BlogArizona Category: Investing in Real EstateThis page contains all BlogArizona posts related to Investing in Real Estate. Read a specific post by clicking on a title below, or scroll further down the page to read through all posts in this category.Friday, June 20, 2008AZ Home Buyers, Sellers & Realtors®: Prepare for the Home Inspection!A couple years ago, the real estate market was so crazy that many buyers were waiving their right to a home inspection just so the seller would accept their offer. But those days are over and in the current buyer's market, the inspection period is once again being used as a time to negotiate price. Although each contract is different, most Arizona home buyers have a 10-day inspection period. During this inspection period, buyers can generally cancel the contract based on their inspections and receive a refund of their earnest money. As a result, the inspection period is a very nerve-racking time for many real estate agents and sellers. While most experienced Realtors® want their buyers to have a thorough home inspection, some real estate agents are scared to death that an experienced home inspector like myself will 'blow the deal' and cost them a commission. But in my experience, most buyers don't want to cancel their contract when the inspection reveals problems. Some buyers do, but usually the buyers will ask for major problems to be repaired, or for monetary compensation in lieu of repairs. Sometimes, sellers will be offended or will refuse to negotiate based on the inspection and it does blow the deal. But usually, the buyers and sellers come to a reasonable compromise and the deal closes. I'm often asked by sellers and real estate agents if there's anything they can do to 'prepare' for the inspection. Here are some things that can be done to make the home inspector's job easier: SELLERS & SELLER'S AGENTS: 1. Make sure ALL utilities are on prior to the inspection. Most sellers keep the utilities on while their home is for sale, at least the electricity anyway. But sometimes the gas or other utilities will be off if the home was vacant for an extended period of time. Foreclosures and bank owned properties usually do not have the utilities on. If the gas is turned off, the inspector cannot operate gas appliances such as the heater, water heater, stove, etc. There are still many items that can be inspected, but you will not get the best inspection possible if any of the utilities are off. If the water is off, I will not be able to properly evaluate the plumbing or anything else which uses water. If the electricity is off, I cannot inspect anything that requires power. My home inspection company always asks the client or Realtor® who makes the inspection appointment to verify that all utilities are on, but sometimes the gas or water company doesn't have it on when they say they will. If I'm unable to inspect something due to the utilities being off and I need to come back to the property, I have to charge the client a re-inspection fee (currently $100, and likely to increase soon due to gas prices). Even when it's not the buyer's fault, the buyer is the one who usually ends up paying it. A good buyer's agent will insist that the sellers reimburse the buyer for this re-inspection fee since it's usually the seller's responsibility to have the utilities on for the inspection (I believe the standard AAR contract requires this). But this is a cost that can be avoided altogether with some prior planning. 2. Unlock gates and remove locks from electrical boxes, sprinkler timers, pool equipment or fences, etc. Basically, unlock everything that's locked so the inspector can access it. 3. Secure your pets if necessary. I love animals and I frequently have animal friends accompany me through the house as I do my inspection. One time, I even had about a half-dozen weiner dogs follow me through a two-story house I was inspecting (have you ever seen a weiner dog try to run up stairs!) I realize I'm in their territory and I try to introduce myself to the pets in a non-threatening way. I don't mind being followed and I even enjoy interacting with the animals. But if you have a large or aggressive pet that needs supervision or restraint, please do so! In the thousands of home inspections I've performed, I've never been attacked by a pet - but I've had a few big dogs I wasn't sure about that were definitely a distraction. Also, if you have a pet that likes to sneak outside when the door is opened, please make me aware so I can watch out for him/her! 4. Move ALL items that may limit the home inspector's access. And please don't stuff everything in the garage or in closets, because I have to inspect in those areas too! Home Inspectors are not going to move personal items to inspect behind or underneath them. If access or visibility is obstructed, that area will not be inspected. This isn't because we're being lazy, but moving things really isn't a home inspector's job. In fact, the state standards specifically say home inspectors are not required to move personal items, furniture, equipment, etc. And it's really best for the homeowner that we don't move their stuff. Most homeowners wouldn't want us to, and we don't want to take a chance of breaking something (which sometimes happens when you start moving stuff). 5. Replace bad light bulbs. This makes my job easier and I won't call a light fixture bad when it's really just the bulb. I have a tool I can screw into the light bulb socket to test the light if it won't come on, but it will only fit regular light bulb sockets. 