20 Questions – Don’t Make Your Realtor Guess What You Want

 

Did you ever play the game 20 Questions as a kid? If you could identify what your opponent was thinking within 20 questions, you won; otherwise your opponent won.

Well, in real estate sometimes Realtors feel like they are playing 20 Questions with their clients. They really want to meet or exceed their clients’ expectations, but their clients either forget to mention critical information or they leave out details. Sometimes clients believe the details are irrelevant; other times, they believe the information is too private or embarrassing to share.

While I don’t recommend sharing information that feels overly personal, I definitely recommend sharing information relevant to a real estate transaction such as being behind on child support payments or having significant credit card debt. While embarrassing, it is far better for your Realtor to know where you stand financially than for him or her to set up a transaction that is doomed to fail.

Good Realtors do their best to come up with creative ways to make sure every important issue is revealed early in the home buying or selling process. (If they don’t, find a new Realtor.) They often ask these 20 questions (or ones that are very similar):

  1. What is your main objective when buying a home? Are you moving to accommodate grandma?
  2. What game plan do you have in mind?
  3. What is the biggest problem you currently face? Baby on the way?
  4. What are you doing now to help solve the problem?
  5. What other ideas do you have about the home you want to buy? Is a view important?
  6. Who else is involved in the decision? Is down payment coming from mom and dad?
  7. What do you like most about the idea of owning a home?
  8. What is your biggest fear when it comes to owning a home?
  9. If you could have any house that you wanted, what would it look like? Don’t worry about color. Paint is cheap.
  10. Why are you motivated to buy a home now?
  11. What has been your previous experience?
  12. How would you feel if you did not buy a home?
  13. What is your budget? What is the max you can afford? What is the max you are comfortable with? What is your future income and expense probability? Child on the way? Promotion?
  14. What financing alternatives have you considered?
  15. How would buying a home benefit you personally?
  16. How can I help you with the home buying process?
  17. Is there anything that is keeping you from buying a home? Down payment, credit, job stability.
  18. What do you see as the next step? Get pre-approved!
  19. Are you working with a deadline? In before school starts?
  20. In a perfect world, what would you like me to take care of for you?

Not all questions will apply, but this list is a great place to start. Unlike the childhood game of 20 Questions, your Realtor’s game of 20 Questions may lead to several additional questions. Your Realtor is not being nosy; he or she simply wants to provide the best possible service. For example, if you’re a buyer and you say you’d like to be near a school because your children play sports, the Realtor doesn’t know if you want your children to walk home (so you need to be within walking distance), or you plan to pick them up (so you need to be within a 5-minute driving distance). When they start asking clarifying questions, it’s usually in your best interest to answer them. Remember, your Realtor only wins if you successfully sell your house or find a home you love. Your Realtor only wins when you win.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

 

Avoid Scams

Most of us think we won’t be duped by a scammer, but these people are good at what they do and desperation sometimes causes us to bypass our common sense. With the rental market in Ukiah as tight as it is, people are frantic to find a place to live, which can cause them to take risks they usually wouldn’t consider.

While I’m reluctant to write an article about this—because it will educate scammers as well as potential victims—this is so common now that anyone of a criminal nature already knows about it.

Here’s how the scam works. Let’s say you need to find a place to rent. The last four rentals you called about were rented yesterday, and then you see an ad on Craigslist and it sounds perfect. You call the number and a sweet-sounding lady answers the phone. She explains that the house was listed for sale, but the listing expired. She gives you the address but insists that you NOT talk to the real estate company. She says she’s not happy with her agent and does not plan to re-list.

She apologizes that she can’t meet with you because she’s on the East Coast with a dying relative, but suggests that you go by the property and peer in the windows. If you like it, send a check for the security deposit and first month’s rent.

On move-in day, she says she’ll have a friend meet you at the residence with the keys. You give notice at your current residence and prepare to move. You pack up everything you own and call your five best friends with pick-ups to bring your belongings to your new home, only to discover the house is already occupied by the people who bought it and closed escrow two days ago.

Bottom line: your $3500 is gone and everything you own is in the back of friends’ pick-ups. I would like to tell you what to do in this situation to recoup your money. Unfortunately, I can’t because there is no way to know where to find the scammers who took your money and ran.

The best advice I can give you is to be skeptical. If someone is not available to meet you at a property and provide you with access to the interior, that should raise a red flag. Even then, things can go wrong. The current tenant can pose as the homeowner and run the scam. When your Spidey sense (think Spiderman) starts tingling, pay attention. If someone asks for cash rather than a check, be skeptical. If the rent seems too low, be skeptical. If you’re told to peer in the windows instead of getting a tour, be skeptical.

