Choose A Home Inspector Wisely

Buying a home is one of the biggest financial decisions you may ever make.  You think you’ve found the home of your dreams, but is it really?  Do you know enough about the structural components that make up your new home to know if there is underlying damage?  Do you know how to operate the major systems of the house properly (heating, electrical, plumbing, etc.)  and are you trained to know if they were installed properly?

Most consumers rely on the expert advice of a professional home inspector to make sure that the home you are buying is free from structural issues and that you will be familiar with all its working systems.  Finding a competent home inspector is not as easy as letting your “fingers do the walking”.  Even “Googling” can only get you so far.

Home inspectors must now be licensed by the state in which they are providing services, and more states are in the process of passing legislation for professional licensing.  Home inspectors may belong to associations like NAHI, ASHI or NACHI most of which have minimum standards that are required for membership, but they do not regulate the industry and in some states anyone can call themselves a home inspector just by hanging out a sign.

In May of 2001, Massachusetts enacted new laws for home inspectors, requiring them to meet minimum standards for each home inspection performed.  They must also pass an exam, carry adequate insurance and participate in continuing education in order to renew a license.  The Board Of Licensure is also responsible for answering consumer complaints and providing appropriate measures against inspectors who violate ethics rules or perform below the standards that are set.  Slowly, the state is making progress in weeding out incompetence.

One of the other changes made in 2001 pertaining to home inspectors was to prohibit real esate agents, other than buyer’s agents, from referring home inspectors to buyers.  This was enacted in order to avoid consumers from receiving services from an inspector who might be thought of as “easy”, one who wouldn’t be apt to “kill the deal”.

If you live in a state where anyone can perform an inspection without a whole lot of training, be careful.  A trusted attorney, friends or neighbors who have bought a home may be able to give you a recommendation. As a local for-sale-by-owner service, we provide a direct link to the Commonwealth of Massachusetts website where buyers are able to look up inspectors by name, current licensing information, or area serviced as well as check to see if any complaints have been lodged against them.

A few years ago, a home inspector in Massachusetts formed IHINI, an organization dedicated to help consumers avoid the risk of self-interest and to learn more about the inspection process.  There is a lot of good consumer information on this website and should be mandatory reading for anyone before hiring a home inspector.

Understanding Your CMA

   A Competitive Market Analysis (CMA) is an important tool to use and understand when pricing and buying homes. In central Indiana, only a Mibor-licensed real estate agent can perform one because the data in the report only includes homes listed on Mibor’s BLC multiple listing service program - and information provided by realtors regarding sold homes.

  What exactly is a CMA? It is a comparison of prices of recently sold homes that are similar to a listing seller’s home in terms of location, style and amenities. Generally how it’s done is that the subject home’s neighborhood is searched for similar homes (active, sold, pending, expired, etc.) in the last 6 months. A quick report will show you pertinent information about other homes such as size, number of bedrooms and bathrooms, price and price per square foot. As long as homes and lots are similar, the price per square foot of the SOLD homes is a good indicator of where other similar homes will be sold at.

  CMAs are a very good indicator of pricing in most cases, but some provide more reliable information than others. The smaller the area searched, the more similar the homes and the more recent the data, the more reliable the information. Knowing this, you should ask anyone doing a CMA for you:

  
-Did you just search my neighborhood?

  -Some areas in my neighborhood vary greatly (custom/non-custom, age of homes, etc.), did you just include the areas most similar to mine or did you search the entire neighborhood?

  -Did you look at the homes individually to ascertain that they were good comparables?

  -What is the time frame of the search? Six months to a year is ideal.

  -Were there foreclosures or short sales included in the search?

  -Were there closing costs paid that weren’t taken into account?

  -How reliable do you feel like this CMA is?

  We provide a CMA to our clients, but often we will recommend a fair market value appraisal when we don’t feel that there are enough similar homes that have been recently sold. Obviously we want our clients to get the most money possible, however we do want you to sell. We value our success rate and since we don’t work on commission, we tell you what you need to hear, not what you want to hear!

  If you decide to consider real estate agents, it is a good idea to meet several and ask for CMAs. You will most likely hear different suggested listing prices. An inexperienced agent may not know how to properly do a CMA, or an unethical agent can skew the data simply by modifying the search. You’ll want consider an agent’s motivation when you receive CMAs. A newer agent or any agent in today’s buyer’s market may desperately need the commission and advise you to price lower for a quicker commission. While another agent may tell you what you want to hear knowing that he or she needs the listing for advertising and leads. Pricing your home correctly is crucial to selling. Make sure you trust the person advising you.

Why Buy FSBO?

