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This is a very common question when we talk with our clients, so we thought we would share what we found on Realtor.com about finished versus unfinished basements. Enjoy!

 

This is the tale of two basements in otherwise comparable houses. One is a finished basement with a den, bedroom, and full bath. The other basement has some sheet rock, an exposed toilet, and a painted floor. The listing for the first house reflects the basement in the total square footage, and in the price. The second house only includes the square footage of the main floors. So, which listing is correct? The short answer is both.

Does a basement count toward overall square footage?

As a general rule of thumb, a finished basement typically doesn’t count toward the overall square footage, especially if the basement is completely below grade—a term that means under ground level. What is included ultimately depends on which state you live in. Your local county assessor’s office determines if basement square footage, finished or unfinished, can be counted as part of what’s known as the “gross living area.”

Walk-out basements

For the states that do allow the addition of a basement in the overall square footage of a home, there must be an egress and ingress. This means a door you can walk out of to yard level on one side of the basement, says Sharon Chambers-Gordon, a real estate agent with Windermere Professional Partners in Gig Harbor, WA. Also known as a walk-out basement, these square footage calculations are done based on how much of the basement is above grade.

How basement square footage affects your mortgage

The overall square footage of a home factors into an appraisal and, therefore, the financing of a house. The home has to appraise for the sales price, or higher, in order for the lender to provide the funds. Here’s what mortgage giant Fannie Mae has to say on the basement matter: “Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. Fannie Mae considers a level to be below grade if any portion of it is below grade, regardless of the quality of its finish or the window area of any room.”

How basement square footage affects your home value

Unlike commercial real estate, homes are generally not priced strictly on square footage. So whether a basement counts as square footage or not, a nicely finished basement generally adds to the value of a home, says Carrie Abfall, a real estate agent with RE/MAX Real Estate Professionals in Columbus, IN. While the price per square foot for a swanky basement isn’t typically as high as main-level upgrades, the home’s value will certainly increase by adding in the additional living space. This is true whether the basement is a walk-out or below grade.

If the home with the finished basement wows a buyer, it may fetch a higher price, says real estate agent Randy Elgin with Keller Williams Realty in San Antonio, TX. Elgin advises to offer what you think is reasonable based on the home’s gross living area plus some fair amount for the finished or unfinished basement. Focus on the usable space and how much value you will gain from it. And include an appraisal contingency in the offer. That way you can back out if you are wrong about the market value.

 This article was on Realtor.com and written by Margaret Heidenry. She is a writer living in Brooklyn, NY. Her work has appeared in The New York Times Magazine, Vanity Fair, and Boston Magazine.

The home-buying process is a high-stakes thrill ride full of exhilarating ups and scary downs, but unquestionably one of the most deflating moments is when the appraisal comes in significantly lower than the accepted offer. This is, to use technical real estate lingo, “a bummer.”

Either you feel as though you got the raw end of a deal by paying more than the property’s worth or, if you don’t have extra cash to hand over, the deal can crumble into dust. (Your lender’s not going to fork over money for a higher loan amount if the appraisal came in lower than expected, so you’ll have to make up that difference yourself.)

“In a rising market, low valuations are pretty common because appraisals are based upon sales that closed when prices were lower,” says Diane Saatchi, a senior broker with Saunders & Associates in Bridgehampton, NY. “The reverse is so in a declining market.”

In other words: Appraisals can’t keep up with how quickly homes are selling in a hot market, so you’re bound to see lower-than-expected values placed on homes.So, what do you do if this happens to you? You have four options:

1. Appeal the appraisal

Sometimes called a “rebuttal of value,” the appraisal appeal takes some work. In fact, it’s a total team effort.

“The homeowner, loan officer, and often the real estate agent work together to find better comparable market data to justify a higher valuation,” says Casey Fleming, a mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.” 

That means everyone puts on their best Sherlock Holmes garb and gets to work looking for anything that helps the claim for higher valuation. Perhaps the appraiser overlooked some comps (homes similar in style, location, and square footage sold within the past few years).

“It’s not uncommon to discover, for instance, that the appraiser used a comparable sale that looks like it’s in great condition, when in fact the home was trashed when purchased and has already been rehabilitated,” Fleming says.

The loan officer writes an appeal using the new comparables and then sends it to the appraiser. There might be some negotiating back and forth until all parties come to a compromise with a new valuation.

Spoiler: It’s a hard battle to fight.