If you want to know who owns the property, ask your Realtor—he or she can check county records and find out. Talk to the neighbors to see what they know.

Realty World Property Management manages about 800 residential units. Right now, as soon as a rental unit is vacated, it is leased to a new tenant almost instantly. This is partly because we keep properties in excellent condition, but the truth is, landlords who do not keep their properties in great condition are also able to rent their properties quickly.

The moral of the story is: if a rental situation seems too good to be true, it probably is.

As a side note on the scam issue, if you’re wiring money when buying a house, be sure you’re sending it to the right account. Realtors’ and escrow company emails have been hacked and the hackers are sending false wire instructions for clients to wire money to. Be aware, get independent verification of wire instructions before you send money. To the best of my knowledge this has not happened in Ukiah…yet.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

How to Avoid Giving Your Estate to the State

For the vast majority of American homeowners, their home is the single largest asset they will ever own; and like the rest of their financial assets, upon their death, that asset will need to be dealt with. Most likely, if your spouse survives you, ownership of your property will be transferred to your spouse. Depending on how you hold title, this will either happen automatically or your poor spouse will have to deal with the hassle of probate (going through the court system to prove his or her right to your assets).

Before I go further, let me remind you that making decisions about how to hold title or make any decisions about estate planning should be done with the advice of your legal and tax advisor. While I have some experience in real estate, I know nothing about your financial or legal situation and that information is critical to making good decisions.

Now, if you and your spouse hold title as community property with the right of survivorship, then upon your death your spouse will automatically acquire your interest in the property. (If you do not have the right of survivorship clause, the transfer of ownership is not automatic.) If you hold title with anyone in a joint tenancy, then upon your death your interest in the property will be automatically vested with the surviving joint tenants without probate. A new form of ownership made possible by AB-139 is called a revocable transfer on death deed. It allows you to deed your single-family residence (with one to four units) to anyone and have that transfer take place the moment you die. It supersedes other legal documents including a will or trust, and while it shares some characteristics with joint tenancy and community property with right of survivorship, it is unique because the beneficiaries do not have any equity (ownership) in the property until the death of the grantor.

In today’s world, many homeowners have ex-spouses, children, stepchildren, and children who are half-siblings to one another. You need to give considerable thought to how you structure your estate when blended families are involved. For example, you may have significant assets and children, and then get remarried to someone with few assets and no children. Upon your death, do you want your surviving spouse thrown out on the street? Probably not. Generally, folks would like their spouses to be able to live out their days in the home they shared. The monkey wrench gets thrown in when your children resent the fact that your biggest asset does not benefit them until the spouse dies (especially if the spouse is significantly younger than you).

While I won’t recommend specific courses of action with regard to your estate planning, I will recommend that you don’t ignore the need to take care of it. It’s easy to postpone uncomfortable family discussions and spending significant sums on legal advice to make potentially difficult and unpopular decisions, but do you really want to leave such an important financial outcome affecting your entire family left unresolved? This can tear a family apart.

If you don’t have any children or relatives you care to bequeath your estate to, you can still name beneficiaries rather than allowing the state to end up with your hard-earned dollars. Choose your favorite charity, whether it’s a health care organization, the Humane Society, or an institution of higher learning, there’s no lack of options. Ukiah has many worthy causes to choose from. I just can’t see having the fruits of your labor go to the state coffers and that’s what can happen if you choose to skip the estate planning process.

Next week, I’ll share some information what to do before you die to avoid paying unnecessary inheritance tax.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

Making Sure You Record the Reconveyance

In California we have deeds of trust rather than mortgages, and when we get real estate loans, our lenders are typically the trustees who receive a deed of trust with the power of sale (since they put up the money to purchase the property). If all goes as it should, when you finish paying off the loan the trustee issues a reconveyance to remove their deed of trust. That reconveyance is then recorded at the county, and everyone lives happily ever after.

That is, unless something doesn’t go as planned.

If you default (stop paying) on your loan, or you don’t pay the required taxes and/or insurance, the trustee can exercise the “power of sale” and foreclose on your property. The trustee can also foreclose if you try to be sneaky and transfer the property to another owner without the lender’s consent (this is called “alienation” and it really makes lenders mad). Finally, if you create waste on the property, the trustee can foreclose. I’m not suggesting that if you throw a Popsicle wrapper on the lawn and forget to pick it up then you’ll lose your home. In this context, waste is more like a Superfund clean-up site. For example, if you dump 50 gallons of used motor oil or hit the house with a wrecking ball, then the trustee has a legal right to declare a default and start foreclosure.

