A Foreclosure Buyer's Guide to Property Repairs

A Foreclosure Buyer's Guide to Property Repairs


By Rick Sharga, Vice President of Marketing for RealtyTrac

One of the most overlooked and underestimated expenses involved in the purchase of a home is the cost of repairs. Whether the problem is a defective part in an appliance, a structural problem overlooked by the home inspector or just Murphy’s Law making its presence felt, it’s rarely the case that someone can buy a property and move in without spending at least a few dollars to fix, repair or replace something.

While these types of expenses are generally minimal in new homes and well-kept resale properties, they can be fairly significant when the home in question is a foreclosure property.

As housing prices have escalated over the past few years, more and more people have started to look at foreclosure properties as an affordable alternative to more traditional real estate purchases. It’s not unusual for a buyer to acquire a foreclosure property for 10 – 20% less than full market value, and sometimes at much more dramatic discounts of 40 – 50% or more. And online sources such as RealtyTrac make it easier than ever to find foreclosure properties. But while the savings possible on foreclosure properties are real—and really attractive—there are sometimes hidden costs involved.

One of these hidden costs is the cost of repairs. Foreclosure properties come in all shapes and sizes—from run-down mobile homes to palatial estates overlooking the ocean. But they all have at least one thing in common: their owner was in some state of financial difficulty. Generally, this means that a property in foreclosure may not have been kept up as well as a home buyer might like. It’s nearly a certainty that the typical foreclosure property hasn’t benefited from the type of pre-sales “fix-ups” that many homeowners perform to increase the sales price of their homes. And, as a rule, most foreclosure properties are offered “as is,” leaving it up to the buyer to find anything physically wrong with the property.

Is it worth saving 1% on a home purchase if it means doing extensive repairs? Probably not, for most people. On the other hand, saving $20,000 on the purchase may make it worth your while to invest in home repairs.

Determining the degree of disrepair can be something of a challenge as well. Early in the foreclosure process, when an owner is in notice of default, he or she may not be interested in discussing the sale of the home, making it impossible to do a thorough inspection. At the auction, or notice of trustee sale (NTS) phase, bidders are generally required to buy the property as is, at the courthouse. And once the home has been foreclosed on by the bank, becoming a Real Estate Owned property, arrangements to inspect the property often need to be made with the lender.

“Foreclosure properties certainly present an attractive bargain, and often the amount of money needed to repair a foreclosure home is inconsequential compared to the possible savings. In fact, many successful investors have made a career buying, rehabbing and then selling these types of properties at a significant profit,” says Jim Saccacio, chief executive officer for RealtyTrac the leading online marketplace for foreclosure properties. “But buyers do need to be diligent about determining the repair costs that will be incurred after the purchase. A property isn’t really a bargain if the cost of repairs equals or outweighs the savings on the purchase.”

Many investors routinely budget 10% of the purchase price of a foreclosure home for repairs. In a typical scenario, where a property with an estimated market value of $150,000 might be sold during the foreclosure process for $120,000—a 20% discount—that would amount to a repair budget of $12,000. In this scenario, the homebuyer still saves $18,000 on the purchase price, and likely increases the value of the home by doing the repairs. Each property, and each situation, is different. But it’s important to note that a difference of 10% in either the discount or repair costs would dramatically alter the financial outcome.

Example 1

Estimated Value: $150,000
20% Discount: $ 30,000
Purchase Price: $120,000
10% Repair Budget: $ 12,000
Total Cost: $132,000

Total Savings: $ 18,000

Example 2

Estimated Value: $150,000
10% Discount: $ 15,000
Purchase Price: $135,000
10% Repair Budget: $ 13,500
Total Cost: $148,500

Total Savings: $ 1,500

Example 3

Estimated Value: $150,000
20% Discount: $ 30,000
Purchase Price: $120,000
20% Repair Budget: $ 24,000
Total Cost: $144,000

Total Savings: $ 6,000

If you’re interested in buying a foreclosure property, the following tips should help ensure that you’ll really get your money’s worth.

