For licensees and customers alike, this is a critical phase of the home buyer/selling process...probably THE most critical phase. In my book "Risk Hotline for Real Estate (www.riskhotline.com) I cover this aspect of the home sale or purchase in several chapters.
For sellers...I strongly recommend you have your own home inspection prior to listing your home, or if you must list right away, have this inspection immediately. It will cost you about $400 but can save you thousands.
Suppose you do not have your home pre-inspected. You negotiate a sale price that you feel isn't as good as you wanted but can live with. Then the home inspector finds $2000 in repairs you had no idea were there. Suddenly your net profit has taken a major hit because you didn't know about problems ahead of time.
Having the pre-inspection and making the repairs before sale gives you the edge in two ways: (1) you know about your problems before the buyer does and can correct them, and (2) the buyer knows you have been pro-active in presenting your home in its best manner, giving the buyer confidence they are making the right decision in purchasing your home.
For buyers and sellers: Do not select a home inspector solely because your brother or next door neighbor used that inspector. Speak to two or three inspectors just as you would when selecting a broker to list your home. Two requisites I recommend are: (1) Be sure they are computerized so they can give you a legible copy of the inspection. Inspectors who still hand-write their reports often write so poorly you can't tell what they've said, requiring endless phone calls to get it right. (2) Be sure they take digital photos of problem areas. This benefits you and the seller because you can both see problems and deal with them more amicably.
Friday, August 18, 2006
Tuesday, August 15, 2006
Oregon Buyers Advisory in "Risk Hotline"
In my book "Risk Hotline for Real Estate...Learn from actual agent experiences before they happen to you," one of the most important topics I cover is the buyers advisory. Why? Because it is a very important way to reduce risk when buying or selling a home, and for licensees, in reducing business risk.
This document is a detailed source of information about purchasing real property. Jenny Pakula, deputy CEO/staff attorney for the Oregon Association of Realtors says, "Everything a buyer could want to know, would want to know, needs to know about a real estate transaction is in this advisory."
This important document covers over 21 topics, including agent responsibilities to the buyer. If it is this important to the buyer, it is of equal importance to the seller, simply so the seller will know what the buyer will be looking for.
The advisory covers such topics as mold, dry rot, underground oil storage tanks, wells, remodeling, neighborhood crime, and much more. In short, says Pakula, it provides "a myriad of documents that could surface in a real estate transaction."
The Oregon Buyers Advisory can be found online at www.oregonrealtors.org. Be sure to click on the "legal" icon itself, not the sub-icons that will pop up. OAR updates the advisory periodically to keep it current.
(The Oregon Buyer Advisory can be found on pp. 149-160 in my book.) You can look up this topic and many others in my book online at Amazon.com.
This document is a detailed source of information about purchasing real property. Jenny Pakula, deputy CEO/staff attorney for the Oregon Association of Realtors says, "Everything a buyer could want to know, would want to know, needs to know about a real estate transaction is in this advisory."
This important document covers over 21 topics, including agent responsibilities to the buyer. If it is this important to the buyer, it is of equal importance to the seller, simply so the seller will know what the buyer will be looking for.
The advisory covers such topics as mold, dry rot, underground oil storage tanks, wells, remodeling, neighborhood crime, and much more. In short, says Pakula, it provides "a myriad of documents that could surface in a real estate transaction."
The Oregon Buyers Advisory can be found online at www.oregonrealtors.org. Be sure to click on the "legal" icon itself, not the sub-icons that will pop up. OAR updates the advisory periodically to keep it current.
(The Oregon Buyer Advisory can be found on pp. 149-160 in my book.) You can look up this topic and many others in my book online at Amazon.com.
Monday, August 14, 2006
Hiring a Contractor - Use caution
NBC's "Dateline" news program had a poignant story on contractors last night which prompted me to write the following caution this morning.
NBC told of two California contractors who had been hired to build or remodel different homes. The owners had paid the contractors hundreds of thousands of dollars to get their work underway. Both contractors got "upside down" as one put it. He took the owners' money but either spent it on his personal bills, or to keep another project going, which he was also "upside down" on. He ultimately declared bankruptcy.
The second contractor simply took that owner's money and left their home in an incomplete condition; worse, he had not properly performed his construction and it had to be torn out and redone.
To add insult to injury, each homeowner was sued by the project's subcontractors and materials providers whom the contractor had not paid. In other words, the homeowners had to pay for the same service twice (plus attorneys fees for fighting all the claims).
These owners made the same mistake thousands of us do each year. Someone refers a craftsman to us and we simply accept that recommendation without doing our own due diligence.
Anytime you hire a contractor, take these steps at a minimum:
1. Get the contractor's license number and call your state contractors board
to see if he/she has any complaints filed. Sometimes the state will only have
knowledge of a complaint. Dig deeper; ask the state for names and contact
information on the complainants. Ask the contractor for an explanation. If
he makes the complaint seem trivial, ask him for the name and number of the
complainant(s) to confirm his statements.
