Home inspections are a vital part of any real estate transaction; whether a purchase or a sale.  A good home inspection should cost anywhere from $400 on up depending upon the size of the home.  Many people balk at the idea of spending so much especially when they already have seemingly endless costs associated with the sale or purchase of a home.

However, savvy buyers and sellers understand the true value of a property inspection.  When a buyer gets a home inspection they ensure that there will be as few surprises as possible down the road.  If, for example, there is a need to set aside $15,000 for a new roof, new electrical or foundation work, the property inspection will give a buyer a chance to discover that up front rather than a couple of months after they’ve purchased the home. 

It’s also very important for a seller to get a property inspection before they put the property on the market.  To not get one would be effectively writing a buyer a blank check.  To a buyer’s mind, their inspection will rule the day and they will feel justified in renegotiating the purchase price to compensate them for the amount of the repairs.  

“Well, why not just sell it as-is,” you ask?  Ahhh, good question.  Well, unless we are back in a true seller’s market where buyers are just throwing their money at you, and one only has to pick the highest bidder, a seller is dependent upon a buyer actually completing the purchase.  If the ultimate goal is to sell the house then it’s a fine line between sticking to the original price and having a buyer walk. 

So what does this really mean to a seller?  It means that, by getting a property inspection before putting the house on the market, a seller can decide whether or not to fix certain items in advance or even whether to reconsider the price for the house.  At the very least a seller’s property inspection will: give the seller a heads-up of potential issues with the house, give the buyer an idea of what they can expect their own inspector to come up with, and should the buyer’s inspection show more issues than the seller’s inspection, the seller now has a leg to stand on if they decide to question the buyer’s inspection report. 

Wait a minute! The buyers are going to do their own inspection as well?  Absolutely.  Having each side do their inspections makes sure that the seller knows what they’re selling and the buyer knows what they’re buying.  The last thing anyone wants is to be in court a few years later because of an issue that a property inspection would have easily revealed.  Having both sides do their inspections makes sure that everyone did their best to find any issues by hiring experts to sniff out potensial problems.

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Buying a house, whether it's a first time purchase in Mountain View, a move up in Saratoga or a down-size to The Villages, can be a very stressful time in our lives.  One of the best ways to take a large part of that stress in hand is to make sure that you as well prepared and informed as possible. 

• 
  Obtain a copy of your credit report.  We cannot stress this enough.  Rather than find out at the last minute that there is incorrect information on your credit report, or even worse, find out someone has been opening accounts without your knowledge, tackle it in advance.  You are much better off knowing what the banks could find out and having a chance to clear it first.  Once the loan process starts, lenders will make you jump through all kinds of hoops if they don't like what they see. 

• Talk to a lender.  This is an excellent time to learn what loan products are available to you.  There are several common loans, such as fixed-rate, adjustable rate, FHA and VA loans.  Fixed rate loans are fixed payments of principal and interest over a period of anywhere from 10 to 30 years.  The advantage of these are that the payments are the same over the entire life of the loan.  Ajustable rate loans have a fixed interest rate for a period of time, but it then adjust periodically according to the dates specified in the loan.  FHA, or Federal Housing Administration, loans are often used by people who do not have much of a down-payment.  The loan limits on these vary.  VA, or Veterans Affairs, loans are loans available to those who have served, or are serving, in the military.

This part of the process is also a good time to talk to your mortgage broker about what kind of a down payment will be most beneficial to you.  It may be that you have enough for what you need, but then again you may find that it is worth saving a little bit longer to get the best mortgage for you.

Last, but not least, this is also the time to get pre-approved.  Sellers will want to see the pre-approval from your bank as part of your offer.  In the past we have had buyers find their dream property only to discover that the sellers are not interested in looking at their offer.  The pre-approval tells the sellers that you are serious enough about their house that you have started the process and are ready to commit to a mortgage in order to buy it.

