Following the acceptance of an offer you have 3 main objectives. Complete a general inspection with a state licensed inspector, get the contract to the lender and complete an insurance quote.
The general inspection can lead towards additional specific inspections/opinions like air conditioning or exact roof details from a roofer. Supplying your lender a copy of the paper work/contract allows them to lock in the interest rate. Without the actual contract a lender cannot lock a rate. And having a specific insurance agent (your own "go to" person for insurance needs OR a highly referred insurance expert from your Realtor or Lender) quote the rate on the exact house AFTER running a Clue Report.
These steps are all done during what we Texans call "the option period". One mistake is getting into the details of a remodel or decorating. There will be time after this initial "option period" for the details of personal touch. For now, focus on what matters most and don't confuse the natural anxiety around buying a home.
There are transactions requiring excessive work to be done and that might require a longer option period. For those houses that need a lot of work (these would be in bad shape and hard to live in under their current status) go for a longer option and still treat the initial 5 - 8 days as a first half focusing only on these discussed "3 objectives".
Tuesday, May 31, 2011
Thursday, May 26, 2011
Big 3 from Major Applewhite
I was invited to The Boys and Girls Club Luncheon by a friend (I call him "DR"). DR and his son are huge supporters of The Boys and Girls Club. What an awesome organization!!
Major Applewhite was the keynote speaker. He compared his goals/focus of coaching at a top university to that of the goals of The Boys and Girls Club. Both Major and The B & G Club have goals in supporting the development of young adults (on and off the field). He outlined 3 key words which are used in his coaching, and likewise interchangeable to the work of The B & G Club;
1. Trust
2. Communication
3. Respect
Major wants his players to trust the other team members. He expects communication to be a 2 way street and finally both coach and player need to respect one another.
These same 3 words could be used to outline the ingredients of a residential real estate transaction. Emotions run deep with housing. Housing transactions are different than a commercial or land deal even a 2nd home purchase.
The principals (buyer and seller) involved need to trust the Realtors-Lenders-Title Company-even themselves and everyone in between. Everyone involved needs to be able to communicate effectively during normal hours of business (and sober :)). Communication must be aligned with realistic expectations. Real estate transactions close because of a willing seller and a willing buyer. Once the 2 principlas come to terms, everyone needs to respect the work that needs to get done to finalize their terms of agreement. If a person involved (from principal to lender to Realtor) in the transaction has trust issues or a unique style of communicating or does not respect a role in the transaction the deal will experience severe ups and downs. In the end, the ultimate goal has the buyer living in the home of their dreams (which is why the buyer was looking to purchase right?) and the seller moving onto the next phase in their life (which is why they put themselves through the selling process right?).
Major Applewhite was the keynote speaker. He compared his goals/focus of coaching at a top university to that of the goals of The Boys and Girls Club. Both Major and The B & G Club have goals in supporting the development of young adults (on and off the field). He outlined 3 key words which are used in his coaching, and likewise interchangeable to the work of The B & G Club;
1. Trust
2. Communication
3. Respect
Major wants his players to trust the other team members. He expects communication to be a 2 way street and finally both coach and player need to respect one another.
These same 3 words could be used to outline the ingredients of a residential real estate transaction. Emotions run deep with housing. Housing transactions are different than a commercial or land deal even a 2nd home purchase.
The principals (buyer and seller) involved need to trust the Realtors-Lenders-Title Company-even themselves and everyone in between. Everyone involved needs to be able to communicate effectively during normal hours of business (and sober :)). Communication must be aligned with realistic expectations. Real estate transactions close because of a willing seller and a willing buyer. Once the 2 principlas come to terms, everyone needs to respect the work that needs to get done to finalize their terms of agreement. If a person involved (from principal to lender to Realtor) in the transaction has trust issues or a unique style of communicating or does not respect a role in the transaction the deal will experience severe ups and downs. In the end, the ultimate goal has the buyer living in the home of their dreams (which is why the buyer was looking to purchase right?) and the seller moving onto the next phase in their life (which is why they put themselves through the selling process right?).
