| Avoid by Disclosing|
Property Buyers do not like to be surprised by undisclosed "material" facts after a sale has closed. Most real estate lawsuits are the result of Sellers not telling the Buyer about all known (current and past) issues regarding the structure and the land prior to the close of escrow.
Exposure: If the Seller does not disclose a material fact about the house, you can bet the neighbors
will do so. Sellers move away, but longtime neighbors love to discuss known defects with a new owner. That is how many issues are exposed.
Sellers have a serious obligation to disclose in writing any and all defects, (a.k.a. "material" facts) which may or may not ultimately affect the transaction.
If in doubt, disclose it!
Ask yourself: If you were the Buyer would you want to know?
REALTORS® provide several disclosure forms to Sellers when the property is listed. Completing the questionnaires must be taken seriously to avoid a lawsuit.
Tips to follow:
1. Spend time reading the numerous real estate transfer disclosure statement forms, and make sure you understand every question before answering.
2. Make sure you use the most current disclosure forms available.
3. Do not allow anyone to fill out the forms who is not on the title*.
*NOTE: In a property sale on behalf of a decedent, the Trust is exempt from completing disclosure forms unless the Trustee is aware of a material fact, which then must be disclosed.
4. Specifically state every detriment
you know about the house and the property, presently or in the past.
5. Disclose very clearly if you, or the previous owner, did not get permits* for additions or modifications.
*IMPORTANT: A permit is worthless if it is not "Finaled" or signed-off by a City inspector after the work is completed.
6. Disclose neighborhood noise issues or other nuisances.
7. Always obtain a copy of the reports after the Buyer has signed, prior to the closing.
Correct it: If you are in the middle of a transaction, and escrow has not closed, go back and amend your disclosure statement if a fact is missing or incorrect. A change may result in principals renegotiating, but whatever it costs the Seller now will be much less than winding up in court.
Excerpts taken from: Broker Agent News.
|Fiserv generates data for the widely watched Case-Shiller Housing Index. The company created
a report to estimate how long it would take 384 U.S. metro areas to regain peak home prices. |
How long in the Los Angeles area? The year is 2026 until prices are expected to return to pre-bubble levels. That is 16 years, compared to an average cycle of every ten years.
Let me know you think. What year will home values return to the peak, which happened in August 2007? E-mail: Cynthia@RealtorRadom.com
Double-dip is this year's buzz word for another possible downward turn in the economy and housing prices. Following the financial crash at the end of 2008 home prices fell about 30% throughout CA, restoring affordability to a once wildly overvalued market.
Since the spring of 2009 certain U.S. regional areas have improved modestly. However, the L.A. market has fared even better with the median price rising about 10.8%. But, now that the tax credit incentives have expired, some analysts expect the sputtering demand (L.A. volume is down 20%) and bloated inventory to trigger a housing recession with prices possibly slipping back to below the April 2009 lows.
What is causing the stagnation in the U.S. housing recovery with mortgage rates at 50-year lows? Here are six reasons why the housing market has not recovered, according to a U.S. News article:
1. Lack of job growth, which holds the key to a recovery.
2. Creation of new households has stymied with unemployed families moving in with others.
3. Foreclosures continue to add to an over supply of inventory.
4. Credit qualifications are tight for a borrower although money is available.
5. Uncertainty of home price stability for new Buyers.
6. Buyers who need to sell a home to purchase another have uncertainty in an unstable market.
That said, there is no indication that the Los Angeles area need worry about a double-dip in prices this year. The land of sunshine with a plethora of housing "deals" will continue to keep prices creeping upward. Although unemployment in CA is the third highest in the nation (Nevada and Michigan rank one and two), there are still plenty of qualified buyers and investors who are actively looking for a home.
Keep in mind: SoCal had the longest housing upswing ever witnessed with continuous years of double-digit price increases. That screeched to a halt with a deep recession, second only to the Great Depression. As a result the recovery will take longer. But, real estate transactions continue in L.A. If you are motivated to move, then sell. If you want to buy, then take advantage of this market and the available deals. Buyers: your time is now.
| TALKING POINTS|
- Home-buying loan applications
at a 13-year low following
expiration of Buyer tax credit.
- Home prices are up in 60 of
the top 100 real estate markets
year-over-year, when 100% of
all markets declined in 2009.
- Average sale price of
properties in foreclosure sold
27% lower than non-foreclosure
- 51% of all CA home sales in
the first quarter of 2010 were in
- 47% of all CA home listings
had at least one price
reduction during the peak
summer selling season with
L.A. markets among the
highest median price
reductions in dollars.