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The Merc had an interesting article recently titled, "Bay Area home prices may drop, real estate firm warns" written by Sue McAllister and published on 2/10/2010. (see link at the bottom)

It's a good read, but we'd like to throw in a couple of thoughts. The article relies almost exclusively on the view-point of Zillow. Ms. McAllister points out in paragraph 17 that "[t]he company applies a proprietary formula to publicly available data about sales and property characteristics." The only publicly available data that we are aware of is the data available from the county.

Whenever a house sells, the county records how much the house sold for, bedrooms, bathrooms, square footage, etc. There can be a problem with that data, however, because it can take weeks or months for some counties to publish the information. So we're concerned that Zillow may not be working from the best and most current information.

That having been said, Ms. McAllister also sites Zillow in paragraph two as saying that, "[h]ome price gains have begun to slow in recent months..." They may be correct, but no where does it mention that home buyers traditionally slow down in November and don't pick up again until well after the Super Bowl; which would be the last few months.

In paragraph three Stan Humphries, Zillow's chief economist, is quoted as saying that they see weakening trends in home values which he thinks will "go negative for the next few months." Part of his reasoning, I think, is mentioned in paragraph four; the expiring homebuyer tax credit and an inevitable rise in interest rates.

Those things will indeed affect the market. However, the tax credit is only applicable if the purchase price is $800,000 or less. Though it may very well affect some of the markets in the Bay Area, the way this article is entitled suggests that all of us are affected and that's unfair and not true. This is one of the best places in the world to live and much of the real estate in the Bay Area is still worth more than $800,000 and so unaffected by the expiration of the tax credit.

I think that Mr. Humphries and Ms. McAllister have a good point; "Things still need to be played out." (paragraph 15) The concern is that, possibly because of lack of specific, local knowledge, they miss an important point. Depending upon where you are selling, many of us are seeing aggressive multiple offers and all cash offers in this slowing market.

That's our two cents. - Caroline and Darlene

http://www.mercurynews.com/real-estate-news/ci_14368647
http://www.zillow.com

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Whenever our team takes a listing the sellers will usually pause, look around and, after an overwhelmed sigh, ask about how much work they should do to the house before we go on the market and where they should start.  After finally coming to the decision to sell, the scope of what needs to be done to the home before the seller will even have the opportunity to see an offer can seem like a massive undertaking.  We recently had a client who took our advice and found out that it was well worth the effort.

When we first walked into this home the ceilings, for the most part, were still the original popcorn ceilings.  The kitchen and the family room were still the same dark wood paneling that was so popular in the 1960's and 70's.  The overall effect was that potential buys would walk into a very dark house.  Though there are always sellers who will argue that buyers will see past this or that the buyer for their home will want dark paneling, these sellers understood that they were risking buyers leaving with a depressed feeling that they would always associate with their home. 

With "light and bright" being the mission, the sellers negotiated a good price with their contractor and, in conjunction with some elbow grease, completely changed the feel of their home.  They remodeled the kitchen and kept the original boxes of their cabinets, but completely refaced the fronts.  This kept the cost down and was also a good green solution because they didn't throw their old boxes into a landfill.  They added granite counter tops, new energy efficient appliances and a new hardwood floor.  The family room had all the paneling ripped out and new carpet put in.  They removed the popcorn ceilings throughout, replaced the interior doors and repainted the interior and the exterior of the home. 


The result for the sellers:
In our market the competition was a bit all over the map.  There were several homes that had been remodeled, but were sitting because they were over-priced.  There were other properties that were sitting because they were dark and needed work.  We advised our sellers to be the best house at the best price and they ran with it!  They took a leap of faith, spent roughly $40,000 on the remodel and priced their house very aggressively. 

We had over 100 groups through on the weekend's open house with only a handful of neighbors.  Ultimately, we got multiple offers and sold the house in 6 days.  Now there is no crystal ball, but there are cold, hard numbers and, given the competition's activity, the sellers sold their house for about $50,000 more than they would have been able to in it's prior condition.  Not bad for six weeks worth of a dusty remodel!

As agents we understand that it can be a very daunting experience to do all this.  Having your agent suggest expensive changes in a market that is fluctuating so dramatically from region to region, during tough economic times is a huge pill to swallow.  But run the numbers!  You just might make yourself more money and sell your house much faster than you expected.

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