Provided the proper procedures are followed, trustees can sell your property to the highest bidder at a foreclosure auction unless you fix whatever problem led to the foreclosure five days before the auction is scheduled to take place.

The deed of trust gives the trustee something called “bare legal title”—a purely legal, but not equitable, ownership interest in the property. If you pay off the loan early or refinance the property, the trustee still has bare legal title until a reconveyance is completed. To resolve this conflict, the original lender signs a full reconveyance that you must take to the county to record. This removes any interest or claim the original lender has on the property. Normally, this is something the escrow company handles for you if you’re refinancing.

Where this falls apart is with private party loans when the loans are paid off, not refinanced. If the reconveyance isn’t done right away, private lenders can be difficult to track down years (even decades) later. And if the original lender passes away and his or her estate is then divided among several heirs, things can get complicated in a hurry. Rather than dealing with John or Jane Doe, you’re dealing with John Doe Jr. and his 15 siblings, trying to get everyone to sign the reconveyance. If you didn’t keep good records, then John Doe Jr. and his siblings may not be convinced you paid off the loan. If things really go south, you may have to hire an attorney to go through something called “quiet title action.” This process determines who the rightful owner of a property is, as well as who may have claims on the property.

This is where I remind my readers to keep every scrap of paper pertaining to real estate payments and ownership. Another useful piece of advice is to follow up and make sure any reconveyance you’re entitled to is recorded at the county. Most escrow companies and lenders require final payment before issuing a reconveyance. Once they’ve received final payment, the motivation to do additional work (like head down to the county to formally record the reconveyance) can dwindle. Don’t let this one slip. Make sure if you pay off your real estate loan, that the deed of trust is removed.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

Realtors Sift Through Online Jungle

When prospective homebuyers think about jumping into the market, they like to see what’s for sale in their price range with the amenities they’re looking for in their geographic location. They typically go online and find various sites promising to make their search easy and quick. Generally, these are empty promises, and one of the Realty World Selzer Realty agents, Tanya Gilmore, was sharp enough to recognize this would be a great topic for me to write about. Thanks, Tanya!

Online residential property databases are fed by a number of sources, some of them reliable, others not so much. The multiple listing service (MLS) is the real estate professional’s database, and it feeds many search engines, but there are other sources that clutter the databases and make it difficult to discern what is legitimately available for sale.

Online search engines such as Zillow and Trulia can sometimes result in information overload. They remind me of when I was subpoenaed by a lawyer to bring all the documents pertaining to a certain case to the courthouse. The lawyer did not understand what he was asking for, and since his position was counter to mine, I did exactly as he asked and brought all the documents—boxes and boxes and boxes of files to the trial. We brought so much information that he had little hope of finding the facts he wanted. He had no way to process so much information in a timely manner.

Too much information becomes useless unless you have a way to sort and filter it so you have accurate, reliable and organized data.

Online databases intended to serve potential homebuyers come in many forms; some include inconsistent data and make it difficult to figure out whether you’re looking at foreclosures resulting in auctions, conventional listings, or pre-foreclosures (properties that are not even on the market yet, but may be soon). Others include relatively uniform data, but only refresh the listings periodically, so the data becomes outdated fairly quickly. When real estate agents input data about a new listing into the MLS, that information is shared with a huge number of sites.

The bottom line is this: so much information requires buyers to spend significant time ferreting out the accurate from the inaccurate, and sometimes from the blatantly fraudulent.

This brings me to one of my recurring themes: choose professionals to help you navigate the sometimes confusing and always complex process of buying or selling a home. Whether you need a lender, insurance agent, escrow officer, contractor, or Realtor, choose one with whom you have good rapport—one you believe is competent and honest—and allow them to sort through all the data relevant to your property search. Their experience should enable them to sort more quickly and effectively through the overwhelming amount of data to provide you with the information you need to make sound decisions.

You may have a brother-in-law who once thought of buying a house and therefore feels qualified to assist you in your home search; trust me, he’s not. While you may hear the sound of a cash register going “cha-ching” each time you review the list of professionals above, it can be costlier not to hire the right help. Some of the costs associated with hiring real estate and associated professionals must be paid up front, but others can be paid upon close of escrow.