6. Don't try to hide stuff with last minute paint or repairs! This never works and will likely call more attention to the area. For example, painting the ceiling to cover a water stain doesn't keep me from knowing about a roof leak. I'll still see the evidence on the roof and in the attic. Likewise, fresh caulking in the shower may cause me to look more closely at that area. BUYERS & BUYER'S AGENTS: 1. Buyers should be present at the inspection. The scariest way for a buyer to learn the results of their home inspection is by reading the report. If a buyer is at the inspection, they can ask questions about the problems that are found and the repairs that are necessary. They can ask questions like "is that common for a house this age?". As a home inspector, it's my job to make sure my clients learn as much information as possible from my inspection. I report on everything I see, but I'm not doing my clients any favors if I scare them unnecessarily. Sometimes, a big list of defects in the home inspection report can scare an unprepared buyer out of one deal, only to find the next house they put under contract has most of the same problems (because the problems are common for the age/type of house). So I make sure my clients understand as much as possible about the problems I find, and those problems are put in perspective. A client who comes to my inspection leaves with an understanding of what problems I found, and a good idea which ones are major expenses. When clients are not at the inspection, I often get frantic phone calls from buyers who are worried about something that's really no big deal. But when they read the report without the ability to be there, see it and ask questions, it's much more scary. Many buyers are out-of-state and cannot attend the inspection. But if at all possible, the buyers should attend the inspection. A normal inspection takes several hours, and I know it's boring to sit around that long while the inspector inspects! So ideally, the client and agent should show up during the last half hour of the inspection (ask what time that will be when you make your appointment). That way, the inspector can give the client and agent a summary of what was found and address their questions. 2. Verify that all utilities are on. 3. Understand what a home inspection is, and what it is not. A pre-purchase home inspection is an opportunity for the buyers to learn more about the home's condition before they own it. Most buyers schedule their home inspection while they can still back out of the deal or negotiate repairs/money. While sellers may agree to make some repairs, buyers need to understand that a home inspection report is not intended to be a repair list for the seller (except perhaps on new homes/warranty inspections). Even on brand new homes, I will usually find dozens of problems. So a home inspection report with only fifteen deficiencies is a pretty clean house. But when a first time buyer who's never had a home inspection and thinks they're buying the perfect house gets a report with fifteen deficiencies, they can be scared to death. Or they may expect the seller to repair every single item, which almost never happens in a re-sale situation. Unreasonable expectations from one party can blow a deal. In short, buyers and sellers need to be prepared, and know in advance what to expect from the home inspection. From my experience, fear of the unknown is the primary reason most deals fall out of escrow after the inspection. But even when the home has problems, a home inspection should remove both the fear and the unknown, giving the buyers confidence in their purchase rather than scaring them away. Now don't get me wrong, if the house has several expensive, unexpected problems, there's no amount of preparation that can overcome that. But knowledge is power, and the home inspection goes much smoother when all parties are prepared and know what to expect.
Posted by Scott Hubbard, Arizona Home Inspector on June 20, 2008 | Permalink | Comments (6) | TrackBack Friday, June 13, 2008Do You Have The Right Amount Of Insurance On Your Home?Recently, the Arizona Department of Insurance issued a press release on Wildfire Awareness. While forest wildfires won’t impact those of us in the city, the information is important to all homeowners. 1. Do you have the right amount of insurance? Marshall Swift/Boeckh, one of the national leading companies in property valuation, estimates that 66% of US homes are underinsured by an average of 18%. You can get a list of replacement cost estimators at the AZ Department of Insurance website or visit my site at InsuranceRenegade.com for an online form. 3. Do you keep an inventory of your property? If you have a claim, will you remember everything you own and will you be able to quickly itemize it for your adjuster? You can try this free home inventory tool from the Insurance Information Institute. You can also walk around your home with a video camera and record a video tour. Technology has made it easy to store either of these electronically online so if there’s a loss you can easily retrieve it. 4. Check your smoke alarms and dryer vent hoses. Change the batteries at least once per year in all smoke detectors. Clean out your dryer vent hose to avoid a fire. Practice an evacuation plan in case there is a fire. I always recommend consumers visit the Arizona Department of Insurance website. There is a wealth of information to help you protect yourself.
