Articles for Buyers
You are here: Home / Archives for Articles for Buyers

Buyers Due Diligence

June 17, 2011 By

Buyers Due Diligence in Real Estate

Be A Detective

Be A Detective

What exactly is due diligence? In simple terms it is the investigation of a property that is performed by a buyer in order to determine whether or not they want complete the contract.

In North Carolina, the Offer to Purchase a property has changed dramatically in the last year, and more emphasis is now being placed on the buyer to perform Due Diligence on the property prior to finalizing the offer. They are given a specific time period in order to investigate the home, with the use of Home Inspectors or Engineers, perform radon testing, and basically leave no stone unturned. By the end of this investigatory period, the buyer should be aware of any issues and let the sellers know if the sale will continue.

This is a great change in my opinion. It places more emphasis on the buyer to become more active and involved in the purchasing process, and to learn more about the home they are wanting to buy. How well you investigate prior to purchasing, will determine how many surprises you will later run into in regard to repairs.

If you hire an inspector and then attend the inspection (which I highly recommend to every buyer when at all possible), the more you learn first hand what is going on with the home. Seeing and getting first hand explanations is much more effective than getting an email with pictures.

There are other things that are not covered by an inspector. If a well or septic is involved, there must be an inspection of these as well. Due diligence requires a trip to the Henderson County Health Department to see if there is a copy of the permit for a septic. And a trip to the city for a copy of the well permit will be needed as well. Both of these permits come with a overhead map of the property (hand drawn by the inspector) with measurements specifying where these wells or septics are located in relation to the border of the properties and the house. These can be very helpful to have when the well or septic person comes.

Good Well or Bad?

Good Well or Bad?

For a well, you will want to get a sample of the water and have it tested. For a septic you will want to have it emptied and cleaned to check for cracks or other issues. You will want to have the septic inspector verify that the tank is the correct size for the house. Ask your Realtor about other septic issues. There are many.

Due diligence requires a lot of leg work, but if executed properly, issues can be avoided down the road. Major issues can get you out of the contract with minimal damages to your wallet. And finding issues before signing on the dotted line can get you some assistance in repairs from the seller prior to closing.

Talk to your Buyers Agent if you have more questions about what is involved in the Due Diligence process, or you would like a copy of the new North Carolina Offer To Purchase forms.

 

Share
Filed Under: Articles for Buyers, Real Estate Terminology Tagged With: , , ,

Home Owners Insurance

February 28, 2011 By Leave a Comment
Bent Tree Condominiums

Bent Tree Condominiums

I read an interesting article in a newsletter I get from AAA, A Quick Guide To Home Owners Insurance. I thought I would share some good points with you.

It started off saying that the most important thing to know was what your policy did and did not cover. I know when I went in for my policy, there were so many points that I started to glaze over the first time. Just let me sign the paperwork and get out of here! is what was going through my head. But after insuring cars and homes over the years I have gotten better at asking questions and trying to understand it all.

Most insurance will cover basics, like damage from fires, tornado’s and theft. But you would be hard pressed to find one that automatically covered any damage from flooding, hurricanes and earthquakes, acts of terrorism or nuclear meltdowns. Most homeowners are shocked after an event like this, to find they have no coverage. Know the details of what is NOT covered as well as what IS.


Some of the basics of home owners insurance:

You need to get enough insurance to cover building your home back from scratch. Always get ‘replacement value’ rather than ‘actual cash value’.

Keep an inventory of possessions, and get a rider for expensive items like furs, jewelry or antiques. This is a smaller fee than you may realize.

Check your ‘loss of use provisions’, so that you have a time frame for how long they will pay for you to rent while out of your home.

Other things that are not generally covered would be:

*Damage from poor maintenance or neglect. Always keep your home well maintained.

*Sewer back ups and mold.

*Damage caused by pests such as termites, birds or rodents, or pets.

*Home office equipment.

Consider taking some protective steps. You can document valuables and store the documentation in a different place, along with important paperwork. A banks safety deposit box is perfect.

 

Review your policies often

Review your policies often

Review your policy annually to see if it still fits your needs. You may have to up your coverage, or lower it, as time moves forward. But most of all, understand what your policy does and does not cover.

While on the topic of insurance, if you have a loan on a home and are married, you may want to make sure you have a life insurance policy that will cover the amount of the loan. If your family depends on two incomes to cover expenses, the one left behind may be in danger of loosing the home due to an inability to cover the mortgage. If you already have a life insurance policy, review it annually to make sure that you have enough to cover the payoff of the mortgage, at the minimum.

Share
Filed Under: Articles for Buyers, Articles for Sellers, Home Owners Insurance Tagged With: , ,

Condominium or Town Home?

January 16, 2011 By Leave a Comment

Condominium or Town Home? What is the difference?