Keep in mind that for most people, a home purchase is the largest financial decision they will ever make, and it is not one that happens frequently enough that they really understand the ins and outs and potential pitfalls related to decisions they will make. This is not really a DIY project. Save time and frustration (and potentially money) by hiring competent professionals.

If you have questions about real estate, contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

Would You Like To Be Paid To Save Money? Consider Energy Rebates

I’ll start by saying I’m not generally in favor of government rebates or subsidies. If investing in something does not make sense without a rebate, then the rebate will result in an inefficient allocation of resources at the expense of either the taxpayer or other rate payers.

However, right now the City of Ukiah is offering a rebate that makes sense. The City is encouraging businesses to save hundreds (or thousands) of dollars by replacing existing fluorescent (or other inefficient) light bulbs with light-emitting diodes (LEDs).

I own an office building on South Orchard Avenue and I just paid $6500 to replace interior and exterior lights with LEDs. The City provided a rebate of $3395 and I expect to save about $3800 in utility expenses the first year, which more than pays for the cost of the upgrade.

The savings from utility expenses is not simply that LEDs use less than half of the required electricity to power fluorescent lights, these LED lights also run a little cooler, so the air conditioner does not have to work as hard to cool the building during the summer. While your heater will have to work a little harder in winter, the cost to heat a building (probably with gas) is far less than the cost to cool it.

And the savings don’t stop there. LED bulbs typically only need replacing about every 15 years. Not only does this save me money on the cost of purchasing new bulbs, it also saves me the labor cost of installing bulbs and because the bulbs run cooler they put less strain on the ballasts, making them last longer as well. In my case, this includes replacing bulbs and ballasts that light the parking lot and require a lift bucket to get 40 feet in the air–not an insignificant expense.

As you can see, even without the rebate this project is economically viable. The rebate is available to businesses within the city limits that have not already taken advantage of a city energy rebate. And by the way, rebates are available for a number of different commercial upgrades, as well as residential upgrades. Be aware—some rebates require prior-approval and funding is limited. Call 855.516.2105 for details. If you don’t live within the city limits, PG&E also offers rebate programs. There’s a vast array of rebates that the city and/or PG&E will pay for to reduce expenses and make you and your family a little greener (environmentally and economically). Look for rebates when upgrading light bulbs, appliances, air conditioning units and attic insulation. This is a win-win if you like paying less and getting more, and helping the planet while you’re at it.

Remember, some upgrades may be cost effective even without a rebate. If you’d like to know how your home or business could reduce its energy usage, there are numerous businesses that will survey your residence or commercial building and let you know what they recommend, not only which improvements or retrofits to make but also whether financial assistance is available in the form of rebates, tax credits or low-interest loans. A word to the wise, don’t get your hopes up too much; most retrofits aren’t eligible for much if any assistance. It doesn’t mean they aren’t worth doing.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

What Do Buyers Really Want? The Secret Homebuyer Checklist – Part II

Last week I reviewed a list of items to consider when buying a home. As a homebuyer, you typically know how many bedrooms you need, how many bathrooms you’d like and a basic layout that matches your lifestyle. But you may not realize the impact of little things like a lack of adequate storage space or the wear and tear of a commute to work or school (emotionally and financially).

In this column, I’ll continue to list important but sometimes-overlooked attributes that can make a property work for you for the long term. When people decide to call a Realtor and tour properties in their price range, they typically see each house once. If they see it in the morning, they see morning light. If they see it in the afternoon, they see afternoon light. They may not consider whether the house is positioned so nature helps keep the house warm in winter and cool in summer. Are there shade trees that protect the house when the thermometer tops 100 degrees? Are those trees deciduous so winter sun can reach the house? A well-positioned house with well-considered landscaping can lower your utility bills.

Is a view important to you? I recently visited a home in the eastern hills with the most fantastic opportunity for a view. But you’d only know this if you’re outside because the view is not featured from within—not a single window looked out onto this incredible vista. So positioning the house is important, but so are strategically placed windows.

Now we’ll talk about the neighbors? While living next to the future Ringo Star might be interesting 20 years from now, it won’t be the least bit interesting when the pounding of drums prevents you from concentrating on much of anything.

How about schools? Do you have school-aged children? If not now do you plan to in the future, or are you an empty nester? If you are raising your family, it’s great to have schools within walking distance. If you’re done raising your family, you may not find it charming to have hundreds of teens walking past your house every day or having new drivers negotiating their route to school.

