you in maximizing your home search efforts. Such items may include:
- One or more detailed maps with your areas of interest highlighted.
- A file of the properties that your agent has shown to you, along with ads you have cut out from the newspaper.
- Paper and pen, for taking notes as you search.
- Instant or video camera to help refresh your memory on individual properties, especially if you are attending a series of showings.
- Location: Look at a potential property as if you are the seller. Would a prospective buyer find it attractive based on school district, crime rate, proximity to positive (shopping, parks, freeway access) and negative (abandoned properties, garbage dump, source of noise) features of the area?
- Visualize the house empty & with your decor: Are the rooms laid out to fit your needs? Is there enough light?
- Be Objective: Instead of thinking with your heart when you find a home, think with your head. Does this home really meet your needs? There are many houses on the market, so don’t make a hurried decision that you may regret later.
- Be Thorough: A few extra dollars well spent now may save you big expenses in the long run. Don’t forget such essentials as:
- Include inspection & mortgage contingencies in your written offer.
- Have the property inspected by a professional inspector.
- Request a second walk-through to take place within 24 hours of closing.
- You want to check to see that no changes have been made that were not agreed on (i.e., a nice chandelier that you assumed came with the sale having been replaced by a cheap ceiling light).
- All the above may seem rather overwhelming. That is why having a professional represent you and keep track of all the details for you is highly recommended. Please email me or call me directly to discuss any of these matters in further detail.
copyright © Agent Image 2011
How to Negotiate with Sellers
Buying a home is one of the most important purchases most people will make. In order to make the right decision the first time, potential buyers need to be prepared. Consider the following before starting negotiations:
Be prepared. Research the housing market in the target area. Once you have information about the general area, focus on the particular property and seller. Look for answers to questions such as:
- Why is the homeowner selling? (If they’re moving because they find the area undesirable, you might want to consider this issue.)
- How long has the home been on the market? (If it has been on the market for a long time, perhaps there are negative facts about the property that you need to know.)
- How much did the seller pay for the home compared to the current asking price? (If the seller paid more, find out why. Was it a general real estate trend, or did property values in that particular neighborhood go down?)
- What is the seller’s time frame for selling and moving? Does it fit within your needs?
- Are there any defects in the home or problems with the surrounding neighborhood? (For example, is the roof so old that it will likely leak during the next storm? Is there a new construction project in the area that will lead to major traffic congestion?)
As the potential buyer, you want the advantage. While you want answers to all your questions to the seller, reveal very little about your circumstances.
Do not give the seller personal information such as your income, the maximum you are able to pay for a down payment or the home, or when you want to move.
Make sure that your agent knows not to reveal any such information to the seller or his/her agent.
Also, do not let the seller see how much you want the property. If you appear desperate or overly enthusiastic, the seller then has the stronger bargaining position. When meeting with the seller or listing agent, keep your emotions in check.
Establish a Timeline. Find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating. Even if you, the buyer, are the one with the deadline for purchasing a home, don’t let yourself be rushed into making concessions or a purchase you may regret later.
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Types of Mortgages
Fortunately for buyers, there are a variety of mortgages to choose from. It is in your best interest to investigate each of them to determine which is the best for your situation. You probably won’t qualify for all of them. In fact, you may only qualify for one. But if you do qualify for more than one, you may save yourself money (and worry) in the long run if you do your homework before signing on the dotted line.
Consider a fixed rate mortgage if either of the following describes you:
- You plan on living in your new home for many years, and/or
- You are not a risk-taker and prefer the stability of knowing how much your payment will be each month.
Since most home loans are for a period of 30 years, if you want a payment you can count on for that long of a period of time, a fixed rate mortgage may be what works best for you.
Once your loan amount and interest rate are calculated and locked in, a fixed rate mortgage will guarantee that you will have the same payment over the life of the loan. Making extra payments to principal will allow you to pay your loan off sooner.
This may not always be the best choice, however. If interest rates are very high at the time you take out your loan, with a fixed rate mortgage you’ll be stuck with that high interest for the life of the loan (unless you choose to refinance).
Conversely, if interest rates are very low, you’ll come out the winner with interest rates that will stay low no matter how high interest rates go in the future.
The following are the advantages and disadvantages of the varying lengths and terms of fixed-rate mortgages:
15-Year Fixed-Rate:
- Pay off the loan in half the time of a 30-year loan.
