SarahToppins' Blog

Homesnap – a fantastic real estate app for buyers, sellers, and agents!

Posted: September 20, 2014 in About Sarah Toppins, Buying a home, Real Estate Technology, Selling a house
Tags: Homesnap

I’ve been playing around with the Homesnap app for a number of years, but this summer, the Chevy Chase company made a deal with our multiple listing system, MRIS, and the app went from good to great. It’s a very comprehensive mobile source of housing information.

Here’s how you can use it. First, you must download the free app on your smartphone or ipad and activate the device’s gps. Then, when you’re in front of a house currently on the market, you need to open the app. It will then show you lots of information about the house – interior photos, schools, all of the information from the multiple listing system, property lot lines. It’s overwhelming.

The app will also show you a map of the area and other homes that are on the market – green markers mean the house is for sale and purple ones tell you that the house is scheduled for an open house.

It’s great to use that feature when you’re first starting out and looking at neighborhoods in which to buy. It’s also good for sellers who are trying to figure out what houses are selling for in that neighborhood.

But the app does more. If a house isn’t on the market, you can take a photo of it and the app will access the tax records and tell you all of the information that’s in them. It will also give you an estimate of what it thinks the house might be worth now, school information, and lot lines. So much information. And from what I’ve seen, their estimates are close to the real market value.

The app has hooked up with other multiple listing systems around the country, so if you’re a reader from somewhere outside the Metro Washington, DC area, it’s quite likely that the app will work for you.

Here’s a link to connect to my Homesnap app. If you select a property as a favorite, I will be notified and can show it to you if y.ou’re not working with another agent.

Staging a Home for Sale is a New “Must”

Posted: September 5, 2014 in Selling a house
Tags: Montgomery County MD, staging, Washington DC

Yesterday, I spent a very hot afternoon looking at houses under $500,000 that only had one full bath. That’s an awkward situation in this area as most buyers want at least two baths.

I’m getting two listings in the very near future that have only one bath, and the sellers are struggling with whether it’s cost effective to add a second bath, usually in the basement because that’s the only space available. So one future seller and I went looking at other homes in his neighborhood that had just one bath. We could only look at the active listings that hadn’t sold. All were vacant and unfurnished.

When I went back to the multiple listing system and looked at those one bath homes that had sold or were under contract, nearly all of them had nice photos of rooms with furniture – many with obviously staged rooms. So I came to the conclusion that one bath is less of an issue if you stage the home and have good photos of the staged rooms.

Professional stagers offer a couple of different levels of service. For a few hundred dollars, they will come in for an hour or two and tell you what to do (paint rooms with certain colors, declutter rooms by giving away stuff now or putting items in storage, and rearranging your existing furniture are just a few of the things they might advise a homeowner to do).

More comprehensive stagers will actually supervise the work and supply the furniture. This will usually cost a homeowner several thousand dollars up to about 1% of the list price.

I must admit I’m late to the staging bandwagon. I don’t mind seeing vacant rooms and can visualize furniture in them. But in observing the market over the past few years, I see that staging a home, particularly a vacant home is a must.

Go to this HGTV post, which had become the most repinned item from my Pinterest boards. It illustrates lots of before and after shots of vacant and decorated rooms. We probably wouldn’t recommend that you decorate the rooms as much when you’re putting your house on the market, but the shots are eye-opening in showing the transformation of unfurnished rooms. Click here to see my most popular pin on Pinterest

Why I’m been silent.

Posted: March 31, 2014 in About Sarah Toppins, shingles

I’m here to tell you that it takes more than 21 days to make a habit, or at least it does with me. I took a blog course last summer and was great about posting when I had to be accountable to other people. But life happens. This blog is about life and its mishaps, not about real estate.

Let me tell you about my experiences over the past few months. First, my 87 year-old mother, who also has Parkinsons, fell over Thanksgiving weekend and broke her hip, had to have surgery, and went into rehab. Mom doesn’t communicate very well, so we were very worried about the rehab. My 90-year-old father hired a caregiver to help her out. I should mention that I don’t live close to my Mom & Dad, but I have two wonderful brothers and sisters-in law who do and who help out a lot. My oldest nephew was also a godsend.

