Imagine taking possession of your newly purchased home and finding that every light bulb has been removed, the place is filthy, and the dining room light fixture that was to have been included in the sale is gone. Not only frustrating and disappointing, it's natural to wonder what else might be missing and what to do next.
First, call your real estate agent and report the general condition of the property. The purchase contract should specify what condition the property should be in when the sellers turn it over to you. The contract might specify that sellers' personal property that isn't specifically included in the sale and debris must be removed. If an item like a dining room chandelier that is permanently attached to the house is not included in the sale, this should be spelled out in the contract.
If you're unable to resolve the issue directly with the seller or with the help of the agents involved, check your purchase contract for the section that deals with dispute resolution. Then call a knowledgeable residential real estate attorney for advice.
Situations like this rarely occur. That is, unless you're buying a foreclosure property on the courthouse steps. These buyers rarely have a chance to preview the property before it's purchased. These properties are often stripped free of appliances, bath fixtures -- anything that has salvage value. This sort of purchase should be left to savvy investors and avoided by inexperienced home buyers.
In a conventional home sale, the buyers' contract should include a provision for the buyers to take a final walkthrough of the property within five days or so before closing. This is not a contract contingency. It gives the buyers an opportunity to confirm that the property is in substantially the same condition it was when they entered into contract to buy the home.
Also, if the sellers completed any repairs on the property between contract acceptance and closing, like fixing a leaking plumbing pipe, the buyers can confirm that this work has been done. Sellers should document in writing any such repairs, and the buyers should sign that they received this information.
HOUSE HUNTING TIP: Unless you've made numerous visits to the property to take measurements or figure out furniture arrangement and are confident the sellers will leave the property in good condition, you should not forgo your right to do a final walkthrough. Many sellers won't vacate until closing takes place. So, you may not be able to see the property vacant on your final walkthrough. But, you should have an indication if there are any red flags, like the sellers haven't even started packing.
You should not take possession of a tenant-occupied property unless you're buying the property as a rental and have made arrangements with the tenant to stay on. Otherwise, you could have difficulty evicting an obstinate tenant, which can be costly and time consuming.
Ideally, the sellers will plan to meet with you at some point during or after your walkthrough to point out anything about the house that you might have difficulty figuring out on your own: the location of a light switch that isn't obvious; how often certain systems -- furnace, water heater, roof gutters, drainage systems -- need maintenance; and how to operate the irrigation system, to name a few. This will save you time.
If the sellers moved out early, ask them to leave a list of items you should be aware of. This should not include new disclosure information, merely operating manuals for appliances and utilities and copies of all transferable warranties.
THE CLOSING: Ask for a list of contractors, and their contact information, who have worked at the property that the sellers recommend. This is invaluable information.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.
Thursday, December 2, 2010
Assemble your real estate A-team
It has always been important to assemble a top-notch team of real estate professionals to assist you with a home purchase. Today, it's more important than ever.
One of the key players on your team is the real estate agent who will represent you and guide you through the process to a successful closing. The other is the mortgage broker or loan agent who will arrange financing for you unless you are paying all cash.
The Internet is a great resource for getting started on your home search and gaining general information about the market, past sale prices, active listings, and local neighborhoods. However, the home-sale market is extremely localized. Neighborhoods within blocks of one another can have different pricing structures and demand levels.
HOUSE HUNTING TIP: Make sure you hook up with the best agent you can find who specializes in the neighborhoods where you want to live. Your agent should educate you about the idiosyncratic characters of various neighborhoods -- information that is difficult to glean from the Internet.
The NATIONAL ASSOCIATION OF REALTORS® reported in its 2009 NAR Profile of Home Buyers and Sellers that 90 percent of home buyers used the Internet for their home search, up from 2 percent in 1995. Seventy-nine percent who used the Internet used a real estate agent to assist them with their purchase.
Only 37 percent of these buyers thought an agent's technology skills were important in selecting an agent. More than four out of five buyers thought knowledge of the process, honesty, integrity, responsiveness, communication, and negotiation skills were very important.
You should not only work with an agent who embraces these characteristics, your agent should specialize in the kind of property you want to buy. If you're interested only in distressed sales (short sales or bank-owned foreclosure properties), work with an agent who has experience in this area.
These can be very difficult transactions. One-third of all short-sale transactions never close. Pick an agent who has experience working with this particular type of transaction and who knows how to navigate the process.
The mortgage business has changed dramatically in recent years. The approval process can be grueling and appraisals problematic. Find a good mortgage professional who has a good track record closing loans in the current lending environment.
Ask how many loans your prospective mortgage professional has closed within the last several months in loan amounts similar to the one you need. Your agent or acquaintances who bought recently can provide recommendations for the best person to work with.
