Should I Have An Inspection Before Listing My Home?

2601 Addison Street Mckinney, TX 75071

I have had a few clients ask me if they should have an inspection before they list their home. It’s an interesting question, mainly because of the nature of home inspections. I can hire two inspectors to inspect the same home, and I will probably receive two different inspection reports.

Here’s a case in point. One of my clients hired a home inspector before we put his home on the market. After the inspection, he received the standard inspection report, and it was 35 pages long. That may sound ominous, but even if the inspector finds nothing, his report will take dozens of pages to tell you everything is OK. In this case, there wasn’t much to report, and the seller fixed everything the inspector found. A week later we put the home on the market, and it went under contract immediately. The buyer hired their own inspector, and a few days later, they sent us their inspection report. It was 32 pages long. Unlike most sellers, my seller agreed to fix almost everything on it.

My point? Even though my seller fixed everything after the first inspection, he still had items to address after the second inspection. If there had been a third inspection, my guess is that he would have had more items to address.

Here are a few things to consider about a pre-listing inspection. As a seller in the state of Texas, you are NOT required to have an inspection before you list your home. If you decide to have an inspection, you will have to disclose that inspection to potential buyers. That means you will have to provide them with a copy of the inspection report. Potential buyers will now have a free inspection report that will point out every little thing that is wrong with your home – before they even make an offer on it.

So if you did have a pre-listing inspection, did you fix everything in the report? If you’re like most people, you probably didn’t. Most people have no idea what an inspector will find, and the older the house, the more they will find. General home inspections tend to find issues that homeowners never even knew existed, and the list can be overwhelming. In addition to malfunctioning items, there are code issues. Building codes change almost every year, and inspectors have to note any issues that are not up to code, even though it was up to code when it was built, or even the last time it was sold.

And even after the buyer has reviewed your inspection report, they will almost always hire their own inspector. They may think you hired an inspector who wasn’t thorough enough, or they may have an agent who insists that they have their own inspection.

The best advice I can give you is to talk with your Realtor. There are issues that I just don’t have the time and space to go into on this blog. Feel free to contact me and I can go into more detail.

Ultimately, you have to ask yourself if it is worth your time and money to have your own inspection. Only you can decide.

Inventory of Homes for Sale is Still Low

Tags

Buying a home, Home Values, Selling a home, Selling Your Home

It’s August in North Texas, and housing inventory is still low. For the month of July, the number of houses listed for sale was down 7 percent from last year. We’re seeing about half the number of homes for sale that we usually see. Many agents believed that the rise in prices and the flood of buyers looking for homes would encourage more people to put their homes on the market. That just hasn’t happened.
“The fact of the matter is that demand continues to outstrip supply, so there has been no reaccumulation of listing inventory,” said Ted Wilson, principal with Dallas-based housing analyst Residential Strategies. “As a result, the months’ supply of inventory remains near a record low.”
The short supply of homes for sale in North Texas has stifled home sales in 2014. In July, 9,578 homes sold, which is just a 3 percent increase from a year ago. Up to the end of July the number of homes is actually down 1% over last year, according to the Real Estate Center at Texas A&M University and the North Texas Real Estate Information Systems.
Although the total number of homes isn’t rising fast, activity is still high, and prices are still rising.
The median home price in North Texas rose 7 percent from a year ago to $196,500. Homes prices are about 40 percent higher that they were in the depths of the recession in early 2010. Since there are so many buyers still looking for homes , most homes sell in an average of 44 days, according to the Real Estate Research Center.
Most of our homes are receiving multiple offers, and many are selling within the first few days of listing.
I’ve encountered many people who would like to sell, but are afraid to put their homes on the market because they’re not sure they could find a home to buy.
There are also a large number of homes that never get entered into the MLS system. Many buyers see a “Coming Soon” sign and call their agent before the home goes on the market.
“There are a lot of ‘hip pocket’ listings that never make it to the market,” Wilson said. “Realtors share with me that they really don’t have much of a problem moving a good property today. So when a prospective property has an indication that it may be ready to come to the market, I think it is not uncommon for a Realtor firm to match that property up with a pre-identified buyer they have been working with, thereby ensuring that the Realtor firm gets to handle both sides of the transaction,” he said.
But Rich Thomas, CEO of the MetroTex Association of Realtors, says that the impact of off-market sales is exaggerated.
“I don’t think the off-market listings have as much to do with it as people think,” Thomas said. “I am of the opinion that the rate of sales is simply accelerating at a much faster clip than the rate of new inventory coming on the market.
“I think it is incredible that by year-end, despite the limited inventory, we will exceed the record-breaking number of sales we had in 2013.”

Should I have an agent represent me when I buy?

