Don’t Accidentally Sell Your House Twice

With interest rates remaining low and nice weather making it easy for people to get out and see new properties, the housing market is likely to remain hot. This is often when we see multiple offers on a single property.

A seller’s first reaction to multiple offers is usually, “Yay! Lots of offers.” The reaction immediately afterwards is, “Dang, I priced the house too low.” The first feeling is justified; the second may not be.

Multiple offers give the seller options. More offers increases the likelihood of a higher sale price, but price is not the only consideration in determining the best offer.

With multiple offers, sellers have the luxury of choosing a buyer who is prequalified or even preapproved for a loan. The seller may also get to choose a buyer who can make an all-cash offer, one who can provide copies of bank statements to prove it.

In addition to finding a highly qualified buyer, sellers with multiple offers can compare contingencies and lengths of escrow. One offer may include no contingencies but require a 90-day escrow (that’s a long time). Another offer could require a seller to perform repairs based on a pest and fungus report, but also close with an all-cash offer in three weeks. Like I said, more offers means more choices.

Things can get a little complicated when multiple offers lead to multiple counteroffers. This is where you have to be careful not to inadvertently sell your house twice. A good Realtor will help you manage the multiple offer/counteroffer process by assuring contracts are written with clear boundaries. Your Realtor will write counteroffers on your behalf that can be withdrawn at any time, and will assure you only confirm the counter offer you want to accept.

Just so you know, you are not obligated to counter all offers or to offer the same terms in counteroffers to multiple prospective buyers. You may be willing to settle for a lower price from a buyer who doesn’t require you to pay closing costs or do repairs.

It is illegal for you or your Realtor to take into consideration anything considered a protected class at any stage in the real estate transaction. This obviously refers to race, ethnicity, and religion. It also refers to age, marital status and whether the buyers have children.

To be clear, it is NOT legal to consider the needs of a family with four kids looking at your four-bedroom house with a jungle gym in the backyard over the needs of a single elderly gentleman. However, if you fall in love with a young couple, you could give them preference over a grumpy old man, because personality is not a protected class.

After you’ve selected your favorite offer, your Realtor will be sure to cancel all other counter offers and open escrow for you. However, do not forget about other prospective buyers. One or more of whom may still see your house as their dream home. They can be encouraged to write a back-up offer, which would become the primary offer if the first offer falls through for any reason.

A certain percentage of offers do not go through for a whole host of reasons. Sometimes the highest price offer—the one that looked so good at first blush—comes with problems. Many of us tend to ignore problems when the money looks good, but we’re sorry later when the transaction falls apart. That’s when the back-up offer swoops in to save the day.

However, as your Realtor will remind you, if the first escrow fails, not only will you need formally cancel the contract, you will also need to disclose any material facts brought to light by the first buyer’s inspections.

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.

 

Disclosures – What Happens if You Don’t Mention Those Pesky Details

Last week, I shared the importance of disclosing what are called “material facts,” information a seller knows or should have known that could influence a buyer’s decision to buy—or the amount they’d be willing to pay. Disclosures cover everything from natural hazards to underground utilities, storage tanks, septic systems, short sales, mother-in-law units, proximity to agriculture or industry, naturally occurring asbestos, and more.

Disclosures cover such a wide range of topics and can be so detailed and complex that there are whole companies that do nothing but deal with them. They’re called Natural Hazard Disclosure Companies (NHDs), and even they don’t deal with all the disclosures legally required by some real estate transactions. Because there are literally hundreds of potential disclosures, many may seem inconsequential to the seller. After all, you’ve gotten used to the noise that the neighbor’s dog makes. And since you and your neighbor (who happens to own a liquor store) are friends who often enjoy a glass of wine together, you’re not likely to complain about Fido the yappy schnauzer.