Other Articles Related to Insurance: Posted by Matt Fox on June 13, 2008 | Permalink | Comments (5) | TrackBack Sunday, April 06, 2008Selling a Home in AZ and Not Sure What to Disclose to the Buyer?I recently received an email with this question about disclosure of sex offenders when selling a home in Arizona:
First, I have to say that I'm not an attorney so I can only address this question in the general sense and from a Realtor's perspective. So do not consider my answer as legal advice, and ALWAYS consult an attorney for questions about your own specific situation. Second, don't believe everything you read in the mainstream media! Of course, you can't believe everything you read on the internet either. But I do know bloggers who are much more thorough about checking facts than some of the major media outlets. Arizona legislators are constantly updating our laws, and real estate disclosure is a hot topic. However, I don't think a change to the law is the source of confusion in this case. From my experience, I'd say all of the sources quoted are technically correct. I think this is the USA Today article that was referenced in the question, here's the AZ real estate attorney who was mentioned, and here's the Arizona Association of Realtors (AAR) Residential Seller Advisory form. The AAR Residential Seller Advisory does indeed state, "By law, sellers are not obligated to disclose that the property is or has been... located in the vicinity of a sex offender." But if you keep reading, it goes on to say, "However, the law does not protect a seller who makes an intentional misrepresentation." And then the top of the next page says, "Sellers are required by law to disclose all known material (important) facts about the Property to the Buyer". So what is considered to be "material" or "important"? Generally, anything that may affect a buyer's decision to buy is definitely material and should be disclosed. To be safe, I tell sellers that EVERYTHING is material to the buyer. At least, a seller has to assume that everything is material because they don't know what's material to the buyer. Every buyer is different... what seems minor and unimportant to the seller may very well be minor and unimportant to one buyer. However, that same item may be extremely important, and thus material, to another buyer. If it ends up in front of a judge, I would guess that anything and everything the buyers find out later, that the seller knew and didn't disclose, will be considered material! The AAR Residential Seller Advisory reinforces this idea with it's heading, "When in doubt, disclose!". If the sellers know there's a sex offender living down the street and the buyers ask, I would tell the seller to disclose it, in writing, to protect both the sellers and the buyers. Even if the buyers don't ask, I would still tell the sellers to disclose it, in writing. It doesn't matter if the buyers are older or don't have kids. You cannot assume they don't care about a sex offender living nearby. They may have grandchildren who visit and play outside, or friends that come over and bring their kids. My point is, you shouldn't try to get inside the buyer's head and figure out what is, or is not material. Only the buyer can decide that. Just disclose it and let the buyers make that call... whether it's a maintenance problem, or something you know about the neighbors, homeowners association, schools, etc. Disclose whatever you know. I know many people are reading this thinking, "Disclose it, even if it they don't ask? That would probably kill the deal." Well, it's better to kill the deal now than end up in court later. And actually, being honest from the beginning by making full disclosure reduces the risk of a last minute deal-breaker, 29 days into the transaction. As a seller, if the deal isn't going to close, don't you want to know right away instead of AFTER your house has been off the market for a month? Full disclosure isn't just for sellers either. It's a two-way street. Buyers should also disclose anything that might be material to the sellers, like if they know something which may affect their ability to qualify for a mortgage. The "golden rule" can (and should) be applied to real estate transactions, just like anything else in life. Every transaction is smoother, less stressful and turns out better in the end if both parties are honest and upfront with each other from the beginning. But buyers, don't be naive! You should NOT rely on the sellers to disclose all material facts about the property you're buying. Even if the sellers are honest people, they may not know all the material facts. So buyers must also do their "due diligence" by investigating everything that's important to them. The AZ Department of Real Estate advises buyers to read and investigate the items on this checklist for Arizona home buyers. While the law may require certain disclosures, "Buyer Beware" is a reality!
Posted by Shannon Hubbard, Arizona Real Estate Agent on April 6, 2008 | Permalink | Comments (8) | TrackBack Monday, March 24, 2008Homeowner Needs Help with HOA IssueI get many emails from homeowners who are having problems with their Homeowner Associations, and are seeking advice. I'm not an attorney, so I can't offer advice on how to handle specific HOA problems. But I've been there myself, so I found the email below particularly interesting. Without revealing any personal information, I'm posting the majority of the email along with my response:
My Response...
Hope you found this interesting too. Have a great day!