1. Physically Inspect the Property

It’s imperative to physically inspect the property if at all possible. In some cases, such as auctions, there is little or no possibility of an inspection. However, if you are able to negotiate a deal with the property owner directly during NOD, or pre-foreclosure, it may be possible to set up a walk-through prior to conducting the sale. During the pre-foreclosure period, the owner has a chance to sell the property or pay off the amount owed before the property is sold at public auction or repossessed by the bank. You’ll also be able to set up a physical inspection if you purchase the property directly from the foreclosing bank after the property has been repossessed. You can locate pre-foreclosures, auctions and bank-owned properties by checking with the local recorder’s office or through online services like RealtyTrac, which maintains the nation’s largest database of foreclosure properties.

If you’re not able to physically inspect the inside of the property, assess the property’s condition as much as possible by driving by and looking at the exterior. Add extra padding into your repair budget for unexpected problems. When there is no physical inspection of the interior, most experts recommend that you cap your purchase price at no more than 70% of the property’s estimated market value. You can determine a property’s estimated market value using comparable sales, which are available through MLS listing from your real estate agent.

You should never assume the property is in move-in shape simply because the owner says it is. Even if the home owner is being completely honest, he or she probably isn’t as accurate or objective in assessing the condition of the home as most real estate professionals would be. And an owner may be completely unaware of a major problem with the home. The bottom line is that you need to do your own research and be as thorough as possible.

It’s wise to hire a professional inspector to come along with you. The trained eye of a professional inspector is priceless in this case because, regardless of how diligent you are in previewing the property yourself, you will undoubtedly miss items an inspector would catch. Make sure the inspector checks the electrical wiring and moisture levels, as well as asbestos, lead and carbon monoxide levels, especially in homes built prior to the 1990s.

2. Note Every Detail that Needs to be Fixed and the Estimated Cost for Each Repair

Have your inspector provide a list of all necessary repairs and, if possible, a ballpark estimate for what each of the repairs might cost. You can also ask the inspector for professional referrals for each individual problem area (roofing, plumbing, etc.). You can check with those professionals for approximate costs. Either way, you’ll know the true cost of the property you are buying.

If you find that your repair list is quite lengthy, you may want to reconsider whether the property is actually worth purchasing. If you’re dealing with home owners in default, you can’t expect them to have the resources to pay for any repairs before they sell the house, but you can use the cost of repairs to negotiate a lower purchase price. That’s why it’s imperative that you accurately document every single repair cost.

If you buy a bank-owned property, the bank will have the resources to make repairs, but they will roll their repair costs into the price of the house. And the bank may not be as motivated as you to get the best prices for the necessary repair work. If you want the best bargain, you’re often better off agreeing to buy the house “as is” from the bank.

3. Distinguish Between Cosmetic and Structural Repairs

While you may be completely correct that the property could use a new coat of paint and some fresh carpeting, your first concerns should be structural. For most people, this can be tough because it’s inherently difficult to look beyond a home’s aesthetic appeal when deciding whether or not to purchase it. Beyond that, most people don’t really know how to determine the structural integrity of a property, unless the defect is so obvious that the home probably shouldn’t even be considered for a purchase. This is yet another reason why it’s imperative to hire the services of a professional inspector: to keep you on task when determining what repairs the property actually needs to make it suitable for living.

Especially with older properties, another point to consider is that homes do require a certain amount of ongoing maintenance. It’s expected that any home will at some point need a new roof or appliances. Don’t let this cloud your judgment or turn you off. Instead, focus on signs of necessary repair such as leaks in the roof or other damage. Make sure all appliances are at least in working order and not emitting dangerous fumes. Overall, you should be more concerned with damage than age.

This is not to say that cosmetic repairs shouldn’t be taken into consideration. However, they should be prioritized properly, so that any repairs that make the property safe and livable are taken care of first. Your goal should be to prioritize a list of repairs from most to least crucial. You can use the information for negotiation and keep yourself on track for what should be handled first when you purchase the property.

The bottom line: know what your priorities are. Remember, while that gold-colored crown molding might be an eyesore, replacing it won’t make you sleep any better on a rainy night under a leaky roof.