Since the prospective buyer is a teetotaler who is unlikely to socialize with the wine-drinking neighbor, he may not find Fido’s quirky but constant yapping so endearing. The point of all this is, as a seller, you need to think of disclosures through the eyes of prospective buyers. It is critical that even seemingly irrelevant issues are disclosed. As I indicated last week, if it changes the buyer’s mind regarding the sale, it was “material.” If it doesn’t affect the buyer’s decision to purchase the property, it doesn’t hurt to make the disclosure.

So what happens if the sellers do not disclose a material fact (in writing!) they should have? Nothing good, I can assure you. You may wonder why it is so essential to note every pesky detail. After all, the prospective buyer tours the property and hears the schnauzer for himself. Let’s fast-forward eight months. Your buyer just found out he has been transferred to New Mexico and it’s mid-2007. The property value just dropped 10 percent and the buyer is now looking for a way to undo the sale. He’s looking for a plausible way out. For example, he wouldn’t have purchased the property if he had known that the neighbor had an obnoxious dog who barks incessantly.

Will you, the seller, win this lawsuit? Maybe yes, maybe no. Will you spend some sleepless nights and help fund your attorney’s child’s college education? Almost certainly, yes. Just the letter from your attorney telling the buyer he has no case (which may or may not be true) will probably cost $300-$500. If a lawsuit is filed and the case never even gets to court, add at least one zero ($3,000-$5,000). If the case goes to court, add another zero. And that is assuming you win. Losing may mean damages or a rescission. You get the house back and the buyer gets the purchase price back plus and money he spent on taxes, improvements, and interest minus the fair market rental value while he lived there. The buyer may also be entitled to damages for the pain and suffering of listening to Fido’s yapping.

So, the rule is this: when it comes to making disclosures, mention every pesky detail, no matter how small or seemingly insignificant.

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.

 

The TRUE Cost of Building

I’m frequently asked why we don’t have more houses available in Ukiah for sale or rent. Although the Realty World Selzer Realty property management division manages about 800 properties, we typically have almost no vacancies—and that’s been true for at least a couple years. The reason, of course, follows the laws of supply and demand. Although the demand for more housing is high, the cost of building it is higher.

Part of the reason for the high building costs is that City of Ukiah is still paying off a $72 million sewer upgrade debt from five years ago. Although I like the changes in attitude I see in our current councilmembers as they support policies to encourage affordable housing, we are all saddled with debt incurred by poor decision-making in years past.

When people try to build on a vacant lot rather than buy an existing residence, they are often surprised by how many fees and expenses they incur. Recently, the sale of an empty lot fell through because the costs of developing the property ran tens of thousands of dollars more than expected. I’m not talking about the cost of the lot itself. I’m talking about the regulatory costs associated with preparing the lot.

Here are some of the costs the buyers would have incurred for the simplest of building projects: putting a mobile home on a vacant lot.

  1. Sewer, water and electrical fees: $19,000.
  2. Sewer lateral and water line from mains to the property line: $10,000
  3. Installation of four street trees installed within five feet of the sidewalk with garden stacking blocks for watering: $3,600
  4. Storm water drainage mitigation (an infiltration ditch with gravel and berm at low end of lot to stop runoff – two feet wide by three feet deep with one-inch berm): $4,600
  5. Demolition of existing sidewalk and ADA-compliant replacement sidewalk around driveway: $6,000
  6. Excavation for utilities from house to sidewalk for underground utilities: $2,200
  7. Building permits: $4,500

This amounts to about $50,000, much of it includes things the owner would not have elected to do given a choice. While every new home needs sewer, water and electrical services, the hook-up fees and the cost of connecting to those services to the structure adds up to more $30,000. That is a lot of money.

Another proposal fell through when a developer wanted to build an apartment complex on the lot behind Rite-Aid in Ukiah. The sewer hook-up fees alone exceeded the contract purchase price for the land.

The bottom line is this: before we see new construction of single-family homes, prices for those properties will have to increase. We are still waiting for the current market value of a typical home in Ukiah to reach the value it held in 2007, before the housing bubble burst.

