It is not uncommon for homeowners and/or sellers to skip the building permit process when remodeling their home or preparing it for sale. But before you consider taking this route, consider the following:

1. Every city has its own permit requirements, but in general any project that involves plumbing, wiring, or structural changes (including the reinstallation of water heaters, sheet rock, roofing, etc.) requires a permit. The reason for the permit process is to ensure that the improvements you add to your home are safe and installed according to current building code.

2. If you proceed without a permit and then sell the house, you must (in California at least) disclose that to the buyers. They will immediately question whether the work was done correctly, and this may devalue your property or even scare off some buyers, especially first time buyers.

3. If you add a room or convert a garage into living space without a permit, the appraiser cannot count that when he or she appraises the property. You may have sold the property as a 4 bedroom home, but it may end up being appraised as a 3 bedroom. So, the house may not appraise for the contract price and the entire transacton may be in jeopardy.

4. Even if you hire a licensed contractor to do the job for you, the codes change constantly and that contractor may not be aware of recent changes. By obtaining the required permit (and inspections) you and the buyers can be confident that the work is done according to the code in effect at the time of the project. 

Many contractors do not like undergoing the permit process. There are sometimes delays when an inspection is required, and if the work is not done correctly the contractor may have to tear it out and redo it. But wouldn't you rather deal with the delays and the inconvenience than deal with an irate buyer whose roof leaks the thrid day after they move in?

If a contractor tells you a permit is not required, it is best to check with the city yourself to make sure that is really the case. As I said earlier, every city has its own requirements and your contractor may not be familiar with the specific requirements in your particular city.

Also, don't forget that the permit itself is useless unless the project is inspected as required and "finaled" after the project is completed. That means the building inspector is convinced that the job has been done correctly.

Even if you are not preparing to sell your home, remember that the permit process is a means to ensure that the installation is safe and that it will endure because it has been done according to the most modern standards. And you can never tell for sure that will not be selling your home. Sooner or later your circumstances may change and you may decide to sell your home after all. In any case, it is definitely worth doing the job right in the first place. And that includes getting a permit whenever one is required.

When selling a home, what usually matters to most sellers is the bottom line… how much money they will have in hand after the sale is closed and all expenses are paid. Many sellers make a misguided connection between commission and the bottom line. For Sale by owners, in particular, usually feel that they can save the commission and end up with more money in hand. But rarely does that happen. And here is why:

1. You are missing the market. Very few buyers and even fewer agents go to For Sale by Owner websites looking for homes for sale. Almost all agents and almost all buyers search the Multiple Listing Service, either directly or indirectly, when looking for homes. There are some exceptions, of course, but they are few and far between. Whenever buyers are on any of the most popular home searching websites, such as Realtor.com, YahooRealEstate.com, MLSListings.com, ColdwellBanker.com, or any number of other sites, what they are looking at, in fact, is the MLS database. If yours is not there, they will not find it.

2. Most professional agents do not want to work with For Sale by Owner sellers. There are exceptions, to be sure. But real estate is much more complex than most people realize, and, being professionals, they prefer to work with professionals on the other side. Otherwise they may end up doing the work for both sides, with all of the liability and responsibility for both sides, but only get paid for one! If that doesnt bother you, it should, because real estate agents are the people who have the buyers. Very few buyers work without one. So, if the real estate agents deliberately shun For Sale by Owner sellers, you will, once again, be missing a lot of potential buyers.

3. For Sale by Owner sellers are notorious for either overpricing or under pricing their homes. Overpricing seems to be more common. In a lot of my conversations with For Sale by Owner sellers, they have told me that they thought the agents they had talked to prior to putting their home on the market had priced their homes too low, so they decided to sell for themselves. Part of a real estate agents job is to assist and guide the sellers in selecting the list price of the home. If you dont heed their advice, you are asking for a lesson learned the hard way!

3. Real estate agents do not like to work for free. So, if they do bring a buyer to your listing, they will expect to get paid if they sell it for you. There goes 3%, maybe less if you are working with an inexperienced agent. But in this area the experienced, full service agents still charge 3%.

4. In the meantime, you will find that all of those newspaper ads can be very, very expensive. You can easily spend what you would have spent on a listing side commission just advertising in the newspaper. If you add up the marketing costs (especially if your home does not sell right away) plus the commission to the buyers agent, you may find you have not gained anything at all. Or, you may end up with less that you had planned, especially if your house lingers on the market and the bottom feeders are the only people interested.

5. Part of the reason to hire a listing agent in the first place is because that person has special training in marketing and in negotiating. One simple little sentence, uttered at the wrong time or to the wrong person, can cost you many thousands of dollars, more than what you would pay that agent in commission. In this market you should have buyers trying to outbid each other for your property. If that is not happening, you are losing money. A professional agent knows how to generate multiple offers and what to do with them if and when they do come.

