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8 Costly Missteps New Homeowners Make in Their First Year

October 19, 2017
 




The negotiations are over. Your mortgage is settled. The keys to your first home are in hand.Finally, you can install your dream patio.You can paint the walls without losing your security deposit.Heck, you could knock out a wall. You’re soooo ready to be a homeowner.

So ready in fact, you’re about to make some costly mistakes.

Wait, whaaat?

“You have to rein it in and be smart,” says Daniel Kanter, a homeowner with five years under his belt. Especially in your first year, when your happiness, eagerness (and sometimes ignorance) might convince you to make one of these eight mistakes:

#1 Going With the Lowest Bid

The sounds your HVAC system is making clearly require the knowledge of a professional (or perhaps an exorcist?).

But you’ve been smart and gotten three contractor bids, so why not go with the lowest price?

You might want to check out this story from a Michigan couple. Rather than going with a remodeler who’d delivered good work in the past, they hired a contractor offering to complete the work for less than half the cost, in less time.

A year later, their house was still a construction zone. You don’t want to be in the same spot.

What to do: Double-check that all bids include the same project scope — sometimes one is cheaper because it doesn’t include all the actual costs and details of the project. The contractor may lack the experience to know of additional steps and costs.

#2 Submitting Small Insurance Claims

Insurance is there to cover damage to your property, so why not use it?

Because the maddening reality is that filing a claim or two, especially in a relatively short period, can trigger an increase in your premium. “As a consumer advocate, I hate telling people not to use something they paid for,” says Amy Bach, executive director of nonprofit United Policyholders, which works to empower consumers. But, it’s better to pay out of pocket than submit claims that are less than your deductible.

Save your insurance for the catastrophic stuff. “You want the cleanest record possible,” Bach says. “You want to be seen as the lowest risk. It’s like a driving record — the more tickets you have, the more your insurance.”

Some insurance groups, like the Insurance Information Institute and National Association of Insurance Commissioners, say it’s hard to generalize about premium increases because states’ and providers’ rules differ. But this stat from a report by UP and the Rutgers Center for Risk and Responsibility at Rutgers Law School is pretty sobering: Only two states — Rhode Island and Texas — got top marks for protecting consumers “from improper rate increases and non-renewals” just for making:

  • An inquiry about a claim
  • A claim that isn’t paid because it was less than the deductible
  • A single claim

Your best protection? Maintaining your home so small claims don’t even materialize.

#3 Making Improvements Without Checking the ROI

Brandon Hedges, a REALTOR® in Minneapolis-St. Paul, recalls a couple who, though only planning to stay in their home for a few years, quickly replaced all their windows. When the time came to sell, he had to deliver the crushing news that they wouldn’t get back their full investment — more than $30,000.

New windows can be a great investment if you’re sticking around for awhile, especially if windows are beyond repair, and you want to save on energy bills.

Just because you might personally value an upgrade doesn’t mean the market will. “It’s easy to build yourself out of your neighborhood” and invest more than you can recoup at resale, says Linda Sowell, a REALTOR® in Memphis, Tenn.

What to do: Before you pick up a sledgehammer, check with an agent or appraiser, who usually are happy to share their knowledge about how much moola an improvement will eventually deliver.

#4 Going on a Furnishing Spree

When you enter homeownership with an apartment’s worth of furnishings, entire rooms in your new home are depressingly sparse. You want to feel settled. You want guests at your housewarming party to be able to sit on real furniture.

But try to exercise some retailing willpower. Investing in high-quality furniture over time is just smarter than blowing your budget on a whole house worth of particleboard discount items all at once.

What to do: Live in your home for a while, and you’ll get to know your space. Your living room may really need two full couches, not the love seat and a recliner you pictured there.

#5 Throwing Away Receipts and Paperwork

Shortly after moving in, your sump pump dies. You begrudgingly pay for a new one and try to forget about the cash you just dropped. But don’t! When it comes time to sell, improvements as small as this are like a resume-builder for your home that can boost its price. And, if problems arise down the road, warranty information for something like a new furnace could save you hundreds.

What to do: Stow paperwork like receipts, contracts, and manuals in a three-ring binder with clear plastic sleeves, or photograph your documents and upload them to cloud storage.