Once that happens, we still won’t see a huge construction craze because since 2007, inflation and regulations governing construction have consistently driven up building costs.

To support the cost of building a new 800-square-foot, two-bedroom, one-bath apartment, rents will probably need to rise to about $1,200 per month. While this is not a welcome idea for people looking to rent an apartment, it is just the simple facts of life when it comes to the cost of building a multi-family complex in the Ukiah Valley. There are a few apartment projects in the planning stages, but they are unlikely to go through until the developers are confident they will have the income to support their project. Based on the shortage of housing, particularly rentals, and the fact that there will be new construction in desirable locations, I think they’ll be able to achieve these numbers.

If you have questions about real estate investment, sales 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.

Getting Ready for a Successful Open House

 Every weekend, Realtors hold open houses so prospective buyers can walk through properties and imagine themselves in a new space. Some open houses are more successful than others, because the sellers plan ahead. If you’d like to get the most out of your open house, consider these recommendations.

4 WEEKS BEFORE

Several weeks before your open house, make plans for all family members, including pets, to be away during the open house. If you have young children, ask the grandparents to take the kids that day. If you have dogs, call a kennel—or friends with a fenced yard—so the dogs can remain offsite while visitors check out your property.

This is also a good time to schedule repairs and carpet cleaning. Although the sagging gutters, loose railings, leaky faucets, and minor pet odors may not bother you; they can certainly bother others.

3 WEEKS BEFORE

With three weeks to go, de-clutter your house. Create clean surfaces and remove half of whatever is in your drawers and closets. When drawers and closets are full (or overfull), people assume the house doesn’t have enough storage. Take your clutter offsite: do not put it your garage. People who visit your open house will look in every available space.

In anticipation of visitors, consider buying fluffy white towels for the bathrooms and a new welcome mat for your front door. You should also purchase a box for each bathroom big enough for shampoo, soap, razors, toothpaste, and other personal bathroom items you’ll want to remove the day of the open house. The only thing on the bathroom counters that day should be a new decorative soap and some fresh flowers.

2 WEEKS BEFORE

With only two weeks left before your open house, it’s time for a deep clean. Remove dead bugs from light fixtures, clean the fingerprints off the sliding glass door, clean the doorknobs and light switches—and the dirt around them; and if you’re up for it, power-wash your house, deck, and driveway. If you’ve never used a power washer, find someone who has. This is not a good time to blow holes in your driveway, and believe me, it happens.

1 WEEK BEFORE

A week before the open house, clean the inside of appliances like your oven and refrigerator, declutter your pantry, and put out the new doormat so it isn’t so obviously new for the open house visitors.

THE WEEK OF

The week of the open house is the time to attend to final details. Purchase fresh apples or lemons to place in a pretty bowl in the kitchen. Clean the windows. Mow the lawn a few days before the open house, so the allergens settle down before visitors come. Make sure you have vanilla extract in the pantry. If you have a fireplace, make sure you have fresh logs.

THE DAY OF

First thing in the morning, take your children to their grandparents’ house and your dogs to the kennel. Put yard clutter away, including toys, hoses, and Fido’s water bowl. Walk around the house and collect any valuables, and put them in the trunk of your car or in a locked safe. (It is really rare, but occasionally people who attend open houses steal.) Put personal bathroom items in the boxes you’ve prepared, and put those boxes under the sink. Stow all kitchen appliances away so countertops are clear (which allows people to imagine their own appliances there). Put fresh logs in the fireplace. Prepare a fresh pot of coffee.

RIGHT BEFORE YOU LEAVE (AND YOU SHOULD DEFINITELY LEAVE)

Open all the blinds. Turn on all the lights and put a drop of vanilla extract on a light bulb in each room. If it’s cold and you have a fireplace, light a fire.

Then leave and allow your Realtor to do what they do best.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. 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.