4. Get as Much Information from the Owner as Possible about the Property’s History

Aside from the tips mentioned, it’s a good idea to get some history on any home you are thinking about buying. Actually talking with the owner of a property about what has been done to it over time is a great way to learn about potential flaws or concerns to look out for. You should ask what repairs have been made and when, as well as whether any structural changes have been made and whether these changes were permitted under the local building codes. Inquire whether the seller has paperwork to back up repairs that have been made. This information may alleviate suspicions you have about repairs that have supposedly been made and may also be helpful when applying for home insurance for the property.

Of course, you’ll only have the opportunity to talk with the owner if you’re purchasing pre-foreclosure. If you buy at the auction or from the bank, you’re buying from a third party who has no knowledge about the history of the property.

It’s important to estimate the cost of repairs when you purchase a foreclosure property, but your strategy for estimating those costs will vary depending on the status of foreclosure. You’ll usually have the most accurate estimate when you buy directly from the owner during pre-foreclosure because you’ll be able to conduct a complete physical inspection and find out information about the property’s history from the owner.

If you buy a bank-owned property, you’ll still be able to perform a complete physical inspection, but you should allow for a little extra room in your repairs budget because you won’t be able to find out about the property’s history. You’ll need to pad your repairs budget even more if you purchase a property at public auction, where you usually won’t be able to physically inspect the inside of the property.

When you properly account for the repair costs when buying a foreclosure, you’re much more likely to realize a great bargain on your next home or investment property.

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Real Estate Bubble: A Self-Fulfilling Prophecy?

There are plenty of naysayers about the real estate market and its unprecedented growth. Las Vegas-based ReviewJournal.com, for instance, has given cyber-print on a report by Doug Fabian, president of Fabian Wealth Strategies and Josh Lewis, first vice president at Santa Ana, Calif.-based Stearns Lending. The report, "Boom to Bust," says the following issues about current homeownership points to a possible bubble:

• Non-owner occupants are now buying more than 25 percent of all homes.
• Households are allocating a greater percentage of income to housing than ever before.
• More houses are being purchased with no down payment. People are buying primarily because of the expectation of appreciation.
• The majority of today's loans involve some combination of adjustable-rate mortgages, interest only or negative amortization.

The report states, "This layered risk will result in a major increase in foreclosures, which will bring the total housing market down in value." Unfortunately, this report brings up nothing new: people have been buying real estate for decades in anticipation of appreciation; also, during those years, households have been allocating a greater percentage of income to housing; and zero percent down payment mortgages have been around for just as long -- all of these factors have been true for the last 20 years.

Now take this report and compare it to the 2nd Quarter 2005 report issued by the U.S. Department of Housing and Urban Development on U.S. Housing Market Conditions and you see a different picture:

• The housing sector continued to be a major contributor to the U.S. economy during the second quarter of 2005.
• New records were set for single-family permits, new home sales, and existing home sales.
• Interest rates remained at less than 6 percent, but the challenge to affordability for new homebuyers grew.
• Compared to the most recent quarter, the median sales price of an existing home rose by 10.3 percent, and was 13.7 percent higher than a year earlier.
• Compared to the second quarter of 2004, permits for new homes were up 2.1 percent.
• Construction starts were up 4.6 percent.
• New housing completions increased by 4.7 percent.
• Sales of existing homes and new single-family units rose, by 4.6 percent and 10.2 percent, respectively.
• Permits and new starts for multi-family units slowed after the first quarter of 2005, but remained stronger than in the second quarter of 2004.

So why all this good news on the housing front -- basically, the economy is growing. And that, my friends, is why you have to second guess the concept of a bubble in the real estate market.
We've become accustom to the use of "bubble" because of the drop in the stock market of 2001, following unprecedented growth in several exchanges. The difference is that the stocks that inflated the bubble on the stock market were based on the founding of companies on investment money in hopes of finding the next internet-based fortune not on the actual production and profit-making of consumer products.

The inflation we are seeing in the housing market is because of economic growth, more jobs, population growth and the local jurisdictions not providing enough housing for this growth. It's pretty simple -- if you grow the economy, you must grow the housing base. However, in the last five years, metropolitan regions have taken the slow growth or limited growth approach to providing housing instead of pushing for more affordable housing in high density projects.