- Fraudulent activities are on the
rise especially those related
to foreclosures and short
- The number of Americans who
own homes fell in 2Q 2010
to the lowest level since 1999.
- Almost 90% of all home Buyers
use the Internet to search for
Each property sale normally includes a Wood Destroying Pest & Organisms Inspection
conducted by a licensed inspector. Each report, normally obtained by the Seller, is broken into two areas: Section One
of issues) and Section Two
(potential issues). Sellers usually pay for the work in Section
One, but this is negotiable. Buyers are expected to pay for Section Two.
Prior to funding a loan many lenders require that the Section One work be completed: Fumigating the house, repairing damage and other reported issues .Areas of concern include:
1. Subterranean and dry-wood termite infestation and damage
2. Excessive moisture in sub areas from rain or sprinkling system
3. Leaks in the roof or around the eaves
4. Leaks under the house stemming from the bathroom and kitchen areas
5. Substantial cracks in cement of garage or foundation (where critters can enter)
6. Dry rot or fungus on wood or any wood structure
Note: Pest inspectors do not check for mold, but the report may indicate sightings or suggest a mold inspection.
Most of the above findings can be remedied without a problem, albeit costly at times. What is cause for concern are dry rot or fungus issues on wood
, when there is intertwined wood (i.e. trellises) or wood that is attached to something (i.e. door and window frames). When the report requires replacing wood
, this type of work can lead to a domino effect of repairs. What seems like a minor repair may be less costly to simply remove the whole structure
(a wood overhang on a patio or a wood deck).
Sometimes fungus can be scraped off infected wood. However, the Buyer will require the wood repairs to be primed and re-painted
. Matching colors to faded wood may require an overall paint job. When selling a home:
1. Get a termite inspection immediately by a registered company.
2. If dry rot or fungus is spotted, get a few quotes to determine the extent of repairs or replacement. Often wood work is sub-contracted and costs may be estimates and exclude painting.
3. A report will note water drainage issues around the property which may need attention.
4. If there are inaccessible areas (packed garages), these should be cleared prior to inspection, as any Buyer will require a complete report.
5. Determine if it is cost effective or beneficial to remove the affected wood item prior to listing. Or, declare upfront that the Buyer will be responsible for the Section One wood work as they may have plans to remove a deck or a trellis anyway. Make it a non-issue with Buyers.
: All inspection reports must be issued to a Buyer, no matter how many are obtained. Each pest inspection is reported to the Structural Pest Control Board
A wise property owner
should have a periodic termite inspection to ward off major problems before any evidence is apparent. Call me for trustworthy inspectors.
|When There is No Will|
As a REALTOR® I am always amazed to learn that a homeowner did not generate a Will or a Trust during their lifetime for all of their assets. The result is a costly, annoying and lengthy
Probate process for the heirs that easily could have been avoided. Probate is basically the after death settlement of all financial matters pertaining to the estate of an individual or remaining spouse through numerous court proceedings if no Will is found. The Probate process does not guarantee a fair and equitable division of assets among the heirs since no prior instructions were written
An Administrator, appointed by the Probate Court, is assigned to deal with the disposition of the estate. Often lasting up to one year in process, the appointee starts by making an itemized inventory of all estate assets and other items of value including: real estate holdings, bank accounts, investments and life insurance policies. Where needed, on items such as property, antiques and motor vehicles, a professional appraisal of value is required prior to totaling the estate's worth.
Debts and liabilities are also assessed and paid including any pending lawsuits after a settlement or a court decision. After a legally-required waiting period has elapsed, and all debts paid, the Probate Court approves disbursement by the Administrator of the remaining estate assets, according to the appropriate State law. This may require selling assets and issuing proceeds according to the law. At this point, a battle may ensue among prospective heirs as no written instructions were issued by the decedent. Now you know the importance of generating a Will and Trust...before it is too late.
This column is normally devoted to specific residence information. However, it has been such an unusual year, let's review what is going on with property sales in SoCal. Starting with national headlines declaring the number of home resales are at a fifteen year low...not since 1995.
Here in SoCal, the number of closed sales declined 21% since last year, however, the median price increased 10.8%. Local zip codes have generally witnessed single-digit price increases.
The major buzz this year is the increase in high-end sales over 2009. As of mid-year there were 96 sales of $5+ million; 33 sales of $10+ million and four sales over $20+ million. Overall, an 18% increase in high value estates since last year.
National news does not necessarily apply to coastal regions. One factor does apply overall - the Buyer "deal." Interest rates are at 50-year lows and Buyers are finding extraordinary values.
With those two factors, why is volume down even in SoCal?
Unknown economic direction permeates hesitation everywhere.