 

Sometimes Beauty is Only Skin Deep

If you’re in the market to buy a home, it can be hard to resist a place with brand new features: new flooring, new paint, new countertops, new bathroom fixtures, and/or new appliances. While newer can certainly mean better, it’s important to make sure upgrades were done properly and the fresh coat of paint wasn’t added to cover mold, water damage, or other problems.

Before 2007, the housing market was hot—prices were through the roof. Then the market crashed and home values plummeted. Many people faced foreclosure and they stopped maintaining their homes. By the time the housing market picked up again, many homes were in disrepair. This allowed enterprising contractors and do-it-yourselfers to buy fixer-uppers, renovate them, and resell them for a nice profit. This is called a flip, and it is a perfectly legitimate business practice. It only becomes a problem when the contractor or D-I-Yer isn’t ethical, cutting corners to increase profits or not disclosing information to prospective buyers at the time of the sale.

This is why it’s always a good idea to learn about the history of a property. Before closing escrow on a house, do your homework. When were renovations done and by whom? Check to see whether licensed contractors did the work. Confirm that appropriate permits were issued and finalized. What may appear to be a sparkly new bathroom floor could be fungus-damaged wood covered by new tile. Don’t assume that because the house has a new electrical panel that is also has new wiring. Just like you wouldn’t assume new bathroom fixtures meant the whole house was recently retrofitted with new pipes.

If the house is vacant, it’s also a good idea to find out how long it’s been since someone lived there. Even a couple months can cause issues with water, gas and electric. Water heaters leak. Furnaces fail, and air conditioners have issues. If the appliances are brand new, they may work perfectly—or they may not. Because they are untested, there’s no way to know whether they can handle the volume your family requires.

I recommend ordering plenty of inspections before you start planning where to put Great Aunt Mathilda’s piano or your favorite recliner. A home inspection, a pest and fungus inspection and a title report are essential. On the title report, I’d spend the extra money to get a lien-free endorsement from the title company. That means everyone who worked on the house has been paid. Mechanics’ liens are not part of the public record, but can crop up after a sale. Then you’re responsible for taking care of them. I’d also consider hiring a plumber to check the sewer lateral, or obtain a septic inspection if the house has a septic system.

I share this information to make you cautious, not to scare you away. Most of the contractors I know are reputable, hard-working people. In a town as small as Ukiah, it’s hard to be a charlatan and stay in business very long. Those who renovate houses in poor condition can take a house that wouldn’t qualify for conventional loans and make it affordable for a first-time homebuyer with a low down payment. Everyone wins.

If you’re nervous about a newly renovated house, talk to your Realtor. Realtors can suggest which inspections to order and they’re often good at sniffing out subtle cues that may indicate trouble. Realtors see hundreds, sometimes thousands of houses during their careers. They tend to have a sense if something doesn’t feel right.

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 Price Your House without Adding an Emotional Surcharge

When you decide to sell your house, it can be hard to let go emotionally, because many of us associate our house with the memories we created there: the birthday parties, the holiday celebrations, and all the firsts—from your child’s first steps to your first day as empty nesters. This can be problematic when it comes to determining your property’s market value because your memories are priceless, while your house is not.

As you contemplate a listing price, remember that you get to take your memories with you to your new home. The memories don’t stay with the old house, so their value shouldn’t either. Determining a listing price is one of the many things a good Realtor can help you with. Your Realtor will review comparable properties in the neighborhood and assess the local housing market trends to come up with a suggested listing price. This is often the moment when sellers see a flash before their eyes of all the improvements they made, and wonder why the house isn’t worth more.

The cost of some improvements can be recouped, usually those that involve updating kitchens and bathrooms. However, converting a garage to a family room or installing built-in shelves may not increase the value of the home by the amount of money (and sweat and tears) you invested. Work with your Realtor to understand the reasons for his or her suggested listing price.

In addition to square footage and location, your Realtor may consider issues such as how quickly you’ve said you want to sell. Keep in mind, the Realtor does not establish the value of the home: the market does. The Realtor is simply trying to interpret market data to reflect an accurate value so potential buyers will come knocking.