- Equity builds up more quickly than in a 30-year loan.
- Payments are higher (which may be a problem if you lose your job or become unable to work).
20-Year Fixed-Rate:
- Pay off the loan in 2/3 the time of a 30-year loan.
- The overall interest paid is considerably less than for a 30-year loan.
30-Year Fixed-Rate:
- The most common choice, especially for first-time homebuyers, as it’s the easiest of the fixed-rate loans to qualify for.
- Monthly payments are lower than for 15-year and 20-year loans. This can prove especially helpful if you do not have a lot of “padding” between the amount you can afford to spend and the monthly payment for your desired property.
- More desirable if you plan on staying in the same home for years, since equity builds more slowly than for shorter-term loans.
- For income tax purposes, this term provides the maximum interest deduction.
Adjustable-Rate Mortgages (ARMs)
If you are more comfortable in taking a risk with your money or if interest rates are very high at the time you take out your loan, an adjustable-rate mortgage (ARM) may be the solution for you. You might also choose this type of loan if your planned ownership of the property is short-term or if you expect your income to increase to cover any potential rise in the interest rate.
Generally, the interest rate when you take out your loan will be lower than a fixed-rate mortgage. Please note that this is true initially, not necessarily long-term.
Since an ARM rate rises and falls depending on the prevailing interest rate, your mortgage payment will rise and fall accordingly. If your income is not sufficient to cover the highest possible payments, then this option is not for you. On the positive side, the lower initial payments will allow you to qualify for a larger loan than if you choose a fixed-rate. The downside is that your payments will increase if/when the rates go up.
Typically, ARM interest rates are tied to a specific financial index (such as Certificate of Deposit index, Treasury or T-Bill rate, Cost of Funds-Indexed Arms or COFi, or LIBOR [London Interbank Offered Rate]) and your payment will be based on the index your lender uses plus a margin, generally of two to three points. Get the formula used by your lender in writing and make sure you understand what it means.
Fortunately, the amount an ARM can increase is limited. There are “caps” on how much your lender can increase your rate, both for a period of one year and for the life of the loan. Plan ahead, and have your lender calculate what the maximum payment would be if your rate went to the highest amount allowed by the cap for your particular mortgage. If you are not confident you’ll be able to pay that amount on a monthly basis, perhaps you should reconsider this type of loan.
If neither the fixed-rate nor the adjustable-rate mortgage seems like the best option, perhaps the convertible ARM will be right for you. This alternative combines the initial advantage of an ARM with a fixed rate after a predetermined number of years. Obviously, this type of mortgage has more advantages when the initial interest rate is low and the future rate is not guaranteed.
Another mortgage option available to some people is a government loan, providing that you meet the qualifications for these loans.
- VA Loans: Veterans may qualify for a loan from the Veterans Administration. There is a limit on the amount you can borrow, so this
option works best for those buying a lower priced home.
FHA Loans: The Federal Housing Association offers loans to lower-income Americans. Look for the phrase “FHA approved” when looking at ads for homes.
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Getting the Best Rates for Your Mortgage
Naturally, you want to get the best deal for the least amount of money. This holds true for mortgage rates as well.
A lower interest rate means a lower monthly mortgage payment, which can save you money in the long run. Also, it is easier to qualify for a lower payment
than a higher one.
You basically have two routes to finding the best rate. The first is to do all the research on your own. The second is to use a mortgage broker.
Do-It-Yourself
With the advent of the Internet, much of this information is readily available online. Once you have educated yourself sufficiently about real estate loans, all it takes is the time and energy to sift through online resources to find the information you need.
Rates change quickly. That great rate you find today might not be there tomorrow. Once you find the rate you are looking for, submit a loan application and lock in that rate.
Some sources for interest rates on the Internet include:
Bank Rate Monitor (http://www.bankrate.com)
E-Loan (http://www.eloan.com)
When comparing loans, make sure that you’re comparing loans of the same type. For example, you find that “Loan A” for a 30-year loan has a much lower interest rate than “Loan B” (also for 30 years).
Upon further inspection, you find that “Loan A” is technically an adjustable rate mortgage. Its payment is based on a 30-year amortization, but becomes due through either payment or refinancing at the end of 5 or 7 years.
These are frequently referred to as a 5-year or 7-year fixed-rate mortgage. While both said “30-year”, they are not the same type of loan.
