What is mandatory to fix after a home inspection? It depends on three factors

Inspect what you expect, or so the saying goes. More than ever, even in these days of multiple
offers and rising home prices, a home inspection should not be optional no matter what the terms of the sale. Jumping into a purchase this large should scream disclosure so that you can sign on the final dotted line with both eyes open, whether selling or buying a home.

After all, who wants to find out after moving into their dream home that the furnace is on the fritz or that termites have taken up residence in the attic? In case you're thinking of waiving the home inspection contingency, you should also be aware that some lenders require a home inspection as a necessary step before they finalize your home loan.

First, a home inspection checklist is made up, outlining how the inspector might have found damage or other causes of concern. He or she will be quite thorough, offering a snapshot of the home's condition at the time of inspection, pointing out everything from major fixes to minor cosmetic issues. Some of these may be representative of the home's, age, location, and how well the previous owners maintained the home.

But what are considered mandatory fixes? Here are the major areas that spell this out for you — (1) the terms of your purchase agreement (2) what the lender requires, and (3) local laws, codes, or regulations.

Most purchase agreements contain a home inspection contingency that allows the homebuyer to back out of the deal should the inspection turn up major issues. For example, if the inspection shows significant damage to the home's roof, the homebuyer could request the seller to replace the roof, or use the expense to ask for a lower sale price.  The home seller can decide to appease the homebuyer by lowering their price or fixing the roof and proceed with the sale of the home, or choose to sell the home 'as is' and reject any improvements.  It all becomes a point of negotiation after the original offer and can change the terms of the agreement.

As for the lender (particularly those that offer government loans), mortgages are only approved for homes that meet their standards for safety, livability, and mandate that certain issues be addressed before closing. The appraiser will inspect the property and assess the home's value before a deal can be made. If comparable homes in the neighborhood do not support the home's selling price, it could be problematic. But for inspection purposes, they will look for things such as ungrounded electrical outlets, the presence of lead-based paint, mold, a leaking roof, contaminated water, a non-working or inefficient septic system, or the lack of sources for heat. If any of these problems present themselves, the homebuyer and seller can negotiate who will pay for which repairs and the deal can either continue or go dead.

Some states require the sellers to provide a report from a licensed pest control company showing that the home is free of termites. In others, if a home inspector finds home improvements, the seller made not to code, or without securing a permit, the local building official will hold the seller liable, requiring them to bring the improvements up to code and pay increased permitting fees.

Because of all this, it has become increasingly popular for sellers, in preparing their homes for sale, to consider having a home inspection done before listing it. Getting caught off-guard can be very disconcerting, so getting ahead of it permits the possibility of a smoother closing process.

Thank you for visiting my blog, please leave a question or comment and come back again soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219

The new build purchase, part 3: the new home orientation

There are few things more exciting than standing at the front door of the shiny new home that is about to be yours, ready to experience what is called the “new home orientation” — the homebuilder version of the “walk-through.” Unlike the tour of a “used” home, the builder’s job here is to familiarize you with how to keep your house in tip-top shape, how to use all its systems, and what to expect if something needs attention during the builder’s new home warranty period.

Dena Kouremetis, a former CA-based new home sales manager and subsequent trainer in the new homes industry, talks about the importance of this watershed event.  “This interaction with the building superintendent is a chance to not only explain the features of your new home; he or she is usually also pretty proud of their work, having orchestrated the building of this structure from the dirt to sticks to drywall to the final touch of paint,” she says. “Hundreds of hands, nails and pieces of wood have taken part in building this home that will soon become yours. This is the time to grab your smart phone and ask questions as well as record all of the advice you are given to keep it pristine, as well as what to do if you encounter any issues.”

Kouremetis explains that the purpose of this meeting is not to find unfinished or sloppy work (it’s a production home, so it’s not an exact science), which can be documented and fixed over the next few months, although this is a good time to bring it up. The point is to instruct you all you need to know, what can happen if you do things that void the new home warranty, and what the builder is responsible for if you do. That’s why they prefer to conduct this tour only to the owners. If you do insist on having your Realtor or other family members along, be mindful of how it can hold up the process and request that they hold their own questions or observations until the end of the tour.