When the economy slows in any given jurisdiction is when you'll see trouble in your real estate market. For instance, in the Washington, D.C. area, home to the hottest employment growth in the country, the region is projected to create more than 82,000 jobs in 2005, according to the Center for Regional Analysis at George Mason University. However, the Center points out local builders are only allowed to put up about 35,000 houses per year.

If you're bringing in 50,000-plus new jobs into an area every year, but only build 30,000 houses -- is that a bubble or a true reflection of the supply and demand of housing? You be the judge.

Mr. Carr has covered real estate since 1989. He is the author of "Real Estate Investing Made Simple." Got a personal real estate issue? Questions can be posted at The Millennium Team's blog.

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Get A Grip, Lock That Rate

Rate locks are key to keeping the lid on lending costs when interest rates begin to take off -- as they have for the past month and a half.

Since Sept. 8, when the average fixed interest rate on 30-year conforming mortgages was 5.71 percent, rates have risen for six consecutive weeks, adding 0.39 percentage points to the average.

That pushed the average mortgage interest rate to 6.10 percent on October 20, according to Freddie Mac's Weekly Primary Mortgage Market Survey.

The six-week run up in prices was the longest sustained week-after-week increase in average interest rates since spring of last year when rates rose for eight consecutive weeks. From 5.38 percent in March 2004, they rose to 6.34 percent by May, 2004.

What's more, the 6.10 percent average rate is the highest it's been since July 1, 2004 when it averaged 6.21 percent, Freddie Mac said.

"Anytime rates go up, rate locks are an issue. If you don't lock in your rate, then your rate is floating with the market," said Jack Guttentag, the "Mortgage Professor" and finance professor emeritus at the University of Pennsylvania's Wharton School.

A traditional rate lock is a lender's guarantee that your mortgage carries a specific interest rate, points, and other terms.

The lock is good for a specified period -- if you fail to complete your home purchase or refinance before the clock runs out, and interest rates rise, brace yourself for a higher rate.

If you qualify for a given rate as the maximum the lender will allow you, and interest rates rise during escrow, you could have to add cash to the deal, be priced out of the market or have the lender turn on you.

"This is mainly a problem with a home purchase because a home buyer has so much at stake and is at the mercy of the market price as defined by the loan officer. If you get to closing and find someone has been playing games and things are not what you agreed to and you don't have a rate lock, you are in a vulnerable position. If you are refinancing, you have options, at least in principle. You don't lose the house if you don't close on the scheduled date," said Guttentag.

If interest rates fall during the lock period you can't take advantage of the lower rate unless you rewrite the lock and perhaps pay additional costs.

The exception is a rate lock with a "float down" option to grant you a lower rate if rates fall within a given window of time. Again, unless specified otherwise, float downs stick you with the higher rate if rates rise during the lock period.

While most locks are designed to protect borrowers from rising rates, but everything depends on the language in the rate lock agreement.

Get it in writing

"There are two kinds of locks. The written lock and the verbal lock. If it's a verbal lock they'd better be your best friend. When rates go up, if he or she didn't lock it in with the lender you are out of luck. If you are going to be careful say, 'Could you write this down?' said Earl Peattie a mortgage expert from Hartford, CT.

In some cases, if the loan doesn't close on time, lenders may automatically extend your lock, say until the loan closes, but that's an option that's less likely in a rising rate market. Other lenders may give you a temporary extension and you'll have to pay fees beyond that. Still others may charge you a percentage of the loan amount for the extension.

The many scenarios make a written contract mandatory!

The contract should lock in as many costs as possible, the interest rate as well as points. The agreement should include your name; the lock's effective date; the agreement's effective date; lock cost, if any; what rate and other loan terms are locked; the lock's expiration date and time; and any post-lock options.

Lock as soon as you see the desired rate or "on application" -- when you first apply for the mortgage -- so that your rate is locked as you spend time getting the application approved. That's particularly important if you barely qualify at today's rates and an increase would make buying unaffordable.

"(Without an agreement) Some lenders set the rate when the loan closes. When rates are going up, this is something your certainly want to pay attention to. Otherwise it could cost you $10,000, $15,000, or $20,000 (over the course of the loan), easily," said Peattie.

Lock periods should be long enough to allow for settlement, contingencies, and other potential delays. Locks average 30 days, but range from 15 to 60 days.

