Helen Rivard- Realtor Selling Homes in Placerville | El Dorado Hills | Pollock Pines | Call me (530) 409-2687

There are a lot of things in real estate that aren’t rocket science: buy low, sell high; low interest rates give you cheaper money; and letting someone else give you a few hundred bucks to protect your house over the next 12 months will save you money up front and down the road.

Let’s think this through. You just spent thousands of dollars to get into your new home. You were able to negotiate a lower price, closing costs and a buy-down on the mortgage from the homeowner, who at this point is more than willing to hand over thousands of dollars to you to convince you to buy his house.

Then — against all the common sense that I can understand — you don’t ask them to lay down $300 – $500 to put up a home warranty that’s going to protect all your appliances, heating/air conditioning, plumbing, electrical, garage door opener, door bell, sump pump, well pump, swimming pool or spa, or washer/dryer. I think you get the picture.

Keeping in mind that a home warranty is not an insurance policy, it may not be regulated by the insurance commission in your state. Thus, the fine print of the warranty is very important to the seller or buyer before signing the bottom line. Most importantly is that it’s going to cover mechanical problems in the house that your homeowners insurance may not cover, such as what I listed above.

Even with a good home inspection verifying that everything in the house is working, the warranty limits your liability in the future in case something breaks down. Your liability is usually the deductible per incident of about $100 (again, check the fine print of your warranty).

Some of the limitations of a warranty may include:

 
• Pre-existing defects. For instance, if you buy the house and have a home inspector tell you that there’s a crack in the heat exchange and should be fixed — the home warranty’s most likely not going to fix it when you move in just because you bought the policy. The heat exchange must be in working order before the policy goes into effect. 
• Some items may not be covered. While electrical items will be covered, the warranty may not cover accessory items such as a house exhaust fan, attic fan, smoke alarms and intercom or speaker systems. In the electrical area what would be covered would be your basic wiring around the house — your light switches, main breaker or fuse panel, box receptacles and the like. (Again, read the fine print.) 
• Additional systems. If you have zoned heating, the warranty may only cover one heating system, not both. There may be a limit on how many toilets it covers through the house (only three, not four). More than one appliance type — the fridge in the kitchen’s covered, not the one in the garage. Nevertheless, many of the warranties I’ve seen allow for riders to cover such items.

 

If you decide to go with a home warranty, remember that having one in place doesn’t mean you can quit taking care of the house. The warranty is covering surprises to the homeowner, not homeowner neglect.

Finally, read the fine print of several warranties before laying out cash for one. Compare the cost per year (but don’t necessarily go with the cheapest); what is the deductible; what are the limitations on coverage (some may have a low deductible, but cap how much they’ll put out on coverage); caps on replacement cost; etc.

Should you get a home warranty during your home purchase transaction? Let’s put it this way. I’ve never heard about a homeowner upset for having one in place, but I’ve heard many complain they didn’t have one when something breaks.

By the way, remember the home warranty is not just for those in the middle of a transaction. Any homeowner can put a warranty in place. For a referral for a good home warranty ask your real estate professional.

Written by M. Anthony Carr

There are inappropriate steps sellers can take when it comes time to put their house on the market.

For instance, the seller in Virginia, who thought the half bath the builder had located at the front of the house would really be better situated toward the back of the main level (though all the other similar models had the powder room in the same place for the previous 20 years). He got hung up on this detail so much, that he just had to move it — and did — for thousands of dollars, just so he could get it on the market the “right way.” His hang-up may have settled some deep-seated emotional need for him, but it didn’t draw any more buyers, and it drained his bottom line. You might say, that was a costly mistake.

Real estate broker and author Sid Davis has identified in his book, “A Survival Guide to Selling a Home,” seven costly mistakes that many sellers make when it comes time to put their home on the market. In my business, I’ve seen each one of these mistakes played out and it just makes me shake my head as to why sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional.

Mistake 1: Putting the home on the market before it’s ready. Most times this happens because the seller gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-sale work done. So it comes on the market with the horrible carpet (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything — so get the work done before marketing the property.

Mistake 2: Over improving the home for the neighborhood. This happens with additions, bump outs, and upgrades that make the home stick out from among its competitors so much that it’s an anomaly, instead of a nice addition to the community.

Mistake 3: Pricing the home based on what the seller wants to net. This pricing strategy always ends in failure. Sellers can control the “asking” price, but they don’t control the “sales” price. The market does. It doesn’t matter what the seller wants, the price is determined by the black-and-white, matter-of-fact reality of the market.

Mistake 4: Hiring an agent based on non-business factors. It might be nice to hand over your largest asset to your nephew who just got his license — but make sure you understand the consequences if your deal starts going south.

