It’s no secret this is a bad selling market and that we are in a buyer’s market right now. Buyers are few and far between and the market is glutted with listings. If a house is not quite perfect for that buyer’s needs, they simply go to the next house.

Buyers know they have the upper hand so when they find a house they like; we are seeing low offers, maybe $10K, $15K or $20K off the list price. When these low offers come in, we as REALTORs®  always hear things from the sellers like: “We aren’t going to give it away”, or “We’re offended by that offer”, or “We are not even going to respond to that offer”.

Deciding whether or not to attempt to buy a house that is in a short-sale situation depends on several things. Before getting into those, you probably need to know... What is a short sale?

A short sale is when the mortgage holder agrees to accept less for the payoff than the amount owed. They are in essence "selling it short". I could spend this entire blog explaining short sales but I don't want to re-create the wheel. There is an abundance of information out there that describes short sales, so you can do that due diligence offline.

As a buyer you need to know several things about short sales and the short sale process:

1 - You can sometimes get a better price than you could if the property was a foreclosure.
2 - It is a very slow process. If you have time restraints for when you have to be in your next home, a short sale is not for you.
3 - Most of the time short sales will be "as is" sales.
 
 I want to elaborate on these three items.

Going through the forecosure process is very expensive for the mortgage holder. That is why they will sometimes agree to accepting less than what is owed. Once the mortgage holder pays to go through the foreclosure process, they tend to not come down as much because they are trying to recover some of the foreclosure costs. Some of the best deals out there right now are properties being considered for short sales. Our local MLS implemented a new area in the listing that puts everyone on notice that this property may be a candidate for a short sale. A savvy investor/buyer may want to key on that search criteria rather than the "foreclosure" designation.

Because the bank or the mortgage company has to be involved, the process can be painfully slow. After the buyers and sellers negotiate the terms and sign the contract, it has to go to the lender for their approval. In the past it has taken up to 60 days for the mortgage company to even let the parties know if they will accept the contract. That means that buyers could wait as long as 60 days and then hear that the mortgage company will not accept the offered price. That's 60 days waiting to hear something. It can be very frustrating. Even if they decide to accept the offer and sell short, it will take another 30 days to close the loan (assuming it wasn't a cash offer) which means the entire process could take as long as 90 days. For investors the wait is not that big of a deal, but most buyers that are planning to live in the home can't wait that long.

The majority of short sales are going to be "as is" sales. The sellers are usually not financially in a position to pay for any repairs and the bank or mortgage company is not going to come out of pocket to fix anytyhing, so the buyer usually has to agree to accept the property in it's current condition. The buyers have the right to get whatever inspections they desire, but the sellers nor the mortgage holder have to fix anything.

Short sales can be great bargains. Buyers just need to consider the time it could take to close and the unlikelyhood that any reapirs will be made. If you don't have that kind of time to wait around to hear back from the bank, or you are not the type of person that could live with an "as is" sale, you should probably "run like hell". If time is not an issue and you don't care if you have to make any needed repairs, then I would say "go for it!"

For more information please visit my web site at www.KevinBurrusHomes.com.

Most people know that curb appeal is important when trying to sell a house. That is true all year long, but during the early spring months, it is very, very important.

Your house is on the market and you’re getting a few showings. Then you get the call from your listing agent saying: “I just a call from another agent and their clients are going to submit and offer”. YEA!!! That is great! The sellers and the listing agent are happy. 

Closing Dates Mean Nothing To Most Mortgage Lenders

I have noticed more and more that the closing date in the real estate purchase contract is getting harder and harder to keep as a firm date. This is not due to anything the buyers or sellers have done or not done or anything the buyer’s agents or listing agents may have done or not done, almost 100% of the time, it is due to the actions (mostly inactions) of the mortgage lenders.

I have discussed this with other agents and even with the closing attorneys, and most agree that most mortgage lenders have a total disregard for the closing dates set forth in real estate contracts.

