Real Estate Advice: Am I Able to do an Inspection before I close?

Yes, you should have the option to do inspections before you close. In California, buyers typically have 17 days from acceptance to do their inspections. If within those 17 days, the buyers decide that they don’t like what they find, then they can walk away. If the buyers do their inspections, then remove their contingencies, then they are committed to the property and the deposit becomes nonrefundable.

It’s extremely important for you to get your inspections done as soon as possible especially if you want to do any further negotating with the seller on repairs, a credit or a price reduction. If your looking at a single family home, I would always recommend a home inspection and a mold inspection. The home inspection will give you a general understanding of the roof, foundation, plumbing, electrical, appliances, HVAC, fireplace, etc. The mold inspection focuses on water/mold issues. So many buyers don’t do a mold inspection, but it’s so important. Water is absolutely damaging to a home and so many times there can be leaks or mold problems that the homeowner is not even aware of. Needless to say, I have all my buyers do a mold inspection. And depending on the age of the home and the existence of large trees on the property, I also suggest a video sewer line inspection which will let you know if there are any obstructions (such as tree roots) or clogging issues. Replacing a sewer line can be expensive and it’s a good idea to know up front what you’re dealing with.

Real Estate Advice: how do we make our condo stand out to sell if there are others asking less $?

If you think your home has been upgraded or has somthing special that separates you from the rest than asking more money will be okay, but these attributes need to be apparent to the buyers. And if it’s not apparent to you, then for sure it’s not going to be apparent to them. So let’s go over some of the possible features or selling points:
1.You can talk about the amount of money you spent on upgrades.
2. Point out any high end features such as granite, hardwood, travertine, updated windows, etc.
3. Maybe you’re in a great location or a reputable school district.
4. The floorplan can be a huge selling point.
5. Do you get a lot of light in your condo? End units and top floor units tend to do better in sales.
6. Can you put a washer & dryer in your unit?
7. How may parking spaces do you have?
8. The other thing to consider is the building. Does it have a lot of amenities? What type of condition is it in? This could add or take away from the value of your unit.

If you have things listed above that your competition doesn’t have, then you may be able to get the higher price.

And remember, you need to make sure your condo shows well. Keep it clean; keep it well lit. You could put together a sheet (handout) of all the features of your home that make it worth more money.

If you haven’t already, you may want to check the recent sales for condos similar to yours. If they’re selling for less than what you’re asking, then you may want to reconsider your price.

Real Estate Advice: When I sell my house can I be responsible for code deficiencies that existed before I purchased?

No, you will not necessarily be responsible for deficiencies in codes or permits. You should disclose everything you know about the problems or lack of permits. If you don’t tell the buyer, then you could be liable for fraud. If you do disclose, then it will be up to the buyers to decide if they are willing to purchase the property as is, and do any necessary repairs, etc. themselves.The buyer can always ask for you to do the work, but you can refuse. As long as the buyer is aware of the problem, then they are moving forward in the transaction with their eyes wide open.

On the other hand, if your property is not selling due to the deficiences, then you may want to consider rectifying the problems yourself in order to sell it. And sometimes certain lenders will not give financing on a property that has permit/code problems. FHA is one of those lenders. So if buyers can’t get financing, then you need an all cash buyer or you may want to fix the problems or pull the permits in order to sell.

Real Estate Advice: What can I do to close on time?

This is a great question. So often closings are delayed and although we can’t control everything, there are definitely certain things a buyer can do that will help the process move forward as smoothly as possible.

First, the loan itself can be a challenge. You have not given your lender much time to get the loan done. Much of the timing is going to depend on the bank’s timeframe. You should ask your lender how quickly they can fund the loan if all goes well.

Second, in order for your lender to get their action items done on time, they will depend on you to get the paperwork they need. So anything they ask of you, try to get it back to the lender the same day, if possible.
Here’s a tip: find out who in your company will provide the lender with your employment verification. Give this person/department the heads up that your lender will be contacting them. This will happen toward the end of the transaction. I’ve had quite a few clients lose days on the loan, because the lender could not get employment verification quickly.

Third, get your appraisal ordered right away. The lender will do this for you, but they often need your go ahead, and your credit card, so they can order the appraisal. Have your agent follow up on the appraisal and make sure it gets scheduled, etc. Appraisals can be another time-suck. Sometimes, the appraisal order gets lost in the shuffle, or the appraiser can’t schedule the appointment for a few days, etc. You want to have your agent stay on top of this.

