What describes a great house? It looks good and makes you feel good when you're inside it. It is energy efficient and comfortable. And it facilitates frequent casual interactions among family members.
This last qualification may seem to be such a statement of the obvious it's not worth making. But as our houses have become bigger with more rooms in the shared public area and more bedrooms and bathrooms in the private area, family life has changed. The daily familial interactions that characterized American family life in a smaller house in which everyone was within talking distance of each other are no longer the rule.
Why does this matter? Frequent interactions are the essence of family life. They make us feel good and help maintain household cohesion. Even more important, through the thousands of interactions that we have with our children from infancy to adulthood, they learn a crucial life skill—how to get along with other people.
When children are young, family members will have plenty of contact with one another, whatever kind of house they live in. Very young children require constant supervision. Somewhat older children can play by themselves, but most still want to hang around their parents or caretakers. As the kids approach adolescence, however, they begin to want more independence and most will fan out into the rest of the house. Once those hormones kick in, they can become famously uncommunicative, often reclusive, and many prefer to stay in their own rooms. You can't force them to talk or to spend more time with you.
Points of contact. But the odds are in your favor if you have built "points of contact" into the design of your house so casual interaction and the occasional longer conversation are embedded in the fabric of your family life. When such interactions are a part of the daily routine, they are more easily carried over into your children's teenaged years when you are eager to stay in their loop and they give every indication of wanting to keep you out of it.
For example, instead of placing the stairs in an entry foyer that no one uses—nearly universal in two-story houses—move the stairs to a place where everyone congregates such as the kitchen. Every time your teens pass through you have a chance to catch their ear.
Locating all the bedrooms on the same floor provides another opportunity for casual conversation between parents and teens. The parents, with an eye to their own aging and perhaps a desire for peace and quiet and more privacy, may want their bedroom on the first floor. But if you do this, you may be regarded as an interloper every time you climb the stairs and approach your teenagers' bedroom area. If they spend most of their time there, you will be out of the loop.
The space that connects the bedrooms can also be a point of contact. Instead of a three-foot wide hall that funnels the household in and out of bedrooms, create a larger area onto which all the bedrooms open. When the kids are young, it may become a favorite play area because it's in the middle of everything. When they're older, it can become a spot for endless extended telephone conversations or reading and provide yet another opportunity for a casual encounter between a parent and a teen.
Even the use of a bedroom as a home office will increase familial interactions. If you choose the bedroom closest to the kids' bathroom and leave your door open, you'll have an opportunity to talk every time your teens pass by, as I serendipitously discovered in my own house.
Limiting the number of rooms in the public part of the house increases the likelihood that the family members will congregate in the same spot. If you have only one television and you put it where you want the household to come together, the likelihood of the family actually congregating there increases exponentially.
Some families find the television intrusive and purposely want to keep it out of a family room area. For such households, a separate television room adjacent to the kitchen/family room puts the family in the same part of the house, if not in the same room.
Tension busters. While families need to spend time together, each member also needs to a place for solitude, where he or she can shut the door and tune out the hubbub. The private sanctuary can be an actual room or a designated spot—"my corner of the bedroom," "my closet" or even "my space under the bed." The most important aspect is that it be recognized and respected by the other family members.
In the public area where the household congregates, clutter will inevitably accumulate, but it can be kept to a tolerable level if there is adequate storage. For example, some combination of a closet, base cabinets and book cases in the family room can accommodate all the different items your kids will bring in as they pass through various stages from blocks to Barbies to board games, books, CDs and blankets and pillows for watching television in maximum comfort.
Comings and goings. Every house should have a place for the sendoff and the return. If the architect is inspired, this area might be uplifting and energizing for family members as they sally forth for work or school at the beginning of the day, then at the end of the day, change tacks to become a nurturing and embracing space through which everyone passes as they reenter the refuge of home.
But at the very least, the early-bird launching pad that becomes the evening landing pad should have plenty of storage for seasonal outerwear, sports equipment and a place for the incoming mail. More often than not, however, new houses have a sizeable formal front hall that lacks adequate storage and is in the wrong place for daily use. Most families routinely enter from their garage, often passing through a laundry room and kitchen before they finally reach the front hall. In many cases, their path through the house is marked by a trail of coats, backpacks and mail. To help alleviate this situation, when budget and space allow, many architects and home builders have added a second foyer at the garage entry.
A simpler solution would be to merge the two entries into one so that whether you enter through the garage or the front door, you end up in the same spot, which should have sufficient storage to hold all the outerwear, sports equipment and whatever else a family routinely brings into the house and needs to stash in the entry. A bench would be handy and a cleverly concealed recycling bin for the unwanted junk mail would be a big hit. Should visitors see an errant boot or glove or two, it will convey the message that real people live there.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=158
Monday, June 18, 2007
House Inspectors: Choosing The Right One...
A qualified house inspector is the surest way to discover a house's not-so-obvious problems. Most professional inspectors are from some type of construction background, such as engineering, architecture or contracting. Their responsibility is to crawl beneath the floors, squeeze through the attic and generally comb the house's structure and mechanical systems for shortcomings. They give the buyer a complete report; with this, the buyer can decide whether or not the house is a good deal, or at least put together a "punch list" of items that must be fixed (it isn't unusual for this report to contain about 50 items). The fee for this service generally runs from about $300 to $500 and up.