 

Bent Tree Condominiums

Bent Tree Condominiums

Condominiums are defined in North Carolina as “The absolute ownership of a unit in a multi-unit building based on a legal description of airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.” What that transfers to is that you are buying the air space within the walls of the unit, and will also have shared ownership in the public spaces, such as hallways and other outside structures, parking lots, roads, signage and other common areas.

There is typically either a monthly, quarterly or yearly fee that is collected by a Home Owners  Association for repairs and upkeep of any of those common areas. These will vary according to the size of the development and what kind of amenities may be offered.

Hendersonville has many Condominium Communities located in all areas of the county. Prices and communities vary considerably. When looking for a unit, be sure to take into account the Association fees, location and amenities. Some people really want the pool and tennis courts, but then after moving in never use them. Be realistic, because you will pay higher fees.

Always ask for the Association By-Laws and read them carefully. You must abide by all rules set forth in these By-Laws. Know what you are getting into prior to making an offer.

Live Maintenance Free in a Town Home
Live Maintenance Free in a Town Home

Town Homes in North Carolina are typically a group of two to three story units that are horizontally connected to each other, sharing party walls. The fundamental difference between the Condominium and the Town Home is that the Town Home does own land on which the unit is built.

Town Homes typically have Home Owners Association Fees to cover the cost of maintaining the common areas and amenities. The can be collected on a monthly, quarterly or yearly time frame, and are then used as necessary to perform the needed repairs. These fees will vary, depending on what these the communities offer.

You will need to obtain a copy of the Community By-Laws to read about the rules for the community. Most Town Home Communities will have these and you must read and understand them prior to signing any offer.

Contact your Realtor for more information on the differences of Townhomes and Condominiums.


Share
Filed Under: Articles for Buyers Tagged With: ,

Equity in your home

January 1, 2011 By Leave a Comment

Equity

Equity

This is the beginning of a series on Real Estate Terminology. I think it is important that every buyer and seller have a good understanding of Real Estate Terminology on their journey though the process of buying or selling a home.

Today I wanted to start with Equity, a term everyone needs to understand.

Equity: The value of your home after the outstanding balance of any loans are subtracted. If you make a 5 percent down payment, you have 5 percent of the price of your home in equity. As you make payments toward principal over time, the equity in your home grows.

Simply stated, the way you determine the value of the equity in your home is to subtract what you still owe from what you originally borrowed. Although, over time, your equity can grow faster than what you are paying down. How can that be? Let’s crunch some numbers:

Let’s say you buy a home for $200,000. You put down $40,000. Your equity is currently $40,000. You make payments for about two years on the $160,000, and then you owe around $155,000. Your new equity is now $45,000. But let’s say that you bought this home right before the big real estate boom. After a few years, you get a new appraisal. Low and behold, the new value of your home is now $225,000 instead of the price you paid of $200,000. Now you have equity of $65,000 instead of $45,000.

This Equity thing is very important, in good times and bad. Let us say that you bought this home in the middle of the real estate crisis. Under the same scenario, when you go to appraise the value of the home, it may now be worth only $180,000 instead of $200,000. What is your equity now? It would only be $25,000. There are many variables to equity. You need to understand, not only what it is, but how it can change over time. Right now we are experiencing a lot of Lost Equity in homes all over the country.

How can equity be used?

Equity

Equity

Years ago, the way our parents and grandparents used equity was to save and pay off the home quickly to be out of debt. This gave them more wealth, as their income was staying in their pockets for other purchases, keeping them out of more debt. They were able to pay more for items with cash, rather than continuing to borrow.

Another way that people used equity was to buy a home with a modest down payment, and live in the home for about 5-7 years. They would hope that the value in the home would grow, and in most cases it did. Then they were able to sell the home for slightly more than what they bought it for. With what they had used for a down payment on the previous home, as well the the growth in value, they would then take this money and reinvest it in a slightly better home. They might do this three or four times in order to get into a home to retire into. The larger the down payment, the quicker you can pay off a home and live without a mortgage.

In more recent times, people have been using their homes as a bank. They put as little as they could down on their homes, or they borrowed against their homes equity, tapping out any equity if they needed to sell at any point. Here is another definition you should know.

Would you like to know another way to build Equity? If you are handy and can do a lot of work on a home, you may be better off getting a home that has some work to be competed. You save on the price of the home and then do the work yourself, saving hundreds to thousands. Maybe a home just needs a little cleaning and painting. Or simple cosmetic work. If you are feeling confident in your abilities, this may be a good route. This kind of work is called Sweat Equity, and is used in Habitat Homes, to keep the cost of the homes down. If this is a route that interests you, be sure that you can really do the work that needs to be done. Living under construction can be disruptive for couples if the other person isn’t handy and the work doesn’t get done. Know your limitations and be realistic.

Equity

Equity

Cash-Out Refinance:

A refinance transaction in which the new loan amount exceeds the total of the principal balance, or money still owed. It may include the original borrowing price, minus payments of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan.