Fourth, schedule all your inspections as soon as possible and negotiate any repairs immediately after you have done all your due diligence. You never know what an inspection is going to uncover, and it may lead you to additional inspections or bringing in an expert on something. You want to make sure you have the time to do all this.

Fifth, make sure you start working on your homeowner’s insurance.The lender will require proof of insurance before they fund your loan. Don’t leave this to the last minute. Do your insurance shopping. Let escrow know who you will be using for insurance. Escrow will order it for your and you will pay for your first year’s premium in your closing costs.

Sixth. make sure all your funds are in order. If you need to move money from accounts or take money out of retirement accounts, etc, this takes time. Don’t leave it to the last minute. Also, find out what your bank’s process/timing is for wiring money.

Lastly, just make sure you don’t quit your job or buy a car or any other expensive items before you close on your new home. This may sound silly, but I’ve heard so many stories where the buyer did one of these things, and ultimately they couldn’t get the loan. Just make sure you consult your lender before you do anything that may adjust your financial situation.

I always like to tell my clients that a close date is kind of like a pregnancy due date. It may happen on the scheduled date; it could be a day early; it could be a few days late. It’s an estimate. But as you can see there are many things you can do to help close on time.

Real Estate Advice: Do I Make an Offer on an Overpriced Listing?

It never hurts to put an offer in. And you won’t know unless you try. Yes, the sellers may be unrealistic and they probably have a strong emotional attachment to their home; the home does hold a lot of value to them. But the good news is that with an overpriced home, you, the buyer, should have very little competition.

First, you should look at how long the property has been on the market and have there been any price reductions. If it’s new on the market, then the seller my be less likely to negotiate. But if it’s an old listing, it may be a good time to make an aggressive offer. Your agent should have a conversation with the listing agent to guage the sellers’ position.

Then you should put together an offer and submit the comps that substantiates your number. The worst thing that can happen is the seller says no. And even then, I wouldn’t give up. If the property is still on the market in a few weeks or months, I would approach the agent again to see if the seller has any change of heart.

I’ve had buyers in both scenarios. I had a client last summer who fell in love with a condo but the sellers were priced way above market. We kept going back to the seller and after a couple of months, we were able to come to a number that satisfied both buyer and seller. The property appraised at the sales price and all parties were happy. Then I had another buyer a few months later who wanted to make an offer on a home but the seller had unreasonably priced the home. It was priced even higher than the new construction that was on the market. The listing agent let me present the offer to the seller in person. And even though we had the comps to justify the offer price, and even though the listing agent was on our side, and even though the seller agreed that the market was down, she was adamant that her home was worth the asking price and she wouldn’t budge. And you know what happened? My client walked away with no regrets and the seller eventually took the home off the market.

FHA Loans continue to get more expensive

FHA has just announced that their upfront and monthly premiums will be going up again. And for loans with less that 10% down, the borrower will have to pay mortgage insurance for the life of the loan. FHA is a great product for buyers who don’t have a large down payment and/or don’t have strong credit. BUT, buyers will be forced to pay a huge premium every month in return for the low down payment. It looks like FHA wants to get out of the loan business.

Real Estate Advice: Buying an Upleg

If both the homes are in nearby neighborhoods and you can find an agent who has a strong knowledge of both markets, then yes, you should absolutely use the same agent. Working with one agent will make it much easier to coordinate the process especially since you have to sell your home in order to get the money to buy a new one. There are a lot of details to consider and it’s much easier if one agent is managing everything so that nothing falls through the cracks.

Now, the type of market you’re in will determine the best way to approach your sale and purchase. And what I mean by this is that if you’re in a seller’s market where there is low inventory and high demand (buyers competing over properties) then you may have a tough time getting your offer accepted if it’s contingent on selling your home. The seller will compare your offer to another offer that is not contingent; it will be an easy decision because the other buyer promises an easier transaction with fewer potential hurdles and hangups. On the other hand, if buyers are in control in your local market – there’s a lot of inventory, and little demand – then a seller may be more willing to accept your contingent offer and patiently wait while you get your house on the market and sell it.