Do you want a yard or not? Do you want a garden or would you rather not deal with landscaping and upkeep? Is there enough outdoor room for your four-legged children (Fido and Rover)? Is there a fence to keep them safe? Do you have a little cowgirl who is sure to want a horse someday? Is there room for Silver so she can play Lone Ranger?

As you contemplate all the details you’d love about your dream home, be sure to choose a location you love, too. Some people make the mistake of selecting a less expensive house even though it requires a commute. I debunked the financial myth in last week’s column (a 30-mile commute can cost more than $600 per month in gas alone—the house may not actually be less expensive if you add in commute costs). Here are a few other commute costs to consider if, for example, you live in Brooktrails and work in Ukiah: an hour on the road each day that could be spent with loved ones (or working or pursuing a hobby or exercising), lost productivity on snow days, wear and tear on your car, and the stress of driving. If you love Brooktrails, move there, but don’t move there simply to save money.

While this list isn’t exhaustive, I hope it provides a starting point for your own checklist of the frequently overlook items that matter most to you.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

What Do Buyers Really Want? The Secret Homebuyer Checklist – Part I

 

When considering which house to buy, something that seems unimportant at first blush can become a nagging pain in the back (or lower) over time. Since spring is here, many people are thinking about either remodeling or buying a new home. This being the case, let’s consider how important some of these items can be.

Consider closet space. Although I may never have met you or been in your house, I can confidently say you don’t think you have enough closet space. The other thing you suffer from is a lack of kitchen counter and cabinet space. Do I expect you to remodel to add an extra five square feet of closet or two square feet of counter space? No, but if you’re remodeling anyway or thinking of buying a new home, keep the following items in mind.

Closet space: how much is enough? Of course, it depends. If you are a family who heads for the slopes each winter, you’ll need space to store skis, snowboards, and lots of winter clothing when you’re not using them. Do you go hunting and need a place for your gun collection? Is your wife unwilling to part with any of her vast collection of shoes? Is your husband a pack rat who can’t throw anything away? Do your children play sports that require equipment that must be stored somewhere?

Moving to the kitchen, how much counter space will work for you? Do you need room for a microwave? Coffee pot? Mixer? Food processor? With all this on the counter, you’ll still need room to work—you know, to prepare meals. And where will you store kitchen tools or dishes you only use once in a while? Do your cabinets have enough room for every day dishes and the antique set you got from Great Aunt Mathilda? How about all those wedding gifts you received years ago that you can’t quite part with? Finally, you’ll need space for those once-a-year party items: your Super Bowl chip dispenser and your green St. Patrick’s Day beer stein. For food, do you need a walk-in pantry or do you use part of your garage to store extra food? A couple without children can probably put all their food in a couple cabinets, but if you have children (especially teens), a walk-in pantry and part of the garage barely suffice.

Once you finish cooking and decide to do a load of laundry, where do you go? Do you need a dedicated laundry room or can you put your washer and dryer in the garage? Do you want a laundry room with space for an ironing board and somewhere to fold clean clothes (or allow a week’s worth of dirty ones to accumulate)? If you use the garage, consider this: if it is at a different level than the rest of the house and requires a few stairs, you may regret it. While at 25 years old, bouncing up the stairs with a load of laundry is good exercise, at 65, it may be something else entirely.

And while you may be able to find a less expensive house a little further from your job, a 30-mile commute can wear on your nerves and your pocketbook over time. Be aware that the 60-mile roundtrip drive repeated each work day during a month adds up to 1320 miles. At $0.50 per mile, you’re paying $660 per month on a car expense that isn’t tax deductible instead of on a house payment that is (mostly).

I’ll share more subtle but important things to look for next week.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

Why Isn’t There More New Construction?

I’ve been asked why we don’t see more new homes constructed in our valley, and the answer is simple: it’s too expensive. Right now it is significantly more expensive to build than to buy because building costs don’t stop with time and materials.

Let’s say you are driving along and you see a beautiful meadow with amazing views just a short drive from town with a big FOR SALE sign posted. Your heart leaps and you think, “I can see my dream home situated right there.” Let me describe the process you’d have to endure to make that dream a reality.

The available lot must first be zoned correctly, and to be zoned correctly it must be in an area where the general plan allows residential zoning. If it is not, anticipate about a six-month period to work with county officials to amend the general plan and rezone the property. This is costly in two ways: the expense of completing the appropriate forms and going through the process, as well as the opportunity cost of tying up funds when they could be invested and making you money.