The excess money is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity. 

In good times, and with a very stable job, this ‘cash out’ can become a life saver. It can also be used to upgrade the home in order to bring more value, thus growing the equity back into the home.

But this option must be used very carefully. Always talk to an appraiser prior to any work being done, to see if it will really bring any value.

Unfortunately, too many people did this and gave up all equity. This behaviour, in part, has helped push the economy further into trouble, because now, people are loosing their homes to over extending, borrowing more on their homes than the values can keep up with.

To sum up Equity, I would say that having it is a good thing, in any economy. It should be a part of anyones long term financial goals, and it should be used carefully over time.

I do hope that this post assists you in a better understanding of Equity. Contact your Realtor or Banker for more information on Equity.

Share
Filed Under: Articles for Buyers, Articles for Sellers, Equity, Real Estate Terminology Tagged With: , , ,

Are you looking at the Hendersonville NC area for a move?

December 9, 2010 By Leave a Comment

 

Welcome to Hendersonville NC 28792

Welcome to Hendersonville NC 28792

Are you looking at the Hendersonville NC area for a move? If you are wanting to spend some time in the Hendersonville area and want to plan ahead, check out the Hendersonville NC Visitor’s Center Website.

On this site you find a helpful calendar of events, places to stay, the best places to eat, and information about the area. Check it out and see everything our Mountain Community has to offer.

Share
Filed Under: Articles for Buyers, Hendersonville NC Relocation Tagged With: , ,

The Clouds Have Lifted-Finally!

December 6, 2010 By Leave a Comment
2010 Flooding

2010 Flooding

The Clouds Have lifted-Finally! We have had a dark and gloomy week here in the mountains of Western North Carolina, and one with so much rain we experienced substantial flooding for a few days. This morning is sunny and bright, but I am still seeing water standing in places where water does not belong, days after the rain stopped.

When it rains in the mountains, it really rains. It comes down in torrents, it is relentless, in that it continues for 24 to 48 hours, non-stop. Sure we have the nice light rains, and the steady little rains as well, but at least a few times a year we have relentless rains that cause flooding, and always, stories about homes sliding down mountain side, or being pushed down stream from flash flooding.

This years storm was no different. We had road closings, making navigation in some areas difficult. We had soggy yards. And we had reports of homes coming down. This year a small home along a creek, just south west of downtown Hendersonville, was pushed from it’s foundation and broken apart, from a flash flood in a nearby creek.

2010 Flooding
2010 Flooding

This is certainly not an article to bring fear to those anticipating a move to the area. Rather it is a cautionary note warning of the dangers of mountain living. Often, people come to this area looking for that dream home, one with a long range view and a bubbling brook. One must understand that both of these can be a pleasure and a nightmare. So, if we do your research, and I mean both the buyer and the buyers agent as the Realtor, these things can be a plus and not the future nightmare.

A long range view almost always comes with a very bad private road. But they don’t have to be that way. Being in a developed neighborhood can be a better choice, with well maintained roads put together by real engineers. And choosing a home that sits properly on the lay of the land can substantially help to avoid watching your home (and possibly you with it) slide down a mountainside. And always be realistic in choosing a home with that stream. Where is it in relation to the home you are looking at? This is crucial.

Buying a home anywhere has it’s risks. As a buyer you just have to know what those risks are, and how to avoid them. Make living in the mountains a pleasure, not a nightmare. Do your homework, and get a Realtor that understands the potential for nightmares, as well as the pleasures of choosing a home in the area you are looking to buy. When a Realtor says, this looks risky, listen. That way, your move to our great Mountain Community will be one of pleasure and not horror. With the right choices, you too can live in this great community and enjoy all of those wants and needs you are looking for in a home.

Share
Filed Under: Articles for Buyers Tagged With: ,

HOW TO CARE FOR YOUR SEPTIC TANK AND SEPTIC SYSTEM

October 29, 2010 By Leave a Comment

I found this great article from the Henderson County e-Newsletter  for November

that I received today, and I thought I would share it with you:

HOW TO CARE FOR YOUR SEPTIC TANK AND SEPTIC SYSTEM

by Scott Foster, Environmental Health Specialist

If you live in a rural area, you probably have a septic system

instead of a sewer connection. Taking care of your septic system

isn’t difficult because modern systems function efficiently when

you follow a few basic guidelines. Put these tips to use for a clean

trouble‐free septic system.

Divert Rainwater from the Septic Drain Field

‐ A soggy drain field won’t absorb and neutralize liquid waste.

Plan landscaping, roof gutters and foundation drains so that excess

water is diverted away from and now across the septic drain field.

Don’t Overload the Septic Tank and Drain Field

‐ Routinely check faucets and toilets for leaks; make repairs if

necessary.

‐ Use aerators on faucets and flow reducer nozzles on showers to

help lower water consumption

‐ Reduce water levels for small loads of laundry.