Tags

Buying a home, hiring a buyer's agent, Using a real estate agent

I’ve heard a lot of people say that they are considering representing themselves when they buy a home.  Their reason?  They want to save money.  They assume that since the seller won’t have to pay a buyer’s broker, they will be able to get a lower price.  In most cases, that’s not true.  They also think that they can find every home that is available for sale.  That also is not true.

Let’s start with saving money.  If a homeowner has a home listed for sale with a broker, that homeowner has a contractual agreement with the broker.  In that agreement, the seller agrees to pay the listing broker a fee for selling their home.  In most cases in the state of Texas (and for the sake of my illustration) the fee is 6% of the sales price.

When a buyer’s broker places an offer on the home, the listing broker agrees to pay buyer’s broker 3% of the sales price.  That leaves the rest of the 6% for themselves.  In most cases, each broker in the transaction receives 3% of the sales price.

What happens if a buyer that is not represented by a broker presents an offer?  In almost every case, the listing broker keeps the entire 6%.  Remember, the homeowner has a contractual agreement to pay the listing broker 6%.  It’s the broker’s responsibility to pay the buyer’s broker.  If there is no buyer’s broker, then there is no one to pay.  They keep it all.

Why not give that 3% to the buyer?  Because in the state of Texas, a broker cannot pay anyone except another broker, a licensed agent or an attorney.

What about finding the home?  Surely you don’t need an agent.  It seems like the internet has every home available for sale.  That’s not quite the case.  Every year, dozens of homeowners approach me and tell me that they want to sell, but they don’t want to put their home into the MLS system or on the internet.  They ask me to market their home to my database of potential buyers and other agents in my office.  That’s what is called a “hip-pocket” listing.  My office currently has over 600 agents.  If only half of them had hip pocket listings, that would be 300 extra homes that you would never see or know about.

And the biggest problem of all when you don’t have an agent?  You don’t have anyone representing YOU and your interests in the transaction.  The listing agent has a responsibility to the seller.  The seller’s interest will always come first to them.

With that kind of money on the line, you should have a licensed professional looking out for you.  There are so many things your agent can do for you, and most buyers have no idea what their rights are.  I’ll cover what we do for you in a separate blog entry.

Using Paint to Sell Your Home!

Tags

Painting Your Home, Selling Your Home

No matter how much you rearrange or decorate a room, nothing affects appearance like a fresh coat of paint. When you enter a house, your eye may be drawn to little decorative touches, but all the staging in the world will fall flat if your paint is drab, dirty, or goes against the potential buyer’s taste. Considering that a gallon of paint is only about $25, it’s also an inexpensive way to give your home a makeover.

Choosing Colors to Appeal to Homebuyers

Using colors that make the buyer feel “at home” will help you sell your home more quickly. You want them to look at each room and be able to literally see themselves and their belongings fitting inside your walls. Inspire a feeling of peace and relaxation, and part of the sale is already done!

Neutrals and soft colors create a soothing, calm atmosphere. Homebuyers can more easily visualize the paint colors they want when other colors aren’t bombarding them at every glance.

Avoid bold, vibrant or dark colors. Even pure white can prove overwhelming. Stay away from trendy colors no matter how good they look to you.

Keep in mind color psychology. Not only do certain colors calm you, but the shade can also affect the room itself. Light colors make a space appear larger. Dark colors, on the other hand, make the room feel smaller. Of course, sometimes a darker color is good if you want a certain effect. A cozy den with a darker color and a bright, cheery kitchen with a lighter color may work best to highlight each room’s appeal.

Neutral Shades

Even with neutrals, you still have a variety of colors to choose from. Off-white is a popular, all-purpose color, but it’s not the only one. Beige, tan, eggshell and ecru are other colors that work well with almost any style. But your choices range even further: pale shades of blue, green, yellow and gray, for instance, can blend with the house and complement the room. Aim for colors that don’t overpower the room or furnishings. Keep the color variations to a minimum to lend a sense of continuity to the house. If every room is a different color, it can prove overwhelming. It’s much better to pick two or three colors to use throughout the house.

Painting Tips

Take the time to paint properly. Mask off areas that will be left unpainted. Throw down floor and furniture coverings to ensure you don’t create damage during the process. Most importantly, prep the wall properly.

You may wish to spread a primer first to block bold colors. If the walls don’t require color or stain blocking, sanding the walls slightly or washing with a solution of trisodium phosphate are other options. Both sanding and washing with TSP will remove dirt, oils and other contaminants that prevent the color from adhering well and looking good.

While you paint, take time and care to cut in the corners and avoid drips. Aim for the best paint job of your life – it will be worth it when the buyers sign on the dotted line!