You're usually welcome to accompany the inspector during the inspection; doing so lets you discuss specifics and ask questions about the severity of some concerns. On the other hand, you probably won't want to crawl under the floors with him or her, so it's important to get one you can trust.
You can find house inspectors through the Yellow Pages or by contacting the American Society of Home Inspectors (ASHI), at (85 West Algonquin Rd., Arlington Heights, IL 60005-- phone 847-290-6012). Nationally, 1400 inspectors are members of this trade organization, which requires a minimum level of experience for membership. You can also go to InspectAmerica Home Inspections for more information about home inspectors or to ImproveNet for a searchable database of contractors.
Real estate brokers regularly refer house inspectors to clients, but it's best to ask a non-partial broker for references. Often the best sources for good house inspectors are friends who've recently bought houses and believe that their inspectors were honest, thorough, and highly professional.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=228
You're usually welcome to accompany the inspector during the inspection; doing so lets you discuss specifics and ask questions about the severity of some concerns. On the other hand, you probably won't want to crawl under the floors with him or her, so it's important to get one you can trust.
You can find house inspectors through the Yellow Pages or by contacting the American Society of Home Inspectors (ASHI), at (85 West Algonquin Rd., Arlington Heights, IL 60005-- phone 847-290-6012). Nationally, 1400 inspectors are members of this trade organization, which requires a minimum level of experience for membership. You can also go to InspectAmerica Home Inspections for more information about home inspectors or to ImproveNet for a searchable database of contractors.
Real estate brokers regularly refer house inspectors to clients, but it's best to ask a non-partial broker for references. Often the best sources for good house inspectors are friends who've recently bought houses and believe that their inspectors were honest, thorough, and highly professional.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=228
How can I improve my real estate purchase offer?
Few failed endeavors can match the frustration of losing out in a multiple-offer competition. But, almost as disappointing is making the only offer—and a strong one—and having the seller outright reject it. Here are a few tips on how to sweeten your offer without jeopardizing your financial security.
A strategy that has been effective for some successful home buyers is to offer to pick up the cost of a fee that is normally paid for by the seller. For example, in some areas sellers pay for title insurance. This can amount to a few thousand dollars on an expensive property. If you pay for this instead of the seller, it increases the seller's net proceeds.
Some communities, such as Oakland, Piedmont and Berkeley in California, have hefty transfer taxes. The Berkeley tax is 1.5 percent of the purchase price, which is customarily shared 50-50 by the buyer and seller. Recently, a Berkeley home buyer who was bidding in competition offered to pay for the entire tax. This increased the seller's net by $9,000. The seller chose this offer over the others.
Whether in competition or not, it's always a good idea to find out as much as possible about the seller's situation before you make an offer. Many sellers, particularly those who haven't lined up a new home, would like the opportunity to rent their home back from the buyer for a while after closing. If you're renting, or haven't sold your current home yet, you can gain favor with the seller by offering a rent back to accommodate the seller's needs.
Under normal circumstances, a seller who rents his home back after closing pays rent to the buyer in an amount that covers the buyer's carrying costs-principal, interest, taxes and insurance (PITI), prorated on a per diem basis. But some buyers in a multiple offer situation offer free rent for a time to make their offer even more enticing to the seller. This effectively puts more money in the seller's pocket.
It's never a good idea to waive contingencies if the condition covered by the contingency hasn't been satisfied. For example, it would be risky to buy a home without having it thoroughly inspected by professionals. But, when there are several buyers competing, you may find that your competitors are making offers that don't include an inspection contingency. Although it's also risky for a seller to accept an offer that does not include an inspection contingency, most sellers find a contingency-free offer hard to resist.
HOUSE HUNTING TIP: If you're inclined to waive contingencies, make sure you do your due diligence research first. Ask the seller for permission to complete inspections before you make an offer. Or, it the seller has obtained a presale home inspection from a reputable home inspector, make sure you read it carefully and fully understand it before you do make an offer.
Call the home inspector to discuss any questions you might have. Better yet, schedule an appointment with the inspector to walk through the property with you to explain the report and answer your questions. But, be sure to ask for the seller's permission first.
Home inspections often include recommendations for further inspections. There may not be time to collect all the information you'd like to have before making an offer. In this case, it's best to imagine the worst-case scenario. If the home inspection indicates that the roof is worn, assume you'll need to replace it. Call a roofer for a ballpark estimate.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=168
A strategy that has been effective for some successful home buyers is to offer to pick up the cost of a fee that is normally paid for by the seller. For example, in some areas sellers pay for title insurance. This can amount to a few thousand dollars on an expensive property. If you pay for this instead of the seller, it increases the seller's net proceeds.
Some communities, such as Oakland, Piedmont and Berkeley in California, have hefty transfer taxes. The Berkeley tax is 1.5 percent of the purchase price, which is customarily shared 50-50 by the buyer and seller. Recently, a Berkeley home buyer who was bidding in competition offered to pay for the entire tax. This increased the seller's net by $9,000. The seller chose this offer over the others.
Whether in competition or not, it's always a good idea to find out as much as possible about the seller's situation before you make an offer. Many sellers, particularly those who haven't lined up a new home, would like the opportunity to rent their home back from the buyer for a while after closing. If you're renting, or haven't sold your current home yet, you can gain favor with the seller by offering a rent back to accommodate the seller's needs.