When I say “mortgage lenders”, I am mostly talking about the lender employees that work behind-the-scenes, not the loan originators. The loan originators do seem to care about the closing date but unfortunately they are not making the behind-the-scenes decisions. The processors and underwriters seem to have this “I’ll get to it when I get to it” attitude. They are sitting at a desk somewhere (shielded from the stress and feelings of helplessness of the involved parties) and could really care less about meeting a closing date in a real estate contract. I actually don’t think they even look at the closing date in the file. I think they prioritize the files by how long they have been sitting on their desk and not by closing date. The closing date in the contract is a binding date by all parties involved… except for the lender.

The loan originators have the borrower and possibly the agent that gave them the referral to answer to. Most originators understand the meaning of customer service and know that if they piss off every client they ever have, their careers will be short-lived.

The processors and underwriters usually have very little contact with the actual borrowers or the agents. They look at the file as just another file piled high on their desk; just another mundane task that they have to do everyday as part of their job. I wonder if they knew how their disregard for the closing date adversely affected those involved with the transaction, would it make a difference.

I have heard such excuses for delays as:

Since 9/11 new rules have been put in place…
Home Land Security has a new requirement…
We lost your original loan application… (we got this one on the morning of the closing)
The computer system won’t let us print the package or send the package due to a glitch…
The loan has to be reviewed by two underwriters…
UDA is backed up… (we get this one a lot)
The underwriters are swamped… (when asked why with fewer loans being made would the underwriters be swamped, the response is “the staff was downsized and now we have fewer people doing the work… which makes me think “hire some more employees!!!”.)
We forgot to send out the verification of income…
We forgot to get the necessary info from the HOA…
The money wire was initiated too late in the day…

 And these last two are priceless:

The processor was on vacation last week…
The underwriter was on vacation last week…

From the buyer or seller’s perspective, when trucks are loaded, houses are vacated, proceeds are needed for the next purchase, furniture is set to be delivered, utilities are scheduled to be turned on or off, and movers are scheduled… the last thing they want to hear is… “the underwriter was on vacation!!!”.

The attorney that I use on a regular basis just told me yesterday that they are thinking about not even scheduling a closing date until very late in the process (like upon approval with conditions from the underwriter). She said that this week they had 6 closings scheduled and every one of them had slipped, with none closing on the contracted date. So that is six sets of buyers and sellers that are unhappy with the process due to the lender’s inability to do their job in a timely manner.

I wish the processors and underwriters could see the stress they are creating by their disregard of the closing date. No matter how wonderful the loan originator may have been to the borrower, when it comes time to buy another house or refinance their loan, if their closing date was missed, I don’t think they will be giving their business to the company that caused the unneeded stress related to the closing.

I don’t know about other real estate agents, but I will do whatever is needed to make the customer happy and get the transaction to a successful close. My career depends on my superior level of customer service. I only wish the “behind-the-scenes” employees in the mortgage industry knew the meaning of “customer service” and made even a feeble attempt to meet the closing dates. Unfortunately I don’t see that happening in my lifetime. I’m afraid we are stuck with the “I’ll get to it when I get to it” attitude.

Of course not all lenders treat their clients this way and that is why it is so important to select the right lender. REALTORs have the opportunity to see first hand which companies have customer service as a priority and which ones that does not. When a REALTOR makes a suggestion to their clients about a particular couple of lenders that they use on a regular basis, potential buyers should take that advice seriously.

How do real estate brokers get paid? It seems that most people don’t fully understand how commissions and commission splits work, so I thought would try to explain it as best I can.

When you are selling your home and list it with a REALTOR, that broker is your listing agent and that real estate company is your listing company. Most real estate companies charge a fee (commission) to list your house and that fee is usually a percentage of whatever the house eventually sells for. In most cases, nothing is paid upfront. The commission is paid at closing and can run anywhere from 3.5% to 7% (with the industry average running between 5% and 6%.)

The commission paid by the seller to list and sell their house is used to compensate both the listing company/broker and the broker representing the buyer. Therefore, buyers don’t pay anything to the broker working for them. In other words, it doesn’t cost the buyer anything to have a broker working for them to help them find and close on a property. The buyer’s broker/company is compensated out of the commission fee already promised by the sellers when their property was listed.