Can Realtors make mistakes? Yes, of course. But are they typically trying to sell your property at a price below market value? No, that doesn’t benefit them or you. You should definitely feel free to ask how your Realtor came up with his or her suggested list price, and where wiggle room may exist, but just because you don’t like the price doesn’t mean it isn’t the right one. Sellers have an especially tough time with this concept when they paid too much for the house and are now “upside down” (owe more than the house is worth). Sadly for those folks, when the appraiser comes to examine the property, there is no line item for how much you paid for the house—this has no impact on the value of the property.

If you want to know how much money you’ll walk away with at the end of a sale, ask your Realtor to create a seller’s net sheet, which includes the sale price minus the expenses related to the sale (e.g., brokerage fees, loan, title and escrow fees and any credit to the buyer for repairs).

Here are some signs that you may be overly emotionally invested in your house when it comes to selling it:

  1. You argue with the Realtor that the list price is way too low
  2. You ignore the Realtor’s advice about making improvements, repairs, or updates to the house
  3. You refuse to respond to requests to show the house in a timely manner
  4. You become irrational during negotiations after buyers make an offer or counter offer

It’s understandable to have an emotional attachment to your house, just be sure to recognize it so your emotions do not take precedence over judgment.

One final piece of advice: before you sell your house, be sure you can qualify for a new one. It’s best to get preapproved for a loan to buy another house before you let go of the one you’re in.

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.

 

Good Credit: Myths and Facts

When it comes to offering home loans to prospective homebuyers, lenders often provide more favorable terms to borrowers with good credit—because for them, good credit means less risk. Your credit score helps lenders determine the likelihood of whether you will pay your mortgage payments, and pay them on time. The most common credit score is the Fair Isaac and Company score (FICO). A FICO score considers a huge amount of credit history, including how many real estate loans and car loans a person has. It reviews credit card information: outstanding balances, whether you pay your cards off each month, and how close they are to the maximum credit limit. The score also reviews how recently and frequently your credit check has been run, and whether closed accounts were closed based on customer requests or vendor requests.

There are decisions you can make that have the potential to affect your credit score. Here are a few to be aware of.

Oddly enough, just having your credit score checked by a potential lender will affect the score. If you inquire about your own credit, this is called a “soft pull” and it does not affect your score; however, if others check your credit, it may cause a little damage. According to myfico.com, when you apply for credit, you authorize those lenders to ask for a copy of your credit report from a credit bureau. When you later check your credit, those credit inquiries are listed (sometimes along with others). The only inquiries that count toward your FICO scores are the ones that result from your applications for new credit.

Closing old or inactive accounts to help your score could shorten the measured duration of your credit history. This is a bad move. As long as you’ve paid in a timely manner and do not have an outstanding balance, old accounts simply show you have a history of taking care of business. This is good for your credit score. If at some point you got behind and were sent to collections, make sure you clean up those negative accounts. Unfortunately, paying off a negative account doesn’t erase it from your record (it usually remains on file for seven years), but it is far better than allowing it to continue to harm your financial reputation.

If you have a grown son or daughter (or any friend or relative) who may have had some credit trouble, be aware that if you co-sign on a loan for them, you are responsible for that account. If they default on the loan, the bank will come to you for payment. I realize this may sound obvious, but some folks are under the misimpression that co-signing is like a vote of confidence that makes the lender feel good about lending to this high-risk borrower. It is far more:  it is a financial guarantee that you may actually have to make good on in the future. And if your friend doesn’t pay on time it may impact your credit score.

As you consider how to build a strong credit score, making on-time rental, utility and cell phone payments isn’t actually all that helpful. It’s a good idea, anyway, but what really helps your credit score is not getting sent to collections for missed payments. While your score will incorporate your financial history, it is only a snapshot. It is like a home appraisal – its value is only good for that point in time. The good news about this is: if your credit score is not as high as you’d like, you can change it. The bad news is: if it is as high as you’d like, it may not remain there.