Under normal circumstances, a seller who rents his home back after closing pays rent to the buyer in an amount that covers the buyer's carrying costs-principal, interest, taxes and insurance (PITI), prorated on a per diem basis. But some buyers in a multiple offer situation offer free rent for a time to make their offer even more enticing to the seller. This effectively puts more money in the seller's pocket.
It's never a good idea to waive contingencies if the condition covered by the contingency hasn't been satisfied. For example, it would be risky to buy a home without having it thoroughly inspected by professionals. But, when there are several buyers competing, you may find that your competitors are making offers that don't include an inspection contingency. Although it's also risky for a seller to accept an offer that does not include an inspection contingency, most sellers find a contingency-free offer hard to resist.
HOUSE HUNTING TIP: If you're inclined to waive contingencies, make sure you do your due diligence research first. Ask the seller for permission to complete inspections before you make an offer. Or, it the seller has obtained a presale home inspection from a reputable home inspector, make sure you read it carefully and fully understand it before you do make an offer.
Call the home inspector to discuss any questions you might have. Better yet, schedule an appointment with the inspector to walk through the property with you to explain the report and answer your questions. But, be sure to ask for the seller's permission first.
Home inspections often include recommendations for further inspections. There may not be time to collect all the information you'd like to have before making an offer. In this case, it's best to imagine the worst-case scenario. If the home inspection indicates that the roof is worn, assume you'll need to replace it. Call a roofer for a ballpark estimate.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=168
How do I prepare to close my home purchase?
Finding a home to buy and negotiating the purchase contract are the toughest parts of the home buying process for most people. But, if you don't plan ahead, and carefully monitor your home purchases transaction, you could find trouble ahead.
The first thing you should do after your offer is accepted is review the contract and make a list of important dates. These will include such things as the contract contingency deadlines and the actual closing date. If you and the seller countered back and forth before arriving at a mutually acceptable contract, these dates may have changed from the original draft of the contract.
Most home purchase contracts include an inspection contingency. It's wise to complete a home inspection as soon as you can. This way you'll have time to order further inspections if necessary. When the real estate market is active, you may have difficulty lining up an inspector quickly. It helps if you're working with a real estate agent who has established relationships with local inspectors.
Homeowner's insurance can be difficult to obtain in some areas, so you should start working on this right away. This used to be one of the last items on a buyer's closing checklist. But, these days, it should be at the top of the list. In some, like California and Texas, some big insurance companies are not currently writing new homeowner's policies. But, a mortgage lender will require that you have a homeowner's policy before they will commit the money to close the sale.
Insurance companies scrutinize both the buyer and the property. The buyer must have good credit. The insurer would also like the buyer to be someone who does not have a history of submitting a lot of insurance claims. Ideally, the property should have had no insurance claims made against it in the last five years. Insurers are particularly sensitive to claims that have been made for water damage.
It's recommended that you investigate the insurability of the property during your inspection contingency time frame. This way, if you find out that it's going to cost more than you expected to insure the property because of the seller's past insurance claims, you will have the opportunity to try to negotiate some form of compensation from the seller. Even if the seller won't give a dime, at least you have full knowledge of what the purchase will cost before you proceed.
When a closing is delayed, it usually has something to do with the buyer's mortgage. In order to ensure that this doesn't happen to you, be diligent about providing your lender with all the documentation needed to give you final loan approval. A lender won't prepare the loan documents for you to sign until all the lender's conditions for approval have been satisfied.
As the closing date approaches, you'll need to arrange for the transfer of any remaining funds that are necessary to close the sale. Many buyers wire closing funds to the closing agent. This may be an escrow office or an attorney depending on where you're buying.
It's a good idea to schedule a final walk-through of the property to make sure that it is in substantially the same condition as it was when the seller accepted your offer. If possible, ask the seller to do an informal walk-through with you to show you all the idiosyncrasies of the house. It might take your to discover these on your own.
THE CLOSING: Ask the closing agent to provide you with a copy of all the documents that you will need to sign in advance of your signing appointment. This may not be possible due to time constraints. But, if you can review the documents in advance, the signing will go more smoothly.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=176
The first thing you should do after your offer is accepted is review the contract and make a list of important dates. These will include such things as the contract contingency deadlines and the actual closing date. If you and the seller countered back and forth before arriving at a mutually acceptable contract, these dates may have changed from the original draft of the contract.
Most home purchase contracts include an inspection contingency. It's wise to complete a home inspection as soon as you can. This way you'll have time to order further inspections if necessary. When the real estate market is active, you may have difficulty lining up an inspector quickly. It helps if you're working with a real estate agent who has established relationships with local inspectors.
Homeowner's insurance can be difficult to obtain in some areas, so you should start working on this right away. This used to be one of the last items on a buyer's closing checklist. But, these days, it should be at the top of the list. In some, like California and Texas, some big insurance companies are not currently writing new homeowner's policies. But, a mortgage lender will require that you have a homeowner's policy before they will commit the money to close the sale.
Insurance companies scrutinize both the buyer and the property. The buyer must have good credit. The insurer would also like the buyer to be someone who does not have a history of submitting a lot of insurance claims. Ideally, the property should have had no insurance claims made against it in the last five years. Insurers are particularly sensitive to claims that have been made for water damage.