‐ Wait until the dishwasher is full to run it.

‐ Use a displacer to reduce the amount of water needed to flush

the toilet.

‐ Replace toilets and washers with low flow (low water use)

models.

Keep Trees Away from the Septic System

‐ Discourage root damage by keeping trees at least 100 feet

away from the septic system.

‐ Trees with very aggressive roots, such as willows, should be

even father away from the system.

The Toilet Isn’t a Garbage Disposal

‐ Never flush cat litter, disposable diapers, sanitary napkins,

tampons, paper towels, facial tissues, coffee grounds, or cigarette

butts and filters. They’ll clog your septic tank in less time than you

might imagine.

Minimize Heavy Duty Cleaners

‐ Overuse of heavy cleaners kills beneficial bacteria in the septic

tank, so solids won’t break down as well.

Do Not Pour Grease Down the Drain

‐ Grease can clog the septic drain field, making it impossible for

soil to absorb liquids.

Avoid Hazardous Chemicals

‐ Varnish, paint thinners, motor oils, gasoline and other similar

chemicals can ruin your system and are a hazard to groundwater.

Dispose of them properly.

Protect the System from Damage

‐ Do not drive over the drain field; build a structure on top of it,

or cover it with concrete or asphalt.

‐ Do plant grass on the drain field to minimize soil erosion.

Perform Regular Maintenance

‐ Solids must eventually be pumped from the tank. Many experts

advise a family of four with a 1,000 gallon septic tank to have the

tank pumped after 3‐5 years of full time use. Other experts say you

can go much longer between pumping operations.

Share
Filed Under: Articles for Buyers, Articles for Sellers, Henderson County Septics and Wells Tagged With: , , ,

Protecting your credit

October 12, 2010 By Leave a Comment

Protecting your credit

Protect your credit

Protect your credit

I was talking to an elder friend of mine the other day, and he started telling me about a friend of his who was a banker. This banker friend gave him a lot of sage advise over the years. One of the best quotes he ever got from Mr. Banker was this: Your credit is the biggest asset of your life. Protect it as if it were life or death. And befriend your banker, always! Over the years this elder friend of mine took this advise very seriously and as a result he told me of all of the benefits this advise gave him.

During hard times, my elder friend was able to call Mr. Banker and get money transferred into his account to cover the emergencies that came up, just on his signature. When he was selling a home a few years back in order to buy another one, and he was going to pay cash for the new home with the proceeds from the house he was selling. When the buyer of his current home was admitted to the hospital on an emergency, and they were afraid of losing the new home, he was able to get the money for the second home until the first one closed. That is the kind of thing protecting your credit will afford you in times of emergencies.

Emergencies!
Emergencies!

Today it is even more important to protect your credit. Even before you buy a home, you are judged on your credit. Things like applying for a job, or moving to a rental home are dependent on your credit today. You may lose that great job based on your credit score even if everything else is perfect. Renting a home can be very tough because most nice rentals come with criminal background and credit checks. Nobody wants to live next to a criminal, and nobody rents to someone that doesn’t pay their bills. The interest rate you are charged for a car loan or a credit card will be effected by your credit score. And did you know that even your rates for car and home insurance are effected by your credit score? Today it is more important than ever to protect your credit as if it were life or death. It seems like everything you touch is related to your credit score.

If you are in the dark about your credit, here are a few things that you can do in order to keep your credit in tip top shape.

Always pay your bills on time. This is very important. Each time you are late it will be reported to all three credit agencies. Each late report will cost you points.

Never allow your credit card charges to exceed 40% of your allowable balance per card, and pay them off as quickly as possible.

Never, ever sign for a loan or credit of any kind, for someone else. Not even your closest friend or family member. They can take you down with them, and their credit can become linked with yours. If they need a co-signer, then they are asking you to share in their credit, and it will lower your scores. Now you will be effected by them and may need a co-signer of your own. This goes both ways. Never ask someone to co-sign for you if your credit is compromised. It will effect their credit as well, and can harm them. Keep in mind the old adage: No good deed goes unpunished. This applies here.

Keep an eye on your credit regularly.  There are three agencies: Experian Transunion and Equifax . Each has a unique scoring system, and you will want to know what each has to say about you. You are able to get a free copy of your credit history once a year. The only place that the government recommends is:  www.annualcreditreport.com

Go there and sign in. You will want to pull all three of the credit bureaus. Be sure and fill your printer with lots of paper and print out all three of them. You will go through each one at a time. You must complete the printing process before going on to the next one. If you do not do this, you will have to pay to get back in. (Remember it is free once a year!) For free you will get your complete history, with all of the bills you have, and how your have been paying them. What you want to look for is the section for adverse history. You will want to do what you can to get any of those items off of your report, if possible.