Ask the lender for a statement detailing all fees associated with the loan. Factors such as “points” (loan fee), interest rate and “garbage fees” (extra fees which some lenders charge) can vary greatly from one lender to another.
Mortgage Broker
If you do not have the time or experience to “do it yourself,” look for a qualified mortgage broker that can assist in finding the right mortgage for
you. Ask friends and associates who have refinanced or purchased recently if they have a broker they can recommend. You’ll want to find a broker who is
energetic, flexible and knowledgeable about finance and loans and someone who has your best interests in mind.
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You’ve Opened Escrow, Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your realtor’s advice) so that escrow and settlement will go as smooth as possible.
You will be asked for a down payment on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.
During this period of purchasing your home, you are going to need an escrow or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes on during the escrow period. This deposit check may also be held by an attorney or in the broker’s trust account. Make sure that there are sufficient funds in your account to cover this check.
The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.
The period that you are “in escrow” is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following:
With an attorney or title officer, review the title report. The title must be “clear” to ensure that you do not have legal issues regarding your ownership.
Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.
Secure homeowner’s insurance. This will probably be required before you can close the sale. Due to such requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period of time. It would be in your best interest to apply for insurance as soon as possible after the contract is signed.
Contact local utility companies to schedule to have service turned on when you close escrow.
Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a “permanently attached” chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.
You’ve made it! Once the sale has closed, you’re the proud owner of a new home. Congratulations!
copyright © Agent Image 2011
Sellers Articles
Risks of Remodeling Without a Permit
Most cities require that homeowners obtain a building permit before making modifications to their residence. Which modifications require a permit vary by city. Also, some cities are more vigilant than others in enforcing permit laws.
In order for the homeowner to receive a permit, the homeowner or his/her designee are required to file plans and pay fees to the city. In addition, the improvements are given a value. If they increase the value of the property, this may result in an increase in property taxes. Inspections are often required, and this means having to schedule and then wait for inspectors to approve the work to be done. This process can be time consuming and inconvenient in the short run. It is for this reason that some homeowners skip the permit process.
If a permit is needed and you fail to get one, the city may discover this at some time in the future and getting a permit retroactively can frequently be significantly more expensive and much more problematic than having obtained the permit before work commenced. If work is not done in accordance with city procedures or if the inspector is unable to determine if the work has been done properly, the homeowner could be required to open walls, tear up floors, so that the inspection may take place. In addition, by law, work not permitted where a permit was required must be disclosed to any prospective purchaser. This may cause the owner to discount their sale price or perform costly or time-consuming repairs before title can be transferred.
For prospective buyers of a property, save yourself the future hassle and loss of money by researching whether all work on the premises has been done according to code and with the proper permits. You may obtain these permits by going directly to Building & Safety in the municipality in which the property is located or by hiring a “permit puller” who will research the permits for you.
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Traversing the Pitfalls of Home Inspections
June and Fred Smith were diligent about getting their home ready for sale. They ordered a pre-sale termite inspection report. The report revealed that their large rear deck was dry-rot infested, so they replaced it before putting their home on the market.
The Smiths also called a reputable roofer to examine the roof and issue a report on its condition. The roofer felt that the roof was on its last legs and that it should be replaced. The Smith’s didn’t want buyers to be put off by a bad roof, so they had the roof replaced and the exterior painted before they marketed the home.
The Smith’s home was attractive, well-maintained and priced right for the market. It received multiple offers the first week it was listed for sale.
But the buyers’ inspection report indicated that the house was in serious need of drainage work. According to a drainage contractor, the job would cost in excess of $20,000. Fred Smith was particularly distraught because he’d paid to have corrective drainage work done several years ago.
First-Time Tip: If you get an alarming inspection report on a home you’re buying or selling, don’t panic. Until you see the whole picture clearly, you’re not in a position to determine whether you have a major problem to deal with or not.
What happened to the Smiths is typical of what can happen over time with older homes. The drainage work that was completed years ago was probably adequate at the time. But since then, there had been unprecedented rains in the area, which caused flooding in many basements. Drainage technology had advanced. New technology can be more expensive but often does a better job.
The Smiths considered calling in other drainage experts to see if the work could be done for less. After studying the buyers’ inspection report, the contractor’s proposal and the buyers’ offer to split the cost of the drainage work 50-50 with the sellers, the Smiths concluded that they had a fair deal.