Anyway, I went to visit my parents over Christmas to help prepare their home in a retirement village for Mom’s discharge. I didn’t feel very well. A cold, I thought. But I developed a terrible headache, then a strange sensation under my skin, and finally I developed a rash. I asked a pharmacist on Christmas Eve to recommend a cream. She suggested I had shingles. I poo-pooed that idea because I’d had the shingles vaccine. Anyway, we got Mom home and hired three terrific caregivers to help her out around the clock. I flew home.

On the plane ride home, I felt so dizzy that I thought I’d pass out. And my rash was spreading. I went to google and decided I might have shingles. I discovered that the vaccine is only effective in 51% of the cases. So, I went early the next morning to one of those emergency “doc in a box” centers. They confirmed I had shingles and gave me a number of prescriptions, but insisted that I see an eye doctor immediately. In fact, they wouldn’t let me leave until I had an appointment that day.

That eye doctor and I have become good friends. I’ve probably had 7 or 8 appointments with him. The shingles hadn’t done major damage to my eye, but I kept on getting cornea infections. Finally, he gave me some steroid drops to stop the infections. Unfortunately, they’ve helped a cataract grow. I’m on my third eyeglass prescription since the first of the year, and I still don’t see as well as I did before the shingles. One pharmacist told me that I was lucky – if I hadn’t had the shingles shot, I probably would have lost my right eyesight. So, I still advise getting the vaccination, but don’t ignore the early symptoms of shingles.

During that time period, it was hard to focus, so I only used my eyes for short periods of time. (I felt like Bob Costas at the Olympics.) My eyes have gotten better, or I’ve learned out to adjust, so I plan to start writing this blog again. Actually, I planned to do it about a month ago, but life interrupted my plans AGAIN!

First, I should tell you that they believe shingles is brought on by stress. I buy that. I got shingles because I was worried about how my Mom and Dad were going to cope with Mom’s rehab and return home. But during the early period of my shingles recovery, Mom seemed to be doing well or as well as could be expected.

My Mom is an identical twin, and in February, her twin fell and broke her hip (the same one as my Mom) and had to have surgery and go into rehab. Then a week later, my Dad fell and broke his hip. No surgery required, but he did go to rehab. Add the depressing record cold and snow here, and I found it hard to recover from a stress-induced illness.

But I am back. Two contracts ratified in the last week. Evidence that spring may be here with flowers pushing through the dirt. And both Mom & Dad home with those great caregivers. I still have some of the post-shingles nerve pain and a few patches around my eye, but I’ve really worked on handling my stress. So count on more blog posts from me, and please hold me accountable. Let me know what you’d like me to write about and that you’re reading me. Thanks in advance.

Housing prices and sales are moving in the right direction – up!

Posted: December 19, 2013 in Housing statistics
Tags: Washington DC housing statistics

The Fed is loosening up on its stimulus package. Lenders are enacting new regulations to tighten (strengthen) loan qualifications. The housing market has slowed down a little the past few months, yet it has improved year over year steadily since 2008. The 2013 figures from the National Association of Realtors (NAR), as of the October reporting period, predict 5, 120,000 homes sales this year with a projected median price around $200,000. That’s great news when you look at the table below of home sales and prices over the past six years. (Information is also from NAR.)

Year	Existing Home Sales Total	Median Existing Home Prices
2012	4,660,000	$176,800
2011	4,260,000	$166,100
2010	4,190,000	$172,900
2009	4,343,000	$172,500
2008	4,110,000	$198,100
2007	5,030,000	$219,000

In the more affluent Metro Washington, DC area, median prices are even higher. The most recent monthly stats are for a somewhat slow November. In the District, the median sales price was $500,000. In Montgomery County, MD , it was $400,000. And in Prince Georges County, it was $205,000. (Click on each jurisdiction to get a more complete report.)

2014 is expected to bring some challenges, especially with mortgages, at the first part of the year, but the market is expected to continue to improve, but at a slower rate. To stay up with the trends, check out the housing stats on my website, http://www.MetroWashingtonDCHomes.com.

And let me know if I can help you with any of your real estate needs.

Hurry up – These Tax Credits End at the End of 2013

Posted: December 12, 2013 in Taxes
Tags: taxes

There are three home related tax credits or deductions that expire at the end of the year, and with Congress’ budget cutting mindset, it’s unlikely they will be renewed.

tax time

1) The easiest one to still do something about is the energy tax credit. For a number of years, homeowners have been able to take a 10% credit (up to a max of $500) for certain energy saving home improvements (certain windows, doors, insulation, roofs). There is also a $2000 credit for new homes built to federal standards for energy efficiency.