“My record on this one is 0 for 9 so far,” Fleming says. “But I know many appraisers personally who have adjusted their values.” So keep the hope alive!

2. Order a second appraisal

“Most often, if the appraised value is not as high as the agreed (contract) price, the seller’s agent will ask to see the comps and get a second or third appraisal,” Saatchi says.

But it will likely cost you–you’re not only paying for the first appraisal (in your closing costs), but you’ll pony up for any additional appraisals as well. They can range between a few hundred dollars and $1,000 depending on the area. Occasionally, real estate agents or sellers will foot the bill if they really want to keep the sale.

3. Negotiate with the seller

If you’re lucky, you and the seller will both budge a little.

“You might go back to the sellers and ask them to reduce the price or split the difference,” says Peter Grabel, managing director of Luxury Mortgage in Stamford, CT. “The seller is under no obligation to do so, but they may prefer to do this rather than take a chance of losing you as a buyer, and starting over again. It is likely that another buyer will have the same issue, so the seller might be better off renegotiating with you unless they have other offers.”

Sellers might be more willing to cooperate, especially if the Federal Housing Administration is involved. Lenders often require the use of their own FHA-approved appraiser, and these appraisals are “locked in” for six months.

“The seller could be forced to take a poor appraisal or wait it out for a buyer with a different loan,” explains Joshua Jarvis of Jarvis Team Real Estate in Duluth, GA.

Jeff Knox, broker and owner of Dallas-area real estate firm Knox & Associates, says this is the most common outcome in his area.

“Of all possible outcomes, this is what happens most frequently,” he says. “While the seller will usually be upset about the low appraisal value, most reasonable sellers eventually come to terms with the fact that any other appraisal values by potential future buyers will most likely come in at about the same value.”

4. Walk away

No one wants to let a property slip through their fingers, especially if it feels like their dream home. But beware of ignoring a low appraisal—you could end up losing thousands whenever you decide to sell.

If you have an appraisal contingency in your contract, you can walk away, get your deposit back, and hope for better luck the next time around.

This article was written by Maureen Dempsey for Realtor.com. She is a writer who covers fashion, beauty, lifestyle, and home decor. She’s recently learned that decorating her new home is just as satisfying as filling her closet.

We wanted to share this article from Realtor.com written by Audrey Ference about who pays the real estate fees.

For both buyers and sellers, the help of a knowledgeable broker is valuable, but who pays for the services of the real estate agent? If you’re about to start your home-buying journey, you’re likely thinking about hiring a real estate agent. Buyers and sellers are responsible for paying for different fees, so it’s important to know best practices for a typical home sale.

Here’s what you need to know about real estate agent commission and how much cash you can expect to contribute.

Who pays the real estate agent?

Standard practice is that the seller pays the real estate commission of both the listing agent and the buyer’s agent, according to Ruth Johnson, a Realtor® in Austin, TX. But she also points out that “while sellers pay the fees, they usually wrap them into the price of the home.” In that sense, you could say the buyer pays the fees.

“It totally depends on how you look at the situation,” she says. Fair point!

How much are real estate agent fees?

A common commission for real estate agents is 6% of the purchase price of the property. The fee is paid at closing by the seller, unless some other arrangement has been made.

All of the details about a real estate agent’s fee should be in the agreement you sign when you hire an agent—don’t be afraid to ask questions if there’s anything you don’t understand.

Generally, things like photography, the cost of listing the property, and the cost of any printed materials or signs are included in the fee, along with the real estate agent’s services, of course. If you have to do major staging or repair work, those costs will come out of your pocket.

Can you negotiate real estate agent fees?

A seller can negotiate the terms of the listing agreement—which contains the real estate agent fees—with the brokerage or agent.

If a buyer is in a tough seller’s market or bidding war, offering to pay some or all of the real estate agent’s fees can be a way to stand out from other offers. In fact, even though the buyer usually pays most of the closing costs, they are up for negotiation, too. That’s one of the many things a good agent will do for a buyer—make sure you get the sweetest deal possible.

Who pays the rental agent’s commission?

Rental agents work differently from purchase agents. It’s up to the landlord and the tenant to decide who pays the rental agent’s fee. Broker fees for finding you a rental generally fall between one month’s rent and 15% of the annual rent of the property.

In some situations, the landlord pays the broker to help him find a desirable tenant. But in other areas, like big cities with large rental populations, the renter will be required to pay the broker fee, even if the landlord hired the broker.

