Last 2006 Post

This has nothing to do with real estate, nor is it really information intended for first time buyers.

I’ve been watching bits and pieces of the New Year’s Celebrations in other cities. Since I used to live in Boston, the Times Square party was always the most fun, and became sort of a tradition. Now, since I am living on the west coast, I can watch it at 9 PM and I don’t have to stay up til midnight! This is a great benefit, although it still feels a little weird.

Anyhow, while these celebrations serve to remind us that another year has passed, more importantly they signalss the start of  new one. And I am looking forward to a great year, personally and in my real estate business. We are seeing signs of positive change, and while I don’t expect things to move along dramatically, I do think we will continue to see more encouraging activity in the market. And for new buyers, this is a great time for you – you should be excited about the opportunities for 2007 too!

Have a great New Year’s, and a healthy, prosperous 2007!

After the Inspection – What if There are Problems? (Part 2 of 2)

Here is more information on handling an inspection where you have encountered some issues. You are still interested in buying the house but…

In the first post in this series, I talked about your options if after the inspection what if there are problems. Assuming you decide to go ahead, here’s how to do it. Please keep in mind that each state may have different requirements and paperwork in order to request repairs by the seller. Check with your REALTOR so you will know what to do and how to do it.

• Here in California a buyer may request that sellers repair some or all of the defects encountered in the inspection, using the Repairs Request Form (C.A.R. Form RR – from the California Association of Realtors).
• The buyer must stipulate what s/he wants the seller to fix/repair/replace, or attach a detailed list.
• The seller will respond in writing on the form as to how s/he will deal with these requests. As a reminder, the seller may decide to fix none, some or all of the items.

Once the seller responds and signs the form:

• The buyer can accept the seller’s response, OR
• The buyer may withdraw the request and submit a revised request on Form RR (labeled #2).
• The process continues, as needed, until both parties agree on what is to be fixed and/or if a credit will be provided in lieu of repairs (or, in some cases, NO agreement is reached)

The buyer can decide to not proceed on the basis of these negotiations.

Once agreement has been reached the buyer must remove the inspection contingency, using the Contingency Removal Form (more on those later).

After the Inspection – What if There are Problems? (Part 1 of 2)

I spoke previously about the importance of getting a home inspection, even if you are buying new construction. But what happens if you find some problems, but are still interested in purchasing the house (the more common situation).

While some problems are serious (cracked foundation, structural flaws) or extensive enough that buyers decide to pass on the deal, most of the time buyers want to purchase the home anyway, but would like to have the problems dealt with in some way. So what are your options?

1. Walk away from the deal – unless the purchase contract precludes doing this, you generally have the option to back out of the deal within a specific period of time and retain your deposit. You will likely need to provide a copy of the inspection.

2. Request the sellers to fix the problems – you can ask for a few, some or all of the issues to be addressed (discuss this strategy with your REALTOR). Keep in mind that the more you request the less likely the seller will be to accommodate you, in most cases. Don’t be unreasonable (asking the seller to replace a broker receptacle cover is absurd).

3. Request the sellers to provide a credit at closing to cover the cost of the repairs (again, something to be negotiated and can vary depending on the extent of the problems).

4. A combination of 2 and 3 – some things may be better attended to by the buyer (that way you can get it fixed the way you want). Or the seller may prefer to simply pay for the repairs rather than having to deal with it.

Please let me know if you have any questions.

More News on the Housing Market

Here is another article that speaks to some of the positive changes that are taking place in the housing market.

If you have questions about what’s happening in certain communities here in Southern California, let me know – I track the MLS stats and can give you a summary. Or you can visit my website for more information.

A Personal Note

I was asked to share 5 things about myself that others on a real estate blog site I visit daily don’t know about me. Here they are:

1. I have been married for 27 years and have 2 daughters – one 26 (in LA) the other is 25 and living in the Boston area. Our first daughter was born on our 10-month anniversary – yes, people were counting

2. My wife and I are avid art collectors and had an art gallery for 3 years in Boston; currently we have well over 100 pieces (and not enough room)

3. I have ridden my bike on 2 AIDS benefits rides between Boston and New York (’bout 350 miles)   [BTW the organization that used to sponsor them had some financial difficulties and ultimately dropped out as sponsor/organizer.]

