Pre-Listing Inspections

Pre-Listing Inspections

A home inspection is supposed to give you peace of mind, but often has the opposite effect. You will be asked to absorb a lot of information in a short time. This often includes a written report, checklist, photographs, environmental reports and what the inspector himself says during the inspection. All this combined with the agent’s inspections and what the sellers have notice themselves makes the experience even more overwhelming. Ordering a home inspection BEFORE you list a homes for sale is a great idea for people who are interested in getting to a closing quickly and with fewer surprises.


Save Time and Money

As a seller, you must provide a Seller’s Disclosure tat indicates all known defects in a property. In this situation, however, what you don’t know can hurt you!

The property inspector is usually hired by the Buyer and arrives at your property after a contract is negotiated to inspect and list any defects, questionable areas, upgrade suggestions and maintenance.

When significant problems are found by the Property Inspector the buyer may:
Terminate the contract
Or ask for amounts to have the problem fixed
Or be so alarmed by the defect found, will terminate the contract without giving you the chance to fix it.

In any of these situations, your property is back on the market and the problem is still there for the next buyer to find.

A Seller’s inspection will virtually eliminate all the hassles and blown deals inspections cause when the Buyer brings their inspector. It gives the leverage back to the Seller.

Most Sellers are honest and are often surprised to learn of defects uncovered during an inspection. Realize that sellers are under no obligation to repair everything mentioned in the report. No property is perfect – so keep things in perspective. Do not kill your deal over things that do not matter. It is inappropriate to demand that a seller address deferred maintenance, conditions that already listed on the seller’s disclosure or nit-picky items.


What About Repairs?

The ideal use of a pre0inspection by a home seller is to determine what repairs are needed in the property and make them.

Sellers with properties found in need of repairs should make the repairs and provide the listing inspection report to buyers along with documentation (warranties on the work receipts) that the repairs have been made. This generates enormous good faith between buyers and sellers and increases the likelihood of a quick and amicable sale. The bottom line is by eliminating the issues that buyers may want to negotiate with results in a win-win for both buyers and sellers.

On the other hand, if your home is not in stellar shape, the benefits to having your property pre-inspected is that the problems can be taken into consideration when pricing the property or during original listing negotiations with a prospective buyer.

This can minimize, if not eliminate, re-negotiations which often fuel emotions and turn off buyers. Historically, buyers will want to negotiate two dollars for every dollar of reported deficiencies. Just think of having to drop your listing price by the amounts equal to twice as much as the cost of all the repairs needed in your home! It can really add up.

By having a professional property inspection document the repairs needed in your property, you can take control of the situation. You can present the inspection report to your buyers and let them know that all these repairs needed are reflected in the listing price. The buyer then has the opportunity to decide whether they would like to move forward and accept the offer.

Sellers typically bare the majority of the liability when it comes to real estate disclosures. It is important to express that properties, whether they are homes, condos, town homes or commercial, are much to complex to assess visually – especially by non-experts. The fractional cost of a property inspection will pay ten fold in peace of mind and security from future litigation. You would not buy a property without getting an inspection; do not list one without getting one either. For more information on property inspections visit: www.AGPIC.com – and click “educate”.

Court Confirmation Procedures

When court confirmation is either chose or required, certain procedures are generally followed, as required by law and/or custom:

o An offer is presented and conditionally “accepted” by the estate representative. This purchase agreement is not binding on the estate.

o After all buyer contingencies are removed from the accepted offer, a petition for the court hearing depends upon the court calendar at the time, but is generally 20 – 6- days from the date of the petition.

o The buyer needs to deposit 10% of the purchase price prior to or on the sate of the court confirmation hearing.

o The sale together with the accepted offering price, is advertised for a statutory period (three times) in a local newspaper.

o There is open competitive bidding at the court hearing, The minimum first overbid shall be an amount equal the accepted purchase price of the accepted offer, plus five percent of that amount, plus $500. In the even of such an overbid, the court shall determine any further incremental overbidding amounts – for example, $1000 or $2000. The bidding stops with the final bid.

o Any person who bids in court must make an unconditional offer (i.e., obtaining financing and approving inspections should not be a condition of the offer) and if confirmed must present a cashier’s check deposit for 10% of the purchase price as described above, or as determined by the court.

o In the event a buyer defaults after a court confirmed sale, the buyer may lose his/her deposit

o If the court confirms the sale to an over bidder rather than the original buyer, the original buyer’s deposit shall be refunded. If the sale is confirmed to the original buyer, the deposit shall apply to the purchase price. (Deposit could be tied up for up to 90 days).

o The purchase price accepted must be at least 90% of the probate’s referee’s appraised of re-appraised value of the property.

o Real Estate commissions are subject to the approval of the court.

