Archive for the ‘Buying & Selling Homes’ Category

What inspections should you get when buying a house?

Tuesday, August 14th, 2012

I think most agents would agree that for any home purchase it is a good idea to get both a pest inspection and a home inspection regardless of how perfect the home looks, but should you get other inspections too?  The answer is usually yes, depending on issues those inspectors find or if there are obvious problems or concerns.

There are dozens of inspections available, not every home needs every inspection.  Below gives you a general idea of what might be included by the various inspections:

1)      Pest Inspection:  Identifies wood destroying pest such as termites, dry rot, etc. as well as conditions that are not currently causing damage but could lead to future damage such as wood debris under a house.  Pest inspectors do not identify mold but usually will point out moisture issues.  Pest inspectors will usually give you an estimate to correct issues found.

2)      General Home Inspection: Usually referred to as just a Home Inspection they will check to make sure the appliances, electrical, plumbing are functioning.  They will also point out other obvious defects that they see but almost always refer you to another specialist if they find something wrong.  Some inspectors will also do a report on the condition of the roof.

3)      Roof Inspection:  This also is a good idea on most homes. If the roof was recently replaced with permits that might be the exception.

4)      Electrical Inspection: Home inspectors give this a quick look but if you plan on making any improvements to the home this inspection is a must.  Because so many homeowners have fooled around with electrical (and in the vast majority of cases did not do the work correctly) this inspection is a good idea.

5)      Chimney:  Will determine if there are safety issues with your fireplace.

6)      Lead Paint: If your home was built pre-1978 (with is most Marin County real estate) count on it having lead paint.  Most people don’t get this inspection because the year of construction will usually tell you if the paint is an issue.  Most of the homes that do have lead paint have been repainted with non-lead paint.  The issue with lead paint (other than obvious health issues if you ingest it) is repainting a house with lead paint is  now more expensive because of containment required with removing old paint

7)      Structural / Foundation: If there are cracks in a foundation or if the home is not level you should have an engineer take a look.

8)      Pools/ Spa:  If you are going to keep the pool, get the inspection.

9)      Septic and/or Well:  If you have either these inspection are a must.

10)   Mold:  Any signs of mold or if you are sensitive to mold get this inspection.

11)   Tree/Arborist:  Some people do this for any home with large trees.  If the tree is leaning, looks dead, or is on a hillside it is recommended.

12)   Permits and Public Records:  You MUST research this for any home….no questions on this.

13)   Title Prelim:  Read the report when you receive it. If there are questions on anything…Ask questions.  This is where you will find items like easements.

14)   Lot Survey:  Very few people get this report because of expense and the time required.   What if you find your fence is two feet in the neighbors yard, or vise-versa but everyone is happy.  On the other hand I have seen a small subdivision where ever house was built on the middle of the lot line.  If one of those homes were destroyed the city might not let them rebuild because of setbacks.  To correct this every lot in the subdivision would need a lot-line adjustment.  Most people get a survey when there is a problem with a neighbor or if they want to build an addition to their home.

15)   Soil Stability:  On a hillside or if the home is not level then get this for sure.

This is not the full list, there are other inspection you can get but you can see that if you spent an average of $500 per inspection your cost would quickly add up which is why most people go with the pest and home inspections and if any issues are brought up they usually get additional inspections, ask for a price reduction or back out of the deal.  Choosing which inspections to get is something your agent can help with but the choice is yours.

Warren Carreiro, Broker

Why construction building permits are so important

Wednesday, February 1st, 2012

Just a few years ago no one seemed to care if a home improvement or addition was done without permits.  Appraisers are now required to call out differences between square footage on tax records and actual measurements.  If the home has an addition that was done without permits some banks will not lend on the property, others reduce or eliminate the value of the addition.

When you buy a foreclosure permits are even more important because you don’t get any history of what improvements were done or who did the work.  When improvements are done by a homeowner or unskilled worker the results can be disastrous.  I have seen beautiful bathrooms with the marble falling off the shower walls because it was not installed correctly.  This is something you would not be able to see, and likely a home inspector would not be able to find until the damage was obvious.  I have also run into homes that had windows installed without permits and the windows did not have any headers (the beams that support the wall and roof above the window).  The windows in this same house were installed in such a fashion that the walls had no shear (support that would keep the home from falling down in strong winds or mild earthquake).

