Buyers and Sellers- How to Prevent a Failed Building Inspection on Your Home

Nobody's too happy when the house doesn't pass a building inspection.  In fact, everyone has to start from square one all over again....The seller, the buyer, and both agents that are involved. Everybody begins their tasks all over again- and that should ALMOST NEVER be the case.
 
A failed inspection would only occur rarely in the market if agents educated their clients during the process.

It is extremely rare  that my clients have had to endure a failed building inspection, and that's whether I represent the seller or buyer- and I have sold hundreds of properties. ....So what makes such a big difference for my clients as opposed  to everyone else?

Education and disclosure. Those two factors will prevent over 99 percent of failed inspections.

Education:

For Buyers: Look closely at the home before you place an offer in on it. My buyer clients get a kick out of looking at houses with me, because I perform mini-inspections as we look at homes, and educate my buyers as to what potential problems there may be if any. I knock on tiles, stomp on the floors, and poke wood that looks like it needs poking.  I am not a building inspector, and do not have that specialized knowledge, but I have attended EVERY home inspection for EVERY home that I have ever sold. If some knowledge hasn't rubbed off on me to impart to my clients, then I wouldn't belong in the business. A couple of very good things result out of this practice- One, if the house doesn't pass my mini-inspection, there is no need to put an offer in on the home and spend money for an inspection that won't end up on a positive note, or, Two- the buyers make their offer knowing that there are some issues that will need to be addressed and are not blindsided by the building inspection.

For Sellers: When you decide to put your home on the market, you  pretty much have a good idea as to whether there may be issues, which could or would break a sale. Tell Your Realtor!  Once you are lucky enough to have a sale, you don't want to needlessly lose it. As a listing agent, I do that same mini-building inspection that I do for buyers when I list your home, and try to find the most common deal-breaker issues that may arise so that we can address them prior to putting the home on the market.  If I see something that looks like a specialist is needed, I'll say so. It's much easier to fix it now rather than fix it later, AND risk a sale because of it.

Disclosure

For Buyers: When buyers disclose found issues prior to the formal building inspection and adjust their offering price because of it, sellers are more likely to accept that offer given that they would have to address items with any future buyer as well. It gives the owner some peace of mind that they won't be nickeled and dimed at time of inspection, which seems to be a common occurrence these days. ( I do not subscribe to the last minute nickel and dime tactics. )

For Sellers: Disclose your known issues, or your suspected issues. By the way, it is the law. Besides that, the little items that wouldn't normally mean a thing to buyers become amplified when there are bigger issues to address, and  they can feel like there might be a lot of hidden problems that the inspector hasn't even found. What happens then is the proverbial straw that breaks the camel's back, and it's hard to keep the deal together or even renegotiate if that's the case.

If buyers have a good idea what they are getting into right from the get go, they are less likely to "walk" after a poor inspection report. They will already be aware of most of the issues. If sellers feel that the buyers have been honest with them, they are more likely to negotiate, or renogiate as the case may be.

Simply put, your agent has to have well rounded skills- marketing, negotiating, and good solid knowledge of a home and its components. You deserve nothing but the best.

When you're ready to buy or sell, contact me. It's my job to keep everything running smoothly, and especially when it gets rough- without worrying you about it unless absolutely necessary.

Tweet

The Top Fifteen Most Common CT Home Seller FAQS

If you have sold a home at one point in your lifetime, you already know that the process is a complex transaction that requires a number of individuals to work together to produce a favorable end result. If it's your first time selling a home, you are bound to have a number of questions about the process, just as you probably had when you were buying.

What is the difference between a CMA and an appraisal?

A REALTOR performs a CMA (Comparable Market Analysis),  which includes data  that compares a variety of active listings, pending listings  and sold listings within the past six months in order to arrive at a price range. An Appraiser performs much the same research as an agent, however he/she is also required to use a standardized form, which holds more information than most CMA's. See this article on CMA's and Appraisals.

Should I include negotiating room in the list price?

Your market analysis should be very clear as to what the sales price to list price averages are for your home, your neighborhood and your area. When an agent arrives at a price range, whatever negotiating room there is or isn't is included in that number. Adding " a little play" only makes your home appear to be overpriced as it will be in a different price range of homes that offer more value for the money than yours. As a result, your home cannot compete with a higher range properties, will appear overpriced, and make it that much harder to attract an offer.

What type of issues must a home seller disclose?

Pursuant to P.A. 95-311, Sellers must complete a Connecticut Residential Property Condition Disclosure, which identifies the current condition and history of all physical aspects of the home, as well as a  Lead-Based Paint Disclosure. When selling your home, you (the Seller) and your broker (if you have one) are responsible for disclosing any known issues that could materially affect its value.

When is the best time to sell my house?