2) The private mortgage insurance (PMI) deduction is for people who bought a home with a conventional loan in 2007 or later with less than 20% down. This deduction for the insurance premiums (about $50 a month for every $100,000 of a loan) is scheduled to go away at the end of the year. If you want to try and keep this deduction, you should lobby Congress.

3. The biggest tax break that is scheduled to end at the end of 2013 is the mortgage debt forgiveness exclusion. The U.S. tax code considers forgiven debt as income. For many people forced to sell their house for less than they paid for it, the IRS has not counted that shortfall as income for the past few years, so the underwater homeowner hasn’t had to pay taxes on it. But if this law isn’t extended, a person who owes $500,000 on a house, but can only sell it for $400,000, would have to pay taxes on the $100,000 of forgiven debt. To avoid this tax, all sellers in a short sale should try to settle before the end of the year.

I have included links to articles on these items if you want to read more about them.

I’ve had a very busy six weeks, so I’ve learned that I having formed a blogging habit yet. One of my goals for the rest of this year and next year is to provide valuable real estate information on a weekly basis (at least).

Image courtesy of Stuart Miles/FreeDigitalPhotos.net.

Capital Bikeshare – these bikes are everywhere

Posted: November 10, 2013 in Maryland Fun, Washington DC Fun
Tags: capital bikeshare

Someone knocked on the door of my open house in DC a couple of weeks ago and asked that I watch his bike from Capital Bikeshare while he looked at the house. So I did. I stood at the front door and watched as the lights on the front panel beeped and finally turned off – I guess timing how long he was on the bike.

Since then, I have seen Bikeshare stations everywhere.

There are all sorts of ways that you can use the program. You can join as a member for 24-hours ($7 membership fee), three days, daily, monthly, or a year ($75 paid in advance.) Then the first 30 minutes of your ride are free, and you’re charged on a fluctuating scale for additional time. Twenty-four hour and three day members pay more than daily, monthly, & yearly members. Click here to see more about the pricing.

You can pay per use at a station or you can get an electronic key (think EZPass for bikes) that allows you to avoid the sign-in hassle even if you’re a once-in while, infrequent daily user.

Capital Bikeshare will even sell you a bike helmet for $16 and send it to you in the mail.

So next time you want to look at properties in an area where parking may be a problem, rent a bike. If you come to one of my open houses, I promise to watch the bike while you look at the house. (But you might want to invest in a lock if you plan to use the bikes a lot. :-))

Is your smoke detector good enough?

Posted: October 23, 2013 in real estate information
Tags: smoke detectors

Better, Smarter Smoke Detectors Push All the Right Buttons

Technology has really improved smoke detectors, but most of us are still using the old style that beeps when the battery is low.

The state of Maryland passed a new law this year that will force new construction and the rest of us paying attention to convert to the new units. Battery only powered smoke detectors must now be replaced by smoke detectors that have long-life (10 years), sealed-in batteries. They also must have “hush” buttons in case they go off in a non emergency situation. (How many times have you heard about someone who knocked down the smoke detector because it went off because of smoke from cooking never rehang it?)

The new law calls for alarms in new construction to be placed in every bedroom, the hall outside the sleeping area, and on every floor including the basement. But if it’s required of new construction, shouldn’t we apply the same standards to our personal residences? And, all homes will be required to use these sealed batteries by 2018.

The Montgomery County, MD real estate disclosure form now asks if a smoke detector is over 10 years old and whether it has a 10 year sealed battery.

As we move into the heating season, make sure you check your current smoke detectors and consider buying some of the new higher tech models.

Check out some of the newer ones by clicking on the houzz.com link above.

How the Government Shutdown Might Affect Real Estate

Posted: September 30, 2013 in Financing, real estate information
Tags: government shutdown

As I write this, it’s hours away from a government shutdown. The morning news programs have covered a shutdown would impact FHA and VA loans. They’re loans insured by the government, and if they haven’t been assigned a case number, it’s unlikely they will get one during the shutdown and that will delay the settlement of any house with a FHA or VA loan.

But there are other areas that can be affected by a shutdown. Nearly all loans require that a borro

wer’s employment be verified in the last 10 days before settlement. If the borrower works for the federal government, there won’t be anyone working to verify that employment.

