Buying and Selling

How to Buy or Sell a Home in Need of Repair

During the purchase or sale of a home you’ll most likely hit some bumps in the road to closing. If you plan to finance your new home, homeowners insurance is required and a clean 4-point inspection (HVAC, electrical, plumbing, and roof) is necessary. So, what can be done if your soon to be new home is in need of a major repair such as roof replacement? 


I recently had a seller who suspected that their roof was in need of repair. They gleefully accepted an offer after only 1 day on the market!  As suspected, the home inspection showed that a flat portion of the roof was at the end of its life and needed to be replaced. However, the sellers didn’t have the cash to do the repair prior to closing.  Whether buying or selling, if you find yourself in circumstances where a repair is needed, you have a couple options that will still allow you to close the deal with little or no money out of pocket. 

The most favorable option is to have repairs complete before closing. Some companies will do repairs and allow the payment to be made at closing. Who pays for the repair depends on whether you have an as-is contract or standard residential...but that’s a whole other topic. If the seller is obligated by contract or willing to pay for repairs, payment can come out of their proceeds at closing so that they are not responsible for the full amount up front. As-is contracts do not require a seller to fix the issue but it also gives the buyer the opportunity to back out of the sale and get their deposit back. 

Another less desirable option is for the closing agent to hold money for the repairs in an escrow account that will pay for the repair after closing. The escrow account will hold 150% of the estimated cost to repair in the event the repair ends up costing more.

Most inspection reports are going to have a long list of items, don’t be alarmed, many items are not a deal breaker. Buyers and sellers can negotiate repairs even after the property is under contract. Thanks to HGTV, many buyers have become less detoured by a home in need of repairs or updates. 


I’m no stranger to a home in need of repairs. See how I financed and gained equity on my own fixer-upper here  or join my mailing list  for a FREE ebook of your choice (Buying, Selling or Credit Scores 101).

What’s my home worth? Click here for Your custom report.

4 Negotiation Tactics to Use When Buying a Home

In a real estate transaction, typically negotiating is thought of as price. However, there are many other factors that can either aid or hinder your probability of getting the house you want for the price you’re willing to pay. 


GET PREQUALIFIED.

As a buyer, the most important item you can provide to flex your buying power muscles is a pre-qualification letter. No seller wants to take their home off of the market for weeks just to find out that the buyer doesn’t qualify for the purchase amount. Any savvy buyers agent would make sure their client has a pre-qualification letter before even beginning the house hunt. 


MAKE A STRONG DEPOSIT.

Offers are normally accompanied by a “good faith” deposit that goes into an escrow account while the property is under contract. Contingencies on the contract protect your escrow deposit in case something arises during the contract period such as a cloud on the title, property appraisal not meeting the purchase price or a poor home inspection. Deposits are typically 1-2% of the purchase price. A larger deposit shows a seller you’re serious and committed to the process of buying the home. 


KEEP INSPECTIONS SHORT.

Inspection periods fall under contract contingencies that allow buyers to negotiate repairs, a lower price, or terminate the contract altogether if the inspection report is unsatisfactory. 15 days is the typical length of an inspection period, keep it at 15 days or shorter to make your offer more appealing. For a seller, a long inspection period means the property is off market for an extended period of time without a guarantee that the sale will go through. 


An “AS-IS” contract means the seller isn’t obligated to make repairs or pay for any items, however, the inspection period on an “AS-IS” contract also states, “If buyer determines, in buyers sole discretion, that the property is not acceptable to the buyer, the buyer may terminate the contract in writing before the end of the inspection period”. AS-IS contracts are basically a low-risk look behind the curtain of a home. Standard residential contracts are more difficult to negotiate repairs as a buyer because the contract has a certain amount built into the contract that the seller has allocated towards repairs. 


CLOSE QUICKLY.

When financing a property closing usually takes about 45 days, some lenders pride themselves on closing deals in as little as 30 days. A quick closing that isn’t contingent on the buyer selling their home is most desirable to a seller. Some buyers want to make the sale of their home a contingency for purchasing a new home but there is usually a “kick-out clause” meaning the seller can still accept another offer without that contingency. 


As a buyer, having Realtor® representation is typically at no cost to you. Don’t walk through the buying process alone or depend on the listing agent of the home. A listing agent can only represent the transaction if they have both sides of the deal and can NOT represent the best interest of both sides. Be prepared, have your own representation that’s looking out for you! If you are in need of a Realtor®, call me! It would be my pleasure to serve you. 

Do Open Houses Work?

Take a quick drive around any residential neighborhood on the weekend and you’ll spot at least one “Open House” sign. Even as the real estate industry has changed over the past few decades, open houses have remained common practice. So, question is...do open houses work?