#6 Ignoring Small Items on Your Inspection Report

Use your inspection report as your very first home to-do list — even before you start perusing paint colors. Minor issues that helped take a chunk of change off the sale price can cause cumulative (and sometimes hazardous) damage. Over time, loose gutters could yield thousands in foundation damage. Uninsulated pipes? You could pay hundreds to a plumber when they crack in freezing temperatures. And a single faulty electric outlet could indicate dangerous ungrounded electricity.

What to do: Get the opinion and estimate of a contractor (usually at no charge), and then you can make an informed decision. But remember #1 above.

#7 Remodeling Without Doing the Research

No one wants to be a Negative Nancy, but there’s a benefit to knowing the worst-case scenario.

Homeowner Kanter tells the time he hired roofers to remove box gutters from his 1880s home. Little did he know, more often than not aged box gutters come with more extensive rot damage, which his roofers weren’t qualified to handle.

“We had to have four different contractors come in and close stuff up for the winter,” he says. Had he researched the problem, he could have saved money and anxiety by hiring a specialist from the start, he says.

What to do: Before beginning a project, thoroughly research it. Ask neighbors. Ask detailed questions of contractors so you can get your timing, budget, and expectations in line.

#8 Buying Cheap Tools

You need some basic tools for your first home — a hammer, screwdriver set, a ladder, maybe a mower.

But if you pick up a “novelty” kit (like those cute pink ones) or inexpensive off-brand items, don’t be surprised if they break right away, or if components like batteries have to be replaced frequently.

What to do: For a budget-friendly start, buy used tools from known quality brands (check online auctions or local estate sales) that the pros themselves use.

By: Amy Howell Hirt, ClientDirect

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.Just send me an email or call me at 619-888-2117.

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Buyers Aren’t Spooked by Haunted Houses

October 12, 2017

 

With inventories so tight, many consumers say they’re even willing to live in a haunted house.

Thirty-three percent of more than 1,000 consumers recently surveyed say they’re willing to live in a haunted house, and another 25 percent said they’d consider it, according to a newly released survey by realtor.com®.

“Haunted houses are a popular attraction this time of year, but we wanted to see how many people would actually live in one,” says Sarah Staley, a housing expert who commented on the study’s findings. “What we found may be a sign of today’s tight housing market, or for many living in a haunted house doesn’t have to be a deal breaker.”

Further, 47 percent of respondents said they’d live in a home where someone has died, and 27 percent additional respondents said they’d at least consider it, according to the survey.

Still, 40 percent of consumers said they’d need a price reduction in order to choose a haunted home over a non-haunted home. Also, a good neighborhood, extra square footage, and more bedrooms would convince them too, according to the survey. On the other hand, 42 percent of respondents insist they aren’t open to the idea of buying a haunted home, even for those extra perks.

For some consumers, living in a haunted house may not be considered a stretch because they claim they’ve already lived in one. For example, 28 percent of respondents said they have lived in a haunted house, and another 14 percent think they may have. They say their house was haunted because of strange noises, odd feelings in certain rooms, and even some reports of objects moving or disappearing.

Source: realtor.com®

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.Just send me an email or call me at 619-888-2117.

Before Buying, Real Estate Pros Insist on Doing These 4 Things

October 5, 2017

One house you’re looking at has the wraparound porch you’ve fantasized about, but it’s on a high-traffic street. The condo you like has a doorman in the lobby, but it has no dedicated parking. What to choose? It’s not every day that you buy a home and make decisions about the next three, five, or 10 years of your life. Since you can’t exactly take a home on a test drive, how do you decide? That got us to thinking about real estate pros. When they’ve seen practically everything on the market, how do they choose?

Four pros who’ve seen it all share their advice and their stories of hunting  for just the right home.

Compromise for Your Priorities

Veteran real estate agent Nancy Farkas knew exactly what she wanted in her home: ranch style, three bedrooms, high ceilings. But you know what she bought? A two-story Colonial.

Huh?

For Farkas, an associate partner with Coldwell Banker Heritage REALTORS®, in Dayton, Ohio, the home’s location and price trumped style. “I had a dog I had to go home and walk at noon, and the house was close [to work] and the right price,” she says.

