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Roy's Real Estate Corner -5
Humor
Those who lend money for a real estate purchase are called mortgagees; those who borrow are called mortgagors. Lending money is a very serious business, and the lending process has a very strict set of procedures that must be followed to the letter. It is common for a borrower to make an appointment with a lender to pre-qualify for a loan. The supplicant spills his or her financial qualifications to the lender's loan officer, and the loan officer uses a set of guidelines to determine what is left of the poor borrowers paycheck after all the credit card payments, auto loans and other monthly obligations are paid, and that determines the amount of dollars that may be borrowed.
Once upon a time, a prospective borrower was begin pre-qualified by a the mortgage lady. He was very positive that he was going to be able to borrow enough money to buy his dream home, and was answering all of the questions except one. He was very evasive about furnishing information about his monthly income. Needless to say, this information is critical in the lending process, and the mortgage lady kept probing. Finally, he admitted that he was going to get the money from the lottery. Impressed, the lady asked how much the lucky man had won. He replied that he wasn't sure yet, he had to go buy his ticket and use the lucky numbers in his wallet! Now that is positive thinking! (But he didn't get the loan.)
The property inspection
If you are contemplating buying or selling a home, you need to know about the property inspection options in the contract for sale. The contract provides for a professional inspection by a qualified inspector, paid for by the buyer. Defects or deficiencies in the property may be reasonably disapproved by the buyer, and the seller may be required to make repairs or reduce the price. If the seller is not willing to correct deficiencies, the buyer may be released form the contract.
Other inspections, such as roof, well, septic, and radon, may be called for with the same provisions.
If you are selling a home, you may want to have inspections made prior to listing the home so you can correct any serious problems. Selling the property "as is" does not release the seller from liability for repairs, but does serve notice to buyers that the seller may not be willing to make repairs.
If you need advice on buying or selling, call Roy.
Movin on Up! (or down)
As we transition into a new year, it is time to evaluate our situation, do tax and estate planning, make those new year resolutions and eat too much.
As far as reas estate goes, it may be time to make a move and take the "dead equity" out of the old house and move into a home more appropriate to your lifestyle. Neighborhoods change, families change, incomes change, but a lot of us stick with the old house because we can't stand the trauma of a move. There may be several good reasons to move, to wit:
Take advantage of tax laws - there is no tax on the gain realized when you sell your old home. (Subject to certain rules.)
A new home in a new neighborhood may appreciate more rapidly than your current home.
Your last remaining tax shelter may be the interest on your home loan. Move up!
Where do you want to be in retirement mode? - Think of downsizing, convenience, energy efficiency and maintenance. Move down!
Call us if you are thinking about moving in any direction. We can help you make the best decision.
The negotiation
The most critical aspect of any sale is the negotiation of the price, terms and elements of the sale. Buyers want the best bargain, sellers want the highest price. Buyers and sellers are natural enemies. No matter how civil and polite relations appear, there is always the underlying concern on the part of both parties that they might not be getting "the best deal".
As a trained arbitrator and mediator for the Cochise County superior court, and based upon years of real estate experience, I have learned that buyers and sellers may have concerns outside of the transaction that are strong motivating factors. The art is in finding out what those concerns are and addressing them appropriately in the negotiation.
The best deal as far as I am concerned is when both parties walk away felling that they have been treated fairly and that they both got "the best deal".
Call us if you are buying or selling property. We can help.
Possession
When buying or selling residential real estate, the date of possession is defined in the sales contract. Possession may be different from closing, which is usually the date that the transaction is recorded; formally giving title (ownership) to the buyer. A buyer may want to move into a vacant home during the period that the terms of the sales contract are finalized (before closing). The seller has to agree to this, and the buyer may be required to pay rent, utilities, and obtain insurance for the time of occupancy. This may be a risk for the seller in the even that the deal falls through, and the buyer is reluctant to vacate the property. It may require an eviction proceeding to dislodge a would-be buyer - costing time and effort on the part of the seller.
More frequently the seller has a reason not to give possession until a specific time, like the end of the school semester or the completion of a new home, and the seller can elect to delay closing or close and retain possession until a specified date. This may be a requirement of the listing contract, and would be specifically addressed in the sales contract. Pitfalls for the strategy include the requirements of the lender, who my insist that the buyer occupy the home after closing.
I have negotiated contracts where possession was delayed for months, while the seller built a new home and the buy liquidated properties and closed out business interests, resulting in a transaction that benefitted both parties - the best kind of real estate deal!
If you have some special requirements or questions about real estate, call the experts at HRES.
Dirty Stories- Septic Systems
Septic systems have gotten a lot of attention lately, including a recent requirement to register a change of ownership when property is sold. The Realtor's purchase contract calls for a septic inspection, and many lenders require that the tank be pumped as a condition of sale. Conventual wisdom indicates that systems should be pumped every 4-6 years. If the sludge in the tank reaches the outlet, it will clog the leach field.
Never put grease, fat or oils in your system. Give your tank a shot of anaerobic bacteria a couple of times a year. Too much fresh water can adversely affect your system, it dilutes the bacteria population to the point where waste is not broken down.
When systems fail, it is usually the leach field that has to be replaced, which entails a lot of trenching and expense. There are alternative septic systems that don't require leach fields, and they are also expensive.
The bottom line is: take good care of your bacteria!
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