Inside Real Estate Archives

Boise Idaho Home Inspections

February 1, 2019

Boise Idaho home inspections often cause the “second sale”!

(Example of black mold above)

Why?

Because nearly every Boise Idaho home is sold subject to satisfactory results of a home inspection.

You may think your home is in perfect condition, but it’s rare for a home to pass a home inspection without needing some repairs.

When those repairs are identified in the home inspection report, you can expect the buyer to submit an RE-10 Inspection Contingency Notice to you, requesting repairs to be made.

Resolving Home Inspection Issues

Significant repair issues are often handled with the buyer asking the seller to have the repairs completed and provide paid invoices, and/or lien releases, when the work has been completed.

After repairs have been completed, the buyers may elect to have the property re-inspected to confirm that needed repairs have been completed correctly.

Minor repairs are often resolved by having the seller give the buyer a credit toward their closing costs.

In that situation, the buyers often make the needed repairs themselves after closing to ensure that the repairs are completed to their satisfaction.

Major repair issues (like a flooded crawlspace, mold, roof replacement, etc.) can result in a failed transaction.

How Sales Fail

There’s an option in the RE-10 Inspection Contingency Notice that allows the buyer to cancel the transaction if they don’t like the inspection results.

Unfortunately, that provision is sometimes abused by buyers suffering from buyer’s remorse, who then cancel for no inspection issues whatsoever.

If you’re a seller, think twice about refusing to make requested repairs.

If your buyer opts to cancel the transaction, another buyer will likely discover the same issues and request the same repairs.

It’s somewhat rare for a transaction to fail over inspection issues, but it does happen.

That’s why resolving home inspection issues is “the second sale” in most real estate transactions.

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Why Eagle Idaho Home Sales Fall Through

January 30, 2019

There are many reasons why Eagle Idaho home sales fall through!

Here are 10 common reasons why Eagle Idaho home sales fail.

1) Financing Issues

Amazingly, some buyers make offers on homes without first securing “Pre-Approved” financing.

“Pre-Approved” means the buyer has a firm, underwritten loan commitment letter, subject only to clear title and an appraisal.

“Pre-Qualification” is not synonymous with “Pre-Approved” and can often be obtained with a phone call, no vetting, and no documentation.

Pre-qual letters are easy to spot because they include numerous conditions to be met during underwriting.

Those conditions often include bothersome little details like credit scores, remaining employed until closing, and proof of funds needed to close escrow.

2) Inspection Issues

There are at least two sales in every real estate transaction.

The easy sale is the first one, where you negotiate the purchase/sale of the home.

The hard one is the second one, where the buyer and seller negotiate repairs requested by the buyer following inspections.

If buyer and seller disagree on making needed repairs, the sale can go bye-bye.

3) Buyer’s Remorse

In a hot market, buyers sometimes figure out they overpaid after their offer is accepted.

That can lead to the buyer using legitimate contingencies (think inspection contingency) to terminate the transaction and get their earnest money back.

When a buyer backs out due to a valid contingency, there’s little a seller can do about it.

4) Seller’s Remorse

It’s more difficult for a seller to back out of a deal, but it can happen.

When a seller refuses to close while lacking good reason, the buyer’s recourse may be to sue the seller for specific performance.

Considering legal fees and court costs, most buyers quickly realize that finding another home is a better alternative than suing a seller.

5) Third-Party Influences

Third-party influences are not a good thing in real estate deals.

Closing isn’t assured when it’s contingent upon the approval of someone’s attorney, CPA, or a governmental agency.

Worse yet is a sale that’s contingent upon the buyer’s funds to close coming from Aunt Mildred’s probate or an insurance settlement.

6) Incompetent/Inexperienced/Part-Time Agents

I’ve always thought that it takes about 100 closed transactions for new agents until they understand how the real estate profession really works.

If you’re working with a new agent who’s undergoing OJT (at your expense), plan on things like unanswered phone calls, ignored voicemails and e-mails, incomplete contracts, missed deadlines, and other deal-killers.

BTW: It doesn’t cost any more to work with an experienced, competent professional!

7) Insurance Issues

Insurance companies have become picky about who and what they insure.

Recent paid claims often make it difficult, if not impossible, for buyers to arrange insurance.

Water damage claims are especially sensitive issues with most insurance companies.

Mortgage lenders require insurance, so no insurance means no loan and no closing unless it’s an all cash deal.

Cash buyers will want insurance too and probably be unwilling to close escrow if they can’t get it at a reasonable cost.

8) Appraisal Issues

Mortgage lenders require an appraisal as part of providing a loan.

The purpose of the appraisal is to confirm that the value of the property is adequate for the intended mortgage.

Appraisals are “opinions of value” that are prepared by human beings and can be very subjective.

When a home fails to appraise for the sales price, the buyer will probably ask the seller to adjust the sales price to the appraised value.

If the seller refuses to do so, the buyer’s alternative is to pay the difference in cash at closing.

That probably won’t work unless you’re in a red hot seller’s market.