Data from the National Association of Realtors says that 7% people found the house they bought from a yard sign or open house. 


Most buyers who attend open houses are not ready, not qualified to buy or simply have no intention of buying...if anyone even shows up at all. Every agent I know has had at least one open house where they’ve sat for 3 hours just to have one curious neighbor who has considered selling their home come through. Once, I even had a neighbor come in, he sat on the couch and FELL ASLEEP! Seriously, I can’t make this stuff up. 

If a buyer is ready and serious, they will make an appointment for a private showing and be prequalified.


In todays digital age 95% of buyers are looking for homes online. That’s why photos, video, and property preparation are essential to making a great first impression online. If a buyer sees a house they’re interested in on Tuesday and they see that there is an open house on Sunday, do you think they will wait until the open house to see it? No way! If they’re serious about buying, they’ll call their agent and set up a showing immediately. 


Safety is also an issue because you’re allowing ANYONE to enter your home. This leaves your home vulnerable to theft and gives burglars an opportunity to scope out your belongings. So, is the risk worth the low probability of capturing a sale? 


In my experience, open houses are ineffective and a waste of a seller’s time. You may be wondering, why then do agents continue this archaic sales strategy? Open houses can actually provide leads for the agent...but that doesn’t help you sell your home. The short answer is we work for the seller and if the seller wants to hold an open house, that’s what we do. 


What’s your experience with open houses? Do you think they can be effective?


I’d be happy to discuss with you my marketing plan and strategies that are tailored to your home and needs! 

What’s my home really worth? Click here for a custom report.

Don't Become a Victim on Your Next Real Estate Transaction

By: David H. Rosenberg, Esq.

 

Technology has made a significant impact in the real estate industry; both good and bad. Unfortunately, as a result of the increase in technology, the real estate industry is being heavily targeted by cyber-criminals.

 

A criminal will often hack into the email of a realtor and monitor correspondence to a transaction. As the transaction nears closing, the criminal sends what appears to be an email from the buyer’s realtor or settlement agent, including substitute wire instructions on where the buyer should send his monies. The substitute wire instructions are for the criminal’s account rather than the account of the closing agent. Once the funds are wired, the criminal quickly withdraws the funds or moves them off-shore.

 

Therefore:

1. Realtors, attorneys and settlement agencies should utilize secure email systems.

 

2. Closing packages & nonpublic personal information should be sent encrypted.

 

3. Always confirm wire information via telephone, to a verified telephone number and

individual. Never rely on contact information contained within an email signature.

 

4. Always review and confirm the email address to which you are sending emails.

Criminals often use email domains which look substantially similar to those of the

parties to the transaction.

 

5. Remember that attorneys and settlement agencies do not change wire

instructions/banking information mid-transaction.

 

6. Remember to never wire to any account on which the name does not match the

name of the intended recipient (i.e. ABC Title Company will have an account titled

ABC Title Company or something substantially similar)

 

7. Never click on links in emails which appear to be suspect due to ongoing issues with

malware, ransomware and viruses.

 

In the event that a wire has been sent as a result of the above, immediately contact the banks in an attempt to stop the wire as well as the local police and Federal Bureau of Investigations.

 

© 2018 David H. Rosenberg, Esq.

DHR LAW

2639 Fruitville Road

Second Floor, Suite 208

Sarasota, Florida 34237

(941) 361-1153

 

 

 

 

 

 

 

Avoid These 8 Home Inspection Mistakes

It’s easy to get swept up in the excitement of buying a home. Once you’ve had an offer accepted on your dream house, you’ll probably be anxious to move in. However, before you make a significant financial commitment, it’s best to know exactly what you’re buying.

When you hire a home inspector it's a worthwhile investment that can save you money in the long run, either by warning you away from a bad purchase or by providing a list of deficiencies you can use to negotiate with the sellers. Additionally, a good inspector can often predict the standard life expectancy of your roof, HVAC, and other big-ticket items so you can start planning for their eventual replacement.

However, many buyers make mistakes during the inspection process that cost them time and money and lead to unnecessary stress. Avoid these eight common buyer blunders to minimize your risk, protect your investment, and give yourself peace of mind and confidence in your new home purchase.

 

MISTAKE 1: Skip Your Own Inspection

Overall, does the home appear to be well maintained? Unless it’s a highly-competitive seller’s market, consider the overall condition of the property BEFORE you submit an offer. Work with your real estate agent to factor in repairs and updates you know you’ll need to make when you determine your offer price.

 

 

MISTAKE 2: Hire the Cheapest Inspector

We all love to save money, but not all inspectors are created equal. Before you hire one, do a little research.2 You may even want to start shopping for an inspector before you complete your home search. Inspection periods are typically short, so it never hurts to be prepared. 