It's recommended that you investigate the insurability of the property during your inspection contingency time frame. This way, if you find out that it's going to cost more than you expected to insure the property because of the seller's past insurance claims, you will have the opportunity to try to negotiate some form of compensation from the seller. Even if the seller won't give a dime, at least you have full knowledge of what the purchase will cost before you proceed.
When a closing is delayed, it usually has something to do with the buyer's mortgage. In order to ensure that this doesn't happen to you, be diligent about providing your lender with all the documentation needed to give you final loan approval. A lender won't prepare the loan documents for you to sign until all the lender's conditions for approval have been satisfied.
As the closing date approaches, you'll need to arrange for the transfer of any remaining funds that are necessary to close the sale. Many buyers wire closing funds to the closing agent. This may be an escrow office or an attorney depending on where you're buying.
It's a good idea to schedule a final walk-through of the property to make sure that it is in substantially the same condition as it was when the seller accepted your offer. If possible, ask the seller to do an informal walk-through with you to show you all the idiosyncrasies of the house. It might take your to discover these on your own.
THE CLOSING: Ask the closing agent to provide you with a copy of all the documents that you will need to sign in advance of your signing appointment. This may not be possible due to time constraints. But, if you can review the documents in advance, the signing will go more smoothly.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=176
How much work should you do before selling?
Recently a couple that owned a home in Berkeley, Calif., decided to move to neighboring Piedmont. They started their search by visiting Sunday open houses. It was quite apparent to them which listings had been prepared for sale and which ones had not. They were invariably drawn to listings that were charming, clean, and uncluttered.
Looking at open houses helped this couple realize what they needed to do to their Berkeley home to ensure that it would attract buyers. By the time their home went on the market, it was charming, clean and uncluttered. It sold quickly and the sellers realized a handsome profit.
As a seller, you have several options when considering how much work to do before selling. One option is to do relatively little and sell the property in it's "as is" condition. Another is to invest time, effort and money into fixing the property up before you sell. A third option is to do a combination of the first two approaches.
In making your decision, keep in mind that in general buyers pay more for homes that are in move-in condition. Most buyers would prefer to buy a turnkey listing that doesn't need a lot of work. A home in great condition will usually attract more buyers than will one that doesn't show well and needs a lot of work.
But there is a market for fixer-upper properties, although it is more limited. Fixer buyers will pay more for fixers that have a big upside potential. Fixer listings sell at a discount when compared to listings that are in move-in condition.
HOME SELLER TIP: A higher sale price is not the only benefit to be derived from fixing up your home for sale. If you're doing the fix-up work, rather than the buyer, you have control over the improvements. You can shop the repair work for the best price. This can save you as much as 15 to 30 percent. Just make sure you use licensed contractors who will abide by city building permit requirements.
Often the decision of how much fix-up for sale work to do will depend on how much time you have before marketing your home. The best approach is to plan ahead so that you have as much time as possible. It can take months to get a house ready to sell, depending on what kind of work needs to be done.
No matter what kind of time frame you're working with, consult with your real estate agent before embarking on major fix-up work. Plan to walk through your home with your agent. Make a list of all the items that should be done before you sell. Ask your agent which reports should be ordered and order them as soon as possible.
The next step is to get bids from contractors and trades people for the recommended work. Also find out about availability and how long it will take to complete the work. With this information you can fine-tune your fix-up for sale work.
Some projects may be too costly and some may not be able to be completed within your time frame. Your agent can help you prioritize if necessary. Other projects, like de-cluttering and cleaning cost practically nothing except your time and effort.
THE CLOSING: Even if you decide to sell "as is," it usually helps the sale to present a property that is clean and free of debris. Buyers need to see what you have to sell in an uncluttered state in order to make a decision to buy.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=60
Looking at open houses helped this couple realize what they needed to do to their Berkeley home to ensure that it would attract buyers. By the time their home went on the market, it was charming, clean and uncluttered. It sold quickly and the sellers realized a handsome profit.
As a seller, you have several options when considering how much work to do before selling. One option is to do relatively little and sell the property in it's "as is" condition. Another is to invest time, effort and money into fixing the property up before you sell. A third option is to do a combination of the first two approaches.
In making your decision, keep in mind that in general buyers pay more for homes that are in move-in condition. Most buyers would prefer to buy a turnkey listing that doesn't need a lot of work. A home in great condition will usually attract more buyers than will one that doesn't show well and needs a lot of work.
But there is a market for fixer-upper properties, although it is more limited. Fixer buyers will pay more for fixers that have a big upside potential. Fixer listings sell at a discount when compared to listings that are in move-in condition.
HOME SELLER TIP: A higher sale price is not the only benefit to be derived from fixing up your home for sale. If you're doing the fix-up work, rather than the buyer, you have control over the improvements. You can shop the repair work for the best price. This can save you as much as 15 to 30 percent. Just make sure you use licensed contractors who will abide by city building permit requirements.
Often the decision of how much fix-up for sale work to do will depend on how much time you have before marketing your home. The best approach is to plan ahead so that you have as much time as possible. It can take months to get a house ready to sell, depending on what kind of work needs to be done.
No matter what kind of time frame you're working with, consult with your real estate agent before embarking on major fix-up work. Plan to walk through your home with your agent. Make a list of all the items that should be done before you sell. Ask your agent which reports should be ordered and order them as soon as possible.