Before choosing a lock-in period, determine the average time for loan processing. Ask your lender to estimate the time necessary to process your loan.

Once you lock-in a rate, make sure your loan is approved and closed before the commitment expires. Quickly submit the application and other required documents.

Locks cost money. Shop around for both the terms of the lock contract and its cost. Some lenders charge an up-front, non-refundable fee even if the loan doesn't close. Others might levy the fee at settlement. The fee could be a flat fee, a percentage of the mortgage amount, a fraction of a percentage point or a higher interest rate. The cost could vary depending upon the length of the lock-in period, the options you choose and mortgage program.

If you have a floater, it's up to you to keep an eye on the market.

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Written by Broderick Perkins for Realty Times

October 24, 2005

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Gardening 101 - Tips to HELP your garden!

If you're into gardening, and even if you're not, there is one technique that you might want to get the skinny on and that's mulching. True that winter is approaching, but it's never to late to learn.

But before you say you don't have a green thumb, keep this in mind: mulching is an easy technique and one that might help your garden grow a lot better -- better than you could ever imagine.

"It's something that everyone should do," said Jack Bennett, owner of The Bird of Paradise Landscaping in Lake Forest, Calif. "It's easy and it can be inexpensive at the same time."
Now that the word hasn't frightened you too much, and you've decided to pull on the old gardening gloves here's a few pointers to help. First of all, "mulch" refers to a material placed on the soil's surface, which can be anything from old leaves to egg shells, Bennett said.

How Mulches Help

Also a simple layer of mulch may help prevent the germination of many weed seeds, reducing the need for cultivation or the use of herbicides. Mulches also help moderate the soil temperature and retain moisture during dry weather, reducing the need for watering, Bennett mentioned. Mulches can also protect the soil from the impact of raindrops that can cause crusting, which can prevent the germination of seedlings.

Most mulch products provide these benefits, but organic mulches -- such as compost or bark -- can be especially beneficial because earthworms and other soil life gradually break them down, mixing them into the soil to nourish plants.

"Often, people will mix a combination of old leaves, trees or shrub remnants with egg shells, banana peels, their trash … just about anything to create mulch," Bennett said. "Everything works within reason."

True, while there are many types of mulch, organic mulches such as wood chips, grass clippings, or other locally available materials help improve the soil by adding organic matter as they decompose. They also may encourage the growth of beneficial soil organisms that can help improve soil structure and the availability of nutrients for plants, Bennett explained.

Mulches can be used to enhance the look of your garden, too. Many bark mulches provide a uniformly rich brown color that contrasts with the plants. The mulch also helps keep plants clean by reducing the splash of soil onto leaves during rainstorms, and helps infiltration of the rainfall into the garden.

Choosing a Mulch Material

If you are most interested in weed control in a vegetable garden, a layer of newspaper covered with grass clippings or just grass clippings will work well. However, if you are finishing off a beautiful perennial garden in the front of your house, you probably will want to use something more attractive such as bark mulch, according to the nursery department at your local Do-It-Yourself store.

If you are mulching around shrubs that will remain in place for years, you may want to use inorganic mulches such as brick chips, marble chips, or stone. While these will not provide organic matter to the soil, they will be permanent. Note that they are difficult to remove if you change your mind or want to add bulbs or perennials.

Mulching does not need to be expensive. Some communities offer chipped wood or compost to residents, which they might hand-out free during certain times of the year.

Leaves, newspaper, and grass clippings are also inexpensive mulches. To be effective, most organic mulches need to be between 2 and 4 inches thick, Bennett said.

Regardless of which type of mulch you choose, your garden should be a lot healthier and easier to maintain know that you know the ins and outs of mulching.

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Remodeling Homeowners Face Quandary

Home owners who are remodeling customers are in a quandary.

Most of them are satisfied with their remodeling contractor, but nearly the same amount are not.

That dissatisfaction comes at a time when more and more home owners are counting on remodeling to improve the value of their existing home, often because they can't afford to move up to such a home.

Two studies addressing the quandary, indicate that it behooves home owners to choose contractors carefully. A good start is seeking referrals to licensed and qualified contractors only from friends, family members, co-workers, colleagues, and other trusted individuals who've recently enjoyed a satisfactory home remodeling project.