Her advice: Make sure your practical and functional priorities don’t get lost in all the home buying hoo-ha (sparkling granite counters, new hardwood floors, a steam shower!). Remember, you can always add the hoo-ha, but you can’t make a home fit all priorities, such as location and price.

Dig Into the Details (Dull, Yes, But Worth It!)

When Grigory Pekarsky, co-owner and managing broker with Vesta Preferred Real Estate in Chicago, was looking for his first home, one of his priorities was to minimize his maintenance costs. He made sure to find out if the house had a newer roof, good siding, and a newer furnace. But he recommends you go even deeper to uncover a home’s not-so-obvious maintenance costs:

  • Scope out the sewer line – especially if you’re interested in an older home — to make sure there aren’t any tree branches or other debris clogging up the works. Otherwise, you might find some nasty sludge in the basement.
  • Look at the trees. How mature are they? Roots from older trees can invade the sewer line; untrimmed branches can pummel your gutters during storms.
  • Know what’s not covered by homeowners insurance.“I learned seepage isn’t covered. Shame on me,” he says.
  • Ask how old the appliances are.You might need to budget for something new in a few years. Sellers are only required to fix what the inspector finds is broken; they’re not going to upgrade working appliances for you.

Seek a House That Matches Your Lifestyle

Having lived the high-rise apartment life as a renter, Pekarsky knew a single-family home was just what he wanted. He was tired of living in a relatively small space with no yard. He wanted a house he could “grow into in the next three to five years.” That meant multiple bedrooms and bathrooms for the family he plans on having. So what he bought — a three-story, single-family with a finished attic bedroom (shown below) on Chicago’s North Side — suits his lifestyle perfectly.

In addition, “you get the biggest value from owning the land,” he says. “In a single-family [home], people aren’t telling you what to do with the investment.”

On the other hand, Matt Difanis wished he’d bought a condo when he bought his first home, a small bungalow ranch in a charming, historic neighborhood in Champaign, Ill. It was first-home love — until it rained.

“If I didn’t clean out the gutters before every rainstorm, the basement would leak,” says the broker-owner of RE/MAX Realty Associates in Champaign. He didn’t realize that taking care of a single-family home wouldn’t be his cup of tea. “I should have opted for a condo without gutters to clean and a lawn to mow,” he says.

Agent Amy Smythe Harris of Urban Provision REALTORS®, in Woodland, Texas, bought a home with a sizable downstairs suite her parents could use now (and she could use years from now). She says her millennial clients aren’t forward-thinking about their lifestyles. Some are childless and say they don’t care about schools, pools, and tennis courts. Then they become parents a few years later and have to move.

“Once they have kids, the first question [they] ask is about school districts, and the second is about where the parks and pools are,” she says.

The pros’ bottom-line advice: Think of your lifestyle preferences and how those might change in the next few years. After all, the typical homeowner lives in a house for a median of 10 years before selling, NATIONAL ASSOCIATION OF REALTORS® data shows.

Look at the House Through the Lens of Resale

All the real estate pros we talked to — no surprise here — emphasized resale. Take appraiser Michelle C. Bradley of Czekalski Real Estate Inc. in Natrona Heights, Pa. When she built her current home — a 2,200-square-foot ranch — she included a full, unfinished basement, even though she has no use for one and rarely ventures into it.

Why would she do that? Because basements are standard in her southwest Pennsylvania market. But Bradley’s not going to finish the basement until she’s ready to sell. That way, she avoids having to clean it and ensures she’ll install the most fashionable bathroom fixtures at sell time.

Her advice: “Don’t buy or build something unique that you can’t resell. If you’re not in an area with log homes, don’t choose a log home. If you’re not in an area with dome homes, don’t choose a dome home.”

Likewise, don’t buy a home that’s not in line with the neighborhood’s average price. When you go to resell, you’ll find yourself in an uphill battle to maintain your higher price.

Other advice from the pros: Watch out for unfixable flaws that could affect resale, like:

  • What’s next to the home, such as vacant land that could be developed, high-traffic businesses, noisy power generation stations, a cell tower, etc.
  • Lot issues, such as a steep driveway that could double as a ski slope in winter, or a sloped yard that sends water special delivery to your foundation.

