real estate infos

Archive for July, 2010

Should I Get A Building Inspection Or Not?

I have been asked many times how important is a building inspection? Do I really need one? This is a new building why should I have an inspection? The city said it was ok so I dont really need an inspection do I? It all looks good to me so why do I need to spend even more money having someone else go through it?

Here are my thoughts. Yes you do need a building inspection. Here is why. If you went to a doctor and got a complete physical and he said everything is ok would you be upset and feel like you had wasted your money? No you would feel good.

You are now going about the most expensive venture of your life or at least a very substantial one. Doesn’t it make sense to have a professional examine it for you who has no vested interest in telling you if something is good or bad?

I did a commercial inspection on a brand new building in Downtown Los Angeles about a year ago. It wasnt even completed but the new buyers wanted me to go through it and tell them what I thought. I had talked to them to let them know I was NOT going to be doing a code inspection. That is the cities job.

They understood this very well they just wanted a professional other than the current contractor or the city to look at everything and list out what still needed to be done and how well things were being done. This is not what I usually do but I agreed. I did this and found maybe 200000 300000 of work either not done or not done properly. I took many pictures and detailed my findings. I was then called in about a month later when the contractor said he was done and found about 20000 30000 still left to do or not done to professional standards. I was then called in about a month after that and found everything was done and done to professional standards. All of this cost the buyer less than 3000 for this building. It was the best money they ever spent.

Usually we look at buildings that are older. The oldest so far was from the 1860s. We go through them fully. This most often takes about 1 to 3 hours using at least two building inspectors depending on size and complexity. We gather our notes and take pictures and ensure we have everything we need to put together the report back in the office.

We usually go through what we have found on the site with our client if they are present or one of their representatives. We then assemble everything back at the office and usually email the report out that same day. It could take up to 3 to 5 days later depending on the size and complexity of the site. We can usually do up to a 20000 30000 thousand sq. ft. office building in one day and get the report out that same day.

We let you know what we have found. We inform you what shape the building is in and how much you should expect to pay over the next five years on the building per industry standards.

Here are the six things we have found to be the most important aspects of any building:

A. Roofing B. HVAC Heating Venting and Air Conditioning C. Electrical D. Plumbing E. Structure F. Site/grounds

We take each one and let you know: 1. What is the expected useful life left in the system per industry standards? 2. What repairs/maintenance are needed now and how much this will cost? 3. What you should expect to pay over the next five years for each system?

What we do not include is the costs of routine maintenance or any cosmetic issues. This is up to buyer or lessee.

These three things above are the things we call a RISK Assessment. It gets you the answer to the most important question that is asked regarding Commercial Real Estate. Namely How Much? It can be how much anything but it is always How Much?

That is the question we can and do answer. We answer it per industry standards and consultation with local contractors.

We can tell you who we feel are reliable contractors. We have not found it workable to refer you to the cheapest contractors. This never seems to work out over the long haul. And we are in this for the long haul.

You can always call us. We will be glad to answer any questions.

I hope this answered your question. Do I really need to get a building inspection? Yes you do.

About the writer:  Bob has been a Certified Inspector since 1994 and a licensed contractor for nearly 4o years. For more information about commercial real estate inspections visit his website at http://www.commercialrealestateinspectors.com to find out how he can help with your real estate inspection.

Short Sale Questions

The main stream media continues to be rich with stories about the struggling real estate market here in the Sacramento area as well as across the country. They generally revolve around the increasing number of foreclosures the mortgage crisis and now some of the government programs that may or may not be any help. What I am not seeing is any mention of short sales. In June 2007 I published Short Sales: Road to Riches? to answer some questions I was receiving at the time on my website www.jalone.com.

Today the number of short sales in the Sacramento real estate market has increased exponentially and I continue to get calls and emails asking what they are can we do one and are they a good way to buy a house?

What is a short sale?
A short sale is when the lender on the property will accept less than the full amount due on their loan when the property is sold. Lenders will accept a lower dollar amount to avoid the expense and time of a foreclosure. Generally a short sale occurs when the loans on a property are greater than what the property can be sold for. The short sale is an alternative for a home owner who no longer can afford to keep their mortgage payments current and desires to avoid foreclosure or even bankruptcy.

Is a short sale a way for me to sell my home?
The easy answer to this question is it depends on your individual situation? Here are the three primary criteria that would constitute eligibility to seek a short sale to avoid foreclosure.

1. The value of your home is less than what you owe. This means if you sold the house you could not get a price high enough to pay off the combined mortgages.

2. You cannot make the mortgage payments and are in default. Generally lenders will not accept a short sale offer if the payments are current.

3. You must be experiencing a financial hardship and be able to provide the lender with documentation that support your inability to make payments or cover the short fall if the property was sold. This means you cant have assets that could be converted to cash to pay the lender. Some examples of events that lead to financial hardship are loss of a job divorce medical situations and death. It cant be that you have decided to stop making payments because the house is no longer worth what you paid for it.

If your situation matches the above criteria a short sale may be a good option for you to avoid foreclosure and/or bankruptcy but there are other considerations.

