Advice About Negotiations and Home Inspections

Thursday, February 25, 2010
A home inspection is helpful whether 
you are selling a home or buying a home.
Any offer you get to buy your home on the market needs to be taken seriously.

As a seller, you should always counter an offer. There's a couple of reasons why this makes sense.

Reason One

The more times papers get passed back and forth, the more emotionally invested the buyer becomes to the offer going through. People will be arranging furniture in their heads, and planning their housewarming with best friends and family.

Reason Two

Not many buyers will open with their top bid. We didn’t.     

The good news is that our offer was accepted. The owner did not even counter-offer. That fact is fascinating to me. It makes me wonder if we could have bought it for less. Well, can’t get greedy, now, can we?

My head is swimming with possibilities for this unit. My challenge will be to keep it under budget. However, for me, frugality is like an Olympic sport. It takes punishing practice and constant dedication, but I’m up for it!

Official Inspection or Not? 

Home inspectors are trained and licensed
so you know there are standards that
are understood by the real estate industry.
We decided not to have a home inspection, even though we usually do. One reason is that both Mr. Carpenter and Mr. Lucky did a thorough examination of the property. The other reason is that the unit is part of a condominium that is well managed.

However, a home inspection is valuable, especially if you are buying a home without knowledgeable advisers, or without much homeowner experience yourself. When buying a home, you can’t count on the seller or the Realtor to educate you about every square inch. Even new homes can have surprises, especially when a builder tries to cut corners to increase profits.

When selling a home, it can be worth the money to hire a home inspector so there are no surprises once you’re under contract. A home inspection will tell you what repairs ought to be made to keep a buyer and his financing people happy.

A home inspection report that shines a favorable light on your property can become part of the selling package that you or your realtor can show prospective buyers.

Taking Risks vs Taking Chances

Not having an official inspection when buying can be risky. Most Realtors suggest it, and some insist on it.

Any real estate investment is a risk. The difference between taking a risk and taking a chance is information. We chose to reduce the risk factor here by learning as much as we can about the property and having an experienced builder do a thorough study of the building, the electrical system, the roof, water heater, appliances, foundation, attic space, moisture content of walls and ceiling, heating and cooling systems, and plumbing.

Our closing is set for March 11. We have two weeks before the big push. I call it that because we need to get in and get out in four weeks, a self-imposed deadline. We set a deadline not just to make it more interesting (Ha!) but to keep costs low. The faster it sells, the lower our carrying costs are.

Are you selling a home? Do you want advice on repairs, cleaning, and staging it? Then download my eBook, DIY Home Staging Tips to Sell Your Home Fast and For Top Dollar. I give you a money-back guarantee, so there are only benefits to be gained at no risk!

We're Wearing Down Our Pencils

Monday, February 22, 2010
Frugal home staging can mean hours with your calculator.
When you’re buying or selling a home, you’re talking big numbers. That’s why doing the homework is important. 

Our homework over the weekend was collecting prices, a.k.a. walking the aisles at Lowes with pad and pencil. We’ve tweaked and crunched and reverse engineered all the figures to see if we can make money, and everything points to a yes. 

As excited as I am about the possibility of beginning a new rehab and staging project, I
have to act fairly cool about the possible purchase because I don't want Mr. Lucky to think I'm not being totally realistic, businesslike, calculating, unattached. If he suspects I’m too emotional about the purchase, it'll just make him be more cool headed and reluctant. You know, to balance me.

Do other couples play this game?

I'm really hoping we can put it together because it's totally win/win: getting to do what we enjoy, and make money, too!

Finally, we submitted the offer. We’re waiting.

I’ve collected all our pages of calculations and price projections and put them in a loose-leaf binder in a section marked “Budget and Estimates.” I’ve added sections for “Measurements and Specifications,” and for “Staging.” 

I’m trying hard not to get ahead of myself because we don’t have a deal, but I can’t help envisioning that cute little 1270-square foot condo set right and dressed up for buyers. 

I’ll be disappointed if all parties can’t agree on a price that will work for us.  We took the price Ms. Speedy thought we could get after we described what we wanted to do, then deducted all our projected costs and what we’d like to earn, to arrive at our offering price. Fingers crossed.

Considerations on Bying a Fixer-Upper

Friday, February 19, 2010
Shrubs were overgrown and the deck needed help.
We're looking at a condo and considering flipping it.We've done this enough to know what to consider going into the deal. We know that buying right is key to making money in real estate.

And staging right!

Home staging and DIY go hand in hand, but anyone doing home repairs should know that there are times you need to bring in professionals to make the workmanship look...well, professional.

When to Say When

Smart rehabbers, investors, renters and homeowners recognize the times when doing it themselves is shortsighted, when repairs and improvements are beyond their skill set.

Besides needing the skills to do a job that will actually improve the value of a property, a person needs the right tools, sufficient time, a certain amount of patience, and maybe an extra pair of hands.

Since Mr. Lucky and I have worked alongside experienced tradespeople like masons, drywall guys, trim carpenters, cabinetmakers, flooring and carpet installers, and landscapers, we know that experience makes a big difference.

When time is of the essence, and it usually is when dealing with real estate buying and selling, investors need to calculate the cost of doing it themselves to "save money," because in the end, it may be more expensive than paying someone else. This property needs to be on the market for springtime buying season. We wouldn't have time for futzing around and do-overs.