Of course, a home isn’t just about resale. It’s just one factor to consider. Remember the first point: Be willing to compromise for your priorities. If the home meets your priorities and you’re going to stay there awhile, then resale might be where you compromise.

By: Dona Dezube and Christina Hoffmann, ClientDirect

 

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more. Just send me an email or call me at 619-888-2117. 

Opting for the Outdoors

September 21, 2017

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more. Just send me an email or call me at 619-888-2117. 

 

Selling Your House? Better Prepare for the Home Inspection

September 14, 2017

You’ve got a contract on your home for sale—congratulations! But before you pop the cork on the champagne, you’ve got to go through an ordeal that could make or break that sweet deal: a home inspection.

The home inspection is a contingency written into most offers, meaning that if the buyers aren’t happy with the result, they can cancel the sale without losing their earnest money deposit, or reopen negotiations and ask for a price reduction.

So it’s important to prepare yourself and your home for this important step of the process. How? Hey, we’re glad you asked! Let’s start at the beginning.

Will there always be a home inspection?
If your buyers are planning to tear down your home and build their own dream house, you might feel a pang of regret, but at least you won’t need to worry about the quality and condition of your property. These buyers are trying to get the lowest price possible and, if they think a clean contract without an inspection contingency will make them an attractive buyer in a competitive market, they’ll often forgo an inspection contingency.

But most buyers who are planning to live in your home want to know what they’re getting into. They want to know which systems work, and which don’t. They want to know how much money they’ll need to plow into the purchase, and which items you, dear seller, are willing to fix or replace to seal the deal.

The results of home inspections can give buyers peace of mind, or a tool they can use to bargain down the price. In the worst case, people with buyer’s remorse will use results of a home inspection to back out of the deal without penalty.

Sound scary? Don’t fret just yet. That first home inspection will let you know everything that’s wrong with your home. Armed with that information, you can fix problems before the next buyer shows up, adjust the price to reflect necessary repairs, or simply have a ready response when the issue comes up again.

Inspectors will look at everything
A home inspection is no quick once-over. Inspectors have a 1,600-item checklist, according to the National Association of Home Inspectors. Yep, you read that right—1,600.

“If we can get to it, we’ll inspect it,” says Frank Lesh, executive director of the American Society of Home Inspectors.

Here are just some of the areas of the home your inspector is checking, and what a home inspector is looking for:

Grounds: Standing water, faulty grading, sick or dying trees and shrubs, crumbling paths and walls
Structure: Foundation integrity, rotting or out-of-plumb window and door frames
Roof: Defects in shingles, flashing, and fascia; loose and hanging gutters; defects in chimneys and skylights
Exterior: Cracks or rot; dents or bowing in vinyl; blistering or flaking paint; adequate clearing between siding and earth
Window, doors, trim: Rotting frames, peeling caulk, damaged glass
Interior rooms: Water-stained ceilings, adequate insulation, and sufficient heating vents
Kitchen: Proper venting, no leaks under the sink, and cabinet doors and drawers operate properly
Bathrooms: Toilets flush properly, showers spray, and tubs are securely fastened
Plumbing: Drains flow properly; water has proper temperature and pressure
Electrical: Proper electrical panels and working light switches and outlets

How can you prepare?
The home inspection isn’t a test that you need to study for. But there are some things you can do before a home inspection to make the process go more smoothly.

Clean and de-clutter your home: Yes, inspectors will look way beyond the superficial sparkle of a clean home. But you want to make sure they have easy access to attics, basements, and electrical panels—and aren’t tripping over your kids’ toys while trying to do their job. Think of it as an early start to your packing.

Get your paperwork together: You should create a file with documentation of all maintenance and repairs you’ve done on your home. If you’ve had an insurance claim on your house, keep those papers together, too, so you can prove that you took care of the problem.
Provide complete access to your home: Make sure you unlock gates and doors to a shed or garage that doesn’t have lockbox access.
You could consider getting a pre-inspection to eliminate any surprises; some sellers choose to hire their own inspector to give the house a once-over and point out any problems, so they can fix them before the buyer’s home inspector arrives on the scene.

But be careful with this tactic.

“It’s not a good idea,” says Bill Golden, an Atlanta-area real estate agent. “If you have five different inspectors inspect the home, you’ll get five different lists of items they’re concerned about. Just because your inspector didn’t have a problem with something doesn’t mean the buyer’s inspector won’t.”