With electrical, plumbing, and HVAC systems becoming more sophisticated than ever, it’s vital that you hang on to every shred of paper the superintendent gives you, placing it somewhere accessible once you move in. These may also be available online, so make a note of their URLs as well. Pamphlets on each appliance, each system, all the warranty cards you should fill out ASAP once you take ownership— they should all be there for you to quickly refer to.  In addition, read your new home warranty carefully to see what voids its terms. Should you rip out the flooring the builder originally installed and an issue develops under the foundation of the structure, the builder will not be liable to replace your flooring after the issue is repaired, even though they may offer you an allowance that equals the cost of the flooring they originally installed.

“And it’s up to the homeowners to instruct their family members of what can and can’t be flushed down a toilet,” says Kouremetis, who suggests they sit down and explain to everyone who lives there the importance of being careful with the new home’s systems and surfaces. “Each appliance and each installation carries a certain drop-dead date for being covered,” she says, and advises that you mark on your calendar when each of these are, since reporting problems with any of them after those dates will find you paying for any repairs yourself. “Don’t bother to make up some story about how something broke. Abuse of any of these systems is readily noticed by the builder’s warranty personnel,” she adds.

All builders offer a “punch list” period. That means that a badly cut piece of baseboard, cabinets installed crookedly, doors that don’t close properly and slopped over or missing paint are place on a schedule for repair over the subsequent months after you move in. The builder has an entire department dedicated to after-the-sale issues, so ask the person in charge of this department how you go about contacting them once these things are discovered. And remember — you attract more bees with honey than with vinegar. If you’re gracious to building personnel, they just may move you up on their list of things to do.

Thank you for visiting my blog, please leave a question or comment and come back again soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219

Navigating the upgrade game when buying a newly-built home: a series for the new home buyer (part 2)

 Now that we’ve looked at how the design center options/upgrades process works when buying anewly constructed home, it’s time to study which of the builder’s offerings are prudent to pay extra for, which ones can sit on the shelf for a while, as well as offer some food for thought as this “production line” home is being built.

Your home’s exterior

Former new home sales manager/sales manager Dena Kouremetis offers her expertise from the other side of the fence, saying, “If the builder offers you a choice of exterior elevations, such as siding, stucco, brick accents, river rock, etc., and up-charges for them, you may want to consider them seriously.” She goes on to say the maintenance of some surfaces mean regular investments (such as painting siding), whereas easy-care surfaces (such as stucco or brick) stay fairly timeless. Paying an extra $20k for an upgraded exterior, however, might find you in a quandary as to its value in the big scheme of things if this home is NOT your “forever” home. If you do plan to be there for a number of decades, however, she says passing up the upgraded elevation might find you having regrets. And if you have ideas to alter them yourself? “Whatever exterior options are offered, however, have been pre-approved by the city. Changing the exterior elevation of your home on your own after the fact may find you facing fines.”

“As for the remainder of the outside of your house, most builders include a minimum of landscaping to the front yard, but always hope you will improve upon it, depending on the neighborhood rules governing the look of your home,” says Kouremetis. “If the builder has an option to sod and add a larger or covered patio to your backyard space, however, compare the costs with outside contractors. There is certainly a beauty to your backyard being just as move-in-ready as the interior of your home. Living with dirt in the backyard for an extended period of time is simply a pain.”

Electrical and plumbing options

Homebuilders in some states are required to install energy-saving features in their new builds — amenities such as hot water on demand (to save water) but most of these also save you money on your monthly water bills. Solar as well. ENERGY STAR appliances are now the norm and not the exception to it, and may be required in most states. If the builder offers other electrical or plumbing options, however, this is the time to think long and hard about it. Kouremetis asks, “How handy would it be to have extra exterior weatherproof outlets for holiday lights and outdoor appliances/future kitchen? This is the time to do it, and chances are good that whatever they charge for things like surround-sound wiring in the ceiling, plumbing for a laundry sink, or recessed or canned lights in some areas will not be much different from having a contractor come in, charging time, materials and labor.” She warns against making quick decisions to have the builder install things like entire sound systems through the builder. “It can be a real crap shoot. Whenever a builder deals with an outside company it contracts with to offer a product in your home, they usually charge a hefty premium. This is the time to do your online homework.”

Flooring

There are a number of ways to look at this important element for your home. The amount of time you plan to live there, whether you have dogs and kids (promising lots of wear and tear), and your own sense of aesthetics all come into play. Many families with young children decide not to invest in an upgraded flooring, opting instead to change it out to a better grade of carpeting or to hardwood or tile later on, when the kids are older. Others decide they want bullet-proof flooring from the get-go. The builder will finish your house with the flooring you choose (in most states, lenders require flooring to be in place before COE), but before you make that selection, get a bid from a flooring company and compare. Should you decide to go outside, the best time to have the flooring installed by the builder replaced is immediately after close of escrow. As for the brand new carpeting or vinyl being torn out at that point, get a handle on either selling it to a private party (perhaps an apartment landlord/owner) or donating it to Habitat for Humanity or another charitable cause.