Mistake 5: Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the market. Once you decide to sell your house, it’s no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn’t matter what you “want,” only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can’t get emotional about how they may or may not appreciate the nuances of your home of seven years.

Mistake 6: Trying to cover up problems, or not disclosing them. Most states have a property disclosure/disclaimer form — use it wisely. Just because you disclaim doesn’t mean you cannot be sued later for the leaky basement, or dilapidated heating/air system that’s discovered 30 days after settlement.

Mistake 7: Not getting your ducks lined up before trying to sell. This would involve financing, reading the fine print on your current mortgage to ensure no pre-payment penalties, not listening to the particulars of your local market, etc. If your local market is dictating lower home prices, then lower it early, not later — it will cost you more. If the local market dictates selling your home first, then buying second, do it in that order, or vice versa.

Avoiding these mistakes is not that difficult. Your REALTOR® is there to help you step over the pitfalls.

Written by M. Anthony Carr

It’s a good time for a home inspection.

In today’s markets, a home inspection can give buyers a negotiating edge.

Sellers, on the other hand, get an anti-haggling tool.

Actually, it’s always a good time for a home inspection. Even in a seller’s market, you ought to know what “as-is” really is.

“It’s always a good time no matter what the market is like. Today, a lot of sellers are getting a home inspection because a lot of contracts are contingent on a home inspection. The price is negotiated based on known conditions. But it is a buyer’s market and they are likely to negotiate the findings” of a home inspection, said Mike Kuhn, co-author of “The Pocket Idiot’s Guide to Home Inspections.”

Kuhn, a Housemaster franchisee, says for $350 to $500 a professional home inspector should review the major, visible and accessible components of the home and provide a detailed written report rating each element. The objective report should include detailed information in a way that allows the customer to make informed decisions about the findings.

The inspection can also be a learning opportunity for a buyer or seller who attends the event. The inspection will let them get to know the home, see the inspector demonstrate systems and to learn maintenance tips.

It can also help buyers see through the veil of misleading staging and other cover-ups as well as help buyers uncover building permit and code violations.

Sellers can likewise use the inspection to determine what they need to do to put the home in the best competitive shape for the market, or price it fairly to sell as-is.

While a home inspection, purchased by the buyer or seller or both, is more common than it’s ever been, 25 percent of home buyers, or more (depending upon the source) do not buy a home inspection, says Kuhn.

“An even smaller percentage of home sellers acquire a pre-listing inspection to help them better present their home in a competitive way,” he said.

Even new homes need a once over.

“There’s a misconception that because it’s a new home there’s nothing wrong with it, but that’s not necessarily the case. It could be something as simple as hot and cold water lines being reversed. It could be appliances not connected. You should have this addressed before you take possession,” Kuhn said.

The three most common construction problems discovered in single-family homes were in the building envelope (41 percent); framing and structural elements (34 percent); and in the plumbing and electrical systems (8 percent).

As homes age, given the life expectancy of certain systems, the home inspection remains prudent.

Within 10 years, foundation settling could create drainage problems; by the age of 20, appliances are well outdated and the roof and wood components exposed the weather or moisture could need replacing; at 40 years the HVAC system will likely need replacement; and older historic or architecturally significant homes can develop structural problems and need restoration.

Written by Broderick Perkins

If your house has been on the market for quite a while, you may have already dropped your price and now you’re waiting for the buyers to rush in and make wonderful offers on this now-priced right property. And then it happens.

The lone buyer does appear, like a bandit in the night and offers you even less than what you just agreed to. Quite a bit less — about 10 percent less. So on your $350,000 house, that you just dropped to $324,000, you now have an offer for $299,000. With a seller subsidy request of $5,000. At this point, your net is $294,000.

So how do you handle such a low-ball offer. Well, first of all — don’t panic, get angry or lose sleep. Especially, don’t reject the offer right off the bat and tell them to come back when they’re serious. Remember, it’s now a negotiation game and the buyer IS serious or he or she would not have made an offer.

Several things have happened before this offer came in. The buyer, with his agent, has researched the market, walked through as many as 30 or 50 properties, conducted a study on the value of the property and written an offer for your house. Remember, you just won the lottery. They could have written on any other house, but they selected yours. So let’s get busy.

First of all, do an analysis of your own goals and needs. How much do you really need to come out of this house to meet your goals of moving to your next home? What could you really live with and what amount are you going to counter. Remember this last point — what are you going to counter? This is assuming that you’re not rolling over and that you’re going to stay in the game.