Each will ask you if you want your credit score. It is well worth the price to get each of them to give you an idea for where you are from year to year. I believe they were all under $10 per score. Score range from 0 to 850. In order to get a home with the best rates you need to be above 725. You can still get a home with higher interest rates, as low as 540, but you will pay much more. The goal is to be at the 725 or higher score always.

I can’t recall which one it is, but one of them will also ask you if you want a reminder for the next year. Click yes! This way you will remember to check every year at the same time for free. Always compare the reports from year to year to see how you are doing.

If you have any items listed that you believe are mistakes, be sure and check with all three agencies right away. These items can take a while to clear up and so you need to start work on them immediately.

Thinking about buying a home?

Thinking about buying a home?

If you are in the market for a new car or a new home, or if you just want to get a new credit card, you will want to be prepared ahead of time and make sure that there are no surprises before you sit down in front of anyone. This is the best way to do so.

If you want to protect yourself from fraud, or identity theft, set up a fraud alert with the credit bureau. You may want to do this on a regular basis. Just be sure that you fully understand what you are signing up for before setting it in place.

You can set up a credit freeze on your account through each of the three credit bureaus so that nobody can access your credit account without a pin, even if they know your social security number and birthdate. You will also need to fully understand what the rules are for this, but it will keep your account from being accessed by any unauthorized persons.

You can also sign up for a company that will monitor it for you, something like Lifelock or IdentityGuard. I am sure that there are other companies out there as well. For a fee they will contact you any time that your credit is looked at, or any time anything is reported, good or bad.

If you take the advise of Mr. Banker from my friend, you too will have the advantages that my friend had throughout his life. Remember, your credit is the most valuable asset you have. And get to know your banker.

Share
Filed Under: Articles for Buyers Tagged With: , ,

Considering a move to Hendersonville?

July 17, 2010 By Leave a Comment

 

Hendersonville NC

Hendersonville NC

If you are considering a move to Hendersonville, NC and will be looking for a job, or if you want to check out the job situation prior to making a move, here are some helpful links to get you started.

If you are seeking a temporary job before accepting the job that is right for you, here is a link, listing agencies that can get you started. You will find the name and phone number for each of them.

If you want to connect with the North Carolina Employment Security Commission, you can create an account and begin a search in just minutes. It is easy.

Blue Ridge Community College Job Links Office
Blue Ridge Community College Job Links Office

We have a fantastic Career Placement Center at the Blue Ridge Community College Job Links Office. To me this is where you get the most bang for your time. They offer all kinds of workshops, like resume building and interview skills, and they will assist you in offering you the best places to look for the jobs you are interested in. And all of their services are free, the best kind.

You can also check http://Indeed.com and enter the zip you are looking for, or the town and it has several categories to allow you to narrow down the search.

Pardee Urgent Care
Pardee Urgent Care

If you are in the medical profession and are looking for some place new to work, this is a great place. We have two hospitals here and both have online human resources offices. Pardee Hospital is located just blocks from Downtown Hendersonville. Park Ridge Hospital is located north of Downtown Hendersonville in Fletcher NC. Both are large and have a good choice of job options.

If you are looking for security prior to relocation, these sites should get you where you want to be.


Share
Filed Under: Articles for Buyers, Hendersonville NC Relocation Tagged With: ,

What Buyers need to know about Home Inspections in NC

July 14, 2010 By Leave a Comment

What is Involved in Home Inspections For buyers

As a buyer, you may be asking yourself whether you really need to spend the money for a Home Inspection. I would have to say that there is no Home Buyer that can afford not to have a home inspected by a qualified Home Inspector. Here is what they do:

In North Carolina, Home Inspectors are licensed through the State, and are usually members of the  National Association of Certified Home Inspectors. You will receive a report with the following items as a check list in order to allow you the important information you need to continue with the purchase of a home.

Structural elements include construction of walls, ceilings, floors, roof and foundation.
The inspector will crawl under the homes foundation, or inspect the basement for leaks in the walls, sagging in any supports, water sitting under the home, and more. The floors will be checked for structural soundness, especially around water pipes exiting the living space. The roof framing, ventilation, type of roof construction, flashing and gutters will be inspected to make sure everything is working properly. It does not include a guarantee of roof condition.

Exterior Evaluation Will include things such as all covering, landscaping, grading, elevation, drainage, driveways, fences, sidewalks, fascia, trim, doors, windows, lights and exterior receptacles. Keep in mind that here in North Carolina, the grade of a road or driveway, and it’s condition, are both very important. We have some steep roads here and they must be maintained well.

Plumbing They will identify pipe materials used for potable, drain, waste and vent pipes, including the condition. Toilets, showers, sinks, faucets and traps are inspected for leaks or drips. It does not include a sewer inspection. You must get a separate septic inspection from a certified Septic Inspector if needed. Air Conditioners

Systems and Components This will include water heaters, furnaces, air conditioning, duct work, chimney, fireplace and sprinklers. An inspector will typically run all systems while there to insure they are working properly.

