Real Estate News with Terri Taydus, AHWD, CNA, CRS, GRI

Real Estate Deal Killers and How to Avoid Them – Solid Advice for Both Buyers and Sellers

Some Information Provided By Nancy Robbers of Zillow.com

Here’s how to keep common real estate mistakes from killing the deal and derailing the purchase of your dream home:

1. No one divides the fixtures

   Sales can falter because of disagreements over silly stuff — like who keeps the fireplace screen, the wall sconces or the appliances. For some buyers and sellers, it can be difficult to distinguish between a seller’s personal property and what actually comes with the house.

   To bypass the issue, your Realtor® should educate you about the difference between attached appliances, fixtures and personal property. If something is really special to a homeowner, they should remove or replace the item before put the house on the market. If this isn’t possible, make sure the listing agent excludes it in MLS (along with items like flat-screen TVs, which are frequently confused for a standard fixture). Buyers should figure out what stays and goes as well, and include any items that are important to them in their written offer to purchase. Whether you are on the sale of buy side, BE CLEAR!   Rely on your Realtor® to advise you and ask questions if you are unsure.

2. The ex disagrees

   Many dread working with their ex, and their potential impact on a home sale is one reason why. Unfortunately, it’s pretty common to find out late in the process that a former spouse hasn’t agreed to the sale with their ex.

   Make sure you get a preliminary title report as soon as possible and question any names that appear on title that are not included on the purchase contract.

3. Buyers buy stuff

   You’re buying your first home!  It’s exciting and you cannot wait to fill it up with all of your new stuff.  You don’t have a washer and dryer, and the local appliance store is offering a smoking deal — a store credit card and 15 percent off new appliances! Sounds like a steal, but it might just kill your deal.  DO NOT (and I cannot stress this strongly enough)  make major purchases, like a new car or appliances, before escrow closes. Major purchases that affect your credit can also impact your ability to secure a mortgage.

   If you really cannot wait to make a purchase please check with your mortgage lender first.

4. Failure to disclose

   Some sellers think it’s better not to disclose a potential issue, but it’s almost always better to overshare when it comes to disclosure.  Inevitably, a neighbor will tell the prospective buyer about the unstable hill, the moldy basement or the meth lab around the corner.

   Problems always seem much bigger when a buyer uncovers them after they’re under contract.

5. There’s no appraisal — or it’s late

   Appraisals used to come in magically close to the offer price. They are great for reinforcing the price of a home. But these days, appraisals are often deal-killers, and often, and sometimes they don’t show up on time. It’s also common to have an appraisal review as well, which slows the transaction down.

   If you are securing financing to purchase your dream home, have a conversation with your lender in advance.  Ask if they use local appraisers that are familiar with the market you are purchasing.  Ask if appraisals have been coming in at value.  Have your Realtor® explain your options if the appraisal comes in low, you may need to renegotiate the purchase price or pay a higher down payment.  It is also important to speak with your lender about this as your lender may be able to reallocate funds should an appraisal come in a bit low so that you do not have to come up with a higher down payment.

6. Unclear property boundaries

   Your buyer thinks they are getting a 6,000-square-foot lot only to find out that the fence is built on the neighboring property. Or they think they own the driveway, but it’s really an easement owned by the cranky old neighbor. Lot lines, shared driveways and fences are common stumbling blocks in a home sale.

   Review the preliminary title report, and have a title officer explain anything unusual. If you have concerns about lot boundaries, have the property surveyed by a professional surveyor. While surveys can be costly, not knowing the actual lot boundaries can be expensive.  A much less costly ILC (Improvement Location Certificate) may suffice, talk to your Realtor® about your options if you have any concerns.

7. There are no permits

   In many areas, unpermitted additions or remodels have become serious challenges for both home buyers and sellers.

   If you are selling a home have your permits handy to provide for potential buyers.  If you are buying a home do not be afraid to ask for permits on work that the seller has done.  You can also go to the city’s planning department and ask questions.

   Sellers, if you have unpermitted work that has been done, disclose this up front.  It will save time off the market time and disappointment down the road.

8. Surprising inspection results

Home inspection results are the number one killer of most purchases. When you are investing in a home, you should understand what you are buying. Inspection periods are like a second negotiation phase, and this additional time can become a problem when buyers and sellers can’t reach an agreement over who is responsible for what repairs.

I recommend that sellers have their home inspected before the property is actively on the market. As part of my listing services I will pay for a pre-listing, major component home inspection. This way as the seller, you will not be surprised by any unexpected big ticket items that may be found by the buyer’s home inspector.  This also gives you a chance to make any repairs prior to putting your home in the MLS.

It can be hard to imagine, but sometimes, just when everything looks great — are not only pre-qualified, but pre-approved, and you are under contract — the lender suddenly changes the rules and you can no longer meet the lender requirements.

Unfortunately, this scenario can’t be always prevented. Work with a reputable mortgage broker or lender with a solid record of closing transactions. Your Realtor® should be able to provide you with at least three local lenders that they have successfully worked with in the past.

If the property being purchased is a short sale, the bank is basically in charge and doesn’t care about a buyer’s timeline. Sadly, it’s not unheard of for short sales to drag on for years, only to have the bank pass.

When a bank is involved, the best way to save your purchase and your sanity is to make sure you have appropriate expectations about the process.  Your Realtor® should inform you about possible pitfalls and let you know that bank-owned properties require a lot of patience.

Fortunately in the local market there are little to no bank owned properties, so #10 is not much of an issue in Boulder County.