More important, if your inspector points out a problem, you’re obligated to disclose it to buyers.

“This could be a potential turn-off to buyers,” Golden says.

Do yourself a favor, and leave.

Unless you’re a glutton for punishment, give the inspector your cellphone number, grab your car keys, and go to a movie or out to lunch when the home inspector shows up. Your anxiety will only make everyone uncomfortable, which isn’t a productive atmosphere during an inspection.

“Inspectors and buyers are not at all comfortable with the seller being present during an inspection,” Golden says. “They need to be able to freely inspect and discuss any and everything they come across. You may think you are being helpful by being present, but you are not; you are impeding the process.”

And don’t play eager hostess. You don’t need to set out cookies and drinks; or provide ladders and other tools the inspector needs. He’ll bring his own.

Check your ego at your own door
Buying and selling a house is a competition: Sellers want to get the highest price, and buyers want the lowest. It’s not personal—it’s business. Remember that when a home inspector presents list of problems with your home as long as your arm.

“A home inspector’s job is to point out each and every deficiency and safety violation they see,” Golden says. “Arguing with the buyers about an inspector’s findings is not helpful.”

Keep your head in the game, and solve the problem with the buyer.

“It may be agreeing to fix an item, it may mean giving them some money toward a repair, or it may simply be providing documentation,” Golden says.

And that’s where an experienced real estate agent earns his or her commission. Agents know how to interpret inspection reports, which issues are vital to address, and which are red herrings designed to reopen price negotiations.

By: Lisa Gordon, ClientDirect

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more. Just send me an email or call me at 619-888-2117. 

Avoid Real Estate Regret

September 7, 2017

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more. Just send me an email or call me at 619-888-2117. 

What Is Escrow And How Does It Work?

August 31, 2017

Now that we know more about the closing costs, it’s logical to begin wondering who pays what? Of course, there are more than closing costs to consider. “Who pays what” is dictated by the traditions and practices in each area and varies from state to state, and even county to county. FHA and VA loans may also have some differing rules and procedures.Below is a general guide to fees and services that may be required. Remember, many items in the real estate contract are negotiable. Let’s take a closer look.

Seller

  • Real estate commission as specified in listing agreement or sales contract
  • Any applicable city, county, or real estate transfer taxes
  • Payoff of all loans in seller’s name including: Principal balance plus interest; any demand, reconveyance or other fees; prepayment penalties and preparation of documents
  • Any judgments, tax liens, etc. against the seller
  • Any unpaid property tax amount at time of transfer
  • Any unpaid homeowner association dues
  • Any bonds of assessments (if specified in contract)
  • Any delinquent taxes
  • Termite inspection and/or work (if specified in contract)
  • Home warranty (if specified in contract)
  • Notary fees, if applicable
  • One-half of the escrow or sub-escrow fees (if customary in your area)
  • Title insurance premium (if customary in your area)
  • Recording charges to clear all documents of record against seller
  • HOA fees (if applicable) – up front fee for documents, transfer fees, move out fee, etc. Varies by management company and association
  • Messenger fees
  • Zone disclosure
  • Water certificate

Buyer

  • Real estate commission as specified in listing agreement or purchase contract
  • Loan charges as required by lender, including: Any loan origination fees or funding fees; preparation of documents; credit report, pre-paid interest, and appraisal fee
  • Impounds for taxes and fire insurance (as required by lender)
  • Termite inspection and/or work (if specified in contract)
  • Other inspection fees (if specified in contract or required by lender)
  • Home warranty (if specified in contract)
  • Any applicable city, county, or real property transfer taxes (as specified in contract)
  • Title insurance premium (if customary in your area)
  • Lender’s title insurance premium and endorsement fees as required by lender
  • One-half of escrow or sub-escrow fees (if customary in your area)
  • Recording charges for all documents in buyer’s name
  • Fire insurance premium (if required)
  • Notary fees for loan sign up
  • Messenger fees
  • Possible HOA fees (move in, next month dues, etc.) Varies by management company and association.
Provided by: Kartikay Escrow

 

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more. Just send me an email or call me at 619-888-2117. 

 

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