The next step is to get bids from contractors and trades people for the recommended work. Also find out about availability and how long it will take to complete the work. With this information you can fine-tune your fix-up for sale work.
Some projects may be too costly and some may not be able to be completed within your time frame. Your agent can help you prioritize if necessary. Other projects, like de-cluttering and cleaning cost practically nothing except your time and effort.
THE CLOSING: Even if you decide to sell "as is," it usually helps the sale to present a property that is clean and free of debris. Buyers need to see what you have to sell in an uncluttered state in order to make a decision to buy.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=60
How to avoid buying bad real estate
Ask any experienced residential real estate attorney about his or her most difficult case. The answer will probably involve a "bad house." While not exactly a legal term, a bad house is one where the buyer alleges the seller knew about a serious structural defect, but failed to disclose it to the buyer before purchase.
Proving the seller knew of the undisclosed defect, which the buyer usually discovers shortly after the purchase, can be very difficult. Since it's human nature to look for someone to blame, a home buyer usually looks first to their seller, then to the realty agent, and finally to the professional inspector if one was involved.
But buying a truly bad house can usually be avoided by following the correct steps. Even brand-new houses have their defects. A local building inspector's approval is no guarantee. However, whether a new or resale house is involved, home buyers can minimize their chances of making a serious mistake.
HOME SELLER DISCLOSURES ARE NOT GUARANTEED ACCURATE. Many states now require home sellers to provide written disclosures of known defects. If the seller lied and failed to disclose a defect, which the buyer can prove the seller knew about, the seller is liable to the buyer for damages.
Incidentally, the easiest way to prove what the seller knew is usually to ask the neighbors. They often know as much about a neighboring house as the seller knew.
For example, shortly after I bought my current home, one of my neighbors came over to get acquainted. After a few pleasantries, he said, "I suppose the sellers told you about when that hill behind your house slid. There must have been at least three feet of mud against the house."
When I replied that the sellers hadn't said a word about the hill slide against my house, he quickly added something about how all the new drainage toward the street probably took care of the problem.
That was 26 years ago. Every time there's a heavy rain, I look at the steep hill behind my house and wonder whether it will slide again. Perhaps it's a good thing the seller didn't disclose the slide, which was apparently corrected properly, because otherwise I might not have purchased my otherwise very desirable home.
HOME BUYER'S FIRST DEFENSE AGAINST BUYING BAD HOUSE
Today's smartest home sellers, before putting their homes on the market for sale, obtain professional home inspection reports. If any serious defects are revealed, sellers should have them corrected so they don't become detriments to a successful home sale.
The best realty agents recommend home sellers also have customary or required inspections completed before marketing the home, such as for termites, energy efficiency, well-water quality, septic system, radon, and building code compliance. Savvy home sellers then have any defects corrected to avoid later problems.
However, the home buyer's first line of defense against buying a bad house is to hire his or her own professional home inspector in addition to the required or customary specialized inspections. To avoid wasting money, the buyer's professional inspection should be completed after the seller accepts the buyer's purchase offer.
Before hiring a professional home inspector, buyers should check the inspector's credentials. Be wary of an inspector recommended by the realty agent. The inspector might be known as "easy" because realty agents don't want to recommend a tough "deal killer" inspector.
The cost of a professional home inspection should be around $300. That's cheap because a typical inspection requires at least two hours, plus time to write the report. Smart home buyers and their realty agents accompany their professional inspectors to discuss any problems discovered.
Although I've used this example many times, it's worth repeating. Several years ago, I looked at a run-down house that had a bad fireplace crack. Fearing the entire fireplace needed expensive replacement, I made my purchase offer contingent on a satisfactory professional inspection of the entire house. When I accompanied my inspector, I asked him to check the chimney especially close. After inspecting it completely, he reported the chimney was fine and the crack could be repaired with special fireplace mortar cement for about $150.
Later, I learned many prospective buyers rejected that house because of the ugly fireplace crack. Fortunately, I made my purchase offer contingent on a satisfactory professional inspector's report, as smart home buyers should always do. If I had disapproved the report, I would have been entitled to refund of my good-faith earnest money deposit.
Incidentally, hiring a professional inspector is also a great way to avoid buying a "sick house." Don't hesitate to ask your professional inspector about moisture and mold, radon, asbestos, lead-based paint, formaldehyde, carbon monoxide and other negative influences that concern many home buyers.
HOW TO HANDLE "AS IS" HOME SALE
Recently I had the pleasure of visiting Sarasota and Tampa, Fla., where I observed many modestly priced fix-up homes with for-sale signs. As these are my favorite type of profitable home purchases, I was drooling at the profit opportunities.
Although I didn't have time to investigate, when a run-down home is offered for sale "as is" that means it is offered in its present condition and the seller won't pay for any repairs. However, in most states, sellers must disclose in writing the known defects of as is homes. Selling a home as is is not a way to avoid defect disclosures.
However, to avoid buying a bad house, prospective buyers of as is homes should condition their purchase offers on a satisfactory professional inspection report to be obtained by the buyer after the seller accepts the purchase offer.
IF BUYER DOESN'T ASK, SELLER USUALLY DOESN'T HAVE TO TELL
Except for statutory defect disclosure requirements, which vary by state law, if a buyer doesn't ask, the seller usually doesn't have to disclose. It's up to the home buyer to ask about special concerns.