Before contacting a realtor to set up a short sale make sure you understand what it may cost you how it will affect your credit rating and the tax consequences.
Lenders who are willing to accept a short sale offer will insist that the seller their borrower not get any proceeds from the sale. A title company will prepare a draft closing statement as part of the short sale presentation to the lender that shows all available proceeds from the sale going to the lender and no cash for the borrower. What this means is that there are likely going to be some selling expenses that will need to be paid for. These may include pest inspections and repair and other maintenance repairs that need to be completed to satisfy the buyer. Often these can be avoided but now always.

A short sale will negatively impact your credit report. Although there are some industry professionals that say having a short sale on your record is not as bad as a foreclosure they do agree that some creditors looking at your report will not differentiate between the two. Clearly it will leave a large blemish. The good news here is that as more and more borrowers go through foreclosure and short sales the more common it will be on credit reports and the impact less sever.

There may or may not be tax consequences as some lenders will issue you a IRS form 1099 reporting the amount they forgave as income to you. The recently passed Mortgage Forgiveness Debt Relief Act of 2007 may protect you from having to report forgiven mortgage debt as income but it is always best to consult a tax accountant or attorney.

Should we buy a home listed as a short sale?
Dont be scared off by a short sale property as they may turn out to be a great deal for you. But you should know a few things before deciding to make a short sale purchase.

In a conventional home sale you generally only need the sellers acceptance of your offer to go forward with the transaction. With a short sale the lenders approval is also needed for the sale to close and this can take up to six to eight weeks. Yes lenders are moving faster today with short sales but there is still a process and most lenders wont even discuss a short sale until there is an offer to review. What this means is it could be two months before you know if your offer is going to be accepted or worse not accepted.

Pending receipt of a complete short sale package the first thing a lender will do is have the property appraised. They are looking for market value and you cannot expect them to settle for a fire sale price. This is where the listing agent can be a big help for the buyers as it will be their analysis as why the offer is fair in light of current market dynamics that goes to the lender.

Lenders will not approve any requests for repair or provide closing costs to buyers. From their perspective it is an as is; sale. Often in short sales the sellers who have been unable to make mortgage payments have not maintained the property and it may be in need of repair. This may mean a buyers request for repair will be declined by the seller because they do not have the financial resources to comply and are not going to receive any sale proceeds.

Bottom line be prepared for short sales to take more time and know the purchase will more than likely be as is; with you making needed repairs after the purchase is closed.

If you are going to make an offer on a short sale property there are some items that can protect and provide you with some sense of how the transaction is proceeding.

1. Make sure your Realtor now required in California outlines the short sale contingency terms and conditions. This essentially sets the time frame for approval by the lender which may or may not help.

2. Be sure to include a provision in the contract that allows you to withdraw at any time up until the lender approves the sale. This way you can get out of the contract without penalty if it looks like the transaction has little chance of closing.

3. Request from the seller confirmation of submission of the short sale package and confirmation that the lender has received the package.

4. Even though the sale is more than likely going to be as is; it is essential for the buyer to conduct a home inspection. You want to know what you are buying and what repairs will need to be made.

5. Make sure there is a pest report and understand the seller may not be able to make Section 1 repairs resulting from wood destroying pests.

6. Be sure to discuss issues and questions with your Realtor before proceeding preferably someone who has some experience with short sales. I recommend only making a short sale purchase with a experienced and knowledgeable agent. There is too much at risk for you and the listing agent represents the seller’s interests not yours.

The answer to is a buying a short sale property right for you depends on your situation. From a buyers perspective there have been some good deals done but they take time require a level of cooperation not normally found between buyers and sellers a good realtor willing to work hard and a responsive lender.

A significant issue with short sales is you are dealing with a seller and a lender and often when the transaction fails you are weeks and even months into it before you end up walking away or the lender takes a position you cant live with. If you are interested in pursuing short sale acquisitions talk it over with your Realtor and find out if your objectives can be met. If you think it is a way to get a deal Id suggest there are much easier ways.

Summary: Short sales have arrived; they are more common today than at any time in the past. Banks are easier to work with on short sales than they were six months ago and sellers who truly have a financial hardship should consider a short sale as an option to avoiding foreclosure. Buyers should not avoid a short sale purchase but must understand it will take more time before they have confirmation the sale will happen. Now the mainstream media needs to share this information with the public.

To learn more about the author Julie Jalone and her company MagnumOne Realty visit her website at www.jalone.com where you will find more articles free home search and her daily blog Keep it Real in Sacramento

Teaser: With more and more short sales on the market here in the Sacramento area why dont we see them mentioned in mainstream media more. Roseville Realtor Julie Jalone answers the most common questions about short sales.

Blog: Why dont we hear more about short sales?
With so many articles and news reports about the struggling real estate market why dont we hear more about short sales? I wrote my first article on short sales back in June of last year Short Sales: Road to Riches?; but still get emails and calls asking what they are can we use it to sell our house and should we consider buying a short sale house?