The City Council of Los Angeles approved one additional day for lawn watering, now three times a week instead of two. Always be mindful of wasting water. Take time to personally ensure your sprinklers are working properly
that water is spraying onto greenery, not cement. Check
for broken sprinkler heads to ensure water is not gushing into the air like a spouting whale.
As a homeowner, take control and conserve water
Sellers should obtain
Would-be Sellers want to know if they should get a home inspection prior to listing the home for sale. The answer is, yes and no.
a wood destroying pest
(a.k.a. termite) report and a retrofitting
report immediately after listing their home for sale. These reports and other Seller disclosures should then be submitted to the Buyer with the first Counter after an offer is submitted
A Buyer will want to obtain their own specific inspections, so getting a general inspection in advance by the Seller is not necessary or required
WISHING YOU AND YOURS A HAPPY HOLIDAY SEASON
Deriving a property value is not a science, there are no absolutes. Obtain five estimates and five different values will result for the same property. A property valuation, or appraisal, is a guesstimate at best utilized by a lender to determine if a home is fund worthy; by a homeowner to substantiate an increase in basis and to learn about current values; or by a County assessor to adjust property taxes.
There are several ways of obtaining a valuation, and a few are worth discussing.
- Online Internet Estimates: Zillow.com, Cyberhomes.com and Eppraisal.com are Web sites created in recent years to offer free home estimates. The search is available to everyone by inputting a property address for an "online" appraisal. What these computerized sites offer is an automated assessment of estimated value. In other words an objective, black and white numbers only guesstimate based on area sales. No consideration is given for upgrades, features or location.
- Out-of-Area Appraisers: While professional appraisers are extremely important to the real estate industry, a licensee who is not familiar with the subject area can be detrimental. Appraising a property too low means a possible deal breaker since a lender does not acknowledge market value. Conversely, valuing a property too high means unrealistic Seller expectations, or property taxes that are out of line. Professional appraisers often contact the listing agent to obtain specific input about the subject property.
Yes, even "seasoned" veterans can also be incorrect about a property's worth (remember, there are no absolutes). However, a real estate agent has the best grasp on worthiness. Agents know the area and what Buyers want in homes today. There are nuances of a property that can enhance or detract a home's value.
Depending on the purpose of a valuation there are certain things to note:
- Web site values are only a start, and can often mislead a property owner.
- Require a lender to use a local appraiser, which is a reasonable request.
- Always consult with a REALTOR® to assist in obtaining a property appraisal. Ask to see the comps and an explanation of why each property was used in the estimate. It is easier to speak to an agent than an appraiser or assessor.
|One of the world's grandest estates, the Spelling Manor, is now officially listed in the MLS having been a pocket listing for the last year and a half. No price reduction, as of yet, the asking price is still a hefty $150,000,000.|
The following can be yours, if you qualify:
- 14 bedrooms
- 27 bathrooms
- 56,500 sq. ft. of living space
- 4.8 acres of flat land
- Large screen projection room
- Billiard room
- Two lane bowling alley
- Arcade room
- Staff wing with five maid's bedrooms and two butler's suites
- Professional florist refrigerator in a "flower cutting hall"
- Gift wrapping room
- European-style covered parking for 16 cars, and a 100-car motor court
- Art studio
- Physical fitness room (how dare they call it a "gym")
- Living and dining rooms that boast a 30-foot ceiling
- Imported fireplaces from France
- Pool and cabana with full kitchen and bar
Let's reinstate the contest for a $100 gift certificate. Guess the selling price and the date escrow closes. E-mail, fax or mail your entry to me with your complete contact information
no later than October 29th.
|I'll never forget the $300,000 price reduction a Buyer received for termite damage as a result of a thorough pest inspection. The historic home was to be renovated, and a dozen columns that held up a porte-cochere between two structures was being eaten inside-out by termites. |
Imagine watching an inspector fully insert his arm inside a column opening and pull out a fist full of sawdust.
and Buyer tax credit incentives
have little impact in the Westside real estate market.
Common transactions for financially troubled homeowners in this area are "short sales
" when homes sell for less than the amount of the remaining mortgage debt. Lenders agree to sell a property at a loss, but Sellers' credit scores still take a big hit. Savvy Buyers can obtain the property for cents on the dollar, thus lowering property values in the area.Tax credits
were applied to homes under $800,000 or newly constructed, neither are easy to find in the Westside.
|If you prefer the "Real Estate Newsletter" mailed to you, please e-mail: Cynthia@RealtorRadom.com
|Respecting your privacy and confidentiality, names and e-mails will only be used for providing pertinent material by Cynthia S. Radom and will not be shared with any other organization.