In our MLS there is an unwritten rule that the buyer’s broker/company will receive at least 2.4% of the sales price at closing. If the listing agreement was for 6%, that means the listing company would get 3.6% and the buyer’s broker/company would get 2.4%. If it was a 5% listing, the listing company would get 2.6% and the buyer’s broker/company would still get 2.4%. These are not hard and fast rules but in our MLS, it is the norm.

There are some companies out there touting a 3.9% listing commission. They still have to pay out the customary 2.4% to the buyer’s broker/company which means they are only left with 1.5% on the listing side. That 1.5% still has to be split between the company and the individual broker. I’m not sure how these types of discount companies make enough money to keep their doors open, but that’s not really my problem to worry about.

In other parts of the country they do a 50/50 split between the companies, and even in our MLS, some companies elect to do a 50/50 split.

So both the listing company and the buyer’s broker’s company are paid at closing out of the monies promised in the listing agreement. Inside of each company the monies are split up even more.

If the company is a national company (like Century 21, Re/Max, Coldwell Banker, etc.) then the national company takes a franchise fee off the top. Then the local company takes a portion and the individual broker is left with the remaining portion. This last split is unique from company to company and can be unique from broker to broker. It all depends on that company’s policy and the specific arrangement that broker has with that company. When I am doing a listing presentation I jokingly make the comment that “after everyone gets their piece of the pie, I am left holding some crumbs.”

I hope this explanation helps you to better understand how real estate commissions work. For more information please visit my web site at www.KevinBurrusHomes.com.

Calls come in to our office all the time from potential buyers that are out riding around looking for a house. They are usually lost and they are almost always not working with a REALTOR. These "do-it-yourselfers" look online and in print ads and then ride around trying to find the house that sounded so perfect in the ad, only to find that it really doesn’t meet their needs or match their search criteria, or even worse, it’s no longer available.

This year, more so than any other, when I go on listing presentations I have to be the "bearer of bad news". It seems like for every 5 listings appointments I go on, 4 of the 5 don’t have enough equity to sell in this market or either the house is currently not worth anywhere close to what the owners think it is worth.

Being the type of person that likes to please and make people happy, it is depressing as all get-out having to constantly be the one that says, “I hate to be the bearer of bad news, but…”

Wake County just had a reassessment in 2007 and the data used to determine those new assessment values was based on data collected for 2005 and 2006. We all know that 2005 and 2006 were some of the best years for real estate sales and sales prices.  In this area, prices didn’t actually start to decline until around September of 2007 (about the time the new assessments came out).

These new assessments make it difficult for the homeowners to understand this current market because the state and county governments are saying that your property is worth more, yet the current market is saying it is worth less, sometimes a lot less.

Several times a week I actually have to tell prospective sellers that if they don’t absolutely have to move, now is not the time to sell. I personally would not dream of selling my personal home in this market, but there are situations (relocation, divorce, job loss, etc.) that make selling now a necessity.

For those sellers where selling now is a necessity, it is usually very hard to make them understand that if they want to sell in this market, they have to price their property to compete. Sometimes, that means competing with short sales and foreclosures in their own neighborhoods.

It also means possibly spending some money to get the house in sellable condition. I am usually the agent that doesn’t want my sellers to spend a lot of money on their house prior to selling, but in this competitive market, sometimes you have to bite the bullet and take care of neglected maintenance items.

There are just too many houses on the market right now to not take care of paint and carpet issues. These are “first impression” issues and in this market buyers will simply go to the next house that doesn’t require any work prior to moving in.

The good news is houses are still selling in this market if they are priced to sell. The other good thing is that this is a great time for buyers to buy. I can’t think of a better time to buy in the last several years.

Even with these two bits of good news, it still doesn’t ease the weight of “being the bearer of bad news”. I guess I will have to get use to this role, at least until this market turns around.

For more information please visit my real estate web site at www.KevinBurrusHomes.com.

How many of you think of real estate auctions as a last desperate attempt to sell, or assume the sellers must be in financial straits, or assume the property has too many problems for it to sell through normal channels? That is far from the case in this current real estate market.

This current real estate market is weeding out the men from the boys, so to speak. Times are lean for some agents and some real estate firms are shutting their doors.