The solution is not always this easy, especially when contractors can’t agree. Keep in mind that there is an element of subjectivity involved in the inspection process. For example, two contractors might disagree on the remedy for a dry-rotted window: one calling for repair and the other for replacement.
Recently, one roofer recommended a total roof replacement for a cost of $6,000. A second roofer disagreed. His report said that the roof should last another three to four years if the owner did $800 of maintenance work. Based on the two reports, the buyers and sellers were able to negotiate a satisfactory monetary solution to the problem for an amount that was between the two estimates.
It’s problematic when inspectors are wrong. But it happens. Inspectors are only human. Here is another example: A home inspector looked at a house and issued a report condemning the furnace, which he said needed to be replaced.
The sellers called in a heating contractor who declared that the furnace was fit and that it did not need to be replaced.
The buyers were unsure about the furnace, given the difference of opinions. The seller called in a representative from the local gas company. The buyers knew that the gas company representative would have to shut the furnace down if it was dangerous. He found nothing wrong with the furnace, and the buyers were satisfied.
In Closing: Sometimes finding the right expert to give an opinion on a suspected house problem is the answer, but it is always good to get two opinions.
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What is a CMA and Why Do You Need One?
CMA is real estate shorthand for “Comparative Market Analysis”. A CMA is a report prepared by a real estate agent providing data comparing your property to similar properties in the marketplace.
The first thing an agent will need to do to provide you with a CMA is to inspect your property. Generally, this inspection won’t be overly detailed (she or he is not going to crawl under the house to examine the foundation), nor does the house need to be totally cleaned up and ready for an open house. It should be in such a condition that the agent will be able to make an accurate assessment of its condition and worth. If you plan to make changes before selling, inform the agent at this time.
The next step is for the agent to obtain data on comparable properties. This data is usually available through MLS (Multiple Listing Service), but a qualified agent will also know of properties that are on the market or have sold without being part of the MLS. This will give the agent an idea how much your property is worth in the current market. Please note that the CMA is not an appraisal. An appraisal must be performed by a licensed appraiser.
The CMA process takes place before your home is listed for sale. This is a good assessment of what your house could potentially sell for.
CMAs are not only for prospective sellers. Buyers should consider requesting a CMA for properties they are seriously looking at to determine whether the asking price is a true reflection of the current market. Owners who are upgrading or remodeling can benefit from a CMA when it’s used to see if the intended changes will “over-improve” their property compared to others in the neighborhood.
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The Home Sale: Securing the Deal
Ready to close the deal? Maybe not.
Sometimes unforeseeable issues arise just prior to closing the sale. Hopefully, with negotiation, most of these have a workable solution. Unfortunately, this is not always the case. But don’t panic. Another buyer might still be found who is willing to accept the house as is.
Imagine that your prospective buyers are a couple with young children. They envision your unused attic as the perfect playroom for the kids but, before closing the deal, they request an inspection to see if it’s safe and also if they will be able to install a skylight to provide natural light to the new space.
This inspection reveals that under the shingles that are in good condition is a roof that will only last another year or two. The prospective buyers immediately balk, not wanting to incur the time and cost of replacing the roof. Their plans were to move in and only have to spend time and money renovating the attic. The additional cost of the new roof, they say, is just too much.
At this point, you sit down with the prospective buyers and calmly discuss the situation and how it can be solved to the benefit of all. First, you agree to get another professional opinion on what really needs to be done. Inspectors are only human, and are not infallible. Once the extent of the damage is agreed upon, you can jointly decide what to do about it. While the buyers hadn’t planned on that expense, you show them that instead of a limited roof life that they would get with most existing homes, they’ll have a new worry-free roof that won’t cost them in repairs for the next decade or so. Since the roof wasn’t in as good shape as you had thought, you agree to lower the purchase price to help offset the cost of the new roof.
By negotiating calmly and looking at all possibilities, what could have been a “deal breaker” can be turned into a win-win situation for both the buying and selling parties. In other cases, the most workable agreement for both parties might be for the deal to be called off. The seller can always find another buyer and the buyer can always find another home.
To protect yourself against last minute “buyer’s remorse,” make sure the purchase contract anticipates and closes as many loopholes as possible after all known defects have been fully disclosed.
copyright © Agent Image 2011