Posted by Shannon Hubbard, Arizona Real Estate Agent on March 24, 2008 | Permalink | Comments (9) | TrackBack Saturday, March 15, 2008For Sale By Owner in Phoenix, AZOkay, this has nothing to do with real estate, but I love this "Best of Phoenix" Craigslist ad anyway - what an interesting way to get rid of scorpions and termites. And can you even believe those pesky City of Phoenix lawn police are forcing the poor guy to sell...! Craigslist's "Best of Phoenix" also has this interesting take on driving in Phoenix. And this guy has a unique idea for a home security system... or at least to keep the neighbor kids off his lawn. Enjoy!
Posted by Shannon Hubbard, Arizona Real Estate Agent on March 15, 2008 | Permalink | Comments (1) | TrackBack Tuesday, March 11, 2008Foreclosure Rates and Neighborhood CrimeHere's an interesting statistic: For every 1% increase in a neighborhood's foreclosures, violent crime increases 2.33%.
Posted by Shannon Hubbard, Arizona Real Estate Agent on March 11, 2008 | Permalink | Comments (7) | TrackBack Saturday, March 08, 2008Recent Changes to the FHA Loan ProgramIt seems like the FHA Loan program is being looked to by government leaders, consumers, lenders and anyone in between to save the housing market. As a result there has been a lot of changes to this program within the past few months. 1. FHA Loan Limits Increased: The loan limit has been raised across the entire country. For Maricopa and Pinal County (which includes all the major cities in the Phoenix Metro area) the new limits are as follows:
2. Down payment Assistance Programs: While this is not a direct FHA feature, one of the major reasons to use the FHA program is because it allows third-parties to contribute towards a buyer’s down payment. The FHA loan limit is 97% of the value of the property but it allows the remaining 3% to be gifted from such non-profits as AmeriDream, Nehemiah etc. Recently HUD (which oversees FHA) challenged the legality of such gifts and threatened to shut them down. The down-payment programs fought back and recently won in court. 3. FHA Secure: This was an initiate from the White House designed to help subprime borrowers refinance into a FHA loan program. It is targeted to those on adjustable rate mortgages facing abrupt increases to their monthly housing payment. The HUD website has addition information, but here are some high points on how you may qualify for FHASecure:
There are further changes coming to the FHA program. Congress is working on a FHA Modernization bill which will decrease the down payment requirement but add risk based insurance (higher insurance for lower credit scores). So, stay tuned, nothing stays the same in today’s mortgage market.
Posted by Shailesh Ghimire, AZ Mortgage Guru on March 8, 2008 | Permalink | Comments (2) | TrackBack Monday, February 25, 2008AZ Home Inspector Licensing Board going away?Arizona Home Inspectors need your help! Arizona's home inspector licensing agency, the AZ Board of Technical Registration (BTR) is inefficient, expensive and allegedly corrupt. In fact, Arizona lawmakers are thinking about eliminating the BTR altogether (SB1171), and moving home inspector licensing to the Registrar of Contractors (ROC). As most of my readers already know, I'm co-owner of Homewerx Home Inspections, one of the Valley's leading home inspection companies since 1999. As such, I sincerely appreciate your support on this matter. While I do NOT support eliminating the BTR, it definitely needs some change - starting at the top with the guy in charge. It's unfortunate, but AZ home inspector licensing seems to be alot more about money and power and industry organizations than it is about quality home inspections. There are some real problems and conflicts of interest that have just been ignored at the BTR, and we all know that problems don't just go away when they're ignored...they get worse! Now, the BTR is so inefficient and lacking accountability that I think the whole idea of protecting homebuyers got lost somewhere along the line. Home Inspectors don't trust the BTR, consumers kind of laugh at them. And the cost of inefficient government regulation is real... look at how much it costs to be a home inspector in Arizona compared to other professionals licensed by the same agency. And look at how much Arizona home inspectors pay compared to home inspectors in other states. "Wow" is all I can say! Home Inspection companies inevitably pass these ridiculous costs onto the homebuying consumer, who is already strapped for cash in case the BTR hasn't heard. And a home inspection is an out-of-pocket expense - those are the ones that really hurt and will be a deal-breaker alot quicker than borrowed money will. So please Help support the 'little guy', and you will help keep Arizona home inspection prices down plus eliminate government incompetence at the same time. Thank you again for your support!
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