Window coverings

 A builder’s design center usually offers a window covering package — at the minimum some blinds to cover windows throughout the house. The neighborhood rules (Covenants, Conditions, and Restrictions) may forbid sheets up on windows immediately upon move in. So compare the price the builder offers for this. If going fancier, such as with cellular shades, drapery, or plantation shutters, again — look around. For both flooring and window coverings, permitting the builder to install these items also means they may be covered by the new home warranty for a period of time. That might mean peace of mind as well.

Lighting fixtures

Chances are good that there will be some “standard” fixtures included in the sales price, such as an entry and dining room chandelier, recessed lights in hallways, bathroom fixtures, and lighting/ceiling fans in some rooms. But you will be asked if you wish to upgrade these items as well. “Light fixtures are a highly personal choice, but don’t pass up the opportunity to add recessed lights to rooms where they are lacking, such as bedrooms,” says Kouremetis. “Either add your own dimmers or look into how much extra dimmers cost through the builder. You’ll thank yourself later. The design center consultant should be able to show you a blueprint of the lighting locations in the house, and it’s before sheetrock goes up that your decisions should be made. Don’t snooze on this one.”

 Paint

You may not have much (or any) choice in interior or exterior paint colors. If the builder offers choices, however, take it as a bonus. They may even offer accent wall colors. Just know that whatever kind of paint job is done by the builder, it becomes part of your new home warranty — a “punch list” item the builder will return to repair/redo if not done perfectly.

 A buyer’s obligations/rights to the home during construction

If you are ordering up a home starting with dirt/sticks in the ground, there will be cut-off times for many of the decisions you’ll have to make. A production home is like a car on an assembly line. Once certain parts have been put into place, it costs a lot of time and money to backtrack and add things to the product. Same with construction. A building superintendent has a schedule to follow, with homes required to be move-in ready by a certain date. After that date, the finished-but-unoccupied home becomes the builder’s liability (a regular mortgage payment). So PAY ATTENTION to cut-off times for your electrical, architectural, flooring, and plumbing options. Some must happen before the foundation/slab is poured, others before drywall is installed, and others before cabinets and trim are started.

As a word to the wise, Kouremetis adds, “Just because you have placed numerous deposits on this home-to-be does not mean you have a right to be in or on the property before you own it, and it definitely means you can’t do any of your own installations (paint, flooring, appliances or even grandma’s antique crystal chandelier) before you hear the words ‘You’re on record,’ and someone hands you the keys. “The builder is liable for anything that happens on their property before move-in, so even if your building superintendent says it’s okay to walk around your home being built, wear the hard hats he offers you happily and don’t sneak around after hours. He does not have to permit you to be there at all.” 

Afterthoughts

Your smartphone camera will become your best friend. Whether you are mulling over your choices at the design center, watching the walls go up or even catching some sloppy work before you have your new home orientation (the equivalent of a resale “walk-through”), let your phone document whatever prompts questions on your part. “No question is too silly or dumb,” says Kouremetis. “Don’t think just because you don’t know what you don’t know, the builder would not be both eager and happy to explain every step of the process. While it’s their job, it will become your home.”

I hope this was useful.

Thank you for visiting my blog, please leave a question or comment and come back again soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219

TBWS

Navigating the upgrade game when buying a newly-built home: a series for the new home buyer

 You’ve been looking in earnest at resale homes, but on a tour of the outskirts of town, you see something off in the distance. A series of signs and banners are everywhere, leading Hansel-and-Gretel style to a brand spanking new set of stunning, lit-up model homes. The curiosity is killing you, so you take all the requisite turns to reach the model home sales office. There, you are greeted by a friendly salesperson (usually a licensed real estate agent) who works exclusively on behalf of the builder.

You are handed a brochure and a price sheet, but pay little attention to it at first. Instead, you stare down at a structure in the middle of the sales office that appears to be a miniature layout of the neighborhood. Called the builder’s “top” (topographical) board, it contains pre-planned cul-de-sacs, a space for a neighborhood park, a future school — it’s all there. Now it’s time to walk through the model homes. There is that new home aroma of new furniture, paint and flooring, uncovered windows letting every bit of light in, and accessories and artwork you know you can’t buy during a quick trip to HomeGoods.