Electrical work done by homeowners is almost always done incorrectly and creates unsafe wiring and grounding, overloaded circuits, and unprotected wires.

We don’t like getting permits because it cost money, slows down the job, and of course the building inspector will see everything you are doing. Most people feel they are doing a good job and the permits are not necessary but building codes are designed for safety and are not always easy to follow.

If you buy a home that had work done without permits and you start a project with permits it is possible the building inspector will notice the other work that was done and make you get permits for the old work.  Remember, the responsibility follows the home so once you own the home you also own the improvements that were done by prior owners.

Most homes in Marin County are older and I would guess that many, if not most, of them have had work done without the proper permits.  When buying a home a full investigation of its permit history is in order.   Talk to the county or City, look at the permits and if the permit does not have a “final” stamp that means the work was not done or at least not signed off by the building inspector.  Buy the house if you like it but discount your price for work that may need to be redone.

What it’s like buying a Bank Owned Foreclosure

Wednesday, March 30th, 2011

You’ve been looking and finally found the house you want to buy and it is a foreclosure, also known as an REO (Real Estate Owned –“by a bank”).  Usually these are considered a good deal, at least they typically are priced a little below the going rate.

Here is what you need to know.  There are no disclosures, nothing telling you the next door neighbors might be noisy or maybe water leaks under the house in heavy rains.  There are reasons for this; the bank has never lived in the house so they don’t know anything about it.  The former owners that got foreclosed on are not anxious to help the bank sell the house.  Also, those owners might make the house look better or worse than it is just to “get back at the bank”.  All this means you better do your homework and get inspections so you know what you are getting into.

When you write an offer on a foreclosure it may take several days for the bank to let you know if your offer is accepted, we are talking bankers’ hours.  Most of the larger banks with counter your offer, even if they like your price, with an addendum that turns the whole purchase contract in their favor.  For example, in a typical purchase contract you might have 17 days to do your inspections and if you don’t expressly remove the Inspection Contingency you can get out of the contract without losing your deposit.   The banks addendum changes that so if you don’t remove your Inspection Contingency by the given date it is assumed everything is okay and you are stuck in the contract.  Not only that but they usually give you just 5 to 7 days to complete inspections.

I suppose we could live with the shorter timeline and passive removal of contingencies except it is usually not clear when your timeline starts.  This is because when the bank counters your offer with their addendum they may sign it one day and you don’t receive it for several days after that.  Usually that would not be a problem but the bank form might say the start date is when it is signed by the bank.  At this point I can’t guarantee my clients what the real start day of the contract is so we have to go conservative and assume it starts when the bank signs it.  That can take our 7 day inspection period down to just a few days or worse if it is Friday or a long weekend.  No problem, right?  All we need to do it issue an addendum asking for more time for our inspections.   The listing agent will say okay and send it to the REO bank.  Problem is the bank never signs the extension but you are told it is okay.  We all know everything in real estate has to be in writing but we can’t get the bank to sign anything.  I have to say, so far, the banks have been honorable with their word but who wants to be there when they aren’t.

If a buyer get emotional in a multiple offer situation they may offer more than they wanted once all the dust settles.   No problem for the bank, their addendum takes care of that for them.  If you want the deal they make you sign a form that says if the home appraises for less that your offer you will still go through with the deal and make up the difference with a larger down payment.

Regardless of all these problems with buying a bank owned foreclosure, REO, it likely will still be less frustrating that buying a Short Sale…

Warren Carreiro

warren@RealtyOfMarin.com

More Home Loan Problems

Tuesday, November 16th, 2010

Getting loan approval is only half the battle.  Sure you need to have verifiable income and a down payment but even with that is does not necessarily mean you can get loan approval for the home you want.  Why, because the home you choose has to be approved by the bank as well.