Just in our small town, several real estate companies have closed down completely. Some have decided they couldn't pay rent, so they're working out of their house. Some have downsized and moved to smaller office space.

On the individual level, agents are getting out of the business in droves. Agents that didn't do a lot of business even in good times, are starving in this market. The current market is unforgiving to those agents that don't want to work hard to find new business.

When the MLS dues were due at the end of January, the number of agents in the Triangle area decreased dramatically. The non-producers realized they were not going to make it, so why pay the dues.

Agents are also jumping ship, thinking the grass is greener elsewhere, and moving around from company to company. This makes it difficult for past clients to locate their agent, further perpetuating the problem they are trying to escape; no money coming in. Also, if they didn't work hard at building their business with one company, will they work hard at a different company?

This is why it is so important to pick a well-established company with a great reputation when seeking out an agent or company to assist with your real estate needs. While we have noticed a slow-down at our company, we are still doing a lot of business. This February was actually better than last February, by almost double. For me personally I had a record year in 2008, in what was touted to be a bad market year for real estate.

Our company, Century 21 Becky Medlin Realty has been affiliated with C21 since 1998 and our owner, Becky Medlin has been in business for 27+ years. Our company is well-established in the area and has the best reputation in the community. If the owner ever shuts the doors of this office, it will be because she has retired. It won't be because of a bad market.

The fact that so many agents are getting out of the business and some real estate companies are shutting down is a good thing. Not for them of course, but for you, the consumer. The cream rises and the top producers aren't going anywhere. With fewer agents and offices in the mix, the chances of you selecting a hard-working, experienced agent and a reputable, well-established company has gone up considerably.

It's a win-win situation. You, the consumer gets better service, and the top producing agents earn more business. Life is good.

For more information please visit my web site at www.KevinBurrusHomes.com.

In this buyers market, sellers need to do everything they can to make their home more appealing to the few potential buyers that are out there.

Everyone knows this is a buyers market. That’s not a secret, right? When the market is flooded with homes for sale, buyers have the luxury of being very particular and choosing the exact house they want, and passing over the houses that are ALMOST what they want. If there is the slightest thing not appealing about a particular house, buyers will simply go to the next house.

It can be difficult for listing agents to get their sellers to understand this phenomenon. A lot of sellers still have the attitude that if the carpet is worn or stained, buyers will look past it. If the walls look like a dirty finger-print smudge-fest, buyers will overlook it. If the home is decorated like a frat-house, buyers will look beyond it. If the yard looks like a wilderness wasteland, buyers will get over it. Let me tell you, in this market buyers are not looking past those types of things.

It is understandable that todays sellers don’t want to spend any more money on a house they are trying to sell, especially since they had to price it lower to begin with due to the current market. The problem is that the difference between taking care of the issues mentioned in the previous paragraph and not, can be the difference between selling and not being able to sell.

The average “Days On Market” statistic has more than doubled since 2 years ago. Some houses are sitting on the market for well over a year. That kind of wait-time to sell causes anxiety in the family and ultimately results in accepting lower sales prices… a lot lower than originally anticipated.

A little money and effort up front can make a big difference.  When we were in a sellers market, it was acceptable for sellers not to replace their worn carpet, but simply offer a carpet allowance to a potential buyer. In this current market, buyers just look at a carpet allowance as a problem they will have to deal with after purchasing. Why should they have to worry about that problem when they can just go to the next house on their list where the carpets were just replaced? The same goes for unsightly lawns, dirty and marked up walls, out-dated wallpaper, worn or ripped vinyl flooring, “weird” room colors, “weird exterior colors, broken deck railings or steps, etc.

The key is to make the buyer’s first impression of your house, one that is positive. If a buyer is making mental notes of what all is wrong with your house and what all they will have to fix or change, they won’t notice the features of the house or feel “at home” enough to be able to mentally picture themselves living there.

Bottom line: buyers have a lot of options and in this market and they don’t have to accept major cosmetic problems. Sellers need to figure this out and take the actions necessary to make the potential buyers first impression a pleasant one.

It’s a buyers market and sellers need to realize it.