First, the recently released Qualified Remodeler Magazine's 2005 Homeowner Satisfaction Survey of more than 750 remodeling customers, found that while 52 percent of them would hire the same remodeling contractor again, 48 percent of them would not.

The survey, conducted this spring by marketing, consulting and lead-generating firm Renex Inc. also found while 55 percent would refer their contractor to a friend -- indicating some of them are referring contractors they wouldn't use again -- 45 percent would not.

The magazine's survey comes on the heels of another survey by the online RemodelOrMove website and portal for those perplexed by the perennial move-up or fix-up decision.
Surveying 5,000 of it's website visitors -- those who are at least somewhat predisposed to performing remodeling work -- RemodelOrMove found that its visitors often see remodeling as an alternative to buying a move-up home.

"The data shows that homeowners are overwhelmingly leaning away from new home purchases in favor of remodeling the home they presently live in," the study says.

Sunnyvale, CA-based RemodelOrMove survey of home owners from around the nation found that those surveyed lived in their current home an average of 8.5 years, and plan to live in their current or next home for the next 18 years, on average, -- much longer than the 5 to 7 years other surveys have indicated as an average period for home owners to stay put.

"The boom in the housing market may be coming to an end. People may be at or close to their limits," said Dan Fritschen, the website's publisher who is not a contractor, real estate agent or moving specialist, but created the website after buying and remodeling several homes for his own family.

Fritschen says the cost of a new home and remodeling have both increased, but when it comes to remodeling it's an increase on a smaller dollar amount for work that could make a home more livable -- livability that may or may not come with the cost of a new home.

Fritschen's survey reveals the cost-factor is omnipresent among those in his survey.
One in four plan to be their own remodeling contractor; 60 percent will do at least a portion of the remodeling work; and 1 in 3 of those who plan to move will sell their homes without an agent.
One third of those who plan to remodel will spend 30 percent of their home's value on the project, which Fritschen says, is much higher than the industry-standard recommendation of 20 percent or less.
Fifty percent of those surveyed said they want more rooms, including dens and bedrooms. More square footage is one of the best cost-vs-value projects home owners can perform -- today, even if the new home is a bit out of line with other homes in the neighborhood, given the demand for larger homes.

Most, 60 percent, consider their bathrooms are inadequate and 50 percent want improved kitchens, again, wise choices when it comes to getting the most bang for remodeling bucks.
While home owners may be considering or making smart moves when it comes to home improvements, large numbers are not happy with the professionalism and workmanship of the remodeling contractors.

That means they may not be getting their's money worth.

Using a scale of 1 to 10 with 1 being the worst score and 10 being the best, Qualified Remodeler's survey found that overall, homeowners rating remodelers -- on professionalism, timeliness, fair price and workmanship -- an aggregate score of "poor" or 6.29.

For specific jobs, the worst level of workmanship went to exterior work (4.74); whole house work (4.21) and additions (5.85). Professionalism got the lowest scores when remodelers performed whole house work (4.95) and room addition work (5.90).

"The report indicates there are two separate worlds of remodeling activity. There are those that are well-versed in business and display a wide variety of skills ... and there are those whose skills do not match the many challenges of completing remodeling and home improvement projects. The latter group is much larger," the Qualified Remodeler report said.

To level the playing field, consumers must choose remodeling contractors with great care.

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Written by Broderick Perkins, Realty Times
October 20, 2005

Four Questions Help Determine "Improve vs. Move"

The walls are closing in. Your teenagers are warring over closet space and you long to have a real office room instead of camping out at the kitchen table. What's the best solution? Should you improve the house or move to another?

The answers to four primary questions are a good place to start in the dilemma to improve the house or purchase another. Homeowners who are happy with their current neighborhood and school district (usually the top two owner' priorities) are wise to weigh answers to the following:

1. How long do you intend to keep the house?

This initial question has impact on several levels. First, it makes little financial sense to pour money into a house only to sell it. Second, if you've ever lived around and through a remodeling project, you know that the emotional upheaval you suffer during construction needs to be offset by enjoying the benefits once the improvements are complete.