Make sure the inspector is licensed and insured. Buyer beware...read the inspectors contract! Some inspectors have a clause in their contract that releases them from liability even if they make a big mistake. 

 

 

MISTAKE 3: Miss Attending the Inspection

Make every effort to be on-site during the inspection. Buyers who aren’t present during their inspection miss out on a great opportunity to gather valuable information about their new home.

 It’s the perfect chance to find out where everything is located, ask questions, and see first-hand what repairs and updates may be needed.3

 

 

MISTAKE 4: Skim Over the Report

Inspection reports can be long and tedious, and it can be tempting to skim over them. However, buyers who do this risk missing crucial information.

Instead, you should read over the report carefully, so you don’t miss anything significant. Now is the time to address any areas of concern. You have a limited window of time to request repairs or negotiate the selling price, so don’t squander it.

Your inspector may also flag some minor items that you wouldn’t typically expect a seller to fix. However, ignoring these small issues can sometimes lead to bigger problems down the road. Make sure you read everything in the report so you can take future action if needed.

 

 

MISTAKE 5: Avoid Asking Questions

Some buyers are too embarrassed to ask questions when there’s something in the inspection report they don’t understand. They avoid asking questions and end up uninformed about important issues that could impact their home purchase.

The reality is, questions are expected. You hired your inspector for their professional expertise, so don’t be shy about tapping into it. For example, you might ask:

 

  • Would you get this issue fixed in your own home?

  • How urgent is it?

  • What could happen if I don’t fix it?

  • Is this a simple issue I could fix myself?

  • What type of professional should I call?

  • Can you estimate how much it would cost to make this repair?

  • How much longer would you expect this system/structure/appliance to last?

  • What maintenance steps would you recommend?

 

 

MISTAKE 6: Expect a Perfect Report

Some buyers get scared off by a lengthy inspection report. But with around 1600 items on an inspector’s checklist, you shouldn’t be surprised if yours uncover a large number of deficiencies.4 The key is to understand which problems require simple fixes, and which ones will require extensive (and costly) repairs. 

Your real estate agent can help you decide if and how to approach the sellers about making repairs or reducing the price. Whatever you do, try to focus on the major issues identified in the inspector’s report, and don’t expect the sellers to address every minor item on the list. They will be more receptive if they perceive your requests to be reasonable.

 

 

MISTAKE 7: Forgo Additional Testing

There are times when an agent or inspector will recommend bringing in a specialist to evaluate a potential issue.5 For example, they may suggest testing for mold or consulting with a roofing expert. 

Some buyers get spooked by the possibility of a “red flag” and decide to jump ship. Or, in their haste to close or desire to save money, they choose to ignore the recommendation for additional testing altogether. 

Don’t make these potentially costly mistakes. In some cases, the specialist will offer a free evaluation that takes minimal time to schedule. And if not, the small investment you make could provide you with peace of mind or save you a fortune in future repairs.

 

 

MISTAKE 8: Skip Re-inspection of Repairs

While the majority of sellers are forthcoming, some will try to save money by cutting corners, hiring unlicensed technicians, or doing the work themselves. Make sure the repairs are completed properly now, so you aren’t paying to redo them later.

Some buyers prefer to avoid this step altogether by completing the work themselves. They either request that the seller to give a credit or reduce the selling price accordingly. Whichever path you choose, protect yourself and your investment by ensuring the work is done properly.

 

 

I CAN HELP

A home inspection can reduce your risk and save you money over the long-term. But to maximize its effectiveness, it must be done properly. Avoid these eight common home inspection mistakes to safeguard your investment.

While these are some of the most common missteps, there are countless others that can trip up home buyers, cost them time and money, and cause undue stress. Our brokerage partners with trusted inspectors and other professionals to help you avoid the potential pitfalls.

If you’re in the market to buy a home, I can help you navigate the inspection and all the other steps in the buying process.  Contact me to schedule a free consultation. It would be my pleasure to serve you on your home-buying venture! 

What’s my home worth? Click HERE to get your free custom report.

 

 

Sources:

  1. https://www.familyhandyman.com/tools/diy-home-inspection-tools/view-all/

  2. https://www.hgtv.com/design/real-estate/finding-the-right-home-inspector

  3. https://www.nytimes.com/2018/03/23/realestate/home-inspection.html

  4. https://www.realtor.com/advice/buy/what-does-a-home-inspector-look-for/

  5. https://realtytimes.com/advicefromagents/item/37369-top-5-biggest-home-inspection-mistakes

  6. https://www.realtor.com/advice/buy/home-inspection-mistakes-buyers-should-avoid/

  7. http://www.startribune.com/who-verifies-repairs-after-the-home-inspection/132844523/