Prayers
A clients family lost their Aunt in the Joplin tornado. The woman was in her 80's. She and her husband of many years were in their home when the tornado hit. Susan's Uncle was found in the hospital, he is 87 years old. They were unable to find their Aunt until Susan's sister flew in from Denver to do a search. They found her Tuesday in the ruin that had been their home. A very sad ending. The family is now trying to figure out how to take care of the Uncle who is expected to live from his injuries. Everything was lost in the strom. How do you start over at 87??
Thoughts and prayers go out to Susan and her entire family.
With the emotions surrounding a residential real estate transaction news like this centers us all on what is most important.
With so many cuts to our state and federal budgets we all need to help Red Cross & other like minded groups supporting these devestated areas by flooding/tornados/wildfires.
Thoughts and prayers go out to Susan and her entire family.
With the emotions surrounding a residential real estate transaction news like this centers us all on what is most important.
With so many cuts to our state and federal budgets we all need to help Red Cross & other like minded groups supporting these devestated areas by flooding/tornados/wildfires.
Tuesday, May 17, 2011
Wonderful Lot in Central Austin, now what?
I came across a great article from Don R. Hancock who is a partner in Hancock & McGill, L.L.P. attorneys at law. He shared a response to his clients desire to build a home on a vacant lot they bought. In his letter he explained how environmentally conscious Austin is. The city has these protections to retain much of its natural beauty and help make the city a desirable place to live. On the "other side" of this discussion these same protections increase the expense and exact a cost when developing a property, demolish and re-build in the central part of City of Austin. Here are 6 steps to research;
1. Lot Status - is it a legal lot? what needs to be done to make it legal?
2. Historic Preservation - expect additional time for your project (75 days)...
3. Restrictions on Home Size - 40% of lot size with additional respect to #6 below
4. Tree Ordinance - start measuring and line that meeting up
5. Zoning - don't be surprised
6. Building Setback - know your set backs, get a current survey ordered
There are many issues which affect the ability to construct a residence in Central Austin. When preparing an offer work with your Realtor and consider calling Mr. Hancock.
1. Lot Status - is it a legal lot? what needs to be done to make it legal?
2. Historic Preservation - expect additional time for your project (75 days)...
3. Restrictions on Home Size - 40% of lot size with additional respect to #6 below
4. Tree Ordinance - start measuring and line that meeting up
5. Zoning - don't be surprised
6. Building Setback - know your set backs, get a current survey ordered
There are many issues which affect the ability to construct a residence in Central Austin. When preparing an offer work with your Realtor and consider calling Mr. Hancock.
Friday, May 6, 2011
Part 2 Home Inspections
The last sentence on part 1 caught my attention. I always understood home inspections in Texas to be an investigation of code violations in addition to other investigations of the improvements to the property.
These inspections can be overwhelming. I think I have listed areas to inspect on previous posts and I will possible be repeating myself. Here is a list of inspections;
1. general inspection from state licensed inspector
2. wood destroying
3. pool/spa "opinions"
4. septic (pumping then investigate)
From the above you can then proceed to another round;
1. pressure test of plumbing
2. structural engineer
3. mechanical (A/C & Heat)
4. electrical
5. roof
Finally you might end up getting bids on;
1. specific repairs of tile, new flooring, painting, windows, driveway/masonry, gutters, new light fixtures, new appliances, new counters, etc. etc..
These inspections can be overwhelming. I think I have listed areas to inspect on previous posts and I will possible be repeating myself. Here is a list of inspections;
1. general inspection from state licensed inspector
2. wood destroying
3. pool/spa "opinions"
4. septic (pumping then investigate)
From the above you can then proceed to another round;
1. pressure test of plumbing
2. structural engineer
3. mechanical (A/C & Heat)
4. electrical
5. roof
Finally you might end up getting bids on;
1. specific repairs of tile, new flooring, painting, windows, driveway/masonry, gutters, new light fixtures, new appliances, new counters, etc. etc..
Home Inspections part 1
What is the definition of a home inspection? Wikipedia has their definition quoted below my posting. Over the years my industry has matured with issues like Agency, Disclosures, Options vs Earnest money. Another such area is the clear distinction between a Realtor and an Inspector. After the following, go ahead and read the definition of a home inspection by Wikipedia.