The best time to sell is when you are ready, or when you must sell for one reason or another. Property sells throughout the year, and market time and saleability is mostly a function of supply and demand. The time of year you choose to sell can make a difference in the amount of time it takes and the final selling price.  The spring market begins in late January and continues through May. There is another surge in activity in September and October.  Timing is strategic and you may just be better off listing your home when the competition is not so fierce as it is in the spring market. Just something to consider.

Should I sell my home first or wait until I find another home?

The answer truly depends on your personal situation, as well as the condition of the local housing market, as there are advantages and disadvantages to each. If you  sell first, you maximize your negotiating position, and eliminate any need or possibilty of carrying two mortgages at once. A good safeguard to minimizing stress is to include a delayed closing contingency clause in your contract so that you can find another home with little or no pressure.

If you make an offer to buy a home without having your home under deposit first, you may be tempted to sell your existing home quickly, even at a lower price. If you are currently in a "buyers market", the odds of selling your home in time  to purchase the new one are not that favorable, and you may end up being disappointed. The only advantage of buying first is you can shop carefully for the right home and feel comfortable with your decision before putting your current home on the market.

How do I get my home to sell faster?

There are number of reasons why your home  will sell faster than others.  The most important factors are condition and price. Your home will sell most quickly when it has been well maintained and priced competitively to other houses selling in the area,  and is in a healthy real estate market.

Does my home need to be staged, and if so, how much does it cost?

Staging your home for sale is in effect, presenting an enhanced image of your home to attract more buyers. Most experts agree that the main living areas sell a home, so it is important to focus on your  living room, dining room, and family room, as well as any room that the future homeowner may find difficult to furnish or decorate.

Each home is different but basic staging principles are the same for all. Very few homes need to be staged to any extreme whereas a professional (and paid) stager is necessary. A good agent will tell you what needs to be done in order to effect a sale. The quick advice on staging?  De-clutter, de-personalize, distract any negatives, and neutralize your home with your agent's guidance.

What if I am "upside down" and won't have enough money to pay off the bank and sell my home?

This is what we call a short sale, and you are not alone. The banks do tend to want to work with you on this, and your agent should have some specialized knowledge and experience working with lenders for these circumstances. You will need to contact your bank and discuss this with them, and authorize your agent to be able to speak and negotiate on your behalf. The bank really does not want any more inventory, and although this process takes time, it is also well worth it.  

How do I compete with foreclosures? 

If your home is in fine repair, and generally in good condition, you need not worry about foreclosed homes as much as the media tends to think that you do.  Buyers see your home as one  that's ready to move into and in good condition.  It’s worth more to them- they don't want to do any work. Repossessed homes truly compete only with homes with deferred maintenance. The overwhelming majority of foreclosure properties are in need of major repairs, appliance replacement, HVAC systems and other structural components.  New lenders generally will not grant a mortgage on these homes unless the work is completed, and the banks are selling these properties as-is, which means that the buyer must complete repairs before the loan is granted. While foreclosures make great bargains for cash buyers who want to rehab them, they really are not for the general buying public.

What if I get a better offer after I’ve already accepted one? –

If you have signed a purchase contract accepting an offer, you are bound by its terms.  If the buyer defaults on one contingency, doesn’t follow through properly, or tries to renegotiate, you may have your way out. You can always ask the buyer if they would agree to walk away, or pay them to step away. Speak with your attorney as to the ways in which the contract can be legally cancelled so that you may accept another offer. See this helpful article on changing your mind after an offer has been accepted.

What are the most common contingencies in a purchase agreement?

A contingency is a stipulation to an agreement. Sales contracts typically contain several "contingency" clauses, or stipulations that the sale is subject to. The two most common contingencies are for financing- that is where the home purchase is contingent upon whether or not the buyer can secure a loan from a lender, and an Inspection Contingency, where the buyer has the right to have the property inspected for any problems that are unknown, or may have not been disclosed. If significant issues arise, the purchase offer could be rescinded or renegotiated.

Do I need to make repairs in order to sell my home? 

Sometimes a buyer might request a repair in their initial offer. More often than not, buyers may request repairs based upon the outcome of the building inspection.  Remember, this is all part of negotiating. just like the purchase price  Sometimes the lender will require some repairs in order for the buyer to obtain loan approval, but you can still negotiate who pays for them.    

Do I need to hire an agent?  

The overwhelming majority of home sellers hire REALTOR’s to list and sell their homes. Those who do not are known as For Sale By Owners, or FSBOs (pronounced FizzBo's). They market, negotiate, and sell their homes without agent assistance. Although there are a small number of  successful FSBO's, most of those sales are to family members or friends. Especially in a buyers market,  it is not the right route to go, considering all of the access agents have to whatever buyers are out there, and have knowledge of the legal ramifications for non-disclosure, misrepresentation, and the like. Ultimately, most FSBOs eventually hire an agent because the agent will handle all the details and minutia that a successful home sale requires – including the contract, forms, and disclosure statements – and expose the home to the widest range of prospective buyers through the local Multiple Listing Service  and the most visited national home search sites.