Nearly all loans require income tax returns. If they need to be verified, a limited staff at IRS won’t be able to do that.

There also won’t be anyone working to verify social security numbers or to provide government backed flood insurance. There may be other forms of government verification required by different types of loans that won’t be provided because of limited staff.

And even if limited staff is available, they’ll be overwhelmed, and mistakes will be made. In the last government shutdown during the Clinton administration, I had a passport waiting in the government bureaucracy to be renewed. It was renewed during the slowdown, but instead of stating that I was born in Arkansas, my passport read that I was born in Alaska – a typo of one letter that took me years to get corrected.

Lenders are recommending that you check with your mortgage company if you have a settlement planned for anytime in the next few weeks.

Photo courtesy of Architect of the Capitol website – http://www.aoc.gov/capitol-hill/architecture/cast-iron.

To Buy or Not to Buy – a Home Warranty

Posted: September 30, 2013 in real estate information
Tags: home warranties

What do you think? Should I buy a home warranty?”

It’s a common question we hear from sellers when they list their property and buyers as they go to settlement. I always include information on home warranties in my buyer and seller paks, but I can’t answer that question.

The basic home warranty runs between $350-450 and is for a year, and can be renewed by the new owners after a year. They have deductibles per incident of between $50-100. The more expensive plans either cover more or have lower deductibles. Most plans allow the purchaser of the plan to pay extra for additional coverage (pools, spas, extra refrigerators, etc.) and/or lower deductibles.

So is the plan worth the extra money?

It depends. These are the questions I suggest asking before deciding to purchase a warranty:

Is the house already covered? If so, you may be able to transfer the policy to the new owners, often for a small fee. The coverage may be from a home warranty program or from a heating and air conditioning company or appliance store.

How new are the appliances? If they’re new or fairly new, a warranty could be redundant. However, home warranties do cover some things that appliances companies don’t.

Does the warranty cover your appliances? When I bought my house 16 years ago, I was given a home warranty. The first time something went out on my boiler, I called the warranty company and found out that this plan didn’t cover radiators and boilers. So check the fine print.

Does the plan offer enough coverage on the issue you’re concerned about? One plan out there offers $300 for roof repair. If you’re buying the policy to cover an old roof, $300 isn’t going to begin to cover a roof replacement. Most plans spell out the maximum they will pay for some types of problems, ie, $500 for polybutylene plumbing repairs.

Does the plan cover pre-existing conditions? Most do these days because a lot of buyers took out warranties to cover unknown problems when buying a short sale or foreclosure. But once again, check the fine print. The policy may not cover pre-existing conditions cause by rust.

Does the plan cover the seller for the items he or she wants covered? Most plans offer more coverage for the buyer during the first year of ownership than they do for the seller during the listing period. However, sellers can generally upgrade their policy and add the excluded appliances. The heating and cooling systems are usually covered for the buyers but not for the sellers. Sellers can add the coverage for an extra $60 or so.

The benefit in taking out a seller policy is that a seller is covered during the listing period and doesn’t have to pay for the policy until settlement. If the house never settles, the seller never pays for the policy even if he or she had a service call.

The other concern about a home warranty policy is how to use it. When something goes wrong, a buyer or seller MUST call the warranty company first. They’ll be assigned a case number and told what contractor to call to get the repair done. It is NOT a policy that you can have the work done and then file for reimbursement. I’ve had a few buyers who learned this lesson the hard way.

My company, Long & Foster, offers two home warranties. Click on the links below to find out more about them or contact me for help with your real estate buying and/or selling needs.

HMS Home Warranty

2-10 Home Buyers Warranty

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Email

Comment

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7 Deadly Conventional Financing Sins Leading to Default

Posted: September 26, 2013 in Buying a home, Financing
Tags: conventional financing, Default

GCAAR, the Board of Realtors for Montgomery County, MD and Washington, DC, has just published a new addendum to the contract dealing with conventional financing.

Most of the addendum is the same as it has been in the past. It covers the terms of the mortgage, which is called the “specified financing”, sets a time frame for the buyer to get the loan, which is called the financing contingency, and states what happens if the buyer doesn’t meet that time frame. In our area, the financing contingency continues until a seller delivers a notice which essentially says “put up or shut up.” The buyer then has three days after receiving that notice to deliver a written commitment for the financing or to remove the financing contingency without the commitment. If the buyer can’t do that, then the seller declares the contract void and signs a release returning the buyer’s earnest money deposit. Lately, few sellers have been “pulling the plug” and sending the notice if it looks like the buyer is really working to get the loan. (In areas where there are multiple offers, this may not be the case if the seller has other interested parties.)