Buyers desire to own their own home, Sellers need to sell their home. Realtors aid in establishing market value for both scenarios either by showing homes to buyers or discussing the market conditions at any given moment with buyers and sellers. Once a home is "found" by a buyer, their Realtor assists them with the process of offering, negotiating and closing the home. A fundamental guideline for this process is the buyer wants the home. If the buyer decides the home is not for them, they can not make the offer or utilize one of the "outs" created by the offer they made with their Realtor. During the "under contract phase" of this process; a buyer will have professional people performing exact steps and offering opinions (Lender, Surveyor, Title, Inspector, Appraisal, specific Contractor). Lets focus on The Inspector.
The Inspector and the Realtor are 2 seperate profesional occupations in Texas both licensed by The State of Texas. Inspectors don't discuss sales and Realtors should not discuss durability-integrity-conditions of improvements. A Realtor could and should discuss what upgrades are worth in the open market of a home sale. A Realtor could also help create a plan with a written Home Inspector's report in making an offer or countering an offer with an active option period. Realtors know how to negotiate the steps in a home sale, that is what we do. When an inspection is in process it is best to have the home empty of the seller owner. Just the inspector and buyer should be around. This simplifies who says what and really frees up the buyer to get their money worth with their inspector by asking questions and learning about their home. We Realtors are a talkative bunch. We see a lot of inspections. We get immune to what an inspection could mean to a buyer, especially if that buyer is first time OR has not bought in 20 years. I would also warn adding decorating ideas during an inspection. A list of inspectors findings in addition to a list of personal preferences could really confuse the entire process. Even under short option periods, a buyer should first to inspections THEN proceed to personal preferences.
Wikipedia...
"A home inspection is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. The first known home inspection company, Home Equity Loss Protection Services dba/H.E.L.P.S.(Glen Ellyn, IL), was originally founded by Christopher P. Nolan and Loyola Professor Mark Goodfriend. Years later, the company was officially incorporated in the early 1980's by Jane Garvey, surviving wife of Professor Mark Goodfriend in Glen Ellyn, IL following its purchase from Christopher P. Nolan, the founder of the home inspection business and entrepreneur. Mr. Nolan was inspired to create a comprehensive system of home inspections because as an investor of distressed real estate and then a nationally recognized real estate expert and speaker, he realized a need to have skilled professionals inspect key areas of the home prior to his purchases in order to mitigate the risk of his investments. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections. The inspector prepares and delivers to the client a written report of findings. The client then uses the knowledge gained to make informed decisions about their pending real estate purchase. The home inspector describes the condition of the home at the time of inspection but does not guarantee future condition, efficiency, or life expectancy of systems or components.[1]
An inspector will check the roof, basement, heating system, water heater, air-conditioning system, structure, plumbing, electrical, and many other aspects of buildings looking for improper building practices, those items that require extensive repairs, items that are general maintenance issues, as well as some fire and safety issues.[2] However, it should also be noted that a home inspection is not technically exhaustive and does not imply that every defect will be discovered. A general list of exclusions include but are not limited to: code or zoning violations, permit research, property measurements or surveys, boundaries, easements or right of way, conditions of title, proximity to environmental hazards, noise interference, soil or geological conditions, well water systems or water quality, underground sewer lines and/or waste disposal systems, buried piping, cisterns, underground water tanks and sprinkler systems to name a few. A complete list of standards and procedures for home inspections can be found at the NAHI, ASHI or InterNACHI websites.
A home inspector is sometimes confused with a real estate appraiser. A home inspector determines the condition of a structure, whereas an appraiser determines the value of a property. Although not all states or municipalities in the U.S. regulate home inspectors, there are some professional associations for home inspectors that provide education, training, and networking opportunities. A professional home inspection is an examination of the current condition of a house. It is not an inspection to verify compliance with appropriate codes."