Is the commission negotiable?

Yes. Commissions are negotiable by law, and can vary depending on service, customer needs, and company policy. In general, agents charge between 4 percent and 8 percent for full service.

What costs are incurred when selling my home, and when are they due?

Paid at closing from proceeds are the real estate commission, (if you hire an agency to sell). Transfer  tax for the sale to the town and state, and prorated costs for your share of annual expenses, such as property taxes, homeowner association fees, utilties

Payable  prior to your home's sale and durring the process are advertising costs, marketing materials, and other fees if you sell the home yourself, repairs- if any are needed in order to effect a sale, and initial attorney's fees  and/or other professionals as needed.

One thing for sure, the more experienced the agent, the smoother the transaction is going to be.  With 27 years  of experience, I have assisted home sellers in the most difficult of markets, and with  the most difficult of buyers on the other side. No one likes to think about any of the negativity that can occur during such an emotional transaction. Be prepared for the bizarre to happen, because  it does more frequently than you can imagine. When you are ready to sell your home, you deserve the best representation available to you, so just contact me when you're ready. I'm up for all kinds of challenges, so bring it on if you have it!

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

  Tweet

How to Figure Out the Right Price to List Your Fairfield County CT Home.

When you arrive at the decision to sell your home,  the next thing to do is to meet with an agent who will conduct a market analysis to value your property appropriately for the current market.

Here's where it can get tricky as far as pricing is concerned. Not all agents are proficient at pricing.  If you decide to call a total of three agents, you are sure to get three different prices.

Yes, they should all be looking at the same competition in the marketplace, and they should all be using a number of comparable sales to arrive at their price, but how is a homeowner to figure out the correct price when three agents give three different answers?

The best price analysis that you can obtain is one where the agent doesn't even have to tell you the price. It should be inherently obvious based upon the  information in the report. If it is not,  that's probably not the correct price.. That's all there is to it.

An analysis of a few active properties and a few sold homes are really representative of those homes and not of the the overall  market in general-  especially not your home.

Some agents will inflate their pricing estimate  just to get you to sign a listing agreement, because you will be happier with the price. Don't go that route, and be extra careful. If there is not enough information to back up their claim, the price is just pie in the sky, and you shouldn't rely on it.

A thorough analysis is always necessary to obtain a truly accurate value, and if the analysis isn't thorough, it should not be relied upon. Again, it should be obvious or very close to obvious as to what your home should "list" for, and also include data and what the estimated sales price will be. We all have the same information, it's just how hard the agent wants to work to do it properly

If you are ready to  sell your home, and want the best reliable and most accurate price, contact me. I will perform a True Market Analysis for you at no cost.

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

Tweet

Having Trouble Selling your CT Home? It's Time to Try a Different Approach

If your home seems to be languishing on the market while others are selling,  it's time to change the marketing approach.  The longer your home sits on the market, the more likely it is to sell at a lower price than originally anticipated. And worse yet, it costs you money every day that your home sits idly by in the market.

Quite simply, if the marketing strategy for your home is not working, have your agent change it, or change agents. Give it enough time to kick in, but if nothing is happening, it's time to change directions.

Have you ever heard  the  definition of insanity? It's doing the same thing over and over again and expecting different results

The best thing that can be done is to change the advertising slant, or focus. If what you or your agent is doing right now isn't working, well. ... then it doesn't work. Period. Don't become "married" to any one idea if it is not producing results.

Experienced marketers identify their most probable consumer(s) and target that audience in a strong way. If the product doesn't sell, they change the ad.  But the problem is two-fold for real estate..  

First, and for quite some time, agents didn't really have to have a marketing strategy other than putting your home on the MLS. Homes flew off the market as a by-product of a good economy.  That doesn't exist right now.

Secondly, and maybe even more importantly- the agents that recognize that they will actually have to market your home don't have a real clue as to how to do it. They try, they might write a halfway decent ad, but it stops there. And here lies the problem. Most agents have an expressive personality. They write an ad that sounds good to THEM. It may  sound good to you, too. That's all well and good, but the pure expressive personality type represents only 25% of the buying population. The other 75% of the buying population dismisses that ad, either consciously or subconsciously.

Let me put it to you another way that might be easier to identify with, about appealing to different personality types. Have you ever heard someone acknowledge  in conversation that they can " see what you mean", or "I hear ya"?.  Those two people would  respond very differently to the same ad. One is visually stimulated, while the other responds to audio.

The psychology of sales is a very interesting subject. I have researched it thoroughly and am completely fascinated  by all of its intricacies. To explain it as succinctly as possible, it is of the UTMOST importance to reach as many qualified buyers in their own "language" that appeals to their dominant personality  type.