Even if you aren't thinking of moving in the near future, be sure to do the math in the following question before wading knee-deep into a project.

2. Will you be able to recoup the cost of improvements when you sell?

A real estate agent or appraiser can show you comparable properties (comps) of recent sales to determine how much if any the improvements will increase market value. If you make improvements that don't add to market value, be prepared to walk away from what you've spent especially if selling in a short period of time (less than five years on the average, depending on the type of improvement.)

3. Are the improvements you're considering logical given the age, size, and location of the house?
Just as you wouldn't install a new sunroof on a dilapidated car, making expensive additions to a house that's full of functional obsolescence makes little financial sense.

Many appraisers would tell you that it's much tougher to recoup the investment from home improvements if they aren't similar in style and design/era to the existing home. And before hammering the first nail, make sure you check the setback requirements for construction especially on rear and side lot lines. What a nightmare it would be to construct a room addition, only to have all or part of it in violation of zoning laws and/or owned in part by your neighbor!

4. Could additions/changes over-improve the house?

A house at the top of the market for the neighborhood can take longer to sell since buyers often purchase on the low side, hoping to maximize equity and improvements made over time. There are some additions that aren't welcomed by certain buyer segments.

For example, families will young children might shy away from owning a swimming pool since it's the number one cause of death for children under age five. A remodeled master suite in a third-floor loft could be undesirable if the prospective buyer/target was retirees. Even though you may want to make additions/changes based on your immediate needs and desires, it never hurts to look down stream at who a potential future buyer might be in order to avoid over-improvements you can't recoup.

By asking these top four questions, you may not have all the information you need to adequately weigh improving the house versus moving to another. But they will serve as talking points to get you focused on solving your homeownership needs in an organized and cost-effective manner.

Written by Julie Garton-Good for Realty Times

Murphy's Law for Sellers

Murphy's Law states that anything that can go wrong will go wrong. Glitches in any real estate transaction are inevitable. If you are prepared, you won't be so shocked when they do. Here are some suggestions that may help:

Understand That Your Home May Not Be Worth What You Think
The biggest shock most sellers face is what buyers think their home is worth. Sometimes sellers can be pleasantly surprised, but the reality is that markets change, and home values rise and fall. Many subjective factors such as floor plan, condition, updates and drive-up appeal affect home values.

The truth is that buyers will determine the worth of your home, in this market, at this particular time, and that has very little to do with what you need to get out of the home.
People Won't Love Your Home Like You Do. You love your home and expect others to appreciate the same qualities in it that you do, but buyers have their own lifestyles, preferences, tastes and attitudes. The chances of finding a buyer who will want your home "as is" are slim to none.

In fact, buyers will look at your home with an eye to how they can make it suit themselves. They may knock out that wall where you have your prize fish tank, tear down that designer wallpaper you had imported from England and gut the kitchen where you spent so many Thanksgivings preparing dinner. All those changes cost money, so they will value your home less as they consider remodeling and decorating costs.

Remember, your home is competing against other homes with updates and features your home may not offer. Your home has to withstand the glare of scrutiny, so you must make it as competitive as possible within your means. Put it in good repair, and make sure it is spotless and clutter-free.

Sooner Or Later You Will Lose Your Temper
Your relationship with your buyer will be one of love/hate. The buyer is an adversary because s/he wants to pay the least for your home, while you want to net the most possible.

The buyer, in order to improve bargaining leverage, may pick your home apart. Many of the buyer's complaints and requests for repairs will be legitimate, but some may not. In fact, some requests can be outrageous.

Stay focused on your goal to sell the home, and keep your cool. Let your agent tell their agent yes, or no. Remember, your home can't close until everyone is happy, so be flexible and willing to compromise.

Don't let your feelings fester. If you are truly uncomfortable about anything, inform your Realtor immediately.

Unexpected Showings

Buyers aren't going to operate on your schedule. They may want to see the home at any time of the day or evening.

Your Realtor will ask you to keep your home in show condition. Don't worry that the bed wasn't made. Trust that only serious buyers will be allowed to see your home.

Buyer rudeness

Poor manners is rampant in our society. So why be surprised when buyers visit your home and leave their McDonald's cup on your coffee table? Or leave the cabinets and closet doors open wherever they looked? Or miss their appointment, expecting you to reschedule at a moment's notice?