Buyers desire to own their own home, Sellers need to sell their home. Realtors aid in establishing market value for both scenarios either by showing homes to buyers or discussing the market conditions at any given moment with buyers and sellers. Once a home is "found" by a buyer, their Realtor assists them with the process of offering, negotiating and closing the home. A fundamental guideline for this process is the buyer wants the home. If the buyer decides the home is not for them, they can not make the offer or utilize one of the "outs" created by the offer they made with their Realtor. During the "under contract phase" of this process; a buyer will have professional people performing exact steps and offering opinions (Lender, Surveyor, Title, Inspector, Appraisal, specific Contractor). Lets focus on The Inspector.
The Inspector and the Realtor are 2 seperate profesional occupations in Texas both licensed by The State of Texas. Inspectors don't discuss sales and Realtors should not discuss durability-integrity-conditions of improvements. A Realtor could and should discuss what upgrades are worth in the open market of a home sale. A Realtor could also help create a plan with a written Home Inspector's report in making an offer or countering an offer with an active option period. Realtors know how to negotiate the steps in a home sale, that is what we do. When an inspection is in process it is best to have the home empty of the seller owner. Just the inspector and buyer should be around. This simplifies who says what and really frees up the buyer to get their money worth with their inspector by asking questions and learning about their home. We Realtors are a talkative bunch. We see a lot of inspections. We get immune to what an inspection could mean to a buyer, especially if that buyer is first time OR has not bought in 20 years. I would also warn adding decorating ideas during an inspection. A list of inspectors findings in addition to a list of personal preferences could really confuse the entire process. Even under short option periods, a buyer should first to inspections THEN proceed to personal preferences.
Wikipedia...
"A home inspection is a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. The first known home inspection company, Home Equity Loss Protection Services dba/H.E.L.P.S.(Glen Ellyn, IL), was originally founded by Christopher P. Nolan and Loyola Professor Mark Goodfriend. Years later, the company was officially incorporated in the early 1980's by Jane Garvey, surviving wife of Professor Mark Goodfriend in Glen Ellyn, IL following its purchase from Christopher P. Nolan, the founder of the home inspection business and entrepreneur. Mr. Nolan was inspired to create a comprehensive system of home inspections because as an investor of distressed real estate and then a nationally recognized real estate expert and speaker, he realized a need to have skilled professionals inspect key areas of the home prior to his purchases in order to mitigate the risk of his investments. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections. The inspector prepares and delivers to the client a written report of findings. The client then uses the knowledge gained to make informed decisions about their pending real estate purchase. The home inspector describes the condition of the home at the time of inspection but does not guarantee future condition, efficiency, or life expectancy of systems or components.[1]
An inspector will check the roof, basement, heating system, water heater, air-conditioning system, structure, plumbing, electrical, and many other aspects of buildings looking for improper building practices, those items that require extensive repairs, items that are general maintenance issues, as well as some fire and safety issues.[2] However, it should also be noted that a home inspection is not technically exhaustive and does not imply that every defect will be discovered. A general list of exclusions include but are not limited to: code or zoning violations, permit research, property measurements or surveys, boundaries, easements or right of way, conditions of title, proximity to environmental hazards, noise interference, soil or geological conditions, well water systems or water quality, underground sewer lines and/or waste disposal systems, buried piping, cisterns, underground water tanks and sprinkler systems to name a few. A complete list of standards and procedures for home inspections can be found at the NAHI, ASHI or InterNACHI websites.
A home inspector is sometimes confused with a real estate appraiser. A home inspector determines the condition of a structure, whereas an appraiser determines the value of a property. Although not all states or municipalities in the U.S. regulate home inspectors, there are some professional associations for home inspectors that provide education, training, and networking opportunities. A professional home inspection is an examination of the current condition of a house. It is not an inspection to verify compliance with appropriate codes."
Thursday, May 5, 2011
Garage or "Cooled" space?
Looking at a home with a converted garage or other recently added space(maybe porch)? Have you converted your garage? Central Austin has a ton of converted garages into living rooms and bedrooms. Increasing the size of small cottages built in the 30's and 40's for better closets and storage has been popular. Depending on the market here are some considerations in pricing if you are a seller or a buyer. Scope of the conversion is instrumental in market value.