If you can’t afford to repaint your entire house, concentrate on a few select areas. The first room the buyer enters is the place to start – remember, first impressions count! Consider painting cupboards, trim and doors along with key rooms. Let your instincts guide you. Look around at other homes for ideas. If your home has a “parade of homes” that local builders showcase, you can glean a lot of tips in a short amount of time.

With a minimum investment, a little time and elbow grease, it shouldn’t take long for you to have your home ready for its next owner.

 

Short Sales

 There are two questions I have been hearing a lot lately.  The first is “what is a short sale?”  It’s usually followed up by “how does it work?”  The answers depend on who you talk to and which side of the transaction you are on – whether you are a buyer or a seller.  First, let’s take a look at it from the seller’s perspective.

 There are a couple of different answers to the short sale question.  The most basic answer is that a short sale is when a homeowner sells their home for less than what they owe to the bank.  The catch is that the bank has to agree to take less than they are owed.  That may sound impossible, but it’s not.  In fact, many banks are very willing to short sell a home under the right circumstances.

 One of the best things about the short sale is that, if it is done right, it will postpone foreclosure.  I have helped many families stay in their homes much longer than they ever thought they would by taking them through the short sale process.  Plus, it’s a much smaller ding on your credit to have a short sale instead of a foreclosure.  Many people are able to qualify for a mortgage in as little as two years after going through a short sale.

 First you have to be behind on your mortgage payments.  If you’re not, your bank won’t even talk about a short sale.  Second, there must be a good reason for being behind on your mortgage.  You must be in financial distress.  Maybe you are on the verge of bankruptcy.  You could have lost your job, or been through a catastrophic illness.  There are so many ways to get into financial distress.  The bank will need to see proof that you are in financial distress.  They will ask to see bank statements, tax returns, and if you are self-employed, they will want to see a profit-and-loss statement.

 There are also different types of short sales, depending which type of mortgage you have.  I won’t go into detail about each type here, but they are very similar.  Most banks want you to stay in the home until it’s sold.  In fact, they will require it.  That’s because your home will most likely fare better with someone living in it than if it is empty.  Once houses sit empty for a few months with no one taking care of them, they start to go downhill fast.  The bank wants to take care of their investment. In some cases, they bank will even help with your moving costs.

 The biggest factor in making all of this work is finding a realtor that knows what they are doing.  Short sales are relatively new to most realtors, and many realtors don’t like to deal with them.  It’s a lot of work for a realtor to sell a home through the short sale process.  Staying in contact with the bank and their negotiator is a time-consuming process.  A lot of realtors would prefer spending that time working on a much simpler transaction, like a standard home sale or purchase.

 If you are going to short sell your home, my advice would be to find a realtor who has been through the short sale process several times.  Ask if they have someone who is dedicated to the short sale process on a full-time basis.  If this is something they do once in a while or something they try every now and then, you should probably find someone else.  This is a completely different type of transaction from what most realtors are used to dealing with.  You need an expert who is experienced in dealing with short sales.

 On the buying side of a short sale, the most important things to have are patience and a good realtor.  If you need to be in a home in 30 days, this is probably not the deal for you.  I have done deals in 30 days, but those are the exception to the rule.  Most take a minimum of 60 days, with some taking as long as 6 months.  The upside is that if you can wait, you can usually get a great deal on a home.  Many homes that are involved in short sales sell for well below market.  It all depends on the bank and the loan payoff.

 Again, I would suggest that you find a realtor who has been through short sale process from the buying end.  There are additional forms and disclosures required in a short sale, so you need a buyer’s agent that is familiar with the process.  You’ll also need a pre-approval letter from you lender if you a getting a mortgage.  In many cases, a pre-qualification letter will not be sufficient.  For a bank to approve a short sale, they want to make sure that the deal isn’t going to fall through because the buyer couldn’t get a loan.  Talk with a lender ahead of time and get them the information they need to get you approved.  If you are paying cash, be ready to provide “proof of funds”.  That means they will need to see a banks statement that shows you have the money sitting in an account, ready to go.

 I have had buyers ask me if they could assume the mortgage.  My advice would be not to go that route, and here’s why.  If a seller has still owes $500,000 on their mortgage, the bank is going to take less than that in a short sale situation, sometimes a lot less.  Why would you assume the mortgage?  That means that you are assuming ALL of the debt, in this case $500,000.  You can get a better deal by buying through the short sale process and getting a new mortgage for less than the original mortgage.  You could save tens of thousands of dollars.  We recently helped a client short sell his home.  He still owed over $400,000, and the home sold for $300,000.  If the buyer had assumed the loan, he would have paid an extra $100,000 in principal alone.

 In summary, a short sale can be advantageous for everyone involved.  My advice is to make sure you are dealing with professionals who are experienced in the short sale process.