Cantonment, FL

You can never be too trusting when it comes to buying real estate. The buyer is entitled to know what he/she is getting for their money. The buyer should insist on an inspection and full disclosure of the house being purchased.

Why Do You Need an Inspection?

An inspection is an opportunity to have an expert give you an oral and written report as to the condition of the property you are purchasing.

After researching recent sales in the area, you decide that 30 year old home for $180,000 is worth the money. You make an offer which is accepted. The next step would be to hire an inspector. The report shows that the concrete foundation is cracked. The roof and plumbing need to be replaced. The cost for repairs adds up to $40,000. Your inspection contingency would let you back out of this deal or negotiate.

Remember to accompany the inspector during the visit. He/She will give oral comments that give more specifics as to the problems of the property. When writing a report, the inspector must abide by certain legalities on paper. He/She will be more open in person.

Why Do You Need Disclosures?

In most states, the law requires the seller to disclose any knowledge about the condition or history of their home to the buyer. For example a seller would disclose information ranging from a leaking roof to their house being built on a sacred Indian burial site.

Disclosure contingency gives you protection. Upon discovering the roof needs replacing, you can either back out of the deal or renegotiate for the cost of repairs.

It also makes the seller responsible legally. A seller may go on record saying nothing is wrong with the house. You move into your newly purchased house only to discover that cracks in the foundation that were filled in and painted over. A court of law can view the disclosure statement as evidence that you had no prior knowledge. The seller is held liable for the repairs.

How Do You Get an Inspection?

The inspection is written in as a contingency in your offer. Many real estate contracts automatically have an inspection written into the terms.

The buyer is responsible for the inspector's fee. Ask your real estate agent to recommend a list of local inspectors. Please check references carefully. This type of service may not be regulated in your area. A retired city or county building inspector may be your best bet.

There are two national trade organizations. One is the American Society of Home Inspectors(ASHI) or the National Association of Home Inspectors(NAHI).

How Do You Get Disclosures?

In California, the law states that a disclosure statement be provided to the buyer who then has three days to approve or disapprove. If the buyer does find the defects acceptable then the agreement is broken.
Your agent or attorney can clarify the laws pertaining to disclosures in your state.

If there is no statutory procedure in your area, the buyer must request it as a contingency in the list of terms. Your investment is not worth being jeopardized. Insist on a home inspection and full disclosure. Make your purchase contingent on approving the results of both.

A "final walk-through" is not a home inspection. Structural problems are only revealed with a home inspection. A walk-through is designed to make sure the seller has not damaged the property since your first visit.

Feeling a Little Cramped? Moving Up

If your home is giving you "the squeeze" because your family has grown or you're seriously thinking about buying a home in a more upscale neighborhood, then you may be ready to move up to your next home. But how do you get started?

Begin with a "reality check."

Take some time to really look at what the next step may be. Visit the neighborhoods you may be interested in. Tour open houses or homes for sale to see what kind of home is available in your price range. I can show you neighborhoods and homes that you might not have considered, but that will meet your needs. Trust your instincts and focus on what you know fits your lifestyle. Then I can help advise you on the value and investment quality of the homes on the market.

Next, talk to your lender to see what kinds of mortgage programs and rates are available, as well as how much you will qualify for. More important, take a hard look at your household budget to realistically determine how much of a mortgage payment you can afford each month. If you don't already have a good relationship with a lender, I'd be happy to refer you to lenders who offer mortgage programs that meet your needs.

In the meantime, I can perform a Comparative Market Analysis (CMA) for your current home to see how it compares to other homes sold in your neighborhood. Then we can determine a realistic asking price. I can also recommend ways to prepare your home for sale. Once you have made a realistic assessment of what you're getting into, then we can put your house on the market and begin to seriously look for your next home.