For example, if the roof leaked, but the seller had a new roof installed a year ago and it hasn't leaked since then, the seller isn't required to disclose the roof previously leaked. However, if the seller knows there is toxic mold in the attic from the leak, the mold problem should be disclosed.
But some problems are of special concern to just a few buyers. Death on the premises is one of these potential problems that bother some buyers but not others.
To illustrate, a few years ago, a San Francisco real estate broker was sued by his home buyer for failing to disclose there had been a suicide in the house. The broker knew about the suicide, but didn't disclose it because the event had nothing to do with the house's structural condition or desirability. However, the buyer came from a country where suicide on a property is considered a bad omen. After learning about the suicide, the buyer sued the realty broker. The jury found the broker had no liability because the buyer didn't ask if there had been a recent death on the property.
CONCLUSION. The best way to avoid buying a "bad house" is for the buyer to ask lots of questions and make their purchase offer contingent on a satisfactory professional home inspection. Buyers should strive to learn everything possible about the home before purchase.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=161
Proving the seller knew of the undisclosed defect, which the buyer usually discovers shortly after the purchase, can be very difficult. Since it's human nature to look for someone to blame, a home buyer usually looks first to their seller, then to the realty agent, and finally to the professional inspector if one was involved.
But buying a truly bad house can usually be avoided by following the correct steps. Even brand-new houses have their defects. A local building inspector's approval is no guarantee. However, whether a new or resale house is involved, home buyers can minimize their chances of making a serious mistake.
HOME SELLER DISCLOSURES ARE NOT GUARANTEED ACCURATE. Many states now require home sellers to provide written disclosures of known defects. If the seller lied and failed to disclose a defect, which the buyer can prove the seller knew about, the seller is liable to the buyer for damages.
Incidentally, the easiest way to prove what the seller knew is usually to ask the neighbors. They often know as much about a neighboring house as the seller knew.
For example, shortly after I bought my current home, one of my neighbors came over to get acquainted. After a few pleasantries, he said, "I suppose the sellers told you about when that hill behind your house slid. There must have been at least three feet of mud against the house."
When I replied that the sellers hadn't said a word about the hill slide against my house, he quickly added something about how all the new drainage toward the street probably took care of the problem.
That was 26 years ago. Every time there's a heavy rain, I look at the steep hill behind my house and wonder whether it will slide again. Perhaps it's a good thing the seller didn't disclose the slide, which was apparently corrected properly, because otherwise I might not have purchased my otherwise very desirable home.
HOME BUYER'S FIRST DEFENSE AGAINST BUYING BAD HOUSE
Today's smartest home sellers, before putting their homes on the market for sale, obtain professional home inspection reports. If any serious defects are revealed, sellers should have them corrected so they don't become detriments to a successful home sale.
The best realty agents recommend home sellers also have customary or required inspections completed before marketing the home, such as for termites, energy efficiency, well-water quality, septic system, radon, and building code compliance. Savvy home sellers then have any defects corrected to avoid later problems.
However, the home buyer's first line of defense against buying a bad house is to hire his or her own professional home inspector in addition to the required or customary specialized inspections. To avoid wasting money, the buyer's professional inspection should be completed after the seller accepts the buyer's purchase offer.
Before hiring a professional home inspector, buyers should check the inspector's credentials. Be wary of an inspector recommended by the realty agent. The inspector might be known as "easy" because realty agents don't want to recommend a tough "deal killer" inspector.
The cost of a professional home inspection should be around $300. That's cheap because a typical inspection requires at least two hours, plus time to write the report. Smart home buyers and their realty agents accompany their professional inspectors to discuss any problems discovered.
Although I've used this example many times, it's worth repeating. Several years ago, I looked at a run-down house that had a bad fireplace crack. Fearing the entire fireplace needed expensive replacement, I made my purchase offer contingent on a satisfactory professional inspection of the entire house. When I accompanied my inspector, I asked him to check the chimney especially close. After inspecting it completely, he reported the chimney was fine and the crack could be repaired with special fireplace mortar cement for about $150.
Later, I learned many prospective buyers rejected that house because of the ugly fireplace crack. Fortunately, I made my purchase offer contingent on a satisfactory professional inspector's report, as smart home buyers should always do. If I had disapproved the report, I would have been entitled to refund of my good-faith earnest money deposit.
Incidentally, hiring a professional inspector is also a great way to avoid buying a "sick house." Don't hesitate to ask your professional inspector about moisture and mold, radon, asbestos, lead-based paint, formaldehyde, carbon monoxide and other negative influences that concern many home buyers.
HOW TO HANDLE "AS IS" HOME SALE
Recently I had the pleasure of visiting Sarasota and Tampa, Fla., where I observed many modestly priced fix-up homes with for-sale signs. As these are my favorite type of profitable home purchases, I was drooling at the profit opportunities.
Although I didn't have time to investigate, when a run-down home is offered for sale "as is" that means it is offered in its present condition and the seller won't pay for any repairs. However, in most states, sellers must disclose in writing the known defects of as is homes. Selling a home as is is not a way to avoid defect disclosures.
However, to avoid buying a bad house, prospective buyers of as is homes should condition their purchase offers on a satisfactory professional inspection report to be obtained by the buyer after the seller accepts the purchase offer.
IF BUYER DOESN'T ASK, SELLER USUALLY DOESN'T HAVE TO TELL
Except for statutory defect disclosure requirements, which vary by state law, if a buyer doesn't ask, the seller usually doesn't have to disclose. It's up to the home buyer to ask about special concerns.