Seperate the original square footage from the converted garage space (this can also work for converted porches and other spaces incorporated into the heating / cooling of the house that is noticeable). Typically a 2 car garage is around 400 square feet. If the "original" house was 1600 square feet, with the converted garage we now have a 2000 square feet home. The original 1600 sqft tends to have a higher valuation per foot than the converted space of 400 sqft. Too often, a home is listed at the peak of the market for the area using all 2000sqft.
This can work when having trouble selling your own home or wanting to establish a method of pricing to make an offer. Of course market conditions apply. If you are selling in a buyers market the pricing of the converted space could be lower than higher. Buying in a seller market could mean inventory is low and you don't have many options.
Seperate the original square footage from the converted garage space (this can also work for converted porches and other spaces incorporated into the heating / cooling of the house that is noticeable). Typically a 2 car garage is around 400 square feet. If the "original" house was 1600 square feet, with the converted garage we now have a 2000 square feet home. The original 1600 sqft tends to have a higher valuation per foot than the converted space of 400 sqft. Too often, a home is listed at the peak of the market for the area using all 2000sqft.
This can work when having trouble selling your own home or wanting to establish a method of pricing to make an offer. Of course market conditions apply. If you are selling in a buyers market the pricing of the converted space could be lower than higher. Buying in a seller market could mean inventory is low and you don't have many options.
"Price per square foot..."
There are many methods to analyze the value of real property. A common practice is to discuss price per square foot. That is one good tool to establish a value however it should not be the only one. How big is the lot? How is the landscaping? How many trees and what type? What is the lot like? Overall condition of interior/exterior? Who designed the house? How good or bad is the floor plan? What is going on with the school district? What amenities are found within walking distance? How is the overall street where this property is located?
There are times when price per foot answers enough questions to make the offer or price the property. However the use of "price per foot" is often the only 'system' used in pricing and there could be more to it.
If you are a buyer and have seen a lot of properties for sale you know valuations better than the future Appraiser.
There are times when price per foot answers enough questions to make the offer or price the property. However the use of "price per foot" is often the only 'system' used in pricing and there could be more to it.
If you are a buyer and have seen a lot of properties for sale you know valuations better than the future Appraiser.
Just business, not personal
A huge advantage to working with a real estate Agent (Realtor) is having the Agent buffering the personalities of the parties involved. If you have chosen your Realtor through careful consideration you should have somebody you know and trust - highly referred. The Buyer gets to talk directly with their preferred Agent and the Seller discusses their business only with their desired Agent. This could be one of the top values in having a Realtor involved with the transaction that goes most unnoticed, rarely discussed.
A willing seller needs a qualified buyer to purchase and complete the transaction. This sounds simple enough only people are involved, highly emotional people. The seller wants to sell, the buyer wants to buy. But what happens if the two parties don't personally get along? What if they have some fundamental differences and "would never hang out"? This matters little to the business of buying/selling real estate. The Realtors do this work on a regular basis. If a seller or buyer has not moved / bought a home in 20 years, the principal is going to be WAY out side their comfort zone. Their ability to trust the Realtor will be key to their own sanity during the process.
Choosing your professional Agent (Realtor) is the first step, then getting out of your comfort zone to trust that Realtor to do what they do is next. This scenario keeps communication in a professional order and reduces confusion. I am not saying it eradicates confusion (remember, people are involved) but it does help.
A willing seller needs a qualified buyer to purchase and complete the transaction. This sounds simple enough only people are involved, highly emotional people. The seller wants to sell, the buyer wants to buy. But what happens if the two parties don't personally get along? What if they have some fundamental differences and "would never hang out"? This matters little to the business of buying/selling real estate. The Realtors do this work on a regular basis. If a seller or buyer has not moved / bought a home in 20 years, the principal is going to be WAY out side their comfort zone. Their ability to trust the Realtor will be key to their own sanity during the process.
Choosing your professional Agent (Realtor) is the first step, then getting out of your comfort zone to trust that Realtor to do what they do is next. This scenario keeps communication in a professional order and reduces confusion. I am not saying it eradicates confusion (remember, people are involved) but it does help.
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