Home-Buyers Beware: Your Decisions Today Can Cost You Tomorrow!

July 27, 2010

by christiborden

Today is the day! You have spent hours and hours looking for and now think you have found the perfect home, right? Who cares if your Realtor has maybe mentioned a few aspects of the property that might have a negative affect on your market value when and if you sell. You love the home, the price is right and you are certain that any issues mentioned will be minimized in the future. No need to worry about that now, right?

Before you make that leap, please keep in mind that your Realtor should be an expert in the area you are purchasing and should be aware of conditions that could negatively impact your home’s value and marketability. I am not speaking of state required disclosures but simple items that historically have made a difference between identical homes selling quickly and at market value or languishing on the market and selling for far less than the competition.

Why is it that two homes can be in the same community, be of similar size and age, maybe even the same floor plan, and still differ widely as to market value and marketability?

First and foremost, the old mantra of “LOCATION, LOCATION, LOCATION” still stands true. There are simply some location features or benefits that buyers will pay more for and conversely, there are negative features that will drive future buyers away forever. These factors can differ from area to area and what turns off a buyer in the suburbs is simply an unavoidable fact of life in urban environments and visa versa.

Adjacent communities could vary widely in average sales price depending upon the amenities they offer, actual builders constructing the homes and the developer’s reputation for upholding their resident’s market value. A Realtor’s knowledge of the community is crucial to making an informed decision.

In Katy, TX – We have communities that back to one another yet the same home by the same or similar builder will cost thousands more on one side of the fence than the other? Why is that? Strength and reputation of community can affect sales values. And guess what? If the home costs more at purchase, chances it may sell for more than the competition in the future. This is not a given but should be considered if you think saving a little money today is your only consideration.

Items to consider with regard to your lot location that can have a direct negative impact on your future market value: power lines in backyard, backing or siding to a busy roadway, backing to MUD water storage facilities, backing to commercial developement, etc.

Alternatively, favorable features that could be a positive in the future: backing to green space, golf course, lake or water, wooded areas, etc. Most builders or developers will charge a premium to purchase a lot with these positive features but you usually recoup this expense when you go to sell.

So what is a buyer to do? Just take a step back and consider carefully that it is not only the home you purchase but your surroundings as well. And it is far easier to change things you may not love about the home itself than to change things that might be an external detriment down the road.

Ask your Realtor their opinion… and happy House Hunting!

Advertisements

Proof that Texas is Truly the Best Place to Live!

July 23, 2010

by christiborden

As a natural-born and very Proud Texan , I could spend days going into so many reasons why Texas is currently the most popular destination for those who have had the misfortune to have been born elsewhere:). Disclaimer: I have lived and travelled abroad so I know I am taking a risk when making such a bold statement but it is my opinion and as any self-respecting Texan…I stand by it.

Just a few reasons would be our great culture, welcoming smile, wide-open spaces, varied but pleasant climate, friendly residents and more… but some would argue that those items are not necessary objective.

According to the Texas Real Estate Center located in at Texas A&M (Whoop): ” Texas is leading the United States in the current U-shaped economic recovery. The state’s economy experienced its second month of positive annual employment growth after 16 months of job losses.

“Texas’ annual employment growth rate was 0.9 percent from June 2009 to June 2010 compared with a negative rate of 0.1 percent for the nation. After 17 months of job losses, the state’s private sector posted a positive annual employment growth rate of 0.4 percent.

“The state’s seasonally adjusted unemployment rate rose from 7.8 percent in June 2009 to 8.2 percent in June 2010, while the U.S. rate in June was 9.5 percent, the same as in June 2009.

“Six Texas industries — education and health services; mining and logging; professional and business services; leisure and hospitality; manufacturing; and transportation, warehousing, utilities — and the government sector had more jobs in June 2010 than in June 2009. Five other industries experienced net job losses over the same period.

Sixteen Texas metro areas experienced positive employment growth rates from June 2009 to June 2010, up from 13 for the period from May 2009 to May 2010. College Station-Bryan ranked first in job creation followed by San Angelo, McAllen-Edinburg-Mission, Killeen-Temple-Fort Hood and Waco.

The state’s actual unemployment rate in June 2010 was 8.5 percent. Midland had the lowest unemployment rate followed by Amarillo, Lubbock, San Angelo, Abilene and College Station-Bryan.”

If you would like to view more information about this great economic news, please click here.