For example, if the roof leaked, but the seller had a new roof installed a year ago and it hasn't leaked since then, the seller isn't required to disclose the roof previously leaked. However, if the seller knows there is toxic mold in the attic from the leak, the mold problem should be disclosed.
But some problems are of special concern to just a few buyers. Death on the premises is one of these potential problems that bother some buyers but not others.
To illustrate, a few years ago, a San Francisco real estate broker was sued by his home buyer for failing to disclose there had been a suicide in the house. The broker knew about the suicide, but didn't disclose it because the event had nothing to do with the house's structural condition or desirability. However, the buyer came from a country where suicide on a property is considered a bad omen. After learning about the suicide, the buyer sued the realty broker. The jury found the broker had no liability because the buyer didn't ask if there had been a recent death on the property.
CONCLUSION. The best way to avoid buying a "bad house" is for the buyer to ask lots of questions and make their purchase offer contingent on a satisfactory professional home inspection. Buyers should strive to learn everything possible about the home before purchase.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=161
How to buy profitable real estate
Are you the adventurous type of home buyer who wants to make a profitable purchase? Or are you looking for a near-perfect "model home" acquisition where all you have to do is turn the key in the front door and move in?
If you are the adventurous type, as I am, please read on. But if you want to buy a model home in perfect condition and are willing to pay top dollar, you're wasting time reading further.
Just a few days ago, I received an e-mail from a homeowner who purchased in December 2002. He spent three months fixing up the home and moved in during March 2003. He reports his home has substantially appreciated in market value, presumably due to the profitable improvements he made.
Now he wants to know how soon he can sell and claim his tax-free principal residence sale profits up to $250,000. The answer is he must wait until March 2005 to meet the 24-month ownership and occupancy test of Internal Revenue Code 121.
It sounds like that buyer bought a profitable home with the right things wrong. You can accomplish the same result.
WHAT ARE "THE RIGHT THINGS WRONG" WITH A HOUSE? If you want to profit from your home purchase by more than the current average 5 percent annual market value appreciation rate in most communities, you'll need to buy a less-than-perfect home.
Here are five keys to unlock a profitable home purchase:
1—BUY A SOUND, WELL-LOCATED HOME WITHOUT MAJOR DEFECTS. Most home buyers aren't looking for major fix-up projects. But minor cosmetic repairs are the most profitable way to enhance a home's market value.
Presuming a house is in a decent location and doesn't require major renovation, it is the perfect profit candidate. Paint is the most profitable cosmetic improvement of all. Spending $1 for paint often produces $5 or more in increased market value.
Other examples of profitable cosmetic improvements include new carpets and hardwood floor refinishing, fresh landscaping, new light fixtures, and updated window coverings.
But try to avoid buying a home that needs unprofitable structural improvements, such as a new roof or foundation repairs.
For example, if a house needs a new roof, which will be costly but will add little or no market value, that is an unprofitable but necessary expenditure. More examples are foundation repairs, new plumbing, or wiring updates, which are expensive but add zero market value.
2—ASK HOW MUCH THE SELLER PAID FOR THE HOME. This might seem like an irrelevant question for a home buyer to ask, but it is extremely important.
If the seller has owned the home for many years, he or she probably paid a low purchase price compared to today's market value. That means the seller has lots of room to negotiate on price and terms.
However, if the home seller recently purchased for a price close to today's market value, that seller doesn't have much room to negotiate on the sales price, considering the condition of the residence.
3—PURCHASE BELOW MARKET VALUE TO COMPENSATE FOR THE OBVIOUS NEED FOR REPAIRS. Some naïve home sellers think their home, which needs cosmetic repairs, should sell for just as much as the similar home down the street, which was recently sold in excellent condition.
But savvy home buyers negotiate hard, emphasizing to sellers and their listing agents that the market for a home needing fix-up work is very limited.
Most prospective buyers seek near-perfect homes but the few buyers of fix-up homes must be rewarded in the form of a lower purchase price because they must encounter the work of fixing up the house.
4—BUY FROM A HIGHLY MOTIVATED HOME SELLER. Closely related to the previous key to unlocking a profitable home purchase is determining why the seller is really selling.
If the seller is just testing the market and isn't anxious to move, negotiating a bargain purchase price to compensate for "the right things wrong" can be very difficult.
However, if the seller is highly motivated, such as moving to a retirement home, a job transfer, family situation, or economic problem such as a pending foreclosure, the seller is unlikely to hold out for the last dollar of profit.
5—LOOK FOR AFFORDABLE FINANCING. As home mortgage interest rates slowly escalate, it pays to look for affordable mortgage financing. The best source, by far, is the home seller.
Retirees who need extra retirement income are, by far, the best source of seller financing. To illustrate, if you discover the reason for the seller's sale is to move to a retirement home, or an assisted living center, that seller probably needs extra income.
If he or she receives an all-cash sale, the best that seller can expect to receive today is 3 percent or 4 percent interest at a bank. But if you offer that seller 5 percent or 6 percent interest, secured by a mortgage on the home they know so well, you can obtain bargain financing and also help the seller.
I've learned from buying many houses with seller financing, the key to success is to include in the purchase offer the exact mortgage payment the seller will receive each month, such as $1,893.45. The interest rate alone is not sufficient to gain acceptance.