A good mortgage professional will be able to look at your financial documentation and credit scores and determine in advance what a lender's underwriter will require from you in order to approve your loan -- perhaps additional documentation or paying down existing debt.
A good mortgage broker knows which lender to submit your loan package to in order to maximize approval. Underwriting requirements differ from one lender to the next. One buyer wanted to use a lender that offered the lowest rate. That lender, however, was a stickler about work done to the property without building permits.
Not only would unpermitted areas not be counted as livable square feet, thereby lowering the appraised value, the bank wouldn't loan on the property unless all power sources to these areas were ripped out so that the areas couldn't be used. The loan was submitted to another lender that didn't allow the unpermitted space to be used for appraisal purposes. But, nothing had to be demolished.
THE CLOSING: Remember that you are part of the team; in fact, you're the captain. You are the decision maker. Never turn over important decisions to your agent, attorney, or loan agent, even if you're busy and would rather have someone else take care of everything.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.
One of the key players on your team is the real estate agent who will represent you and guide you through the process to a successful closing. The other is the mortgage broker or loan agent who will arrange financing for you unless you are paying all cash.
The Internet is a great resource for getting started on your home search and gaining general information about the market, past sale prices, active listings, and local neighborhoods. However, the home-sale market is extremely localized. Neighborhoods within blocks of one another can have different pricing structures and demand levels.
HOUSE HUNTING TIP: Make sure you hook up with the best agent you can find who specializes in the neighborhoods where you want to live. Your agent should educate you about the idiosyncratic characters of various neighborhoods -- information that is difficult to glean from the Internet.
The NATIONAL ASSOCIATION OF REALTORS® reported in its 2009 NAR Profile of Home Buyers and Sellers that 90 percent of home buyers used the Internet for their home search, up from 2 percent in 1995. Seventy-nine percent who used the Internet used a real estate agent to assist them with their purchase.
Only 37 percent of these buyers thought an agent's technology skills were important in selecting an agent. More than four out of five buyers thought knowledge of the process, honesty, integrity, responsiveness, communication, and negotiation skills were very important.
You should not only work with an agent who embraces these characteristics, your agent should specialize in the kind of property you want to buy. If you're interested only in distressed sales (short sales or bank-owned foreclosure properties), work with an agent who has experience in this area.
These can be very difficult transactions. One-third of all short-sale transactions never close. Pick an agent who has experience working with this particular type of transaction and who knows how to navigate the process.
The mortgage business has changed dramatically in recent years. The approval process can be grueling and appraisals problematic. Find a good mortgage professional who has a good track record closing loans in the current lending environment.
Ask how many loans your prospective mortgage professional has closed within the last several months in loan amounts similar to the one you need. Your agent or acquaintances who bought recently can provide recommendations for the best person to work with.
A good mortgage professional will be able to look at your financial documentation and credit scores and determine in advance what a lender's underwriter will require from you in order to approve your loan -- perhaps additional documentation or paying down existing debt.
A good mortgage broker knows which lender to submit your loan package to in order to maximize approval. Underwriting requirements differ from one lender to the next. One buyer wanted to use a lender that offered the lowest rate. That lender, however, was a stickler about work done to the property without building permits.
Not only would unpermitted areas not be counted as livable square feet, thereby lowering the appraised value, the bank wouldn't loan on the property unless all power sources to these areas were ripped out so that the areas couldn't be used. The loan was submitted to another lender that didn't allow the unpermitted space to be used for appraisal purposes. But, nothing had to be demolished.
THE CLOSING: Remember that you are part of the team; in fact, you're the captain. You are the decision maker. Never turn over important decisions to your agent, attorney, or loan agent, even if you're busy and would rather have someone else take care of everything.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.
New incentive for home sellers
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is offering a new program that pays a home buyer’s mortgage if he or she is laid off. The Home Payment Protection Program (HPPP), a program similar to the successful C.A.R.H.A.F. Mortgage Protection Program, is offered by REALTORS® to sellers at the time of listing as an added incentive to prospective buyers. The program is paid for by the seller and is completely optional.
The program covers both first-time and repeat-buyers for 12 months from escrow closing and provides up to six mortgage payments up to $1,000 or $1,500, depending on the coverage level the seller chooses. A seller can choose to pay $200 for six mortgage payments up to $1,000 or $275 for six mortgage payments up to $1,500.
For more information about the Home Payment Protection Program, contact your REALTOR®.
The program covers both first-time and repeat-buyers for 12 months from escrow closing and provides up to six mortgage payments up to $1,000 or $1,500, depending on the coverage level the seller chooses. A seller can choose to pay $200 for six mortgage payments up to $1,000 or $275 for six mortgage payments up to $1,500.
For more information about the Home Payment Protection Program, contact your REALTOR®.
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