For more information visit my web site at: www.KevinBurrusHomes.com.

 Smoking hurts your chances of selling…

Agent Recommendations For Service Providers

Choosing a Lender and a Closing Attorney

When working with buyers I am often asked to suggest a lender and closing attorney. I offer my advice with enthusiasm because I am privileged to work regularly with a couple of professionals I trust to provide the same level of service that I try to provide to my clients.

When choosing a lender your REALTOR® knows best.

As a buyer you may only buy a few houses in your lifetime, and those homes may not even be in the same city or area. With that kind of infrequent need, how are you supposed to know which loan officers treat their clients with respect, are accessible whenever you may need them, look out for your needs – not their own, don't have unreasonable or hidden fees, are able to process loans in a timely fashion, and don’t generally miss closing dates because the loans are not ready?

As a REALTOR® doing multiple transactions per year, I can see which loan officers do a good job and which ones don’t. If an agent in my office has a bad experience with a loan officer, word gets around the office pretty quickly. Any loan officer can have a bad transaction where things just don’t go as planned, but if a pattern starts to develop, every agent in the office knows it and will start to refer their business elsewhere.

Another important thing to keep in mind when choosing a lender is to always choose a local lender, not an out-of-state lender. The real estate laws in N.C. are different than most other states. Out-of-state lenders don’t understand how we do business here and they will make it hard on the borrower, the agent, and the closing attorney. Not only will the transaction not go smoothly, I have never seen a closing happen on time when an out-of-state lender was used. So if you don’t want to be packed up in a moving truck with no where to live because the lender has delayed the closing for 3 days, always, always, choose a lender local to where you are buying.

When Choosing an Attorney, Take Your Agent’s advice.

Real Estate is a specialized area of practice and not all attorneys can do it well. There are attorneys out there that specialize in other areas of the law, but will do an occasional real estate closing. That is not the kind of attorney you need when purchasing a big-ticket item such as a house.

In a real estate transaction, the buyer typically chooses the real estate attorney and because it is cheaper to do so, the sellers will use that attorney to prepare the seller’s documents.

As a REALTOR® that handles buyer and sellers, I get to see how a lot of real estate attorneys operate. I get to see the ones that have staff that don’t know what they are doing, the ones that wait until the last minute to begin the work - which jeopardizes closing dates, the ones that do poor title searches and miss important title defects, the ones that don’t explain the paperwork at the closing table very well, and most importantly, the ones that are ethically challenged.

Again, you want to choose an attorney that is local to the area you are buying in. They should be a full-time real estate attorney, meaning real estate is the main part of their practice. If you have chosen an experienced REALTOR® they will have first hand experience with a lot of the local real estate attorneys, therefore their advice should be seriously considered.

Now you know what to look for in a lender and a closing attorney. When seeking these services the best advice you can get is from your REALTOR®.

For more information go to www.KevinBurrusHomes.com.

Our real estate office has two practices that others in our profession may consider to be outdated, or old-fashioned. Those two practices are, phone duty and touring new listings. To understand these two practices, let me provide a more detailed explanation.

Phone Duty

In our office we have approximately 16 residential agents and we all take turns working the office phone. We do not have a receptionist to answer calls. Our Broker-In-Charge issues a phone duty schedule for each month and each agent in the office is assigned 6 to 8, 2-hours slots of phone duty. When a potential client calls in about an ad, or with a question, the agent on duty can work the call as a lead and help the caller with their real estate needs in real time. In our office we get as much as 60% of our business from phone duty. All of our agents value their phone duty. Even the top-producing agent in our office won't give up his phone duty. It helps that our office receives a lot of calls. The owner of our company has been in business for more than 26 years and our company is the most successful and most well known in our city. The standing that our company holds in the community results in our phone ringing..., ringing a lot!

Touring New Listings

Another practice that we do is touring all of our new listings for the week. We have a weekly staff meeting on Tuesdays and after the meeting is over, we all pile into our cars and caravan around the area to tour all of our new listings for the week. There are several benefits to this practice. One is that the listing agent can get immediate feedback from fellow agents about their new listing, and that feedback can be fed directly back to their sellers. Another benefit is after seeing the newly listed property, an agent in our office may determine that it is something their current clients would be interested in seeing. Lastly, and probably the most important benefit is that when the agents are working their alloted phone duty, when a call comes in about a particular property, the agent can talk intelligently about the home because they have actually toured the property.