2. Ask the contractor for references. Call those owners and ask if the contractor
was timely, thorough, and clean.
3. Once you select your contractor, make your checks payable to both him and the
subcontractor/materials provider. That way, you won't end up like the owners
above with double billings for services and materials. Be sure the contractor
gets a building permit for the project and that the local inspectors approve
his/her work (foundation, electrical, plumbing, etc) as the project proceeds.
Don't assume the inspectors will automatically do their duty - I heard of a
new home in which the contractor had failed to install attic insulation. The
owner discovered it during winter months when her heating bills skyrocketed.
No inspection had ever been performed.
4. Never give the contractor more than 10 percent down. Then make the payments
in increments as the contractor proceeds.
5. Oregon requires all contractors to pay a $5000 bond in the event they have
complaints filed against them. This bond helps only in small claims...thus
the importance of being diligent in your own investigation of the contractor.
NBC told of two California contractors who had been hired to build or remodel different homes. The owners had paid the contractors hundreds of thousands of dollars to get their work underway. Both contractors got "upside down" as one put it. He took the owners' money but either spent it on his personal bills, or to keep another project going, which he was also "upside down" on. He ultimately declared bankruptcy.
The second contractor simply took that owner's money and left their home in an incomplete condition; worse, he had not properly performed his construction and it had to be torn out and redone.
To add insult to injury, each homeowner was sued by the project's subcontractors and materials providers whom the contractor had not paid. In other words, the homeowners had to pay for the same service twice (plus attorneys fees for fighting all the claims).
These owners made the same mistake thousands of us do each year. Someone refers a craftsman to us and we simply accept that recommendation without doing our own due diligence.
Anytime you hire a contractor, take these steps at a minimum:
1. Get the contractor's license number and call your state contractors board
to see if he/she has any complaints filed. Sometimes the state will only have
knowledge of a complaint. Dig deeper; ask the state for names and contact
information on the complainants. Ask the contractor for an explanation. If
he makes the complaint seem trivial, ask him for the name and number of the
complainant(s) to confirm his statements.
2. Ask the contractor for references. Call those owners and ask if the contractor
was timely, thorough, and clean.
3. Once you select your contractor, make your checks payable to both him and the
subcontractor/materials provider. That way, you won't end up like the owners
above with double billings for services and materials. Be sure the contractor
gets a building permit for the project and that the local inspectors approve
his/her work (foundation, electrical, plumbing, etc) as the project proceeds.
Don't assume the inspectors will automatically do their duty - I heard of a
new home in which the contractor had failed to install attic insulation. The
owner discovered it during winter months when her heating bills skyrocketed.
No inspection had ever been performed.
4. Never give the contractor more than 10 percent down. Then make the payments
in increments as the contractor proceeds.
5. Oregon requires all contractors to pay a $5000 bond in the event they have
complaints filed against them. This bond helps only in small claims...thus
the importance of being diligent in your own investigation of the contractor.
Sunday, August 13, 2006
Home warranties boost sale price
RE/MAX Equity Group, Inc. in Oregon recently commissioned American Home Shield (AHS) to conduct an independent survey. The survey was to learn the effects of AHS home warranties on a home's listing and sale price as well as the time it took to sell the home.
The purpose of this study was to see if a home would sell faster and for more money if it had a home protection plan on it. AHS used a 3d party - Cannon and Company, CPA firm located in Memphis, TN - to guarantee integrity in the survey.
What did the survey report:
1. The median list price of homes with a home warranty was 15% higher than those
with no home warranty.
2. Homes with a home warranty sold for a median price of 14% greater than homes
with no warranty. Specifically, homes with warranty sold for a median price of
$220,000 while those with no warranty sold for $193,000.
3. Homes with a warranty sold in 63 days on median average while those with none
sold in an average 72 days.
Jane and I are among the few who provide a home protection plan for ALL of our
clients. We recognized long ago the value of this service to our clients.
The purpose of this study was to see if a home would sell faster and for more money if it had a home protection plan on it. AHS used a 3d party - Cannon and Company, CPA firm located in Memphis, TN - to guarantee integrity in the survey.
What did the survey report:
1. The median list price of homes with a home warranty was 15% higher than those
with no home warranty.
2. Homes with a home warranty sold for a median price of 14% greater than homes
with no warranty. Specifically, homes with warranty sold for a median price of
$220,000 while those with no warranty sold for $193,000.
3. Homes with a warranty sold in 63 days on median average while those with none
sold in an average 72 days.
Jane and I are among the few who provide a home protection plan for ALL of our
clients. We recognized long ago the value of this service to our clients.
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