The newest addition to the addendum is allowing the buyer a three (business) day extension after the contract’s settlement date to close if the financing contingency has not been removed and if the buyer is not in default.

So it’s important for buyers to know the seven ways in which they could be in default on this provision. Here they are –

Failure to lock in the interest rate and not qualifying for a loan because the interest rate has increased.
Failure to qualify with lender requirements in a timely and diligent manner
Application for loan with another lender who does not meet settlement date
Failure to have cash for down payment, closing costs, and reserves
Misrepresenting financial ability to purchase
Failure to apply for loan AND property insurance within 7 days of ratification
Failure to follow-thru on things agreed to in the contract.

A good agent will help you avoid these pitfalls. If you don’t have one, I’d love to help. Contact me through my website.

They’re up over a year ago, but down compared to earlier this summer – Metro Washington DC home prices

Posted: September 22, 2013 in Housing statistics
Tags: Montgomery County MD housing statistics, Pricing, Prince Georges Count MD housing statistics, Washington DC housing statistics

Housing prices in Washington, DC continue to be the highest of the three Metro Washington, DC jurisdictions I cover (the District and Montgomery & Prince Georges Counties, MD) .

The current median price is $463,500. At the height of the market in 2007, it was $529,000. The average price in DC that year was $687,459.

The second highest prices are in Montgomery County, MD. The August median price was $415,950. The highest prices, once again in 2007, were $500,000 (median price) and $617,367 (average price).

Prince Georges County, MD has the lowest prices, but the most dramatic increase. The current median price is $209,450. In 2008, the median price was $288,500. In 2011, the median price fell to around $150,000.

If you want to look at all of the current housing stats, click on the links below.

Washington, DC

Montgomery County, MD

Prince Georges County, MD

To discuss this further or follow the stats on a regular basis, contact me at http://MetroWashingtonDCHomes.com.

It’s Not A Done Deal Until…Home Sale Contingencies, Part 2

Posted: September 20, 2013 in Buying a home, Selling a house
Tags: contingencies

In part two of this series on home sale contingencies, we’ll discuss non-inspection contingencies that can impact a home sale. (To review part 1, click here.)

Appraisal

The first is an appraisal contingency. If a buyer is getting a loan, a licensed appraiser must examine the property and compare it to similar sales close by within the last 90 days to see if the property is worth the sales price. This can be adjusted based on how much the bank is lending, or the loan to value. The more money a person is putting down, the more lenient the appraisal is. I generally allow 21 days for an appraisal contingency.

If the property does not appraise, the buyer can back out of the deal with no ramifications, the seller can lower the price to meet the appraised value, the buyer can come up with the difference in cash, the buyer and seller can split the difference, or in some cases, a new appraisal can be ordered.

Financing

After evaluating the value of the property as well as the credit worthiness and ability to pay of the buyer, the bank will give a loan commitment. So most agents include a financing contingency in their contracts that combines those factors. I generally allow 30 days for a financing commitment. But buyers and sellers should be aware that most commitments come with conditions (like re-verifying a purchaser’s employment in the last 10 days before settlement), so even if a commitment is given, it’s not quite a done deal.

Home Sale Contingency

Sometimes a buyer needs the money from the sale of his or her current house to go to settlement on the next house. In that case, they will write a home sale contingency into to the contract saying that they will have their house on the market within a short period of time at a certain price and will have a sales contract on the property within 30-45 days. Most sellers don’t like home sales contingencies because it’s not a done deal and impacts their ability to purchase and move. A more agreeable version of this is a settlement contingency. Buyer A writes a contract for Seller A’s house saying that they have a contract on their house and most of the contingencies have been dealt with, but they need the money out of Buyer A’s house to go to settlement, so this is a contingency that Buyer A’s house will settle the already agreed on contract in hand.

Home sale contingencies may be given even if the buyer does not need the money out of his or her current residence, but needs to eliminate that debt in order to qualify for another loan.