Existing Home Sales to Trend Up in 2008

Written by National Association of Realtors


WASHINGTON, D.C. - Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors®. However, a recovery for new-home sales is unlikely before 2009.

Lawrence Yun, NAR chief economist, said the worst part of the credit crunch has already worked its way through the data. “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” he said. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September. It was the second consecutive monthly gain, but remained 18.4 percent below the October 2006 index of 106.8. “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,” Yun said.

The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago. In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.

“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun said. “Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.”

Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006. Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.

“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008. I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,” Yun said.

“Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases,” he said. “The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price.”

Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash. “We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions.”

New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million 2006; no sustained improvement is seen for new homes until 2009. Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year. The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.

The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest ratesGrowth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 200The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008. Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.
End of Article

Increasing Conforming Loan Limits Part of Stimulus Package

The U.S. House of Representatives unanimously approved a measure Tuesday that includes an increase in the conforming loan limits as part of a larger economic stimulus package. The measure would allow the Federal Housing Administration and Fannie Mae and Freddie Mac to issue mortgages above the current $417,000 level. Raising the conforming loan limits to more accurately reflect the cost of housing in California and other high-costs areas of the nation has long been an objective of C.A.R.

“While this measure is expected to face an uphill battle in the Senate, Tuesday’s action by the House represents a huge win for Californians and for C.A.R., which has fought aggressively for the increases for several years,” said C.A.R. President William E. Brown.

“For years, Chairman Barney Frank and I have worked to create affordable housing opportunities for families across the country by increasing the FHA and GSE conforming loan limits,” said Congressman Gary G. Miller, who has worked closely with C.A.R. to push for the reforms. “With the average home price in high-cost areas like California exceeding the current loan limit, homeowners and homebuyers in these areas have been unable to utilize these important federal housing programs. The loan limit increases included in the economic stimulus package will make safe, conforming mortgage loans available for homebuyers in all areas of the country.”

Currently, Californians are forced into more expensive non-conforming jumbo loans, decreasing homeownership opportunities for many and forcing others into more costly – and often riskier – loan products. Under terms of the proposed stimulus package, the conforming loan limit will be raised from $417,000 to as high as $729,750 in high-cost areas. The increases would only be valid through the end of the year.

While the House is hoping to send the measure to President Bush for signature by Feb. 15, the Senate is reported to be crafting a stimulus package of its own, including add-ons, which may result in delays. In addition, the Office of Federal Housing Enterprise Oversight (OFHEO) continues to oppose conforming loan limits reforms.

The House’s economic stimulus package also includes $500 million to support foreclosure mitigation counseling agencies across the country, many of which are currently short-staffed and overwhelmed by the rise in defaults.

SENATE PASSES FHA MODERNIZATION BILL

In a significant victory for REALTORS® and homeowners across the country, the U.S. Senate on Dec. 14 approved legislation designed to modernize the Federal Housing Administration’s (FHA) mortgage insurance program by increasing loan limits and helping troubled borrowers with subprime loans refinance into federally insured mortgages. The Senate’s approval followed an aggressive call to action by C.A.R. urging REALTORS® to contact Sen. Barbara Boxer seeking her support in passage of the bill.

The FHA Modernization Act, approved in a 93-1 vote, would increase loan limits for FHA-insured loans from $362,790 to $417,000, to mirror current conforming loan limits Fannie Mae and Freddie Mac may purchase. In addition, the Senate bill would allow the FHA to insure refinanced loans for borrowers who are delinquent on their mortgages due to ballooning payments on subprime loans.

“This is a tremendous victory for REALTORS® and C.A.R., and I want to thank REALTORS® who responded to our ‘Calls to Action’ and urged their elected officials to pass this bill,” said C.A.R. President William E. Brown. “The Senate’s action is a milestone in our efforts to provide safe alternatives for financing a home mortgage, not only for those borrowers who are facing foreclosure today, but for future homeowners as well.”

The bill, which has the support of the Bush administration, also would reduce the required minimum down payment for an FHA-insured loan from 3 percent to a flat 1.5 percent of the appraised value of a home.

The House passed a separate FHA overhaul measure in September, but there are several differences between it and the one passed by the Senate. The House bill, for example, would increase the FHA loan limit to $729,750, or 175 percent of the Conforming Loan Limit. The House bill also is pushing for a 0 percent minimum down payment, compared with the Senate’s 1.5 percent. The house bill would allow risk-based pricing for FHA mortgage insurance premiums, while the Senate version opposes it. Both bills would categorize all condo units as single-family units.

Both the House and Senate measures will now be carefully scrutinized by a conference committee for comparisons and reconciliation of their differences. Once a final bill can be crafted, it will be sent to the President for signature.

Meanwhile, C.A.R. will continue its efforts to work with California’s congressional delegation to ensure the final version of FHA reform passed out of conference committee has as high of a loan limit as possible.