The condo's living room had new carpet, but the walls were dinged, and the room felt small.
We have a friend I'll call Mr. Carpenter. He is our go-to tradesperson and a genius one at that!

He has saved us serious chunks of money when we worked with him on three previous houses. What’s valuable is that he comes up with creative solutions to thorny problems. Years ago he put himself through college doing carpentry and has been part of the construction industry ever since. I don’t know his age, but I know he’s almost eligible for Medicare, so figure it out.

That’s the kind of guy you want on board with a project like this.

 Light fixtures that didn't really illuminate, and popcorn ceilings were problems.

What Needs Fixing

These are some of the things that Mr. Carpenter's creativity can solve when we tackle this house makeover. :
  • He could make new oversized cabinet doors to make the kitchen more attractive, and install a new countertop. 
  • He could bump the vanities three inches up to make them look more contemporary, and then give them new countertops, sinks, faucets, and lights.
  • He could replace the range hood with a microwave and exhaust fan combination.
    He gave us a price for all these things that fit nicely into our penciled sheets.

    The baths were typical for a 1980's condo -- wallpaper, vinyl, brass, and wooden seats.

    Save Money, Buddy Up

    To keep costs low, Mr. Lucky would work alongside Mr. Carpenter. And we’d do all the grunt work ourselves – removing wallpaper, patching walls, installing lights, pressure washing the deck and walkways, and clean, clean, clean.

    Of course, we’re painters, so everything would get a coat or two of fresh paint – ceilings, walls, closets, cabinets, doors, trim. We’d buy a new stove, install new posts on the deck, and clean up the landscape.
    The rooms aren't large. That won't change. The colors are wrong. That can be changed.
    Bedroom number two, painted an even worse color. Should we worry about small windows?
    One room had a high ceiling, and a ledge I could use for staging.
    Kitchen appliances, cabinets and countertop were dated and showing wear and tear.
    Since this room overlooks the water, I would stage it as a dining area.
    We don't know whether the deck is salvageable with just pressure washing and paint.

    The Plan
    Of course, we'll then stage the property to maximize its value. We would not even consider trying to sell a home without staging it to accentuate all that's good about it, and minimize its shortcomings. In this home, the best feature is location -- waterfront. The downside is that it is small and nondescript. There are no architectural details of interest, no spacious rooms, no high-quality touches.

    So, my challenge would be to make rooms look larger, more interesting, more luxurious, and to showcase the water. I love tackling a project like this!

    We’re almost ready to make an offer, but we want to double check all our figures and scratch our heads some more. Are we missing anything?

    If you are considering making changes to a property and you want to know where to spend money for the best return on your time, talents and cash, ready my eBook, DIY Home Staging Tips to Sell Your Home Fast and For Top Dollar. I'll show you what home buyers look for when they shop.

    Should We Buy This Home?

    Monday, February 15, 2010
    Outside, the condo doesn't look bad.

    Inside, it was another story. Drab, cheap, outdated! 

    Cast of Characters

    I paint houses for a living. My husband and I have bought and sold investment properties. We recently moved to the North Carolina coast after selling our home in the  North Carolina mountains.

    Today a local Realtor friend called to ask if we wanted to look at a nearby property. Technically, we are not in the market for an investment property, but she knows that we have flipped a couple of problem houses, so she thought of us.

    A good Realtor is inventive like that. In this blog, I’ll be discussing what makes a good realtor. Finding one is a major step on the path between deciding to sell and leaving the closing table with money. But I won’t ignore readers who are F.S.B.O.        

    We went immediately to her office. When you’re working with Ms. Speedy, things happen fast. I call her Ms. Speedy because she is. Quick thinking and quick-acting. I guess I could have called her Alka Seltzer.    

    The Property in Question

    The property is a vacant waterfront condo that’s been on the market for two years. Ms. Speedy told us that for the first year the house smelled so bad real estate agents would not even enter the place to show it.  Finally, the owner was convinced to spend some money to replace carpeting and vinyl. That got rid of the doggy smell. But agents still aren’t bringing buyers.

    The question we are now asking ourselves is, can some serious cosmetics and some simple staging turn an ordinary two-bedroom, two-bath condo into money. Its amenities are the deeded boat slip just steps away from the back door, a water view, a great neighborhood, reasonable homeowner association fees, close-by shopping, restaurants and other services, and no exterior maintenance.   

    One great thing about Ms. Speedy is that she has been a real estate investor herself and she knows what it takes to fix and sell a house for a profit.  We tossed around ideas about what needed to be done to make the property attractive to buyers.  It’s a long list, so we went home to mull it over.   

    The Questions We Need Answers To

    At home, my husband, aka Mr. Lucky, and I speculated about all the what-ifs. We looked at the photos I took and asked ourselves what it would take to make the kitchen look more upscale. 
    • What could we do with the baths to upgrade them on a shoestring? 
    • Is there room for improvement of the deck?
    • What about that popcorn ceiling and the drywall tape that’s coming loose around the ceiling edges?
    • The fogged-up patio doors?
    • The outdated lighting fixtures?
    • The puny landscaping?
    • The wallpaper?!

    We spent the rest of the day penciling in prices on sheet after sheet of lined notebook paper.  Asking price. Selling price. Fix-up costs. Realtor’s commission. Carrying costs. Profit. It’s the fix-up total that holds the key to whether it’s doable. 

    We called a friend, I’ll all him Mr. Carpenter because he is one, and more than that, and asked if he would come and help us ballpark fix-up costs. We’re meeting him tomorrow.

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