For some reason, the majority of real estate companies have stopped touring their new listings and have hired receptionists to answer the phones. Some companies even use the fact they don't require touring or phone duty as recruiting tools when hiring agents. Offices are free to do what they want, but there is not an agent in our office who would want to do away with these two practices. When doing listing presentations, we actually tout that we are the only ones that still do these two practices in our market, and it does give us an advantage.

Doesn't is stand to reason, that a potential client calling a real estate office would prefer to talk with an agent and get an immediate response to their real estate needs. If a receptionist answers the phone, he or she is not an agent and can only take a message to give to an agent later. Because the receptionist is not an agent, they may not know how to convert that caller into a promising lead. Not to mention the fact that office politics can influence how the leads are passed out to the agents. In our office, we all get equal chances for phone duty, and therefore equal chances to convert calls into leads.

I have heard agents from other offices speak negatively about touring. They don't want to be told they have to give up 2 hours of their time, once a week to go on tour. I personally think they are being a little lazy, and most importantly, they are being a little short-sighted when it comes to growing their business.

These two practices may not work for most offices, but I know 16 other agents that wouldn't have it any other way.

For more information please visit my web site at: www.KevinBurrusHomes,com

When selecting a real estate agent, there are a lot of things to consider. There are the obvious things like:

Experience
Attitude
Knowledge
Personality

There is one thing that people to tend to overlook, and that's choosing a company and an agent that is local to your market.

For buyers, this issue is not critical, but it is important. While an agent from 2 or 3 towns away can get you through the transaction, they may not be able to pass along key things that you may want or need to know. Things like: planned road projects, planned zoning changes, neighborhood squabbles, odor causing farms in the area, planned new commercial openings, water run-off issues, etc. An out-of-town agent would not know these things and would not be able to pass them along to you, the potentional buyer. As you can see, these are all things that would be useful to you before you sign the Offer To Purchase contract.

The issue is a little more critical for sellers. I see it all of the time. Sellers call me and say they have had their house on the market and they are not happy with their agent. Their listing term is getting ready to expire and they want to list with me. As I get into the details, I find that their previous agent was from 2 towns away, never kept the flyer boxes filled, rarely communicated with the sellers, was unwilling to meet a potential buyer at the house in a reasonable time because they live an hour away, had incorrect directions in the MLS or had the starting point for the directions be some road that is 2 towns away. That always gives me a chuckle.

The really bad thing about this situation is that these sellers have wasted a lot of time with an agent that couldn't properly service the listing because they were not local to the market. That time is gone, and time is $$$.

When I go on listing appointments, the last thing I say as I'm leaving is, "even if you don't select me to be your listing agent, please do yourself a favor and choose an agent and company that is local."

So you finally have a contract on your house, and the buyer’s have just had a home inspection done. They give you the Repair Request and your jaw drops to the floor! "How could this much be wrong with my wonderful abode?"

This situation happens to a lot of sellers, so don’t feel alone. The majority of home owners tend to put off the normal maintenance items that need attention over the years. After years of neglect, all of those attention-needing items look like a short novel when seen listed in a home inspection report. It's too late now. It’s time to pay the piper.

The majority of the items usually found in an inspection report are items that could have been avoided with some regular maintenance. These things include changing the HVAC filters on a regular basis, keeping the exterior caulked and painted, periodically checking the condensation line on the AC unit for clogs (especially if it is the attic), cleaning out the dryer vent, caulking the corners of the transitions for exterior doors, keeping stain or sealer on the deck, keeping shrubs and foliage off of the siding, making sure gutter downspouts are directing water away from the foundation, keeping vapor barrier (plastic) on the ground in the crawlspace, periodically checking under the house for standing water or water intrusion issues, etc., etc., etc. I could go on, but you get the idea.