Having been born and raised in the Panhandle and currently living in fabulous Katy, a huge suburb west of downtown Houston, I can tell you our State is as varied and amazing as one would expect from the second largest state in our union. Our people are quick with a joke and a smile, and it takes a while for non-Texan’s to get used to complete strangers waving at them as they pass.

We offer breathtaking landscapes, job opportunities, affordable housing, metropolitan/urban areas for culture and suburban areas for those seeking a slower pace.

And did I mention the food and wine? So many choices and some of the best Bar-B-Que and Mexican Food to be found in the nation… and our wine industry continues to win global recognition for quality.

With so many reasons to make Texas you home… what are you waiting for? Come on over, we are waiting for you!


Low Home Appraisal? What Do You Do Now?

July 20, 2010

by christiborden

So everything seemed to be going well in the home selling process…

  • Listed with your favorite Realtor – Check
  • Home Staged to attract buyers – Check
  • Good showing traffic and feedback – Check
  • Ready, Willing and Able Buyer presents an offer, which is negotiated and accepted – Check
  • Inspections are performed and repair items negotiated – Check
  • Appraisal is performed – Check
  • Appraisal comes in lower than acceptance price… WHAT? Back up a minute. How can that be? Shouldn’t a home be worth what a ready, willing and able buyer is willing to pay for it?

Not according to the buyer’s lender. In fact, the home needs to appraise not only at what the buyer is financing but the entire sales price as well. Why? Fraudulent loans and appraisals have caused such a backlash that lenders are very cautious and need to make sure their collateral (the property itself) is at lease worth the indebtedness so that they are covered should the buyer walk away without benefit of paying off the loan.

So, now what do we do?

Appraisals are really just the opinion of that one person and they are only human… mistakes are made. If the appraiser is unwilling to reconsider or revise, then you (the seller) can do one of three things.

  1. Accept the appraisal value and lower your sales price to match.
  2. Negotiate with buyer to pay either the original sales price regardless of appraisal or to meet somewhere in between (may mean buyer has to bring more cash to the table depending on his loan).
  3. Let buyer terminate (could be with a return of earnest money depending on the contract terms) and go back on the market hoping for a better appraisal with your next buyer. One item to note, if the buyer had an FHA loan, this appraisal stays with the address for any future FHA loans within 6 months).

How can we insure a good appraisal?

In today’s lending environment and with the HVCC  (Home Valuation Code of Conduct) rules in place, the lender has no control over who handles the appraisal. But there are things you can do to increase the chances of the property appraising if it is indeed selling for or below market value:

  1. Make sure property is in good working order on day of appraisal.
  2. Leave behind a list of any and all upgrades to the home that you wish the appraiser to consider.
  3. If there were multiple offers on the home which may have driven the sales price over list price, leave data supporting this such as copies of other offers to show a demand for this property over and above the competition.
  4. Provide comparable properties for the appraiser to view in the event he or she is not familiar with the community. While the appraiser may not use these exact comps, he or she may find it helpful. I find it is always better to offer the assistance up front prior to the appraisal rather than afterward so that there is no hint of impropriety or influence.

In our market, the majority of appraisals turn out as they should. However, as every Boy Scout knows… Be Prepared!


Why has our Buyer Cancelled the Deal? Today’s Home Seller Dilemma…

July 7, 2010

by christiborden

While real estate certainly has its ups and downs (one of the reasons I love it), some of the hardest minutes are those right before I have to call my seller to tell them that their buyer has terminated their contract. Whether it be on the last day of their Option Period* or the day prior to our closing date, it is still a very hard pill to swallow. And for the sellers, it can be devastating.

In this very interesting (read, volatile) real estate and economic climate, this is occurring all too frequently. Why? First and foremost, buyer confidence has certainly been impacted by the economy, worries about tax increases, health care reform costs, job security (or lack thereof) and locally, the issue of the BP gusher in the Gulf. When you come to think of it, with all of those worries, it is a wonder buyers can get out of bed each day, much less commit to purchase the largest financial investment of their lives.