Saves you money!
Buying directly from the homeowner in a “For Sale By Owner” transaction will save you the cost of having to pay for the real estate commission. The 6-7% commission that is typically charged by real estate agents will often times be added to the total cost of the home. When this is done, YOU (the buyer) are the one that will end up paying the commission. 

Buying a home in a “For Sale By Owner” transaction will cost you less money and you will get MORE HOME FOR YOUR MONEY!! 

Saves you time!
You deal directly with the homeowner rather than through a third party. Communication is more direct, faster, and to the point. You will get more accomplished in a shorter length of time which means YOU CAN BE IN YOUR NEW HOME SOONER! 

Easy to do!
Some people think that purchasing real estate from anyone other than a real estate agent or broker is difficult. This myth is very far from the truth. Purchasing “For Sale By Owner” is simple. Our best suggestion is to contact your local For Sale By Owner for guidance and/or assistance.

Home Buying Tips

1. Take a few moments to discuss what you’re looking for with your spouse or partner before you start setting up appointments to look at properties. Make a list of “must have” features together, then discuss other “would like, but can live without” features. After you’ve looked at a dozen or so properties, re-evaluate your criteria. Often priorities shift with time.

2. Have a realistic idea of how much you can afford before you start looking (most lenders will pre-qualify you for free). Not only will this save time, but will also avoid needless disappointment on everyone’s part.

3. Don’t sign a contract with an agent that locks you into looking with him or her, or guarantees them a commission even if you find the house yourself! Specify, instead, that a commission will be paid only if you buy a property shown to you by that agent. This enables you to look with others, and also at For-Sale-By-Owner properties, at your own convenience.

4. Don’t bring an agent with you to look at FSBO properties, or bring them into the picture when it’s time to draw up a contract, unless you are willing to pay their commission through either a higher sales price, or out of your own pocket. Otherwise, you may risk losing the house. (note: Contact your local For Sale By Owner magazine for help if you aren’t sure of the process)

5. If you find the house you want to buy before you’ve sold your home, and the seller is reluctant to sign a contract with you with the contingency that you sell your home first, you may draw up a contract that allows the seller to continue marketing and advertising the property yet gives you the “first right of refusal” should they receive another offer. This way you will be notified immediately if the seller has another offer, giving you an opportunity to re-offer if necessary. Another option is to put a non-refundable deposit on the property. This shows the sellers that you are serious about buying their property.

6. If you sell your house before finding a home you want to buy, be sure your sales contract is contingent upon you, the seller, finding suitable housing!! We have heard several stories of people frantic to find a home under pressure, and even having to rent after the closing, because they sold first. Remember, the seller is legally bound to sell once the contract is signed.

7. When presenting an offer, be courteous and respectful of the sellers. In general, avoid criticizing the property with statements like “we don’t care for the new carpeting, and therefore will have to replace it”. This will not justify a lower offer and may possibly insult the sellers, decreasing you chances of their accepting your offer.

8. If you feel the property may be overpriced, yet the seller refuses a lower offer: Make your offer contingent upon the property appraising for the selling price or higher.

9. Request that you be permitted to walk-through the house (shortly before closing) after the furniture is removed to make sure that some of the home’s faults weren’t covered with furniture, iugs, or wall coverings. It is far easier to request compensation for necessary repair work before the house is sold than afterwards.

10. Request that the seller complete a property disclosure or disclaimer form (will vary from state to state) before you make an offer. Agency listed properties carry no guarantees, and it is the seller who is legally bound to be truthful in reporting the condition of the property. We all recommend that any major deficiencies in the home are reported to the buyer regardless of the form being utilized. Also, be aware that in some states the disclosure/disclaimer form is not required and that real estate documents will vary from state to state.

11. Make the time frame of your offer short (24 hours or less) so the seller has less time to “shop the bid” among other interested parties, or to accept another offer. Also, don’t make the deadline time at midnight unless you usually are awake at that time!

12. If you don’t know much about building construction, don’t worry. Simply make your offer contingent upon the property passing a professional home inspection. This is also an excellent way to become more familiar with the upkeep needs of your future home.

13. Put everything in writing. Your sales contract should spell out whether the washer and dryer stay, etc.

A MESSAGE FROM FSBO PUBLISHERS NETWORK

Welcome to FSBO Publishers Network real estate blog. We are an organization of regional for-sale-by-owner publishers that together print over 1.5 million magazines, distribute to over 24,000 locations, and boasts a monthly readership of over 3.4 million people! The purpose of our association is two-fold:

For Buyers & Sellers
To help our customers save money by means of commission free real estate sales. Buyers can more easily find homes by means of our national Internet site and custom services. Sellers can get more information to make wise and informed selling decisions.

For FSBO Network Member Publishers
To help all FSBO magazines succeed by sharing information, providing support, leveraging buying power, and combining resources to better promote the “For Sale By Owner” movement.