Now let’s imagine that you’re a real estate developer and the property you saw could be subdivided to build several homes. Once the property is zoned residential, you’ll need to spend thousands of dollars to create a subdivision plan, including details such as lot size and configuration, as well as the roads and green space that will consume 30 percent of your property.

Next you’ll need to hire someone to navigate the approval process at the state level. In addition to the cost of this arduous process, you should anticipate about two years before approval (if all goes well). If things don’t go well, the state may come back with changes for you to incorporate into your plan.

Before the state’s public report is finished, you must put in roads, and if you’re going to put in roads, you may as well put in utilities. All of this typically requires permits (and money). If your location requires curbs, gutters and sidewalks, the price increases. Depending on county regulations and road conditions, plan on $175 – $200 per foot of road. I highly recommend building roads to county specifications and dedicating the roads to the county so the county and not you are responsible for future upkeep.

Now you’re three years in and, having received the state’s blessing, you can start grading the lots and preparing to build. Before you can grade the lots, however, you must have a permit. Once you grade the lots, you’ll need architectural plans for the spec homes (another cost), and you’ll have to pay to have utility hookups for each house. For a three-bedroom, two-bath, 2000 square foot house, permits are estimated to be between about $3,700 in the county and $4,200 within the Ukiah city limits. Sewer hookups cost $14,000 for Ukiah Valley Sanitation District Sewer and $12,000 for city sewer. Not including time and materials, water hookups range from $1,630 in the city to about $9,000 through Millview County Water District. Electric hookups depend on the number of poles and transformers needed to get electricity to each home. All of this before you put a shovel in the ground.

Finally, you’re ready to build. You must now hire a contractor and pay for labor and materials, plus follow government rules about which appliances you can choose, what type of insulation and windows you can install, and per recently passed legislation, fire sprinklers that will run you about $15,000, not including a monitoring contract.

When the dust settles, it would cost about $600,000-$700,000 to build a new 2,000 square foot home. For that price, you can buy yourself a nice home without the hassle and delay.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

The Goldilocks Approach to Pricing: Not Too High, Not Too Low—Just Right

As a rule, people who sell their real estate holdings want to receive top dollar, whether it’s a family residence or a commercial building. The challenge is how to price a property to sell relatively quickly without undervaluing it.

Ultimately, the market will determine the value of a property, and the market is fluid. Value is based on what buyers will pay the day they look at a house, and unfortunately for you, the seller, buyers do not take into consideration what you think the property is worth or the amount of money you need to get out of it.

A common misconception when determining a property’s listing price is the belief that it is okay to start too high, figuring you can always come down. Overpricing a home is risky and can ultimately result in it selling for lower than fair market value.

Most people fail to realize that there are a limited number of buyers looking for houses in a given price range at any one time. Serious buyers often have a sense of urgency, so when a new property goes up for sale, all those looking for a home in that price range will probably see the property within a week or two.

If your home is overpriced and no one makes an offer during the first few months, what can you do? One option is to wait for more buyers to enter the market. This can be a slow process and your home will become less appealing as its days on the market pile up. Your property will be viewed as a stale listing and people will begin to wonder what’s wrong with it.

Another option is to lower the price in hopes of recapturing the attention of the buyers who have already seen your home and think it is overpriced. The problem with this approach is that most buyers pay more attention to new homes coming on the market than to the homes with price reductions. Even real estate professionals can miss price reductions that make a property a great deal. Once a listing gets a reputation as overpriced, even after months of lowering the price, it can simply be overlooked.

Prior to 2007 (before the real estate crash) most buyers got pre-qualified for the biggest loan they could and set that as their target price for purchasing a home. In today’s market, many buyers take a more conservative approach. They base their price range on their own comfort zone, not necessarily what they are pre-qualified for. If they are getting a loan (as almost everyone does), their lender will order an independent appraisal to confirm the home’s fair market value. Before a lender is ever involved, buyers often research home prices on the Internet to make sure they are not overpaying. Regardless of how much you paid for your home and regardless of how much you’d like to receive for it, buyers will not pay more than fair market value.

What you can control is how attractive your house is the moment it hits the market and makes its first impression on buyers ready to make offers. Pricing will determine the number of buyers who look at the house and ultimately whether or not they choose to make an offer.

On the bright side, the market will rarely allow you to under price your home. If buyers feel your price is too low, you will receive multiple offers. The market will push your price to the highest price the market will bear. So let go of the idea that overpricing is a good strategy—that it will allow you to see if anyone will bite. It isn’t and it won’t.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.