If you are interested in short sales or the answer to any of the questions above check out my latest article Short Sale Questions.; We have completed a good number of these complicated transactions in the past year and I am happy to share my experience and knowledge.

I don’t understand your cheerleading on low interest rates: wasn’t it cheap money that got us into this mess it the first place?!? This was a comment I got on my recent post Rates Fall ndash; Price Dropped Broker Agent.; My first reaction was to think Im not a cheerleader.; Then as I started to think about what my reader said I realized I dont think low interest rates in the early 2000s were the driving force behind the correction or downturn in our Sacramento real estate market and I dont believe they will play a significant role in any recovery.

About the writer:  Julie Jalone is an experienced professional Realtorreg; serving the need of buyers and sellers of residential real estate in the Greater Sacramento area including SacramentoPlacer El Dorado and Yuba counties. Some of the communities served by Julie include Sacramento Roseville Rocklin Lincoln and Granite Bay. Julie is a wife and mother living in Rocklin. For more information see her website www.jalone.com which includes listings home search news resources for buyers and sellers and her daily weblog Keep it Real in Sacramento.

Seven Home Staging Basics

Home staging is a mixed bag because there is so much you can do that knowing where to start especially if you are doing it yourself is almost as important as the staging itself. In a down real estate market or any market you could find yourself spending thousands of dollars to make your home stand out from the rest of the competition. But will you recoup your costs? How do you know where to start? Read on to see the top seven home staging basics that will save you money and still get buyers to swoon over your home every time.

1. Check your bulbs twice. Home lighting is quite possibly the most effective way to sell your home. When a buyer looks through your home for the first time it’s an exploration and as such they are trying to see every detail during their first trip and impression of your home. If a buyer spots a burned out bulb or is unable to see all the space in a closet because the lights don’t work then they deduct the perceived loss of square footage and needed maintenance from your asking price. Stop this top objection in its tracks by replacing all of your burned out bulbs before putting your home on the market.

2. Clean the gutters. How your home looks on the outside is 50 of the buyer’s first impression. If the buyer walks up to the front door and sees gutters weighed down by leaves and other debris it triggers thoughts of deferred maintenance and future home structure problems. A home buyer does not want to inherit a home seller’s problems so cleaning the gutters and ensuring they are not sagging will clear the path to a successful home tour.

3. Pack your family photos and awards before putting your home on the market. Your home is your home. It’s a very personal space but once you have decided to put your home on the market you have to take into consideration that home buyers are trying to see this as being their next home. Family photos and awards all great things to have should be packed before you put your home on the market to avoid creating visual breakers when a buyer tours your home.

4. Clear the counter space. There are two types of real estate a buyer considers when looking at your home. The first is the home and property the home resides on and the second is usefulness of the interior space of your home. Kitchens are the heart of the home and as such the buyers want to know that there will always be room to grow in that space. Clear away nonessential counter appliances and kitchen accessories to give off the impression of more space for the buyer’s dollar.

5. Get the carpets cleaned professionally. Carpets are beautiful and make for great floor surfaces but if you haven’t had them cleaned since you moved in then you should have it done before putting your home on the market. Dogs kids and the elements of nature all make their mark on carpeting over the years and the last thing buyers want to do when buying a home is take on a large project like carpet replacement after they move in.

6. Paint high traffic spaces. High traffic spaces are the best places to find dings and marks on the walls which look like deferred maintenance but are in reality the consequence of daily wear and tear. Patch and paint the walls in high traffic spaces.

7. Define your rooms! Buyers have imaginations but not when they are looking at homes. When selling your home the dining room can no longer be the home office and the living room cannot be the catchall play area and living space. Clearly interpret what your home has to offer to buyers so they don’t deduct points and dollars when writing an offer for your home.

Home staging is as much about putting your home’s best foot forward as it is whisking away the most obvious home buyer objectives before the buyers have a chance to come up with them. By following these seven home staging basics you will be able to command the right price for your home in any market and increase the chances of selling your home quickly.

About the writer:nbsp;nbsp;Hassan Omar is the President and Managing Director of TBD Investing Company LLC an Atlanta Georgia based real estate investment Company that specializes in providing quality investment properties and professionally remodeled homes to qualified buyers in the Atlanta Area.

A professional Investor Hassan has been active the National and Atlanta real estate market since 2000 and has analyzed purchased rehabbed marketed managed and sold millions of dollars worth of commercial and residential properties over that period.

He is the author of acclaimed ebook The Complete Property Locators Guide available at www.tbdinvesting.com

Prior to forming TBD Investing Company LLC Hassan was worked as a finance manager for the Coca Cola Company; as a financial analyst for a multinational commercial real estate management company; as an auditor for the State of Georgia; and served as a logistics officer in the US Army.

Hassan holds an MBA in the Management Of Information Systems from Mercer University and a Bachelors degree in Accounting from Georgia Southern University.

He is a member of the Georgia Real Estate Investors Association GAREIA and the Greater Atlanta Home Builders Association. For more information on our properties products or coaching please visit www.tbdinvesting.com email flipstbdinvesting.com or call 678.683.0646.