4. I have lived in 9 homes (in 5 states – Ohio, Massachusetts, Michigan, Minnesota, California) and 3 rentals since I got married.

5. I was in the opera “Aida“ in Philadelphia when I was 12 years old (and no, it was not singing).

The pic was one I created using Pikipimp.com for my profile on another real estate blogsite.

How do I Evaluate a House When Touring it?

As a new home buyer, you may wonder how to decide what home is right for you. And what things you should look for while you are touring specific properties.

Many people say that when they walked into the home they currently own they KNEW it was the right house. So you very likely will get a feeling that a particular home is the right one – something about it just feels good and comfortable. It may remnd you of a place you grew up in, or the apartment you currently live in. While this is no guarantee that the home IS perfect, it is not something to ignore. And if the overall feeling is positive, it can help you overlook other minor issues that you don’t like.

If you have created a list of things that are most important, as was suggested in a previous post, you should use that to help you evaluate each house. 

• Does the home have most of the things you want?
• Are there key items lacking? And, if so, could they be added or not?
• If the overall configuration of the home pleasing or does it make you uncomfortable? Is it workable or totally unacceptable?
• Are the things that need work something you are willing to take on, or pay someone to do, or not?
• What is the kitchen like (this is the most expensive thing to update or remodel) and is it something you are reasonably comfortable with?
• Try to ignore paint colors – you may hate what the owners have done but paint is the EASIEST thing to change.
• Also ignore people’s decor, furniture and personal clutter – this can be hard to do but don’t let it discourage you from looking at the house as a place for YOU to live, not how the current sellers live.
• Listen to neighborhood sounds, street noise, look at views from inside and from outside in the yard – are they pleasing? Annoying? 

With these few suggestions you should now have a good idea of how to approach touring each home and things you should consider. Keep in mind what is important to you and what is not.

Finally, I recommend that you revisit the home or homes that you particularly liked before you decide. It is amazing how you can miss things the first time around, especially if the home really appeals to you. A second view will help you be more objective so you don’t make a hasty decision. Your REALTOR can give you feedback about the home and answer questions, but ultimately YOU have to be comfortable with the property. And don’t worry if it is different from what you imagined you would buy – this is very common, especially for first time buyers.

What Does a REALTOR Do? (Part 4)

Each agent may operate a little differently, depending on experience, personal style, and the requirements of the particular transaction. Here are some more things you can expect from a REALTOR. and if you want the full report, you may visit my Buyer and Seller Reports page and request it via email.

(Read Part 1, Part 2, and Part 3)

Tracking the Loan Process

• Ensure buyer has a lender and completes the loan application process by date set forth in offer
• Maintain contact with lender to follow loan processing through to completion; coordinate information-sharing with lender as needed to complete loan file in a timely manner
• Ensure buyer obtains letter of commitment by date as noted in the offer; if not, communicate new date to listing agent and request extension (must generally be in writing)
• Ensure loan contingency is removed per required signed form, and acknowledged by seller
• Make sure buyer maintains contact with individual managing the closing (attorney or escrow company, depending on state) so all requirements are met by deadline

Preparations for Closing

• Obtain Insurance Certificate and /or other required documents (if condo) from listing agent – this may vary from state to state
• Ensure buyer obtains homeowner’s insurance and can provide proof with payment receipt at closing
• Remind buyer to set-up utilities at new property (provide names and numbers for gas, electric, telephone, water, sewer, cable as needed)
•  Ensure buyer obtains final closing costs and has funds for payment either before or at closing, depending on standard process
•  Schedule Final walk-through prior to closing (timing may depend on situation and agreement with seller)
•  Attend final walk-through with buyer and note any issues or concerns
• Ensure everything is in order for closing, and assist buyer in resolving any issues
• Attend closing if standard protocol.
• After closing, STAY IN TOUCH!!

While there may be many other things that go on behind the scenes, this will give you a good idea of what you can expect. As always, feel free to ask your agent questions at any time to make sure the process goes well. After all, it is YOU who has the most VESTED INTEREST in getting the house to closing. Good luck.