Electrical Main panels and circuit breakers, types of wiring, grounding, exhaust fans, receptacles, ceiling fans and light fixtures will all be inspected.

Appliances Dishwasher, range and oven, built-in microwaves, garbage disposal, and even smoke detectors will be inspected.
Garages The slab, walls, ceiling, vents, entry, firewall, garage door, openers, lights, receptacles, exterior, windows and roof will all be inspected.

Home Inspection Checklist Items Needing Service
Home inspection reports do not describe the condition of every component if it’s in excellent shape, but should note every item that is defective or needing service. The serious problems can include: Health and safety issues, Roofs with a short life expectancy, Furnace / A/C malfunctions, Foundation deficiencies, Moisture / drainage issues.
If at all possible, everyone involved in the purchase of a home should be present for the inspection. You are paying for it and you need to understand all of the report from the person who is doing the inspection. They can physically show you what items are an issue.
You will receive a detailed report, which will included photographs of all of the items the inspector states are problems. But if you are not present at the inspection, you may not be able to find the items they are talking about. So being present gives you a better idea of what is going on.

Items that should be fixed:

As a buyer, you have a choice as to what you think are the most important items to fix. Large items like a furnace or roof issue should be addressed as soon as possible after the inspection. You can submit a repair request to the sellers and ask them to repair the items prior to closing. They have the option of saying yes or no. Be sure to talk with your  agent in order to understand what is a reasonable request and what can effect the purchase of your home.
You can call around a get estimates for repair of any items on the inspectors list. This will give you a better idea of whether you will want to repair the items after moving in, or have the sellers do them.
Keep in mind that an inspection only reports what is visible to the inspector. They cannot uncover walls and see inside. But they can detect issues that are visible.

I would recommend that all buyers, whether a first time buyer, or a seasoned on, should get a full report from a Qualified  Home Inspector prior to buying a home. There are things they can see that you may not. It is worth the peace a of mind and well being to know what you are getting into.

Share
Filed Under: Articles for Buyers Tagged With: , , ,

What Every Buyer Needs to Know About Radon

July 14, 2010 By Leave a Comment

What Every Buyer Needs to Know About Radon

Radon is a gaseous element that results from the disintegration of minerals in the ground. It occurs naturally, but can be more intense in different areas, even in neighborhoods, or house to house. It is radioactive, and is odorless, colorless and tasteless.

Radon comes into a home through a basement or foundation, seeping through floor joists, or cracks in the floor, cracks in the walls, and gaps around service pipes.

In Western North Carolina we have a higher than normal rate of radon in homes. Henderson and Buncombe Counties are definitely in the red zone (EPA map to the is here).

Radon Map

With Radon being the number two cause of lung cancer, I would advise any home buyer get the test done as part of a Home Inspection. If levels are low, you can move forward. But if testing is high, you will definitely want to get it fixed prior to moving in.

Most Home Inspectors are either qualified to perform a radon test, of work with someone who is. The cost is usually well below $100, so it is definitely worth the money. Testing should show levels below 4.0 piC/l. Anything below is fine. Anything higher should be addressed.

The fix for Radon is not that bad. The cost is around $1500. It involves venting the crawl space or basement through any number of systems. Correction is called mitigation, and you will want to look into mitigation systems

You can research systems for a better understanding of how they work. But basically, they work by pulling air from under the house, and releasing it out through a vent that is a bit higher than the peak in the roof of the house. If the home is a slab or has a basement with a cement floor, a hole may need to be drilled into the cement floor in order to pull air trapped below the home up into the vent. The best way to go is to hire a qualified Mitigation Installer to put the system in. They will install a system that meets the specific needs of the home you are buying, and it will have to be an EPA approved system. And it usually can be put in withing a few days.

If you are the buyer, you may want to negotiate the system be paid in full or in part by the sellers. But you really should have the system completed prior to moving in.

Share
Filed Under: Articles for Buyers Tagged With: , , ,

Is your IRA in the toilet? Check out Self Directed IRA’s

July 13, 2010 By Leave a Comment

Self Directed IRA’S

IRA in the Toilet?

Is your IRA in the toilet? Have you ever wondered if there was a safe place for all that IRA money? Someplace you can plant it that wouldn’t cost you in penalties when removed from a dying IRA Account before you retire? Someplace safe that won’t lose a dime?

I have the answer for you. And it is not a gimmick. It is being done all over the country by savvy investors.

In one easy move you can transfer your money to a Self Directed IRA. What does this mean? It is still a retirement plan. The big difference is that instead of someone else investing where they think your money should go, you direct them to place it where you want it to go.