Condo (or HOA – Home Owner Association) Document Review

Because condos and home owner associations have rules, the purchaser must be able to review those rules to make sure he or she can honor them before buying a place. Some places don’t allow pets; others don’t allow commercial trucks to park on the premises; and still others won’t allow renters. Each jurisdiction has a set period of time for the delivery and review of the documents, but it varies by location. The documents must be current, so they are generally ordered after a contract is ratified. If a buyer doesn’t like what he or she sees in the documents, they can back out and get their earnest money deposit back without discussion.

A mortgage company must allow approve a condo building, so condo information also plays a part in the financing contingency.

Co-op Approval

If a community is a part of a cooperative, the co-op may require a buyer to be interviewed and examined before the co-op will approve the purchase.

Third Party Approval

If a property is a short sale where the seller owes more than the house is worth, the original mortgage holder has the right to review the contract and decide whether they are willing to accept the shortfall AFTER the seller has ratified the contract. Short sales are complicated and can delay a settlement for months, so buyers should be aware that the requirement for third party approval in a short sale could be time consuming.

There are third party approval requirements for other types of sales – bankruptcy, divorces, estates. They might delay a process somewhat, but not as much as in short sales.

A third party approval could also be used if only one half of a couple has seen a property and wants to make an offer before his or her spouse is back in town, but wants final approval from the partner before proceeding. This type of third party approval might be used for a very short contingency. (I used it once when a client was out of town travelling with the President and his spouse found the perfect house while he was gone. He approved – they’re still in the house 20 years later.)

If you need help wading through the various forms of home sale contingencies, your best bet is to work with a knowledgable agent. If I can help, contact me at http://MetroWashingtonDCHomes.com.

How spending $1 can save your $100’s

Posted: September 19, 2013 in Selling a house
Tags: home inspections

I recently advised a seller of mine to change his furnace filter before a home inspection. As he had already moved out of the house, he indicated that he didn’t have the time to do that, but there were extra filters by the furnace, and if the inspector wanted the filter changed, the buyer could write that into the home inspection request. The buyer didn’t ask for a filter replacement, but did ask that the furnace be serviced by a licensed contractor, that the vent be certified as safe (it was, but did not meet current code), and that the ducts be cleaned. I’m not sure this seller could have

saved the hundreds of dollars he had to spend to correct these items, but the dirty filter wouldn’t have been a red flag.

The week before, the inspector for a buyer of mine found a dirty filter in an otherwise immaculate house. Because of the dirty filter, the differential in temperature was higher than recommended. As my buyers were trying to decide whether to ask for the furnace to be serviced, the seller offered to purchase a new one for a little under $5000. My buyers gratefully accepted.

In both of these cases in the last month, changing a dirty furnace filter may have saved the sellers hundreds, if not thousands, of dollars. The first reaction a home inspector or buyer has in seeing a dirty filter is that the furnace hasn’t been properly maintained. But that’s not always the case. Because sellers often refinish floors and sand and paint walls before putting a house on the market, the dirty filter could be the result of recent activities, not long term neglect.

Changing a furnace filter is the easiest thing to do to prepare for a home inspection, but I’ve outlined some other suggestions in this short presentation.

Don’t hesitate to contact me at http://MetroWashingtonDCHomes.com
if I can help you work your way through the real estate maze.

It’s not a done deal, until… – Home Sale Contingencies, Part 1 – Inspections

Posted: September 11, 2013 in Buying a home
Tags: contingencies, home inspections

Most buyers write several contingencies into the sales contract that allow them to continue to do research and inspections on the property before finalizing the sale. Here are the most common inspection contingencies:

Home Inspections

Click here.

In the Metro Washington, DC area, there are two types of home inspections – one of which is called a specific inspection in which you look for specific problems and you can ask the seller to fix some or all of them, give you a credit for the repairs (if the lender will allow it), or walk away from the contract and get your earnest money deposit back.

The second type of home inspection is called a general inspection, and it’s primarily done just as information for the buyer. In most cases, the buyer can walk away. These inspections are done for distressed properties (short sales and foreclosures). A buyer might also include a general inspection without a walkaway provision in a contract in a multiple offer situation. These inspections are generally included with an “as is” clause or paragraph. Any lender required repairs or treatments must be done by the buyer before settlement.

In our area, 3-7 days after ratification (or third party approval for short sales) is the typical contingency period.

It is possible, with the seller’s permission, to do an inspection before you write a contract. These are usually a little less thorough and used when you think a number of people will be bidding on the property.