Just staying on top of these few items, over the years, will keep that repair request list to a manageable size. Letting these little maintenance items pile up over the years, can be very costly for you when trying to sell. Putting off what you can do today…

                                   …can cause sticker shock when you have to fix it all at once prior to selling! Be smart... tackle it as it comes.

For more information on all of your real estate needs, please visit my web site at www.KevinBurrusHomes.com.

If you are buying a property, you should ALWAYS pay for a home inspection!!! That holds true for new construction also. As excuses, we hear buyers say “It’s new. It had to pass the county’s inspection”, or “It’s brand new, what could be wrong with it?”, or "It appears to be in good shape. I just don’t want to spend the extra money for a home inspection.” This type of rationale can prove to be a very costly mistake.

I tell all of my buyers that home builders are the reason there are home inspectors! I have seen more items found on new construction inspections than on homes 30 or 40 years old. Builders are constantly cutting corners, trying to save a buck. These cut corners often result in things not being done to code or to manufacturers recommendations, or even safely. Don’t even get me started about county inspectors. Just because someone signed off on the house and gave it a C.O. (Certificate of Occupancy), doesn’t mean it is actually fit to live in.

The average home buyer doesn’t know what to look for regarding construction techniques, installation techniques, current building codes, manufacturer’s recommendations, damaged materials, wood-rot, water intrusion, etc.

A good home inspector will check out the following areas:

Crawl-space - looking for improper construction techniques, plumbing leaks, insulation issues, signs of pests and wood destroying insects, visible problems with duct work, damaged wood or rotten wood, signs of drainage problems, water intrusion, etc.

Roof – looking for improper construction techniques, failed or damaged roofing materials (shingles, copper, tin, etc.), flashing, vent boots, nail pops, etc.

Attic – looking for improper construction techniques, signs of water intrusion, wood-rot, insulation issues, etc.

Exterior – looking for improper construction techniques, damaged siding and trim, wood-rot, water intrusion, air intrusion, signs of pests and wood destroying insects, etc.

Interior - looking for improper construction techniques, safety issues, operation and functionality of all household systems (HVAC, range, dishwasher, gas logs, windows, breaker panel, power outlets, water heater, sinks, tubs, showers, whirlpools, hot tubs, etc.

I’m sure I have left out some of the major areas that the typical home inspector will check out, but you get the idea. There is a lot to look for and there is a lot of knowledge and experience needed to know what to look for. A good home inspector stays up on the current building codes, reads up on the current installation techniques and manufacturer's recommendations.

The home inspection process is a vital part of the home buying process. If home buyers don’t have a professional home inspector check out the house, they are taking a very large risk. A home is the largest and most important investment most people will make. Home inspections cost usually between $275 and $500 depending on the size of the house. That is nothing compared to the cost of the house or the costs associated with repairing major problems. Especially problems that you didn't know about until it’s was too late! After closing, you now are the owner of the home, and the owner of any unknown problems.

For more information on all of your real estate needs, please visit my web site at www.KevinBurrusHomes.com.

When a title insurance policy is purchased at closing, the title company issues two policies, one for the lender and one for the homeowner. If a new survey is not obtained prior to closing, the title company makes an "exception" on the homeowner's policy for survey coverage. Meaning, they do not provide survey coverage. The homeowner is getting guarantee of clear title, only. In other words, just deed related coverage, not survey related coverage. However, the lender policy includes full survey coverage. I am seeing that more and more buyers are refusing to get a survey prior to closing on a property. Lenders stopped requiring buyers to pay for a survey several years back. The reason for this is the title insurance industry came up with a solution for the lenders. They provide survey coverage to the lenders, without a new survey, but not to the homeowners. The only time a survey related claim would come up for a lender is if they have foreclosed and then have a survey related dispute. How often will that happen? That’s right…, next to never! So for the title insurance industry, it is a safe bet. The home buying public, and frankly the majority of Real Estate Agents, don’t seem to understand the importance of having that survey coverage for the homeowner. To put it in plain English, if a buyer doesn’t have a new survey done prior to closing on a property, any easement, encroachment, set-back violation, or boundary dispute that may arise, will not be covered under the homeowner’s title insurance policy.

