Thursday, October 31, 2013

Q: I can’t believe that the buyer of our house is asking us to replace a cracked window and fix a leak in the kitchen sink.

We included that in our seller’s disclosure so they already knew about it when they made the offer to buy the house. What’s the deal?

A: Disclosing defects by filling in the seller’s disclosure (form 17) is critical. You must disclose anything you know about the property by filling out that form. However, it has nothing to do with the inspection done by the purchaser at their expense. They can ask for anything to be fixed that is found by that inspection. The fact that you disclosed it doesn’t mean they can’t ask that it be repaired or replaced.

Most sellers try to get their home ready to sell but often miss things they have grown accustomed to and no longer notice. Things like a broken or cracked window or a plumbing leak can lead to much more serious damage if left unattended. These are not very expensive repairs but will make a difference in cost of heat, appearance of the home and, in the case of a leak, potential for major problems with water damage to the floor.

Also keep in mind that you’ve lived in the home for a long time. The buyers are just getting to know the house and property. They will see things differently from you because this is all new to them. It doesn’t mean there needs to be any hostility between sellers and buyers or misunderstanding. You’re lucky if this is all they find that needs repair.

Most of us leave home maintenance chores for last minute if at all. Selling a home suddenly brings these unfinished projects or deferred maintenance issues into the bright lights of an inspector’s flashlight. The best thing to do, in my opinion, is to have an inspection of your home before you put it on the market. You’ll see what a potential buyer will find and can make repairs before you list the property.

Tuesday, October 22, 2013

Q: My folks want to buy a rental property on Vashon and you took them out looking at what was available.

I was surprised to hear that you discouraged them from buying a couple of places I thought were really a good buy. Why was that?

A: Buying investment property is very different than buying a home you intend to live in.  You have to think like a renter.  Our company did property management here on the island for many years.  We no longer do that but it was certainly an educational experience for me.
Generally, you want to have a rental that fits the requirements of the largest number of people so that you have a good number of potential tenants to chose from and have very little turnover.  You are losing money every time the place sits empty.

 In my experience most folks are looking for a three bedroom, two bath home.  That fits a variety of family sizes and is usually in the highest demand.  A small, two bedroom, one bath home will work for a single person or even a couple who don’t mind a tight fit,  but it leaves out larger families or the many people who use a bedroom as an home office. 

  You’re also better off with a home that’s not too isolated.  Many long term renters use the bus service here or walk to work.  That means you want a place closer to town and/or close the bus line.  The math also matters. If your parents bought a small, two bedroom home they might get an average of $900 per month.  If they bought a three bedroom, two bath home, they would likely get $1,200 to $1,800 or more depending on the condition of the home. 
  There are houses here that rent for $2,000 a month or much more, but those often attract higher income tenants who are just renting until they find a home they want to buy.  In that case, you  have several months of lost rent between tenants and that wipes out the value of the higher rent.

Monday, October 07, 2013

Q: My real estate broker is really hassling me to get to the escrow office and sign my closing papers.

The house doesn’t even close until next week. What’s the rush? I think he’s being pushy and I wanted your opinion.

A: Your broker is not pushing you. The closing date is the date upon which the transaction is recorded at the County courthouse. In order for that to happen the parties to the transaction, the sellers and buyers, have to sign their documents several days ahead of that closing date. Let me explain how the scenario usually goes in a typical sale.

The buyer’s lender plays the major role in the timing of everything. That’s really important to understand. The escrow company can’t prepare closing documents until they get the final loan package from the lender. That means the buyer must be very responsive to whatever the lender asks for. Waiting a few days until you can get around to sending them your latest pay stub, for instance, can put a halt to everything and delay closing.

Once the escrow company has the final loan package from the lender, they prepare all of the closing documents. You sign those documents and then the whole package has to go back to the lender for final review. That can take a couple of days. That’s why signing earlier is important. Any delay can shut things down.

I recommend that a buyer be fully preapproved for their loan before they even start looking to buy. That saves a lot of time once you make an offer. Plus, a preapproval letter is generally expected with any offer. Next, once you have an accepted offer, get the documentation requested to the lender as soon as possible. Even if it seems like they just asked for and received those same documents a couple of weeks ago, send them again anyway. I’m not kidding about that! It happens often. The best case is that the buyers and sellers are able to sign everything at the escrow office three days or so before the closing date.

Wednesday, October 02, 2013

Q: We’ve been through a couple of sales already and are so disappointed that there were so many problems with the houses.

The inspector found all kinds of issues. Is there any hope of finding a house that’s really in good shape?

A:  Keep in mind that no one goes under their house. A beautifully remodeled home can be full of wood destroying insects slowly eating away the structure of the home. They can also have rats in the attic (common here) and small leaks that are not apparent but have slowly rotted out the kitchen floor. The smartest sellers have a pre-inspection before they put a house on the market and then fix the things that are problems. That’s all too rare.

Deferred maintenance in all of our homes is also common. The back porch stairs that you walk down every day could have rot at the bottom and you wouldn’t notice. The light switches could all have reverse polarity (common) and you’d never know it. The water heater could have been installed improperly and you wouldn’t have a clue. The bottom line is that there are no "perfect’ houses. Even brand new homes have issues that have to be fixed.

You will never buy a home if you want to wait for the perfect home. Your best bet is to have your broker negotiate repairs that actually are health or safety issues, and then move in and fix the small things over time yourself. I can’t tell you how many times I’ve sold homes that I sold years before and found the same problems that had been on the inspection then. We live in our homes. They are not museum objects. Some wear and tear is expected.

For sellers, I suggest you get an inspection or at least get yourself under the house and see what’s there. Rotted beams, wood destroying organisms, rats, debris and junk all are common. Fix it now, before you put that for sale sign up. You’ll make more money on your house and it will sell faster. Get real folks, nothing is perfect.