What Does a Realtor Do? (Part 3)

Here is some more information on what a REALTOR (keep in mind I am referring to an agent who is a member of the National Association of Realtors) does for buyers. This may vary from state to state, and from agent to agent. (if you missed my earlier posts, read Part 1 and Part 2 here)

Post-contract Acceptance

• Ensure listing agent/seller provides all required disclosures and other documents per offer contract in a timely manner to buyer for review and acknowledgement/acceptance/discussion
• Ensure buyer reviews all forms in timely manner and provides appropriate acknowledgement and/or signatures for selle,r and escrow company or attorney (depending on state adn who handles the transaction file) 
• Discuss home and other inspectional options with buyer (unless waived)
• If Buyer Agent:  provide names of recommended inspectors for buyer to set up appointment; inform listing agent of appointment time and date
•  Attend home inspection with buyer;  Ask clarifying questions as needed
• Review home inspector’s report with buyer
• Determine if buyer has questions about the inspection or concerns about noted repairs or other deficiencies
• Assist buyer in preparing a written punchlist (using required form) to present to seller, if applicable
• Present documented repairs list to listing agent for presentation to seller
• Provide written feedback from seller to buyer regarding repairs list items to be completed or not
• Once agreement is reached, provide final signed copies to all parties
• Inform listing agent of buyer’s decision to move ahead or not prior to end of contingency period or deadline stated in offer to purchase
• If buyer decides to not proceed with purchase, provide appropriate documentation as required, necessary signatures and request return of deposit
• Discuss homeowner’s insurance and ensure buyer determines insurability in timely manner (in CA, during the Contingency Period)
• Coordinate with lender and listing agent to schedule home appraisal 
• Follow-Up with lender to find out when Appraisal has occurred 
• Provide feedback to buyer; if property does not appraise, discuss alternative strategies with buyer and lender
• Ensure seller (through listing agent) is informed of any issues in writing and request for an extension to performance, if needed, is obtained
• Ensure buyer removes any and all applicable contingencies by deadlines (using appropriate forms with signatures as required by state)

There may be other activities your REALTOR will engage in during this period. Check back for my next post, and let me know if there are any questions.

Good News about Mortgage Insurance Premiums

Can there really be good news about mortgage insurance premiums?

Well, yes, for some of us. President Bush just signed a bill that will, beginning in 2007, allow for mortgage insurance (MI) premiums to be deducted. This impacts those of you who are buying in 2007, and anyone who decides to refinance (provided MI is involved). There are limits on who this will apply to.

Stop by this site for more information on this news about mortgage insurance premiums.

What Does a Realtor Do? (Part 2)

Here is some more information on what a REALTOR does for you, the buyer. If you missed the first post on this topic, you can read Part 1 here.

The Offer and Contract

• Review Offer to Purchase including all disclosures (if applicable) in detail, and answer all questions regarding 17-day (or other) contingency period, agency disclosure, deposit, liquidated damages options, buyer’s rights and obligations, escrow process, etc.
• Obtain pre-approval letter on buyer from lender
• If Buyer Agent: prepare spreadsheet of comparable sold properties
• If Buyer Agent: review comparables spreadsheet with buyer and discuss offer strategy
• Discuss pros and cons of offer strategy, timing and related issues
• Determine from listing agent if there are other offers pending or expected
• Complete offer to purchase form and other required documents with buyer’s input
• Ensure buyer reviews all forms for accuracy, and signs and/or initials where required
• Discuss the offer presentation process and timing, and what buyer can expect
• Contact listing agent to arrange to present offer
• Present offer face-to-face if possible; otherwise fax or deliver hard copies
• Communicate to buyer that offer has been presented and any feedback
• Once listing agent provides response to offer, communicate promptly
• If necessary, discuss, prepare and convey any counteroffers, acceptance or amendments to listing agent
• Provide copies of signed offer and all addendums to buyer, listing agent, buyer’s attorney (if buyer decides to hire one – in some states attorneys are standard protocol but not in California)