Wednesday, September 24, 2014

Q: We’re grateful that you talked us out of buying that house we were intending to make an offer on.

We met the people who did buy it and they’ve found all sorts of things wrong with it. A lot of what they’ve discovered wasn’t obvious and their inspector wouldn’t have been able to see it. Now we’re a little nervous about buying anything. There was some sort of disclosure from the seller but it didn’t mention the problems that they’ve found. How can we protect ourselves from having this happen to us?
 
A: Buyers rely on home inspections to find serious defects in the home. Unfortunately there can be things that have been covered up or problems beyond the scope of the inspection. The inspection contingency allows for additional time to have other experts examine the house. It’s always a good idea to take that time if your inspector recommends something be checked by a specific expert. It does cost more money but it could save you serious consequences.  On a recent inspection I attended, the inspector thought he saw something wrong with the electrical system. However, since he isn’t an electrician, he recommended we seek the option of an electrical contractor. The good news is that the electrician didn’t find anything wrong and explained to my clients why it could have looked like a problem. That gave them (and me) some real peace of mind. There’s a requirement in this state that a seller, with a few exceptions, must fill out a Form 17, a seller’s disclosure. But don’t rely on these too much. Many sellers don’t really know that much about their home and property. Things that might be a problem for a new buyer might not be anything the sellers notice any longer. That could include leaks, rotting wood, or even exceptional noise from a nearby factory.  No house is perfect. We use the term "normal wear and tear" to describe the common issues that can come up in any house. What you need to look for are serious defects that will cost a lot to fix.

 

Monday, September 08, 2014

Q: We really appreciate you coming over to my dad’s house and telling us what you think it's worth.

We’re still dealing with his death but we do have to sell the house. I especially appreciated all the hints you gave us on getting the house ready to go on the market, but here’s my problem. My sister wants to just put it on the market “as is” and not worry about doing anything to fix it up. She thinks it’s already enough work just to get rid of all Dad’s stuff. What can I tell her to convince her to just spend a little more time to clean up the place?

A: The most important message is that she will be leaving money on the table. The difference between what you have now and what you could have with just a little effort can be considerable. When a buyer sees a house that needs cleaning, has old smelly carpet from pet damage, has exposed wood on the siding, etc. they assume the whole house is in need of major repair. They will offer even less than the asking price because they assume that they will have to pay thousands of dollars to make it livable.
You could be looking at a discount of 30% or even more from the price you could get if it were cleaned up. At the very least I would remove the carpets, clean the house until it shines, and touch up the outside paint. It’s obviously an old house with a great deal of deferred maintenance, but you want potential buyers to see it as a diamond in the rough, not a hopeless fixer that they will have to pour money into for many years.
I think this is an important message to all adult children of elderly parents. If you will be the one selling your parents' home, it's money well spent to keep it maintained. Not only will this ensure a better inheritance for your family, it will add to the comfort of your parents while they still live there.