What Is Reasonable?

Dear Esther,

We recently accepted a contract on our home and were excited to begin packing and moving on.  However, since the contract was contingent on a home inspection, we’re working through that.  A lengthy home inspection report revealed many, what the home inspector called “defects”, which we considered alarming and insulting.  My wife and I are ready to tell the buyers to buy a new home as we feel like their expectations for our home (which is 20 years old) are unrealistic.  I’m wondering what your opinion is on all of this.

Home inspections are almost always an aspect of selling and can be unpleasant at times.  Not only do you, as a seller, feel invaded upon as strangers spend hours in your home digging behind and under everything, but often the report which results provides lists of items that, in the inspector’s opinion, should be corrected.  These recommended corrections can be as small as a dripping faucet to something large like mold.  The process of which items, you as the seller, will correct is part of selling your home.  You may lose your buyer if you decide you don’t want to fix what they requested of you.

I recommend, when reviewing the list, that you ask yourself, “What is reasonable to fix in order for my home to be safe and comfortable for the buyers?”  If you feel items on the list are either wrong or unreasonable, I suggest sharing your thoughts with the buyers so they understand you’re not just being stubborn or cheap.  They may come to realize, as you do, that those items are unnecessary and a waste of money.  A good real estate agent will help to make this process as painless and stress free as possible.

One caution – do your best to keep your personal feelings out of this process.  This is difficult as you’ve spent years in your home, making it your own and taking care of it well.  Then some “expert” invades it, providing a list which gives you the message that you’ve been careless at best.  Throw your emotions into a bin for the time, put a hard shell on and deal with the items as if you’re looking at a report of someone else’s home.  Most of the time, this mind set will get you through the back and forth negotiations with less pain and suffering.  And did I say a good real estate agent will help you through this?

Finding A Buyer’s Agency

Dear Esther,

I have been renting for a few years and have decided this area is where I want to live.  Buying a home is my next step. A friend recommended I find a buyer’s agent.  How does that work?

A buyer’s agent is a real estate agent who works exclusively for the buyer in a particular sale.  If the same agent is also listing the home for sale, that agent is representing both buyer and seller and is called a dual agent.  If a different agent is selling the home, that agent is representing the seller so is a seller’s agent.  When you meet with a realtor, she will cover this discussion of agency with you so you are clear about who is representing you (or working for you) in purchasing the home.

In looking for an agent to help you in your home purchase, it is important to find someone who is familiar with the area you’re interested in purchasing so she can intelligently answer questions, not only about schools and shopping, but concerning home values.  You should feel comfortable with her, convinced she is working for your best interest to make the home purchase transaction as stress free as possible.

Begin by asking your friends or family who may have had good experiences with agents they worked with.  Take note of the home for sale signs in the area to see who is successfully working in the area of your interest.  Meet with a few agents until you find one that you feel is not only good at what she does, but will work hard for you

Why A Homeowners’ Association?

Dear Esther,

I’m thinking of buying a townhome so I’ve begun looking.  Every community seems to have a homeowners’ association in charge of it.  I’m wondering why.

High density communities (homes on small lots or those with shared walls) have homeowners’ associations so lawn care and snow removal are taken care of by someone else.  In these neighborhoods, it does not make sense for each owner to have his own lawn mower for a small strip of grass or his own snow blower for a shared driveway.  Buildings in close proximity and similar in appearance are improved when rules govern their exterior look so shutter colors, roof shingles and the like remain consistent.

It is important to be familiar with the homeowners’ association documents before agreeing to purchase a property.  A document entitled Certificate of Resale must be provided to you as part of signing a contract on a home governed by an association.  This is accompanied by the association rules and regulations, financial statements, insurance and record of any judgments.  As a potential buyer, you have 5 days after receiving these records to look over them and sign off that you’re ok with them.  If you see problems, you can terminate the contract on the home.

I encourage you to make sure you’re comfortable with the rules and regulations so there are no surprises when you move in.  If you’re a free spirited person who doesn’t like others telling you how to live, a home governed by an association may not be a good fit for you.  Pay attention to the financial information and association dues and what they cover.  The financial statements allow you to see if the association has sufficient funds in reserve.  If not, your fees will probably increase substantially as roads need paving or roofs wear out.  The record of judgments is important. If the association is in litigation (either being sued or suing), there is cause for concern.  Lawyer fees are transferred into higher dues and mortgage companies are hesitant to finance properties in litigation.

Although associations sometimes get a bad rap in the press, there is good news that gets unreported.  They are designed to protect the value of your property, maintain order in the community and your enjoyment of it.  They also free up your weekends so you’re not slaving on your lawn. Your back is spared as you watch the snow plow do its work from your window. And your unconventional neighbor is prohibited from painting his home black and trim purple.

If you have questions about associations or other real estate issues, please feel free to contact me – Esther Prosser, esther@stoltzfus.com, 484.269.7153, PO Box 20, Elverson, PA 19520.

What’s a Seller’s Assist?

Dear Esther -

A friend of mine told me she just sold her home for $205,000 but agreed to a $5,000 seller’s assist.   What is a seller’s assist?

Dear Friend -

A seller’s assist is simply money given from the seller to the buyer at settlement to pay for all or part of the closing costs as a way for the seller to assist the buyer in purchasing the home.  The amount varies, depending on what the mortgage company allows.