DON'T BUY A HOME NEEDING AN "EXTREME MAKEOVER." One of my favorite weekly TV programs offers an extreme home makeover to a lucky homeowner. After viewers learn why the home needs major renovation, the experts quickly move in and perform major miracles within a week or so to create a practically new home for the happy homeowner.
But that's not the real world. Having renovated many fix-up homes that needed profitable improvements, I know it takes weeks, sometimes months, to renovate a house.
However, the results of acquiring a house with "the right things wrong" can be extremely profitable. If you want to profit from your next home purchase, follow the five keys above and buy a house with profit opportunities.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=180
If you are the adventurous type, as I am, please read on. But if you want to buy a model home in perfect condition and are willing to pay top dollar, you're wasting time reading further.
Just a few days ago, I received an e-mail from a homeowner who purchased in December 2002. He spent three months fixing up the home and moved in during March 2003. He reports his home has substantially appreciated in market value, presumably due to the profitable improvements he made.
Now he wants to know how soon he can sell and claim his tax-free principal residence sale profits up to $250,000. The answer is he must wait until March 2005 to meet the 24-month ownership and occupancy test of Internal Revenue Code 121.
It sounds like that buyer bought a profitable home with the right things wrong. You can accomplish the same result.
WHAT ARE "THE RIGHT THINGS WRONG" WITH A HOUSE? If you want to profit from your home purchase by more than the current average 5 percent annual market value appreciation rate in most communities, you'll need to buy a less-than-perfect home.
Here are five keys to unlock a profitable home purchase:
1—BUY A SOUND, WELL-LOCATED HOME WITHOUT MAJOR DEFECTS. Most home buyers aren't looking for major fix-up projects. But minor cosmetic repairs are the most profitable way to enhance a home's market value.
Presuming a house is in a decent location and doesn't require major renovation, it is the perfect profit candidate. Paint is the most profitable cosmetic improvement of all. Spending $1 for paint often produces $5 or more in increased market value.
Other examples of profitable cosmetic improvements include new carpets and hardwood floor refinishing, fresh landscaping, new light fixtures, and updated window coverings.
But try to avoid buying a home that needs unprofitable structural improvements, such as a new roof or foundation repairs.
For example, if a house needs a new roof, which will be costly but will add little or no market value, that is an unprofitable but necessary expenditure. More examples are foundation repairs, new plumbing, or wiring updates, which are expensive but add zero market value.
2—ASK HOW MUCH THE SELLER PAID FOR THE HOME. This might seem like an irrelevant question for a home buyer to ask, but it is extremely important.
If the seller has owned the home for many years, he or she probably paid a low purchase price compared to today's market value. That means the seller has lots of room to negotiate on price and terms.
However, if the home seller recently purchased for a price close to today's market value, that seller doesn't have much room to negotiate on the sales price, considering the condition of the residence.
3—PURCHASE BELOW MARKET VALUE TO COMPENSATE FOR THE OBVIOUS NEED FOR REPAIRS. Some naïve home sellers think their home, which needs cosmetic repairs, should sell for just as much as the similar home down the street, which was recently sold in excellent condition.
But savvy home buyers negotiate hard, emphasizing to sellers and their listing agents that the market for a home needing fix-up work is very limited.
Most prospective buyers seek near-perfect homes but the few buyers of fix-up homes must be rewarded in the form of a lower purchase price because they must encounter the work of fixing up the house.
4—BUY FROM A HIGHLY MOTIVATED HOME SELLER. Closely related to the previous key to unlocking a profitable home purchase is determining why the seller is really selling.
If the seller is just testing the market and isn't anxious to move, negotiating a bargain purchase price to compensate for "the right things wrong" can be very difficult.
However, if the seller is highly motivated, such as moving to a retirement home, a job transfer, family situation, or economic problem such as a pending foreclosure, the seller is unlikely to hold out for the last dollar of profit.
5—LOOK FOR AFFORDABLE FINANCING. As home mortgage interest rates slowly escalate, it pays to look for affordable mortgage financing. The best source, by far, is the home seller.
Retirees who need extra retirement income are, by far, the best source of seller financing. To illustrate, if you discover the reason for the seller's sale is to move to a retirement home, or an assisted living center, that seller probably needs extra income.
If he or she receives an all-cash sale, the best that seller can expect to receive today is 3 percent or 4 percent interest at a bank. But if you offer that seller 5 percent or 6 percent interest, secured by a mortgage on the home they know so well, you can obtain bargain financing and also help the seller.
I've learned from buying many houses with seller financing, the key to success is to include in the purchase offer the exact mortgage payment the seller will receive each month, such as $1,893.45. The interest rate alone is not sufficient to gain acceptance.
DON'T BUY A HOME NEEDING AN "EXTREME MAKEOVER." One of my favorite weekly TV programs offers an extreme home makeover to a lucky homeowner. After viewers learn why the home needs major renovation, the experts quickly move in and perform major miracles within a week or so to create a practically new home for the happy homeowner.
But that's not the real world. Having renovated many fix-up homes that needed profitable improvements, I know it takes weeks, sometimes months, to renovate a house.
However, the results of acquiring a house with "the right things wrong" can be extremely profitable. If you want to profit from your next home purchase, follow the five keys above and buy a house with profit opportunities.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=180
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