Next, conduct a comparative market analysis of the house once again. What’s happened in the market to get this buyer to offer such an offer (notice I didn’t say ‘low’). It might be that your house is now worth that amount. And if it is — that’s okay, because it probably means the house you wanted to buy up into is also worth less. At the worse, you’re going to take away less money. The best thing to look at, however, is that now you’re going to buy up with a smaller down payment because the buy-up property is also less.

Now, let’s start the negotiation. Keep in mind, this is for the long haul. Keep it alive as long as the buyer will keep it alive. Give up a little bit at a time. If you reduced the house to $324,000, expecting an offer of $319,999 with closing costs of $10,000 — then start there. You’re already willing to accept a net of $309,999, so you’re not really that far off. Understand you’re not going to get top dollar with no seller subsidy. So come down to $320,000 and give them their closing costs. So now, your net has come up to $315,000.

Hey — you’re actually ahead of the game if they accept. Oops — they don’t. Now they’ve countered to $309,000 and still want the $5,000 in closing. (Now our net’s at $304,000). Great. Just think. When you started, you were $324,000 apart (remember, you had NO offer at all). Now, you’re only $5,999 away from the net you were willing to accept in the first place.

We’re almost there. Now, before I go much further, here’s a negotiation tip — keep this civil. Use a lot of complements about the offer, the buyers and the agent. “What a great offer. Thanks so much for writing. We are very excited about selling this house to you.”

You want the buyer agent and his/her clients to know you’re wanting to work with them. You’ve been waiting six months for this day (negotiation day) and you want to keep everyone engaged in the process to get your goals met — sold and on your way to your new home in the country.

Now offer your final counter (or maybe next to final). You definitely want to use the complements at this point: “We are so close.” “I can’t wait till we wrap this up, then we can all celebrate.”

At this point, you know the buyers want to buy and your sellers are ready to start packing, so emphasize that you’re very close. Use a dialogue like this: “We are so close. We have some goals to meet, just like you do. And I hope we can bring this together to get us both where we want to be.”

This is when you make the final offer and stick with it. If you offer $314,000, they definitely get what they need and you get closer to your final net — which at this point would be $309,000 — just $999 off of your initial goal. Then you know if it goes forward or you’re back on the market. However, don’t be so stubborn that you lose the lone buyer because of $2,000 or so.

If the buyer is stretching and this won’t work, this is when the honesty comes out. The agent may tell you, If we can’t do $309,000, it’s just not going to work. It goes too far beyond their qualification.” Then you can decide whether to keep it on the market (hoping you don’t have to drop the price again), or you cut the loss and move forward with settlement.

Be patient with the process. Don’t get upset, remember, they’re trying to meet goals just like you are. By working together, both can get what they want.

Written by M. Anthony Carr

Amid the scary financial headlines last week, there were some less-publicized developments in Washington that bode well for the home real estate market in the months ahead.

Federal regulators last Wednesday gave the go-ahead for Fannie Mae and Freddie Mac to buy an extra $200 billion in mortgage securities — a move that pushed down interest rates for home buyers and refinancers almost immediately.

At the same time, the 12 Federal Home Loan Banks prepared a plan that could allow them to buy an additional $160 billion in mortgage bonds.

Now you might ask: How does buying bonds help the mortgage market … or trickle down to help real estate sales?

Here’s how: The biggest challenge in the capital markets right now is what economists call “illiquidity,” which means that large U.S. investors aren’t able to sell their mortgage bond holdings because global investors have lost confidence in their safety.

Now in reality, most of the mortgages in these illiquid loan pools are paying on time and often are not even subprime credit. But global investors still won’t touch them because they got so badly burned in the subprime crash.

The new moves by Freddie and Fannie to buy up some of these securities are designed to break the logjam and get the secondary mortgage market flowing again. The same is true for the Federal Home Loan Banks.

So: We’re looking at the prospect of up to $360 billion of fresh capital injected into the market. Who benefits?

Number one: Just about anybody looking for a mortgage. After the Fannie-Freddie deal was outlined in Washington last week, 30-year fixed rates dropped by anywhere from an eighth to a quarter point.

Rates fell back below 6 percent — after hitting the mid sixes last month.

Another set of beneficiaries are likely to be thousands of financially-distressed homeowners with loans they can’t afford. Fannie and Freddie promised to help some of these homeowners get into fixed-rate mortgages that they CAN afford.

Home buyers in high cost California and along the Eastern seaboard should also benefit: Part of the $200 billion is expected to finance some of the new “jumbo” mortgages authorized by the economic stimulus legislation through December 31 — those are the big ones that go as high as $729,750.

At a time when the private capital markets are choked up with fear, moves by federal regulators to prime the pump and get fresh money into the housing market can only be a plus.

Which forces us to say: Now and then, amazingly enough, Washington works!

Written by Kenneth R. Harney