What if you find a home before yours sells...or vice versa

One of the biggest concerns of move-up buyers is what happens if they find their dream home before their current one sells, or if their home sells before they find a new one. Here's a brief look at several options (please call me for greater detail or help with your particular situation):

If you have an acceptable offer for your home on the table but haven't yet found a new house to move to, you can:

Go for it with the understanding that you may have to move twice - once to a short-time rental unit, the second time to your new home.

Accept the offer with the stipulation that you want a long closing and the right to rent back from the new owner for 60, 90 or 120 days. Assure the buyer that you will do everything possible to move things along so they may be able to take possession of the home sooner than the specified terms.

Inform the buyer you'll sell the home only if you can find a house you like and it will take 30 to 60 days to determine if, indeed, you will sell. This may seem a bit risky but this approach can be successful if you allow the buyer to do their inspection (not appraisal) and get their financing in order while you shop for a new home. You also allow them to continue looking at other homes on the market. If the buyer finds something they like better, then you agree to let them out of the deal and refund their inspection cost (typically it's only $200-$300). This a good way to avoid having to take your home off the market while you're looking, only to have the buyer then do an inspection after you've found a new home, giving them an opportunity to renegotiate the deal when they know you're over a barrel. To prevent surprises at the outset, we can include in your listing description a phrase such as "...the sale of this house is contingent on the seller finding a suitable home..."

Think about the future

When looking for your new home, try to think more about your future needs than your current needs. Generally, I recommend buying as much home as you can afford without overextending yourself, especially if you're buying a new home with few maintenance issues. By stretching a bit within your personal budget, the home will better meet your current and future lifestyle, you will likely hang on to it longer, and it will be a better-performing investment in the long run.

With all that said, remember that you will likely not live in your new home forever. According to U-Haul, the average American relocates 11 times over the course of his or her life (Ladies Home Journal, July 1998). If your new home meets many of your needs, then go for it. You likely will be moving up again in the future.

Charles Stallions, CRS, CSP, CBR, CDPS, SREE, EREI - 800-309-3414, a leader in real estate investing, buying and selling. Lead Real Estate negotiator for several investment clubs as well as investors throughout the US. Call Charles for a list of references before buying or selling you what some consider being their largest investment.

Signing A Listing Agreement

When you choose a REALTOR®, you will most likely sign a listing agreement - a contract in which you agree to allow the REALTOR® to sell your home during a given period. The agreement says that you will pay the REALTOR® a fee when you sell your home. Most REALTORS® are independent contractors who work for a company operated by a licensed real estate broker. (A salesman is licensed by the state to sell real estate through a broker. A broker is licensed by the state to sell real estate to others for a fee and employ salesmen and other brokers.)

The amount of compensation you pay a broker is negotiable, but the REALTOR® will generally follow the company's policy regarding compensation. The amount of the fee will be spelled out in the listing agreement. Make sure you understand how the fee will be paid before signing.

Exclusive listing
Most REALTORS® will ask for an exclusive right-to-sell listing. This means that you will owe the broker a commission regardless of who finds a buyer during the listing period. In other words, if you decide to sell the house to your cousin, your broker still gets a commission. The advantage of this kind of arrangement is that the broker is motivated to work harder to sell your home.

It's possible that a REALTOR® from another company will find a buyer for your home. In that case, your broker is the listing broker, and the second agent is the selling or cooperating broker. Many times your listing broker will agree to pay the cooperating broker a fee from the amount you pay the listing broker. Your listing broker cooperates with other brokers who procure buyers interested in your property and offers to compensate the other brokers for procuring a buyer. Cooperating and compensating other brokers is discussed in the listing agreement you sign with the listing broker.

Length of listing
The listing agreement will specify how long you agree to list your house with a company. Your REALTOR® will probably suggest an average time that homes like yours are on the market. You want a period that's long enough to motivate your REALTOR® to advertise your home and respond to buyers, yet short enough to allow you to change to a different company if you become unhappy with the REALTOR®'s service. Remember that the listing agreement is a contract. You should get a copy for your records. Your REALTOR® is bound to the terms just as you are. You can expect the REALTOR® to keep appropriate information confidential and effectively market your property.