In order to be most effective, the advertising of your home must appeal to the four different personality types, and have something of interest and value  for each one in order to produce a sale.  This is the essence of marketing. It's complex but incredibly effective. You , as a homeowner, really don't need to have this knowledge. Your agent does, or should.

I have that knowledge and the expertise to implement it, and I will explain to you exactly how my strategic marketing works. When you want to sell your home, just contact me.

Tweet

Is a Short Sale Right For You?

A "short sale" is a real estate sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance owed on a property's loan. This typically happens when a borrower can’t pay the remainder of the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is a better alternative than foreclosure.

Short sales are different from foreclosures because the lender forces a foreclosure, while both lender and borrower consent to a short sale. Consent between these parties may suddenly change, however, such as if the borrower becomes obstinate and forces foreclosure, or if the lender disapproves of the sale price. If the property is collateral for a second mortgage from a different institution, it, too, must agree to the short sale, which may further complicate the transaction. 

Short Sales from the Lender’s Perspective

Banks incur a smaller financial loss from short sales than losses resulting from foreclosures, which cost lenders billions of dollars, mainly through the expense and time required to foreclose on the borrower and subsequently market the property. If the borrower owes $30,000 on their home, it’s often worth it for the bank to waive that amount, as the expense may be as much as $50,000 per foreclosure, according to a study by the U.S. Congress Joint Economic Committee.

 

Short Sales from the Seller’s Perspective

While a short sale will damage the seller’s credit rating, a foreclosure causes even greater credit damage. The process for a short sale is also faster, cheaper and less emotional than a foreclosure, in which former owners are often forcibly removed from their homes.

 

Short sales, however, do not necessarily release the borrower from the obligation to pay some or all of the remaining balance of the loan, known as the deficiency. The bank, depending on state laws, might be able to go after the seller for the remainder of the loan after the home sells. Also, in these states, known as recourse states, the IRS can treat the unpaid portion of the mortgage as taxable income.

 

Communities, too, invariably prefer short sales to foreclosures, which drag down the real estate market of whole neighborhoods. Vacant foreclosed houses, many of which have been ransacked by former owners or vandals, further reduce the property value of neighboring homes which, in turn, increase the likelihood of more foreclosures. Of course, communities don’t have much of a say in whether a home short-sells or forecloses, which is partly why a federal rule was issued to streamline and encourage short sales.  As of April 5, 2010, the various parties that must consent to allow a short sale – the borrower, the lender, the investor who owns the loan, and the bank that owns the second mortgage (provided there is one) – are all offered financial incentives to consent to a short sale. 

 

Typically, the following conditions must be present in order for a short sale to be approved:

• The property’s market value has dropped.
• The mortgage is near or in default status.
• The seller can prove that they have few assets. Tax returns and financial statements may be required to prove that the borrower has no stocks, bonds, or other real estate, for instance, which may be used to pay off the balance of the loan.
• The borrower has fallen on hard times. The seller is required to submit a letter to the lender that describes why they cannot pay the difference due upon sale, and how they wound up in financial hardship. This plea to the lender to accept a loss, known as a letter of hardship, may include the following acceptable explanations:
  • unemployment;
  • divorce;
  • medical emergency;
  • bankruptcy; and/or
  • death.

The following circumstances are generally not accepted "hardships":

• bad purchase decisions, such as gambling or vacationing;
• unhappiness with the neighbors, such as if a meth lab opened up next door;
• buying another home. If you can afford another home, the bank will wonder why you can’t pay off the one in which you currently reside;
• pregnancy. Lifestyle decisions aren’t taken seriously in letters of hardship; or
• moving into an apartment.

If you are considering the purchase of a short-sale property, here are some tips:

• Obtain legal advice from a competent real estate attorney.
• Consult with an accountant to discuss the tax ramifications of buying a short sale.
• Hire an InterNACHI inspector to inspect for problems typical of short sales and foreclosures, such as pests, mold, water damage, and/or structural defects. Realize that short-sale sellers have fallen behind on their mortgage payments, making it likely that they have neglected basic building maintenance and repair, or even intentionally abused the building. Presale inspections, which are suggested for all real estate transactions, are as critical for short sales as they are for foreclosures.

In summary, a short sale is a compromise consented to by the lender and borrower in order to avoid foreclosure, and can be a better financial deal for all parties involved.

by Nick Gromicko and Rob London

 

Nick Gromicko, FOUNDER. http://www.nachi.org
International Association of Certified Home Inspectors (InterNACHI) is the world's most elite, non-profit inspection association.
President, ComInspect, www.cominspect.com
Director, Master Inspector Certification Board, www.certifiedmasterinspector.org
Author, 15 books and Co-Host of  http://www.NACHI.TV