Second, we in the Katy, TX (and much of Houston) markets have to deal with the issue of abundant, reasonably priced inventory (much of it new construction). Buyers will commit to one property, write an offer, agree to a contract price, even go through inspections only to find that their dream home has now come onto the market and all bets are off. Goodbye, Buyer…

Third, I have seen recently quite a few buyers cancel a contract over inspection items that in the past would not have been of great concern. It seems like today’s buyers want a resale home to be perfect in every way – and frankly, even the new homes rarely pass inspection with flying colors. Most if not all inspection deficiencies can be repaired but there have been instances where seller agrees to repair everything and the buyer is still not satisfied. Why is that? I think in some cases it has to do with cultural misunderstandings of how our inspections work here and the grandfather clause for many changes in codes through the years. Another factor may be the lack of an experienced and professional Realtor representing the buyer (who should prepare their buyer for what to expect upon inspection and what may be reasonable or not reasonable to expect a seller to repair). I have actually seen agents send over an inspection list and say to the seller, “Buyer wants you to repair all items”. If the agent had done their work in counseling their client, they would have told them that inspectors are required to inspect with today’s code in mind but sellers are not mandated to bring their homes to today’s standards. This can go a long way in helping keep buyer’s expectations reasonable and could alleviate a lot of frustration on the part of all parties when and if repair items are requested.

So, how do we help our sellers understand that a contract is only as strong as the buyer behind it (or as strong as the buyer’s Realtor and Lender, but that is another story indeed). First, we must truly analyze the offer as to all terms, not just price. Even with multiple offers in hand, remember that the buyer you let go may be the one you wish for 2 weeks down the road.

All parties need to have a back-up plan if the transaction fails. One thing I tell my seller is DO NOT start packing until the inspection is completed and all repair negotiations, if any, are worked out to the satisfaction of all parties. In Texas we have a Termination Option* that allows the buyer a given amount of days after the execution of contract to terminate for any reason, whatsoever, and still retain his earnest money. This is usually the time period that inspections are completed and any repairs negotiated.

Once that period expires, then the buyer is contractually committed to close. Does that mean it is a sure thing? No way! There is also a time frame within which the final loan approval process must be complete and this allows the buyer to be released from the contract with his earnest money in tact if for some reason the loan cannot move forward – loss of job is a great example here.

So what is a seller to learn from this?

  • Please be aware that a contract is no guarantee of a closing.
  • Have a back-up plan so that you do not find yourself homeless if the deal falls out at the end.
  • Be informed: Stay in touch with your Realtor and make sure he/she is constantly in touch with all the parties involved: buyer’s agent, title escrow officer, buyer’s lender, etc.
  • Allow a flexible timeframe between your next purchase and the closing of your current home, even if it means asking for a temporary lease from your buyer or moving your family to a hotel and your household items to temporary storage to allow for closing delays – which unfortunately is more frequent that we would all like. I have seen transactions built on multiple back-to-back closings crumble like a deck of cards which could have been prevented if all parties had left wiggle room in between the closing dates.
  • And if by chance your buyer terminates, it is not the end of the world. Pick yourself back up, dust yourself off, repair needed items presented on inspection and proudly put yourself back out on the market … You will find that your next buyer was really the best buyer for you and everything eventually always works out for the best.

Good luck and happy selling!


Realtors working hard for homeowner’s rights! Tax Credit Deadline extended and Flood Insurance issue resolved!!!

July 1, 2010

by christiborden

Last night, the Senate passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569), an extension of the National Flood Insurance Program until September 30, 2010. This will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010, to the date of enactment of the extension. National Association of Realtors members sent more than 250,000 letters to Members of Congress encouraging them to extend the program.

Additionally, Congress passed an extension of the closing deadline for the Home-buyer Tax Credit, the Home-buyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have ratified contracts in place as of April 30, 2010, that have not yet closed. The legislation is designed to create a seamless extension; the new closing deadline for eligible transactions is now September 30, 2010. There will be no gap between June 30 and the date the President signs the bill into law. Extending the tax credit closing deadline will help provide additional stability to real estate markets across the nation.

This was crucial as we all worked so hard for our buyers to help them write contracts before the April 30th deadline… only to find ourselves out in the cold when it came to making the closing deadline of midnight, last night. Underwriting restrictions and backlog simply made that deadline a fantasy rather than reality for many. Another reason for delays in closing was inability to purchase flood insurance across the nation. For many of those in areas that mandate this purchase, their hands were tied and their transactions were unable to close.

Our political action committees across the nation (whether at a national, state or local level) worked hard to get our members motivated to send emails, letters and phone calls to our legislators to show them how important it was to our clients and fellow constituents, to get these matters taken care of NOW!

Looks like they listened….