Appraisers are often asked to make note of any of the following issues when appraising a home:

1)      Peeling paint

2)      Missing appliances

3)      Heat or hot water issues.

4)      Additions or improvements done without permits

5)      Major fixers

One of the newer issues is banks asking appraisers to make note of improvements done without permits.  Because most the homes in Marin are older it is not uncommon, over time, for something to be done without the benefits of permits.  Some banks do not want to lend on those homes unless the permit problems are resolved.  Usually something can be worked out with the city, if the seller has the time and money to get retroactive permits.  Historically, unpermitted remodel projects did not cause a problem with loans, maybe with the City but not with your lender.

Often REO (foreclosures) and Short Sale homes have deferred maintenance and in some cases have been trashed.  If it in very bad condition most banks will not lend on the property which often means cash investors are the only buyers.

Home Sales PLUNGE: Not for Marin

Tuesday, August 24th, 2010

It is all over the news this morning; home sales PLUNGE to levels not seen in 15 years.  While this may be true nationwide the saying “real estate is local” definitely applies to Marin.  Sure we have taken our hit on prices and sales and I do feel badly for those homeowners that are underwater or have lost their homes to foreclosure, however, our sales did not plunge in July.

According to the report on Huffington Post sales nationwide are down 27% from last July.  In Marin sales were down 3% from last July.  Year-to-date sales of Marin County Real Estate are up 21% compared to 2009.  The Marin median price is also up 5% so far this year.

Even Belvedere which has a high number of listings (47), with only 2 in contract, and believe me those numbers yell OVERPRICED, is doing better than last year.  So far this year there have been 18 sales compared to 13 for the same period last year.  The median price is down to $808 per square foot from $941 but because it is such a small town with few sales the statistically base is too small to mean much.

Warren Carreiro, Broker

Sales of Single Family Homes up 50% in Marin

Sunday, March 7th, 2010

This has not been making the newspaper headlines yet but the sale of single family homes has taken off the first couple of months of 2010 up 50% from the same period last year. Perhaps more disheartening to first time Marin buyers is just 18% of those homes sold for $500,000 or less (compared to 22% for the same period last year).

The focus here is single family homes because they are currently hot. This is not permanent as condo prices tend to leap-frog homes when the price differential is great. That is to say when condo prices approach house prices people tend to say lets buy the house, it is just a little bit more and does not have an association fee. The jump to single family home purchases cause prices to go up creating a price difference large enough that condos look like the better deal. As condo sales increase prices go up and thus the leap-frog of prices. This is true of neighborhoods too, when Greenbrae is just a little more expensive than San Rafael that is where the buyers go. Once the price difference is great San Rafael looks more attractive.

For the first two months of 2010 there were 199 single family homes sold and 18% were $500,000 or less. For the same period in 2009, 22% of the 133 homes were $500,000 or less. All the information for this post comes from the Marin County BARIES MLS, which does not include “off market” sales.

For more information contact:

Warren Carreiro

DRE# 01031805

warren@RealtyOfMarin.com

 

New law for cash investors on REO’s (bank owned property)

Friday, October 2nd, 2009

This is a great opportunity, because of very low prices, for first time buyers to finally get into the housing market.  Those that have saved a down payment (sometimes as low as 3% with FHA financing) and have documentable income can buy a home that just a few years ago may have cost twice as much.

The problem is many of these homes have multiple offers, ten or more is not uncommon in Marin county.  It is not unusual that the majority of those making offers are cash investors that have no plan on living in the home.  Nothing wrong with that, after all the United States is a capitalistic society which is not a dirty word.

The sellers, big banks many of whom received bailout money favor cash offers as do most sellers.   There should be some regulation that would put intended owner occupied buyers on the same footing as cash investors.  If the buyers have a down payment and proof of income and fully qualify for the purchase REO banks should not be allowed to accept a lower cash offer from a non owner occupied investor.  These qualified buyers are the type that build communities, have an interest in local events and tend to keep up the homes and therefore the neighborhoods.  This just seems like a no-brainer to me especially if the REO bank is using OUR bailout money.