From Wikipedia:  A Self-Directed Individual Retirement Account is an IRA that requires the account owner to make investment decisions and investments on behalf of the retirement plan. IRS regulations require that either a qualified trustee, or custodian hold the IRA assets on behalf of the IRA owner. Generally the trustee/custodian will maintain the assets and all transaction and other records pertaining to them, file required IRS reports, issue client statements, assist in helping clients understand the rules and regulations pertaining to certain prohibited transactions, and perform other administrative duties on behalf of the Self-directed IRA owner for the life of the IRA account. Self-directed IRA accounts are typically not limited to a select group of asset types (e.g., stocks, bonds, and mutual funds), and most truly self-directed IRA custodians will permit their clients to engage in investments in most, if not all, of the IRS permitted investment types (an almost unlimited array of possibilities including foreign real estate). Some of the additional investment options permitted under the regulations include, but are not limited to, real estate, stocks, mortgages, franchises, partnerships, private equity and tax liens. Self-directed IRAs, by allowing a wide range of investment choices, improve the account owner’s opportunities to diversify their IRA portfolio(s). Some investments, such as life insurance or collectibles as defined by the Internal Revenue Service, are not permitted in IRAs[1]. Also, if real estate or any other investment asset held in a self-directed IRA has been employed for personal use, or to gain any other personal benefit (other than a return for the IRA), in the view of the IRS or the Department of Labor, the IRA(s) may become immediately taxable. In addition, if the IRA owner is younger than 59 1/2, the IRA will be subject to an early withdrawal penalty of 10%. It is important, however, to understand that the IRA account holder is responsible for compliance with all codes and regulations. While a custodian’s job is to follow the directions of the account holder as a non-discretionary trustee, a custodian cannot ensure compliance or give legal or tax advice. Therefore, those interested in self-directed IRAs should seek education offered by an unbiased source.

Start Watching Your Money Early

Start Watching Your Money Early

This biggest advantage is this:

You can direct your IRA to purchase Real Estate! It is true. There are rules for this. For example you cannot buy a home for you to live in. You cannot buy or sell from/to a direct relative. And you cannot take the income from the property.

But you can buy rental properties to generate income into your IRA.

Let me give you an example:

Let’s say you have enough money in your IRA to buy a duplex outright. You transfer your money to a Self Directed IRA, and have the IRA buy the property. Then direct all the rents to the IRA (which you must do). Your IRA will grow back from the rent. And when the time comes to draw from the IRA you can sell the property and will still have the money from the rents in the IRA.

Here is a possible scenario:

Let us say that you paid $100,000 for the duplex (just to round numbers) from your IRA and then you collect rents from the property for 10 years at $1000 per month into your IRA. You have generated $120,000 in those 10 years from the rents that are growing safely in the IRA and you still have the property, which could continue as income for retirement, or could then cash out upon retirement. At cash out, one would hope that in ten years the economy would have recovered and the property would have gained some value, which could put more money in your pocket, in addition to the original investment purchased, plus rents.

Your $100,000 in ten years could turn to $220,000 in value in this case, even if you just got what you paid for it.

Now let us take it a step further. You have the IRA generating $1000 per month and you don’t want that money just sitting there. At first you could be safe and buy something like CD’s to generate safe growth, even though t is small. After a year you may have accrued a slight gain in the $12,000 from rents. After several years you may have accrued enough of a gain that would allow you to buy a small house outright. This in turn could generate more rent.

Enjoy retirement

Enjoy retirement in Hendersonville NC

You can see how this could snowball with the right clear headed thinking. On top of this, by following some rules, you can also take out a loan for a property with the IRA. This gets complicated and talking to the right people is a must. But the possibilities are huge for anyone willing to do a little research.

With a tanking economy and home owners quickly becoming renters this may be a much safer bet then the losing prospect of the stock market.

How is your retirement fund performing?

Share
Filed Under: Articles for Buyers, Investors Tagged With: , ,

How does a buyer determine the value of a property?

July 7, 2010 By Leave a Comment

How does a buyer determine the value of a property?

As a buyer, you may find it difficult to determine the real value of a property you are interested in. How do you really know what it is worth, in order to make an offer that is fair to both the seller and you? (Because a win:win is always the best)

What's this property really worth?
What’s this property really worth?

Let’s look at a property and go through the steps you should be looking at.

Yesterday I was previewing homes in the Mills River area with another Realtor and we looked at a house. This home has three bedrooms and two bathrooms, and is about 2,000 square feet. It is priced at $869,000. It has been on the market as of today, 912 days.

What you will find is a home in pretty rough shape, but with very good bones. Although the exterior of the home is badly in need of a new roof and all of the windows need replaced, the exterior brick is in really good shape. The interior needs to be gutted. The kitchen and bathrooms are so outdated and the kitchen barely functions. The floor coverings are very old, worn carpets, but the flooring feels solid underneath.

The property comes with 17 acres, and has a barn, pond, and some views. It is open farmland and could be turned into a working farm again.

Because of the acreage, you may want to temporarily discount the land value until you can determine the value of the home. You will want to compare similar homes in the same condition and see what they have sold for. I would look at homes with under .75 acres and see those numbers. So let us say for this example this home compares to others in the $150,000 range. That gives us a starting point.

