Archive for the 'Inspections' Category
Real Estate Bargains: Getting the Best Buy Possible
Yesterday we highlighted four common myths that sometimes lead buyers to believe they’re getting a better deal than they really are. Today we’re sharing some thoughts about finding true real estate bargains.
Let’s just get this first point out of the way early. If you’re looking for a ridiculous value – a complete steal – then a real estate agent probably isn’t going to find it for you. You need to start pounding the pavement to track down leads on your own. You need to find sellers who are (1) just starting to think about selling their home, and (2) completely out of touch with the approximate value of their home and the real estate market overall. Because once they talk to a real estate agent, or begin to look at what similar homes are selling for, the pricing is going to be far more rational and efficient. You are effectively competing with agents for listings.
Okay, so if we agree that your buyer’s agent is not going to find you the deal of a lifetime, how do you find a good real estate deal?
1. Look at what everyone else is ignoring.
Buyers are currently fixated on fully updated homes. This is a big change from the middle of the decade when sweat equity was all the rage. As a result, there are some interesting opportunities in homes that are in desirable locations but need some work. Sometimes these homes can be money pits, but other times the main issues are cosmetic. Differentiating between the two can lead to very good investments.2. Be flexible in your requirements.
The wider the range of possibilities that you are considering, the more likely you are going to find a seller willing to compromise on price. Consider multiple towns. Consider different house styles. Consider different bedroom and bathroom configurations. The more options you are open to, the more likely an opportunity will come your way.3. Be ready, willing, and able to react.
Every now and then we come across a property listed in the MLS that’s a good buy. We tell as many of our buyer clients about it as possible, but most of the time it’s not a good fit for their needs or the timing isn’t right.For example, last year there was a home in a popular neighborhood in West Hartford that turned out to be a very good buy. According to the group of agents who visited it with us on broker’s tour, it was initially listed about 10% too high. It was also listed late in the spring market. The sellers quickly lowered the price to the point it was fair, but nothing happened. Buyers had checked out for the summer and there were no offers. After lowering the price to about 8% below was we all initially agreed was fair, they got an offer. The property ended up closing more than 12% below what we thought it was worth, and more than 20% below the initial asking price. It was not a distressed home, just one that got lost in the shuffle due to poor timing and pricing.
4. Focus on more than just the price.
Most of the homes in Greater Hartford are more than 25 years old, which means that their original mechanicals are approaching the end of their useful lives. Time for a quiz! You have the choice of buying two houses that are virtually identical. Choice A is a home with fresh, tasteful paint, but older mechanicals. Choice B is a home with hideous wallpaper and shag carpet everywhere, but new windows, roof, and furnace. Both have dated, but functional, kitchens and baths. Both have the same number of bedrooms, baths, and total rooms, and both have the same asking price. Which do you prefer?Most buyers gravitate towards the tasteful and pretty. They overestimate the amount of time, effort, and money needed for cosmetic issues and underestimate the value of the mechanicals. Not only will newer mechanicals allow you to avoid the cost of replacing them, they will also operate more efficiently and save you money every month.
The average real estate buyer and seller is much more knowledgeable today than ever before. Information available via the internet and traditional media sources help them understand the sales process and pricing, which in turn makes the overall market more efficient. Finding an unbelievable bargain is a real challenge. Most buyers are focused on making sure that they get a good buy if a property needs work, and at least pay a fair price if the home is in move-in condition. The key is to know what else is on the market, so you know if the price is right.
Nice Chimney!
Home inspectors almost always find something wrong with chimneys. They’re just not a part of the home that owners think about on a regular basis, so routine maintenance is often ignored. Sometimes they simply need to be cleaned, other times the outside needs repointing, and on occasion there are major structural issues. So when representing buyers, we’ll always sneak a quick peek at the outside of the chimney to see if it might lead to trouble. Here’s a quick quiz … which chimney has been recently been rebuilt?
Answer: The chimney on the left was recently rebuilt. All of the bricks are the same color, as is the mortar between the courses. There is no mortar missing, and the courses are lined up very neatly. The chimney on the right has a lot of things going on, starting with the plant life.
Beyond the visible portion, there are other ways that chimneys can need attention. Interior bricks experience the same decay as those outside the house, though less so since they are not exposed to the elements. There can also be problems with the flue, like cracked tiles, objects falling into the flue, or build-ups of soot and creosote.
Our three most recent deals all had issues with the chimney, and in each case the buyer asked the seller to address the problems. The cost of fixing chimneys can vary widely depending on what needs to be done and the location of the problem area. The work is labor intensive and may require building scaffolding or mechanical lifts if it is on the upper portion of the home. Fortunately, there are no moving parts to a chimney, so once it is properly repaired it should remain in good shape for years to come.
You may not have paid much attention to chimneys in the past, but I bet now you’ll take a quick look every now and then.
Inspector Shortage?
When a buyer purchases a home, they have the right to have certain inspections performed within a specified timeframe after the contract is signed. In our market, the window to have inspections conducted is typically anywhere from 7-14 days. Buyers want their right to understand any issues with the house and sellers want the review conducted as soon as possible so that they know the contract is continuing forward towards closing.
Often my buyers look to me for home inspector recommendations. When asked, part of my job is to provide a list of competent professionals that I know will look out for my buyer’s rights and do a thorough and professional job. Over the years, I’ve found some top notch inspectors that I greatly respect. They take their continuing education seriously and know the latest about changing building and mechanical system standards, safety, and environmental issues. They thoroughly inspect each home from top to bottom, whether it’s hauling themselves into tiny, sweaty attic crawl spaces looking for roof leaks and adequate ventilation or dragging themselves under decks to check for structural stability and evidence of insect infestation.
One of the trends I’ve recently noticed is that all of the inspectors that I normally recommend are scheduling about a week in advance. Previously my buyers could arrange to have their inspections conducted within 2-3 days of a contract being signed. Not now. They’re all booking well in advance and have been for weeks. Most have been doing their 2 inspections a day, 6 days a week and don’t see a let up any time soon. They all notice that the trend this year has been smaller, first time buyer starter homes, rather than the larger move-up houses.
So what does this mean for my buyers? Once they’re under contract I suggest they start calling inspectors as soon as possible to arrange for their inspections. We only have a limited time to get them completed and then submit requests for repairs to the sellers.
Meanwhile, I’m in the process of finding more inspectors to recommend, which is easier said than done. My expectations are very high, as there is a lot riding on these home inspections for my buyer clients. If something isn’t found during their inspection it can become a major surprise for them down the road, when they’re living in the house or when they need to resell. No one likes surprises when it comes to houses.
So I continue my search to expand my list of true professionals that I feel comfortable recommending. Hopefully the situation won’t get any worse because we’re already cutting it a little too close for my taste…