More Mortgage Changes!

Having just missed Halloween, I may be a little late to try to scare you with a horror story or two. But hey! There’s never a moment when a good story to shake things up isn’t welcome.  Today, I wanted to share a potential trend that a few of us have experienced in the “wonderful world of real estate”: the lenders becoming involved in the home inspection negotiation process. If that doesn’t scare the living daylights out of you, maybe it should.

At the risk of redundancy, I’ll say it again. Home sellers REALLY need to have a home inspection prior to putting their home on the market. The little quirks and irks you’ve lived with for the last 5 – 15 years will show up on the inspection.  I know you don’t think the way the dryer vent exits the house right next to the outside air condition unit is an issue, but your buyer will. It’s been that way since the house was built in 1983. Doesn’t matter. It will show up on the report. 

I have already gone on about how this inspection portion of the purchase process can spook a nervous buyer and irk a seller who feels as though he has gone as low as he can go in this market, and he can’t be bothered with $300 roof repairs, $500 worth of broken window seals and a fireplace cap that needs replaced.  Knowing this information up front and having already made the necessary repairs, puts this seller in better negotiating position. And in this “buyer’s market”, wouldn’t you, as a home seller, want to find SOME advantageous position? And buyers, wouldn’t you like to buy a well maintained home that isn’t fraught with “surprise” issues? Just buy the home, bring your toothbrush, and move in!

A couple of lenders in the area have begun to ask for a copy of the home inspection summary page, and the addendum between buyer and seller outlining how any repairs will be handled.  One lender insisted on a physical re-inspection of the property prior to closing on what most of us would consider a “typical” FHA purchase.  Because the majority of home buyers do not care to pay for a 2nd home inspection, generally speaking, a walk-through prior to closing and collecting receipts for the work performed will insure compliance of the addendum. This issue arose: who pays for the inspection, and who is now the inspector’s client?

Another problem to consider is this:  the lenders are now telling buyers they want a “sign off” on the repairs, a statement of satisfaction with the work performed, well in advance of our contractual opportunity to complete our  “…within  48 hours prior to closing…” examination of the property. Generally about 5 days prior to closing so the paperwork can be processed in time for the appointed closing date.  Moving is a busy time, and most sellers wait until the last minute to complete repairs, especially if the luxury of a few days of occupancy after closing is negotiated into the contract.  We need to know that this is a possibility, and amend the wording of our purchase contract and / or addendum, to insure the buyers can comfortably sign off on repairs that they have had the opportunity to inspect. In other words: Sellers be ready because my buyers and I are coming over sooner!

Not to be an alarmist, but I am concerned a bit that if underwriters or loan processors 4 states away review an inspection report, and the agreement between buyer and seller on certain repairs, then decide they don’t like the agreement made between buyer and seller, are they now opening up the opportunity to insert their opinion on the resolution?  I don’t know. That is a little scary to me.  If your eyes are rolling at me right now, I understand. But loan processing is a very different scenario than it has been in the past.  I’ve had this discussion with agents and loan officers who all wonder if this is a passing fad, or harbinger of even more changes to come. 

Personally, I think much of this issue could be resolved by sellers taking the bull by the horns and just getting their homes in order prior to putting them on the market.  Make sure the GFCI plugs are where they need to be. Have a fireplace? Get it cleaned and inspected. Make sure it’s been deemed safe to use by a pro. Clean the gutters and tighten the wobbly ceiling fans. I know. Those are not “material defects”, but trust me on this one: they will be on the report.  Have the HVAC cleaned and inspected. It will show up on the report if you don’t have receipts to show it’s been done.

Do you have a list of things to do prior to closing? Please complete those items ASAP.  Not all buyers have their “backs against the wall” and will be certainly in a position to delay closing until they are satisfied that all work has been completed as contractually agreed.  A delay in closing may not be in your best interest either, so fix those windows, and clean those gutters because we are coming over to re-inspect!

More Cincinnati real estate information can be found at RealCincy.com

I have repeatedly heard that “…my last agent never showed my home…”.  I hear “…Agent X will have an open house every other week, why won’t you?”  After a blunt discussion about market trends and how it affects the price of the home I’ve actually heard,  “I don’t think you’re excited about my home”.  For the record, I’m not excited about your home. I AM excited for the opportunity to work for you, and love meeting with new clients each and every day. You don’t need for me to be “excited” about your home. You need for me to be realistic. Emotion will cost you money….and after all, don’t you want the most $$ for your home?? Isn’t that the point?

Let’s look at 5 Big Secrets….just for fun!