 

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.

 

 

 

Home Selling Myths – DeBunked Part I

 

Most of us don’t buy and sell homes very often, so when we hear a myth that sounds plausible, we believe it. Last week I shared home buying myths and debunked them. This week, I thought I’d jump to the seller’s side and debunk common myths people have about how best to sell their property.

Myth #1: I don’t need a Realtor. Yes, you do. I am a real estate broker and I’ve hired Realtors to represent me when I buy or sell property. A typical, run-of-the-mill real estate contract requires a 10-page purchase agreement, 6-8 disclosures of one to twelve pages each, and 3-5 inspections, all of which need to be reviewed and understood. Real estate law and practices are updated frequently, so knowing the latest information requires constant education.

Myth #2: I looked online and I know what my house is worth. No, you don’t. If you read the disclaimers on those websites, they admit that the prices they list are only estimates and that you should talk to a real estate professional to determine your property’s value.

Myth #3: I can negotiate my home’s purchase price better than a Realtor. This simply isn’t true. One of the biggest benefits to having a Realtor is his or her ability to serve as a third party negotiator. When a prospect has looked at your house and not made an offer, how can you find out if an offer is coming? If you call for a status report, you are breaking the first rule of negotiating by making first move. It is seen as weakness and it communicates a sense of urgency you may or may not care to admit. When a Realtor calls, he or she is just following up in the process of looking for a commission—not putting you at a disadvantage.

Myth #4: I don’t need inspections; the buyer will get them. My recommendation to every home seller is to get as many inspections up front as you can, from wells and septic systems to sewer laterals, roof, pest and fungus, home inspections, preliminary title reports and more. These inspections provide value for lots of reasons. First and foremost, inspections tell you what’s wrong with your house, giving you the opportunity to take care of minor issues before they come to a buyer’s attention. Fixing little issues will also make your house show better. Finally, it will make your sales transaction go more smoothly, because you’ll have no last minute surprises for the lender or buyer to resolve prior to the close of escrow. Having inspections up front takes all the wind out of a buyer’s sails in the event that he or she wanted to renegotiate price because of some newly discovered issue.

Next week, I’ll debunk four more myths about selling your house.

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.

 

 

Home Buying Myths — DeBunked

Most of us will only buy a home a few times in our lives, so it’s hard to know fact from fiction when it comes to making good decisions. Here are some common myths debunked.

Myth #1: When buying a home, the first thing to do is look for a house. Nope! The first thing you should do is find a Realtor. Then his or her first job will be to help you find a loan officer so you can get pre-approved (not pre-qualified) for a home loan. Once you’ve done this, your Realtor will sift through all the houses on the market and show you those that fit your lifestyle and your budget.

Myth #2: A 30-year fixed mortgage is ALWAYS best. While I tend to believe 30-year fixed rate mortgages are almost always best, some circumstances call for shorter terms or adjustable rates, which can save you money.

Myth #3: You must have a 20 percent down payment to get a home loan. This simply isn’t true. In today’s world, there are many programs with low or no down payment options. Government programs through the USDA and FHA offer loans to people who cannot afford a 20 percent down payment. If you are a military veteran, you may qualify for VA no-down payment loans. Work with a loan broker to review your financial resources, income and credit history to find the loan best suited to your needs and circumstances.

Myth #4: The only cash you need to buy a house is the down payment. Unless you are buying a house from your mom and dad and they are also paying for your loan fees, mortgage insurance, title insurance, escrow fees, and all the inspections and repairs needed before you move in, you’ll definitely need more cash than simply your down payment.

Myth #5: You can’t buy a house if you have bad credit. You can, but it’s more expensive. If you have good credit, you will get a vastly superior loan with a smaller required down payment and lower interest rates. However, I have a source for home loans for people with bad credit. It does require a lower loan-to-value ratio, which equates to a higher down payment or a guarantor on the loan, but it is available. Regardless of your credit score, you’ll be required to prove you can make the loan payments each month before anyone will lend you money.