9) Liens

A lien is an obligation to pay someone.

Liens can kill deals because they must be paid to get title insurance that’s required for closing.

Lenders won’t loan on properties with unpaid liens.

Buyers won’t buy a home with an unpaid lien on it because the lien is secured by the property.

That means liens must be paid in order to close escrow.

If the seller doesn’t have enough equity to pay off the lien, escrow will not close.

10) Easements

An easement gives a thirdparty rights of use for the subject property.

Most buyers want full use of the property they’re buying.

Both buyers and sellers should review the preliminary title report carefully to see if there are any easements that will affect rights of use for the property.

It’s critically-important for everyone to understand all easements early in a transaction.

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Should You Buy A Boise Idaho Flip?

January 28, 2019

Buying a Boise Idaho flip may sound enticing, but you need to be careful!

Home-flipping has been glamorized and over-simplified by numerous TV shows from HGTV and other networks over the past few years.

HGTV even created its “Boise Boys” show about flipping homes in Boise a couple of years ago!

Buying a “flip” may appeal to you, but it’s a good idea to look beyond the eye candy commonly seen in flipped homes.

There’s more to a quality home than quartz countertops, light gray paint, pendant light fixtures, faux barn wood floors, roller barn doors, subway tile backsplashes, and other current real estate trends.

Questions You Should Ask:

Did the seller obtain all required building permits?
Will the seller provide a copy of the building department’s final inspection approval?
Was the home vacant for an extended period of time?
Was the home winterized during the winter months?
Was the sprinkler system blown out over the winter months?
Was the remodeling work done by licensed contractors?
Did the seller pay all of the suppliers and subcontractors? (think about mechanic liens)
Will the seller provide paid receipts and lien releases from all of the suppliers and subcontractors?
Which major components of the home (HVAC, plumbing, roof, windows, appliances, etc.) were replaced?
Were those major components replaced with brand-new items or used items bought from Craigslist?
Will the seller provide warranties for all of the major components that were replaced?
Were major components replaced with the cheapest items available?
Did the seller have all locks re-keyed to prevent subcontractors from accessing the home after closing?
Will the seller allow you to have the home inspected by your own home inspector?
Will the seller correct issues identified by your home inspector?
Will the home qualify for title insurance to assure you of clear title?
Is the home eligible for the type of financing you intend to use? (think about FHA/VA)
Will you be able to arrange homeowner’s insurance? (check with your insurance agent before buying)

Before You Buy

Ask yourself “is this home a do-it-yourself, lipstick-on-a-pig renovation?”

Take your time and evaluate the quality of the renovation.

Look for obvious clues like:

Uneven floors
Brushed paint over old oak cabinetry
Cheap materials
Sloppy paint work
Mismatched plumbing and/or light fixtures
Mismatched door/window trim
Mismatched windows.
Mixed brands of appliances
Mismatched carpet qualities/colors
Mismatched door hardware/keys

Need some professional help figuring out that Boise Idaho flip you’re considering?

Give me a call at (208)938-5533 or e-mail me.

Don’t be surprised if I tell you to NOT buy that home and keep on looking!

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When Sellers Lie On The Seller’s Property Disclosure

January 25, 2019

Here’s what can happen when a seller lies on the Seller’s Property Disclosure.

The following actually happened in one of my transactions a couple of years ago.

I represented the buyers in the transaction.

The home looked good on the surface.

We prepared an offer that was accepted by the seller.

I had to request a copy of the Seller’s Property Disclosure from the listing agent when it wasn’t posted in MLS.

That was my first indication of the listing agent’s inattention to details.

The listing agent sent the Seller’s Property Disclosure to me, I carefully reviewed it, and found no disclosed issues.

However, I noticed that only one (male) seller had signed the Seller’s Property Disclosure.

I then searched the public records and discovered that title was held by both a husband and wife.

That meant that our accepted offer wasn’t legally-binding because the offer hadn’t been signed by all parties on title.

The preliminary title report also confirmed that title was held by both a husband and wife.

The wife’s signatures were also missing on the MLS listing and the Seller’s Property Disclosure.

Then, things got even more interesting when the home inspection revealed that the 10-year old roof needed to be replaced due to defective, recalled shingles.

When I notified the listing agent about the roof issue, he told me it “wasn’t a problem” because the seller had already applied to have the roof replaced under warranty.

That confirmed that the seller and listing agent knew of the failed roof and both had misrepresented a known adverse material fact.

The listing agent had also failed to obtain the wife’s signatures on the listing, Seller’s Property Disclosure, and Purchase Offer without disclosing it to me.

The home inspection also revealed a flooded crawlspace, which might not have known to the seller.

The bottom line:

My buyers and I finally realized that we were dealing with a dishonest seller and listing agent, neither of whom could be trusted.

We terminated the transaction with a full refund of my buyer’s earnest money.

Later, I noticed that the home had been sold and reported closed in MLS.

I wonder if the buyer ever learned what I discovered during my failed transaction?

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