As tempting as it may be to play Miss Manners, it's not worth passing up a good offer because the buyer had to change a dirty diaper and left it in your trash bin.

Inspections

Inspections kill more deals than any other single factor besides overpricing. All older homes have some minor and some major problems, so address the problem before it becomes a problem. Get a seller's inspection, and you'll have advance knowledge of any problems that must be fixed. A buyer who sees a favorable inspection report as part of the home marketing materials is more likely to make a fair price offer. (Note: Buyers should always have their own inspections performed.)

Last Minute Problems That Delay Closing

Service providers, from lenders to inspectors to closing agents, may cause problems, sometimes without meaning to. In some areas, closings are happening at such a rate that all service providers associated with the real estate transaction are on overload. So schedule all steps in the transaction early. Track the transaction with your Realtor so you know which steps have been fulfilled properly. Have your Realtor nudge anyone along who is late with their piece.

Written by Blanche Evans of Realty Times

NEW Listing in Silverlake 4BR/3BTH

851 North Hoover Street, Los Angeles CA (Silverlake District)

4 Bedrooms

3 Bathrooms

Large Corner Lot

Listed at $799,000

Recently Remodeled Spanish Style Home

Zoned for Multiple Units

RECENTLY REMODELED SPANISH STYLE HOME IN SILVERLAKE AREA. 4 BEDROOMS AND 3 BATHROOMS. LARGE CORNER LOT. LARGE KITCHEN AND DINING ROOM. LAUNDRY ROOM. NEW WINDOWS AND STUCCO. PRICED TO SELL!!! NEW LAWN AND SPRINKLERS ARE BEING INSTALLED. CLOSE TO SUNSET JUNCTION AREA! ZONED LARD1.5 RECENTLY APPRAISED AT $830,000!!!

How Can I Sell My Home For More Money?

By Anthony Vulin

Clean it. Home buyers, it turns out, hate dirt more than just about anything else. So, give your home a thorough cleaning from top to bottom. Wash the walls, floors and windows. Rugs should be thoroughly cleaned unless you plan to replace them. Curtains should be washed by hand or taken to a dry cleaner. If you're not up to the task, spend $100 for a professional cleaning company to do the job right.

Organize it. If your home looks too small for you, prospective home buyers are going to think it's too small for them. So, take everything off of your kitchen and bathroom countertops, half the books off your bookshelves and the past season's clothes out of your closet and pack them away. Not only will your home seem larger, but you'll have made a good start on packing for your future move.

Repaint it. Real estate agents say you'll get the biggest bang for your buck by repainting the interior of your home in bright white paint. White walls help home buyers imagine how their own stuff is going to look. If you have wallpaper that's in good shape, choose a neutral shade of white or off-white to complement it. If your wallpaper is peeling or is dated, strip it off and start over with paint.

Mow it and plant it. Most home buyers today will spend about 10 seconds looking at a digital photo of your home on the Internet. If they like what they see, they'll do a "drive-by" showing. You have approximately 6 seconds to impress them as they drive from lot line to lot line. Make the most of what you have by giving your landscape a power-lift. Trim hedges and trees, plant colorful flowers, mow the grass and edge your beds. If you're not up to it, hire a professional landscaper to get the exterior of your home into shape. Then, power wash, touch-up, or repaint the exterior of your home for an irresistible package.

Fix it. If it isn't working properly, you could pay dearly when it comes time to negotiate the price of your home. Today's home buyer just wants to move in and get on with his or her life. So oil the squeaky doors, screw in the knobs, replace the rotting wood lintels, and repair the holes in the porch screen door. The better shape your home is in, the more a home buyer will pay for it.

Meet the Millennium Team

Come see The Millennium Team at Valley Pride at the CBS Studios , 402 Radford, Studio City California, on Sunday October 9th from 11 AM till 6 PM. We will have team magnets to give away as well as USC, UCLA football schedule magnets. We will also be giving away a Burke Williams Spa treatment. We look forward to meeting you all and helping you with all your real estate needs! www.TheMillenniumTeam.com Anthony@TheMillenniumTeam.com (310) 461-1252