1. Realtors ® are really focused on advertising their name:  Look at the sign in the yard. Look at the ads. Why is their picture on the sign in your yard? Is the Agent more interested in getting the neighbor’s listing, promoting their image, or are they trying to sell your home?  What percentage of their marketing dollars will go towards selling your home, vs. selling themselves?  The RealCincy Group knows that your home is your priority. Our advertising is tailored to promote your home, not our faces.
2. Many Realtor’s ® marketing ends with putting a sign in your yard:  So many Agents do not have an actual marketing plan for their listings.  They put the home in the MLS, it’s picked up by the local MLS participating brokers, and the sign goes in the yard. The next action plan: Go to lunch or their “other job”.  Ask any Agent what their marketing plan is and how they plan on using the internet.
3. Realtors ® will tell you your home is worth what you want to hear it is worth to win the listing:  It happens all the time. Period.  These agents find it much easier to ask for price reductions after your home is listed than tell you the truth up front. Many just get caught up in the “excitement” of a listing appointment, and don’t have a clue themselves what the market will bring. They do not possess the skills to develop and explain good pricing strategy, so that you will net the most amount of money in the shortest time.  I have to restrain myself here. I’m so tempted to talk about example after example of recent listing appointments, where I did not get the listing, because the sellers did not like what I had to say. By the way, they are all still on the market, and chasing that “falling knife” trying to minimize the damages. I had one seller in Mason call me last week for help. Obviously, she’s under contract with someone else and I can’t help.  Ask the Agent to show you the analysis they used to determine the suggested list price.  Don’t let your Agent use sales from previous years when home prices were higher!! Even the last 2 years information is inaccurate!! In this market, you can’t “test a higher price”.
4. They don’t advertise for buyers:  Most Real Estate Agents do not have a buyer advertising strategy to attract new buyers. Ask your agent about their buyer strategy and how they attract buyers. “Phone duty?”   I’ve done that and enjoyed playing endless hours of online Solitaire while “on duty” staring at a phone that did not ring.  Print ads?  With newspaper readership statically down? Is that $$ well spent?
5. We hold Open Houses to Promote Your Home:  Wrong!!  Most Realtors ® hold open houses because they are hoping and praying that a potential buyer or future seller, unattached to another Agent, will come through the door, and like them best. Today’s buyers can schedule showings and people from all around the world can see the pictures of your home on the Internet at their convenience. Open houses often bring out the neighbors, who want to see your decorating. Is that productive? My open house experience is that it’s me and the newspaper for an hour or so. Sure, someone somewhere can tell the story of how their home sold as a result of an open house…but, really? When? Pre-internet? Would that buyer have come through anyway with their agent on Monday if you weren’t open on Sunday? Probably. Less than 4% of the homes that do sell, nationwide, sell as a result of an open house. Not exactly time well spent.

So, now you have it. A few “myth-busters” to consider!

More Cincinnati real estate information can be found at RealCincy.com

Imagine pulling up to your new home, and noticing that the bushes and plants have been “thinned”. Imagine walking into the bathroom, and seeing that the sellers have taken the shower doors!
How disappointing would it be to the kids to see that the giant play set that they have been looking forward to playing on, was dismantled, and loaded on to the moving truck!! Yes, all of these scenarios have been played out because someone didn’t understand the difference between “real” property, “personal” property, and fixtures.

We could take up quite a bit of space discussing our system of property ownership and transfer laws, rooted in the land laws of England….but we won’t. That’s for a text book.

To help minimize misunderstandings, I’m glad to say that we do have, pre-printed, on our purchase and listing contracts, items that a buyer can anticipate seeing still attached to the home, or remaining with the property, if those items are currently on the premises. If a seller has an item or two that needs to be eliminated from that list, the seller does have the opportunity to let a buyer know that they should not expect to see, let’s say, a particular chandelier or window treatment. I always take the time to review this important paragraph with sellers, to make sure they understand what must stay, what may go, and what is negotiable.

The same rules apply when reviewing a contract with buyers. We will take the time to review this paragraph so that the homebuyer understands that if they want that amazing stainless steel, 5 burner, gas range and convection oven, they better be sure to write it into the offer! Just because it’s offered in the MLS information, that does not insure that it will be part of the transfer if not included in the contract.  If we don’t write in the wine refrigerator in the finished basement entertainment area, it may not be there on moving day.

While common sense should reign, it doesn’t always. To save us from ourselves, the Cincinnati Area Board of Realtors ® has typed in a few items that would seem to be obvious. Electrical, plumbing, heating and air conditioning equipment, including window units, wall – to – wall carpet, garage door openers/operating devices are, for example, just a few items that any common sense person would assume would be left behind.  You’ll also see shades, blinds, awnings, curtain rods, storm windows & doors, shrubbery and landscaping, fireplace inserts, gas logs, screens and glass doors are noted. Affixed mirrors, bathroom fixtures, including shower doors, all stay.  All built-in appliances, such as mounted microwaves, dishwashers and garbage disposals are attached to the home, and should be left behind.

There are items that not everyone knows should be left behind. That’s where questions arise: above ground swimming pools, water softeners, swing sets and play sets, invisible fence transmitters and collars for example. All pre-printed, considered “affixed” or “permanent improvements”, but often missed by sellers emotionally attached to the play set, or still paying on the water softener. Sellers: Be sure to read, carefully, and exclude immediately if you don’t plan on leaving an item behind!

 Better yet, replace the family heirloom chandelier with something else before the buyers ever see it.  If they see it, they will want it. Refrigerators, clothes washers and clothes dryers, counter microwaves…all negotiable.

The items listed above are not a complete list. Reading, reviewing, and understanding what you are signing is important to the home purchase and home sale process. The Real Cincy Group will make sure you are comfortable with your purchase contract, whether buying or selling,  and understand “what stays” and “what goes”.

More Cincinnati real estate information can be found at RealCincy.com