You are unwittingly being romanced at every turn, making you feel like a kid in a candy store. Former CA-based new home sales trainer Dena Kouremetis offers her advice to buyers in this series on the ins and outs of the upgrade options offered to new home buyers. Questions include (1) Should you settle for only the amenities the builder offers in the base sales price and then add your own upgrades later on? (2) Why/when might it be prudent to use the upgrades offered by the builder’s design center? (3) Should you compare the costs of everything you can get at Home Depot or Lowe’s for similar items before signing on the dotted line? (4) What amenities are ALWAYS best to get on your own, after close of escrow?

 But first, let’s cover the topic of how this upgrade/design center thing works. The homebuilder offers its 2415 square foot single-level, 3 bedroom + office/den, 3 bath home for $530,000. Included in that price is either a carpeting option throughout most of the home (except for the entry, laundry, bathrooms and kitchen) or LVF (luxury plank vinyl flooring) throughout. The included appliances, windows, interior paint, lighting fixtures and standard electrical and plumbing features are all listed on the builder’s slick brochure in your hand. In order to physically find any of the standard items within the model home, it may take several more visits, but they are usually somewhere in one or more of the models.

 As you walk through the prototype of the home that interests you, there are disclaimer tags on walls and items saying things like “I’m included!” But most of them read, “Available feature!” or even one that explains that the case goods and furniture throughout the place is not available at all, since it was a staging company that placed it all there. You’re attracted to the 8-burner Wolf range, would die for the built-in SubZero refrigerator, salivate over the wine fridge, love the idea of a whole house speaker system, and have only dreamed of the telescoping folding glass doors that open up the entire family room to the backyard covered patio (which in the model includes an outdoor fireplace). They’ve got you baited for sure. As you can imagine, the builder’s design center is no doubt a gleaming theme park of upgrade possibilities. The stage is set, however, and now you’ve got a visual handle on what it might be like to live in a home like this.

 Once you commit to the house itself (you’ve studied the area, the commute, the schools, the builder’s reputation, etc), the salesperson’s next duty (if you’re not paying cash) is to make sure you are fully pre-approved for the mortgage. Knowing you may add some upgrades here and there, they try to qualify you for the max amount — certainly one over and above the sales price. They explain that for each $1,000 increment you add to the price of the house for upgrades, it adds X amount of estimated dollars to the monthly payment you’ll make. That extra $100 per month to your payment (depending on the interest rates at the time) may only amount to a month’s worth of Starbucks runs in the big scheme of things. But for your future home it means hardwood floors as well as upgraded appliances -- that is, <i> after</i> the builder credits you for the amount their (included) flooring allowance would have covered —at their cost, not at retail. After all, although they buy in bulk, they do intend to sell it to you for a profit.

So now your mind is at work. If amortizing the amount of your upgrades over the life of the loan, how much might that cost you by the time you either sell your house or pay it off? Might it have been more prudent to just live with vinyl on the floor, cook on the standard 6-burner stove for a while and look into fancier versions later? At that point, would you pay cash for it, would you be financing it all through a credit card, or refinancing when it became cost-effective to do so?

 Your new home salesperson may not cover all these ‘what ifs' with you,” says Kouremetis. “They don’t want to pry too much into your financial situation when you begin making decisions regarding upgrades. But they may have some suggestions for how to proceed if you prefer NOT to add upgrades through the builder, such as paying for the house to be PREPARED to receive extra electrical and plumbing options later on. They may also offer some food for thought on how it may be wiser to go through their design center for some of the options.”

You’ve been looking in earnest at resale homes, but on a tour of the outskirts of town, you see something off in the distance. A series of signs and banners are everywhere, leading Hansel-and-Gretel style to a brand spanking new set of stunning, lit-up model homes. The curiosity is killing you, so you take all the requisite turns to reach the model home sales office. There, you are greeted by a friendly salesperson (usually a licensed real estate agent) who works exclusively on behalf of the builder.

 I hope this was useful.

Thank you for visiting my blog, please leave a question or comment and come back again soon. 

Roxy Redenbaugh, Broker

Sr Mortgage Consultant

Residential and Commercial

www.roxyloans.com

The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,

NMLS#269926 Company NMLS#1930219