The purpose of a seller’s assist is to make it possible for buyers who don’t have funds to pay for closing costs to purchase a home.  In this market with few buyers, sellers are trying to do all they can to encourage interest in their home, hoping to find someone who will buy it.   A seller’s assist allows someone to purchase who otherwise would not have the money to do so – usually someone with a good job and credit but little or no savings.

Although this sounds like a good idea, there are drawbacks.  Because the sales price of the home (in your friend’s scenario) is $205,000, she will pay transfer tax (1%) and commission (usually 6%) on $205,000, even though, with the seller’s assist, she is only getting $200,000 for her home.

A possible obstacle with a seller’s assist, especially in this market, is the property appraisal.  Using the same scenario, even though the seller is really only getting $200,000 for her home, the property must appraise for $205,000 in order for the bank to finance it.  With home values down, the home may not appraise for that amount which will kill the deal since the buyers can’t purchase without a mortgage.

If sellers are eager to sell, a seller’s assist may be necessary to get a contract on their home.  And it allows buyers, who don’t have the savings, to be able to purchase – a win/win in this difficult market.

If you have questions or need more information, feel free to contact me – Esther Prosser, 484.269.7153, esther@stoltzfus.com.

Ready To Sell

Dear Esther -

I’ve cleaned out my home during the summer and fall in order to get it ready to sell.  My daughter told me I should wait to sell it until the spring.  She said no one is out looking for a home in the winter months.  What do you think?  Ready to Sell

Dear Ready to Sell –

It is generally understood in real estate circles that the spring is the best time to sell a home.  The days are getting longer, the weather is nicer and with flowers and green grass, everything looks better.  Potential buyers are eager to get out of hibernation and think about moving.  With contracts signed in the spring, they can settle in the summer and pack up before the school year begins in the fall.

Along with the increased volume of spring sales, however, are an increased number of homes on the market.  Because most consider spring to be the best time to sell their homes, there are more homes for sale during those months.  Thus, your competition is greater making it more difficult to sell.

My own selling experience does not support the “spring is the best time to sell” argument. In fact, this past year January, February and October were my busiest contract months with the rest spread out evenly throughout the year.

You’ve cleaned out your home which is a good beginning.  I suggest meeting with a real estate agent to discuss anything else you could do to attract buyers. Your agent will also help you price it. Then when the busy holidays are over, your home can be the first with the “for sale” sign in the yard before the spring rush.  Who knows? With it looking good, priced right and marketed well, yours may also be the first with a “sold” sign in the New Year.

If you have questions or need more information, feel free to contact me – Esther Prosser, 484.269.7153, esther@stoltzfus.com.

Found What We Love

Dear Esther – My husband and I are ready to move out of the large home where we raised our kids and buy something easier to take care of.  We dropped into an open house last Sunday and found exactly what we want.  We really weren’t thinking of buying before we sell but are afraid we may lose the house we love if we wait until we sell ours. What should we do? Found What We Love

Dear Found What We Love,

It’s fabulous to find exactly what you’re looking for when you’ve decided to move on.  Signing a contract to buy that perfect property seems to make sense.  You want to know where you’ll be when your home is no longer yours. The tension and uncertainty are difficult.

I recently discussed buying before selling with a mortgage representative who shared some interesting options which may work for you.  If your home is paid for, you can apply for a revolving line of credit, an amount up to about 85% of the value of your home.  This money sits in your account until you need it. There are no costs until you use it.  And when you use it, you can make interest only payments for a time.  The rate adjusts after one year.  Unlike a mortgage which generally costs about $1,500 to acquire, there are no costs to obtaining these funds (no application or appraisal fees).  But you must act before you put your home on the market.

If your home is already on the market, you can apply for a bridge loan.  Costs are about 1% of the amount borrowed.  These options and others have numerous variables.

If your home is not paid for, your best option is to prepare your home to sell and list it, doing all you can to make it attractive, pricing it well and finding an agent who will work hard to help you sell it and buy the home you found and love.

If you would like to discuss this further or have other questions, please contact me – Esther Prosser, PO Box 20, Elverson, PA 19520, esther@stoltzfus.com, 484.269.7153.

Tired of Waiting

Dear Esther – I would like to sell my house and move south. I’ve been waiting to see if home prices go up as I bought it 5 years ago and will take a hit if I sell it now. Can you tell me about how long I will have to wait until I can get what I paid for when I sell?

Tired of Waiting

Dear Tired of Waiting,

There is nothing I’ve read or heard to indicate home prices will go up in the near future. Although mortgage interest rates are at a record low and homes are selling at bargain prices, buyers are few and far between.

The reasons are varied. Unemployment remains high and real estate sales are tied to jobs. If folks don’t have secure jobs or jobs at all, they can’t buy a home. Mortgage guidelines are tighter so approval is more difficult, eliminating some buyers who may want to purchase but don’t have the means to do so. There are a lot of homes for sale because of foreclosures and short sales which has created bulging inventories of unsold homes. When supply is up and demand is down, prices remain low.

However, despite the bleak selling picture, the loss you take when you sell will be regained when you purchase (assuming you buy when you move south). Instead of living your life waiting for prices to go up (and wondering all the time how long that will be), I recommend you sell and move on. Fun awaits you as you settle in the warm sunny south.

If you would like to discuss selling or have other questions, feel free to contact me – Esther Prosser, 484.269.7153, esther@stoltzfus.com or PO Box 20, Elverson, PA 19520.