In looking at this property, one would need to take into consideration how much money the home would need in order to get it back in shape. You might start with a contractor in order to get a good idea before even considering an offer. And an inspector to determine what the good, bad and ugly are in the home. Let us just say, for this example, that the home may need about $60,000 to get it into shape with a new roof, new flooring, a new kitchen and new bathrooms, plus painting the walls. This is probably way off, but we’ll go with it. Looking at other homes in the area in the same shape with similar square footage, number of bedrooms and baths, we can determine that this home may be worth around $150,000 to $160,000.

Now let’s look at the land. There are 17 acres. In order to determine land value I went back to January 1, 2009 to see what had sold. I looked for land that was 5 acres or more and found only three properties that had sold in this time frame. 

The first lot was 10 acres, and wooded, and it sold for $186,700. It was on the market for 499 days and the average per acre price came to $18,670.

The second lot was 6.3 acres, a wooded property. It was on the market for 48 days and sold for $233,000, or $36,984 per acre.

The third lot had 21 acres and was mostly cleared, with some woods and a stream. This property was on the market for 137 days and sold for $135,000, or $6428 per acre.

Let’s take the value of the home, $150,000. And let’s calculate the value of the land using the property value of the highest selling lot sold, $36,984 times 17 acres, to give us $628,728.

Combined with the home value, we have determined that the value of this property could be valued at around $778,728. This does not include the value of the barn and other out buildings. This would also have to be determined. And keep in mind you may have to spend $60,000 for repairs.

Now that you are armed with this information what would you offer? You would have to determine what this property is worth to you, based on what is there and what your needs are, along with the data you have collected.

In gathering this information before making an offer, you are doing your due diligence. You are being an informed buyer. Always look carefully at whatever data you can get before thinking about what a home is worth. If you do your homework, you will feel good about any offer you make.

Find a Realtor that will assist you in gathering this information so that can make an offer based on fact rather than a gut reaction or any dream price you may have. After all, a win-win is in everyones best interest.

Share
Filed Under: Articles for Buyers Tagged With: ,

Septic Tanks and What They Mean to Buyers and Sellers

June 25, 2010 By Leave a Comment
Henderson County Department of Health

Take Care of Your Septic

As a buyer, when you look at a home, you really should understand the importance of septic systems. If the home is not on city water and sewer, then you will be responsible for both. It could mean a lot of money if you do not do your homework and understand its importance.

With a septic tank, you will need to know if the system was approved by the Department of Health when it was installed. If the listing agent does not have the information for you, you and/or your buyers agent need to contact the Health Department. In Henderson County this will mean a trip to the building located at 1200 Spartanburg Highway.

 

Henderson County Department of Health

Henderson County Department of Health

You will want to go to the door for the Health Department, on the right side of the building that is facing Spartanburg Highway, and then follow the hallway all the way to the back, to the door marked:

and talk to Fran. You will need to know the property pin number or the name of the person who ordered the system. This can sometimes be tricky. It may have been put in the name of the installer instead of the owner of the property, or the original owner may have been too many owners back to locate. If this is the case, the records may be lost.

But if you are lucky enough to locate the records, then you will have an approved system. Congratulate yourself. This is the best case scenario. You will get a copy of the record, which will be a nice map showing exactly where everything is. There will be measurements and you will be able to walk it off and know where on the property it is, and where it is situated in relation to the house and the well. This is invaluable.

You must understand where the leach field is situated, and you must never drive on it. This will result in compaction of the soil on the drain pipes and the system will not drain properly.

If you do not locate a mapped permit from the Department of Health, do not lose heart. You can have the system inspected by a certified septic inspector. This involves having the tank located and sucked out (I know…) and cleaned. Then it will be inspected for size and to see if it is draining properly. Systems are sized by the number of bedrooms the home has. So you will need to verify if the system was sized properly for the home it services. I would advise this for any buyer, even if the system does have a permit and is older than 10 years. A lot can happen in that time. Usually an approved system has few problems. They are really built to last. But for peace of mind, I still advise it.

Reading up on Septic Systems and how they work is a really good idea. You can find all kinds of links online. If you buy a home with a septic tank, be sure you understand how they work and how to maintain one. You will need to understand what you can and cannot put down the pipes. It is very different from a city system.

As a seller with a septic tank on your property, you may want to have this information available for a potential buyer. These issues are a big deal, especially to a first time buyer. If you do not have it, you will want to get it. The more information you have to put a potential buyers mind at ease, the better. If you do not have the paperwork, you may want to be pro-active and get the tank cleaned and inspected. It will show potential buyers good faith. Either way, in this area it will cost between $250-$350.

With a little due dilegence on both sides, there should be no serious issues in moving forward.

Share
Filed Under: Articles for Buyers, Articles for Sellers, Henderson County Septics and Wells Tagged With: , ,