Myth #6: Home inspections are unnecessary. Not true unless you plan to raze the house and rebuild from the ground up. Especially if you are tight on cash, a home inspection is important so you know what you’re getting into. The last thing you want to discover after you move in is that the roof should be replaced in two years and the furnace needs to be replaced next month.

Myth #7: The seller will be offended if you come in with an offer under the asking price. Most sellers would prefer an offer below their asking price as compared to no offer at all, as long as the offer isn’t frivolous.

Myth #8: Realtors aren’t really necessary. Okay, I’m a little biased here, but Realtors are necessary. They have access to all the local properties for sale (not just those listed online). They know which professionals are good and which ones aren’t when it comes to home inspectors, insurance agents, loan officers, pest and fungus inspectors, contractors, and others. Realtors will negotiate on your behalf, make sure you have all the necessary disclosures, saving you time and money. Choosing a For Sale By Owner property and not using a Realtor yourself can lead to expensive legal mistakes. Your Realtor is your advocate. I wouldn’t buy a house without one.

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.

 

Now’s a Great Time to Consider a Career in Real Estate

Last year appears to be the best year in real estate in a decade, and probably longer. If you’ve ever considered a career in real estate, this could be a great time to jump in. Not only has the housing market heated up, but the average age of real estate agents in California is 58. Given the fact that most people stay in their homes for 5-7 years, many of the agents currently in business will be retired by the time last year’s homebuyers are in the market again.

A job as a real estate salesperson (or any salesperson, for that matter) can be the easiest low paying job or the hardest high paying job. If your career goal is to sit around, read the paper, and drink coffee while talking with friends, you’d become a Realtor in the first category. If, on the other hand, you’re will to be organized, show up early and occasionally work late with a clear goal of helping others, then you could fall into category two.

I’ve been doing this for more than 40 years and I cannot imagine doing anything else. Although it absolutely requires hard work and long hours, it also affords me the flexibility to schedule vacations when I like, attend my children’s sporting events, and be in control of my own financial future.

Most licensed agents can find a job within a day or two in almost any city in the nation. There are some requirements, however, before you can call yourself an agent. First and foremost, you must pass the state exam to earn your real estate license. Then, you must have the wherewithal to run your own business, even if you’re working for a broker.

As with any startup, a new real estate business requires some capital. If you’re like me, you enjoy food with your meals. Not only that, you prefer a roof over your head and clothes on your back. So, when you venture out into your new career as a real estate agent, you need to have the funds to pay for business expenses and living expenses until your commission checks start rolling in.

If this career path is of interest to you, talk to some people. Talk to Nash Gonzales, the real estate instructor at Mendocino College. Talk to Don Strickland at Redwood Empire Title. Talk to a real estate broker or two here in Ukiah. Each one will give you a slightly different perspective on the business, but I guarantee all of them have been involved for many years and can’t think of a more satisfying career.

As I mentioned, this is a great time to get into real estate. During the next five years or so, you can learn from people who’ve been selling properties and land for years (some of them, decades); then they’ll retire. Not only will you benefit from their years of institutional knowledge, they can provide you with a book of business in return for referral fees. In most cases, this will be well worth the investment.

As you get further into the business, you may choose to specialize in a certain area: residential, commercial, industrial, ranches/land, agricultural properties, or new development. Each area has laws and practices associated with it, from zoning to water rights. If you’re selling ranches, plan on owning a four-wheel drive vehicle and a pair of hiking boots. If you want to sell agricultural property in Mendocino County, understanding how soil and terrain affect different types of grapes comes in handy. If you want to work with a developer to subdivide land and build spec houses to sell, you better be good at details and willing to work with bureaucracy at all levels. Whatever you choose, I welcome you to the wonderful world of real estate.

If you have questions about getting into real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. 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.