Failure to get a survey prior to closing can be devastating to the homeowner. The public sometimes are short-sighted when it comes to spending a little money upfront to protect them in the future. I realize surveys aren’t cheap and may cost anywhere from $350 to $600 for residential surveys in the Raleigh area, but that is money well spent when the neighbor goes to sell his property, has a survey done and finds that your garage is sitting 3 feet on his property and he wants it moved! Or, you have built a new 30x30 work shop on the back of your property, only to find out later that there is a power company easement running across the back property line and they insist that you move it to allow them access to their transmission lines. You can see that to remedy either of these situations is going to cost you significantly more than $600.

The home-buying public shouldn’t bare all of the blame. They are simply uninformed. If the issue was explained to them thoroughly, most buyers would probably agree to pay for a survey prior to closing. But who should be explaining the issue to the buyers? Their REALTOR! The REALTOR representing the buyer in the transaction should be guiding them through the process and informing and educating the buyers about the pros and cons of every issue involved with the transaction. The problem is that the majority of REALTORs don’t understand how title insurance works, and therefore, don’t understand the importance of survey coverage for the homeowner. I am lucky. My wife has been in the Title Insurance industry for 20+ years, so I know how it works and I always explain the issue and strongly suggest that my buyers get a survey prior to closing.

There is a little-known, cheaper option that homeowners can do if they don’t want to get a survey, but still have survey coverage. Most title insurance companies offer something called an “enhanced” policy, or “advantage” policy. If the buyer pays 25% more for their owner’s policy, the coverage will include survey coverage, even without having a survey done prior to closing. The title insurance companies are able to do this because again, they are making a safe bet. They are playing the percentages. Not many people even know about the availability of the enhanced or advantage policy. So if those numbers are very small, how many could actually result in a claim? Not many. Keeping in mind that the standard cost for title insurance is approximately $2 per $1000 of purchase price, a 25% increase for the enhanced or advantage policy could be a cheaper way to go.

Regardless of how the buyer gets survey coverage, the home-buying public need to be educated on the issue so they can make an informed decision and REALTORs need to get educated on the issue so they can educate their buyers.For more information on all of your real estate needs, please visit my web site at www.KevinBurrusHomes.com. 

I have been harping on this issue in my “Real Estate Update” newsletter for months now, so I decided to turn it into a blog entry.

First I want to review with you the condition of the local real estate market in the Triangle area. We have not been hit hard by the bubble-bursting that occurred in other parts of the country. Our property values were never outrageously inflated, so we didn’t have to endure the correction that has crippled the West Coast, Florida, Arizona and other metropolitan and resort areas in the country. With that said, we have had a slow down in sales. Houses in this area are sitting on the market a little longer than normal. Equity in homes are not rising like they were 2 or 3 years ago, and the mortgage crisis has removed a lot of potential buyers from the market because they may not be able to qualify for financing. All of these things are making our current market situation a “Buyer’s Market”!

Who benefits from a buyer’s market? Rental House Investors! Because equity is not increasing dramatically, now is NOT the time for investors looking to flip houses. Now is the time for investors to purchase rental houses!

It is being estimated that 2008 will see the largest amount of homes going into foreclosure than has been seen for the past several decades. Also, because the banks are tightening their belts and not lending as generously as they were, the people that don’t qualify for a loan are going to have to rent. More renters in the market require more rental houses.

I personally think the rental market will be strong for the next 2 to 3 years. You can’t really lose! You swoop in now and pick up depressed properties whether they are just slow sellers or foreclosures. You rent them out over the next 2 or 3 years. When the market swings back to a seller’s market, you can decide to either stay in the rental business, or sell. If you have good tenants and you have positive cash flow, you may decide to continue being a landlord. If you have bad tenants and don’t have the kind of cash flow you wanted, you can decide to sell and reap the equity that you have built up due to the market value increases. I truly think owning rental property is the way for real estate investors to go right now, but hey…what do I know? This is just my opinion. You as an investor should do what you think is right. After all, ...it is your money.

For more information on all of your real estate needs, please visit my web site at www.KevinBurrusHomes.com.