6. Last, but not least, there is the liability issue. There is no question about it. People in California are sue crazy. Give them any excuse and they will sue you. Recently a buyer sued a seller, after escrow closed, because a plane flew over the house one night and the seller had not disclosed that planes sometimes do fly over the house. This buyer brought a suit to have the entire transaction rescinded and to also collect damages from the seller. While there are no guarantees, part of the listing agent's responsibilities lie in trying to protect you, the seller, from this sort of thing happening.

I would love to reach out to the people selling the house that prompted this article to explain some of these issues to them. But their phone number is on the Do Not Call list. I cannot call them unless I have a specific buyer who might be interested in their home. The best I can do is mail a copy of this article to them and hope that they will contact me to see what else they can do to sell their house. If they do contact me, I will have one recommendation for them. Guess what that will be!

For more information go to: http://www.puttinguptheforsalesign.com/index.php/2006/03/03/home-sellers-is-your-listing-agent-the-reason-your-homes-not-selling 

© By Lynne Mercer, March 2006

All Rights Reserved

The median price of an existing home in California in January increased 13.8 percent and sales decreased 24.1 percent compared with the same period a year ago, the California Association of Realtors® (C.A.R.) reported. (For complete article go to http://www.rismedia.com/index.php/article/articleview/13682/1/1/ )

What does that mean to somebody living in Palo Alto or Mountain View or the immediate surrounding communities? In an area that is famous for its micro climates, it isn't too much of a stretch to understand that the real estate market also has micro climates. All you have to do is look at the zip code maps in the local newspaper every weekend to see that sales and appreciation can vary widely, even within the same city.

It is early in the year, and there is no established pattern just yet as to which way our area will go this year. Some areas are still hot, while others have cooled substantially. However, consider the following: homes that are listed under $1,200,000 in Palo Alto and under $900,000 in Mountain View, if prepared and marketed correctly, are still getting multiple offers in almost all cases and selling above asking price. Prices seem to be continuing to climb, despite the slowdown in sales activity.

Houses in the $1.2 million to $2 million range, especially in Palo Alto, are still selling briskly, although many only get one or two offers. On the other hand, it is clear that the market has slowed in the over $2 million range. Those prices are softer and those houses are staying on the market longer. Still, after being in the business since 1980, I am convinced that this area is very resilient. The fantasic climate, the proximity to Stanford and other great institutions, and the quality of life in general make this area a draw for people all over the world.

There is no right or wrong time to sell, except what works for you. If you are thinking of selling your home, be sure to work with an experienced agent who is familiar with your specific market so that you can accomplish your aims and maximize your bottom line. That is what counts in the long term.

In California, with very few exceptions, the seller is legally obligated to disclose any and all material facts that may affect the desireability of the property for sale. This can mean almost anything... the neighbor's dog barks when a plane flies over, the toilet leaked 2 years ago but you had it repaired and have had no problems since. Even seemingly trivial things, if not disclosed, can come back to bite you.

Here is an example: A seller lists for sale an older home with a radiant heating system (i.e., a heating system where the water runs through pipes in the floor after being heated in a boiler.) The seller, an elderly man, thought the heating system worked just fine. The listing agent, new and inexperienced, did not order a radiant heat inspection (not required but it would have been a sensible thing to do.) The buyers purchased the home "As Is" but they also did not order a radiant heat inspection. About 3 days before escrow closed, the heat did not come on so the seller hired a professional to check into it. It turned out to be a little gas valve that had plugged. It was replaced, and the escrow closed.

Now, several months after the escrow closed, the buyers claim the heating system does not work. They have discovered the seemingly minor problem that ocurred (but was not disclosed to the buyers) just 3 days before escrow closed, and are now claiming that the seller failed to disclose a problem with the heating system. They are demanding that the seller replace the entire heating system, to the tune of about $20,000!

I have no idea how this is going to play out. The principals are not my sellers or my buyers (thank goodness) but I tell this story to reiterate to sellers how important the disclosures are.  A simple clogged gas valve (value about $150) would not have caused the buyers to back out of the transaction, but if it had been disclosed and acknowledged by the buyers, prior to escrow closing, the buyers would have absolutely no reason to make their current claim. "As Is" means "As of the day the contract is ratified." If malfunctions occur during the escrow period, the seller has an obligation not only to repair that item but to disclose the problem to the buyer.

The moral of the story is that it is always better to disclose everything, even seemingly trivial items, and let the buyer decide what is important to them or not.