Since you have already identified your upleg (new home purchase), you should at least get your house on the market quickly, and make an offer on the other home. Have your agent explain to the listing agent that you are aggressively marketing your home to find a buyer. You should build into your contract a timeframe that allows you to market your home while the seller of your upleg pulls their property off the market. I normally have my clients ask for 30 days. This means that you would have 30 days to market your home and get a buyer. Then ideally, the escrow period (this is what we call it in California) for both properties will run concurrently and you can close the sale of your home one day before the sale of your new home. (This may differ a little bit in your state depending on your closing process.)

If the seller does not accept your offer and you still want to move (and you are in a seller’s market), then I would get your house on the market and sell your house contingent on you finding a new upleg.

Real Estate Advice: Backup Offer in a Short Sale

If the bank does not approve the contract, and submits a counter, and the buyer subsequently walks, then the seller will not necessarily have to relist the property. Once the current contract is canceled, the seller can accept the new offer and it will be submitted to the bank for approval. The good news is that at this point, the listing agent should know what terms are required to get an approval from the bank. And you can submit your offer with those terms in place, if both you and the seller agree to them. From this point forward what happens will really depend on who the lender is. Some lenders will be able to approve the short sale relatively quickly because the “investors” have already stipulated their terms and they are already far along in the short sale process. However, some lenders start from the beginning because it’s a new buyer.
Your agent should be able to ask these questions of the listing agent so that you will know what to expect.

Making an Offer on an REO

When making a decision on how much to offer there are several things to consider.

1. What are the comps? Have your agent (and it shouldn’t be the listiing agent) pull the comparable sales in the area. Determine what you think the value of the property is.

2. Now that you know the comps, decide how much you’re comfortable paying for the property. This is not necessarily the same number that you’re going to make your first offer at, but it’s a good idea to know up front how much you’re willing to pay.

3. Assess whether you’re in a buyer’s market or a seller’s market. If you are in a buyer’s market, you have more leverage. You may not be competing with anyone else for the property which means you can make your offer lower than the asking price and see how the bank reacts. More often than not the lender will stick to their asking price but I have been able to negotiate lenders down considerably by understanding the market and geting the listing agent on my side. It can take time and patience but it’s possible. On the other hand, if you’re in a seller’s market, then you may need to make a more competitive offer. Ask the listing agent if there are other offers on the property. Usually with REOs, the listing agent will be pretty frank about whether offers are going over asking or not. And they will let you know how many offers you have. It’s also important to know if the bank wants to see your highest and best offer up front or if they will counter all offers.

3. Remember, you’re not dealing with an emotional seller. This seller only cares about the bottom line. And even if you make an offer hat is at or over asking, it’s the bottom line that the bank wants to see. Consequently, with REOS, it always a good idea to ask for very little else in the contract. For example, if you ask the bank to pay your closing costs (let’s say it’s $7,000) then the asset manager is just going to take out his calculator and deduct the $7,000 from your offer price. If you ask for termite work, the bank is going to deduct that cost from the offer price. The same goes for a home warranty and repairs. The list goes on and on. Of course, if no one else is making any offers, then you can ask for more. The bank will simply tell you what they will or will not pay for. But if you’re offer is going to be lined up with 10 other offers, you want to make sure your offer is as clean as possible.

4, One last tip for REOs: If your offer is accepted and during the transaction you want to ask for repairs, the banks are more likely to do repairs that are health and safety related. I’ve had REO transactions that are advertised “AS IS” and “no repairs” all over the MLS listing, and I’ve gotten repairs approved by the bank because I’ve been able to position them as health or safety related.

Real Estate Advice: Low Appraisal for Refinancing

You can always try again. It’s just going to cost you each time you have to order an appraisal. When an appraiser is assigned you should make sure that this appraiser is familiar with the area. if the appraiser is from out-of-the-area, then you can request a different appraiser. Also, you should pull comps that you can give to the appraiser to help them do their job. You can probably ask your real estate agent to do this for you. I have clients who call me all the time for this assistance.
But keep in mind, appraisals for re-fi’s typcially come in lower than appraisals for purchases. One main reason is that when it’s a purchase the appraiser knows the purchase price and they just have to confirm if the price is above, below or at market value. When it’s a re-fi, the appraiser is not using any number to compare against. They have to come up with a number just based on the research they pull, and they are usually more conservative. For instance, I had clients who tried to re-fi their home. The appraisal came in at $1,100,000. But when we put their home on the market a few months later, I got it appraised at $1,335,000 (the selling price)..