Other Inspections

There are a number of other inspections that a purchaser can order and pay for after ratification, but the more a buyer asks for, the more likely a seller will be scared away from this buyer. The ones I see most ofter are:

Radon

Because we do have slightly elevated levels of radon in this area, many buyers ask for this. 4.0pci is the EPA standa

rd above which a person should retest or remediate. Remediation is a relatively inexpensive process. I had one done last week for $900 for a two-story house without a basement. I generally allow three more days for a radon inspection than a home inspection as the radon testers must be left in the house for 48 hours. So, if I ask for a 7 day home inspection period, I seek 10 days for the radon contingency.

Termite

We are ordering this less often these days if the lender doesn’t require a termite inspection to make the loan. I think the reason for this is because a good home inspector can point out termite or other wood-destroying insect damage, and if you’re buying a house “as is”, a buyer would prefer to do the repairs after he or she becomes the owner, and not be required to do it before settlement if the lender requires it after seeing a negative termite report.

Lead

As a buyer, you’re going to sign many lead disclosure forms. Most buyers don’t seek lead inspections because they’re expensive and there’s no standard or requirement for a seller to correct for lead. I advise buyers to get lead inspections if they plan to do major remodelling (tearing out walls, etc.) while living in the house, especially if they have children or are pregnant.

Mold

We don’t see a lot of these inspections either. Sensitive people can sense mold without an inspection, and a good inspector can let you know if there are active water issues. While getting rid of mold is important, stopping the problem that caused the mold is more important. After it is stopped, getting a professional to clean up the mold is advised.

Structural

The average home inspector is a generalist and not a structural engineer. If the inspector sees a problem with the structure, he or she might recommend getting a structural inspections. I’ve had these done a handful of times in my career. They’re expensive and take time. So if you need to get a structural engineer in, I recommend asking that the home inspection period be extended and get the seller’s written agreement via an addendum.

In part 2 of “It’s not a done deal, until …”, we’ll discuss other home sale contingencies.

Contact Sarah Toppins if you’d like to work with a buyer’s agent who can guide you through the home sale process.

What makes condo financing different and more difficult?

Posted: September 4, 2013 in Condos, Financing
Tags: condo financing

I seem to be selling more condos lately as both the selling and listing agent, and the process seems to be getting more complicated all the time, generally due to financing issues.

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Since condo ownership is a form of communal ownership, when one owner defaults on his or her mortgage, all owners in the building are affected and must pick up the slack. So lenders adopted tougher financing rules.

A mortgage company will ask about the delinquency rate of a building – what percentage of home owners are behind in making their condo association payments? If it’s above 15 percentage, most lenders refuse to give a mortgage to anyone looking to buy in that building. And that can change month to month.

Lenders also want to know the investor ratio – what’s the percentage of owners versus renters in the building. The thinking is that renters aren’t as cautious about taking care of an apartment as owners are and costs rise the more tenants are in a building, especially if utilities are included in the condo fee.

So when buying a condo, don’t be fooled when you’ve been preapproved for a loan into thinking that’s it. The building must also be approved. And a building that was approved last month may not be this month because of changes in the delinquency rate or investor ratio.

Another thing mortgage companies look at is the how much money the condo association has in reserves to pay for big building expenses, like roofs and elevators. If a condo association doesn’t have a large enough reserve, the building will be forced to charge owners a special assessment to build up the reserve or pay for a big repair. And any extra fee assessed on an owner impacts his or her ability to pay their mortgage.

A 4th extra condo concern is the percentage of a building that might be used for commercial operations. In a downturn, commercial enterprises are more likely to fail causing the condo association to have to absorb more charges.

There are some buildings that just can’t meet these requirements, so see if you can find out about the financial security of the building before you write an offer. Most condo contracts include a review of the condo docs and financial statements after a contract has been ratified allowing you to back out of the contract if the answers won’t work for your situation. Most sellers don’t have the specific answers to these questions until after a contract has been written because the answers to the questions change frequently, and the owners are charged for condo docs and want the information to be as current as possible.

Getting approval for a condo mortgage takes a little longer than for a single family home because the lender must approve the buyer, the unit, and the condo building. And to get the best rates quotes by lenders, a buyer usually has to put 25% down. A high condo fee could affect a buyer’s ratios, how much of his or her monthly income the bank permits them to spend on housing.

Feel free to contact me, sarah@sarahtoppins.com, if you’d like to learn more about condos. Check out my website to learn about different condos on the market.