Customs vary widely by location, so always make sure you clarify who is going to pay for what, and how much it’s going to cost, before you agree to work with a rental agent.

Audrey Ference has written for The Billfold, The Hairpin, The Toast, Slate, Salon, and others. She lives in Austin, TX.

We are often asked, How hard is it to sell a house in a market where houses don’t stay but 1-2 days before having multiple offers? It is hard, trust us! FSBO are tricky and here are 5 reasons why from Realtor.com

For-Sale-by-Owner, or FSBO, transactions are commonly seen in seller’s markets or whenever homeowners want to maximize their profits by not having to pay commission.

However, statistics show that selling your home with the assistance of a professional real estate agent will garner you a higher profit, enough to cover the commission as well as put more money in your pocket. According to the National Association of Realtor®’s 2016 Profile of Home Buyers and Sellers, the average FSBO sales price was $185,000, while the average price for a home represented by an agent was $245,000. That’s a difference of $60,000!

If you choose to sell your home on your own, you’ll be negotiating and relying on your own skill to finalize a contract, leaving yourself open to potential legal problems and a smaller profit when all is said and done.

Here are some of the top reasons why FSBO home sales can go very wrong.

1. Marketing your home online isn’t as easy as you think

Buyers always start online, and FSBO sellers are unlikely to get the exposure they need on a number of listings websites to reach their audience, says Realtor® Wendy Hooper with Coast Realty Services in Newport Beach, CA. Sticking a sign in your yard or trying to pull off some DIY social media marketing hardly has the same effect.

How an agent can help: Using an agent automatically offers widespread exposure for your listing through the multiple listing service. Your real estate agent will also have the means to promote your house to fellow agents to share with their clients. FSBO sellers would have to shell out big bucks for advertising and still might not reach the most important audience.

2. You could price your home wrong

Those who put their homes on the market as FSBO tend to set a price based on an online assessment tool or the lofty sum that the neighbor down the street claims they were offered—two methods that are liable to put the listing price way off.

“Using a free online valuation tool is like bringing your doctor a printout of your Google search about symptoms and possible cures,” says Jon Sterling, a real estate consultant with Keller Williams Realty in San Francisco. “There’s no substitute for actual market knowledge.”

The danger in overpricing a home is that it will languish on the market, and buyers will wonder why, even if you lower the price later, says Mark Ferguson, a real estate agent with Pro Realty in Greeley, CO.

“The home becomes stigmatized, and buyers are likely to pay a lower price when the home has been on the market an extended period of time,” Ferguson says.

How an agent can help: A real estate agent will provide an accurate home value based on a comprehensive market analysis to help you arrive at the right listing price. The goal is to make sure you’re pricing your home in the sweet spot—not too high so that you are turning off potential buyers, and not too low so you are leaving money on the table.

3. You could underestimate (or overestimate) how much money to spend on curb appeal

“A novice home seller is unlikely to view their home objectively or know how to stage it to appeal to the broadest audience,” says Hooper. That means you might be turning off potential buyers with an amateur paint job, an overgrown yard, or even a broken doorbell.

On the flip side, you might end up investing far more money than is needed. Hooper had sellers who were convinced they had to totally overhaul their 35-year-old kitchen and floors to the tune of about $50,000. Instead, she advised a $10,000 investment for paint, staging, and minor repairs, which still netted $45,000 above their target price.

How an agent can help: Even if you’re not up for a full home makeover, your agent has an eye for detail and can recommend simple, budget-conscious swaps that can translate into real dollars when it comes negotiation time.

“We know how to spend the least amount of money to get the best outcome and home presentation possible,” Hooper says.

4. Showings are a drag

FSBO sellers don’t realize how draining it can be to set up showings. And on top of scheduling actual potential buyers, you also have to deal with both looky-loos (gawkers with no intention of buying the house) and “sharks,” (investors looking to flip your house for a profit).

“Sellers who advertise their FSBO will quickly be inundated with calls from real estate investors who are looking to save the same commission the seller hopes to save,” Sterling says. Unfortunately, typically these offers are very low and could likely lead to no sale.

How an agent can help: Your agent will handle all the scheduling and staff the tours for you, so all you have to do is quickly tidy up and vacate.

In fact, that is another key reason to have an agent: Buyers can get uncomfortable with a seller hanging around during a showing, says Ferguson. Agents also will weed out unsuitable offers and collect feedback that potential buyers might be unwilling to share directly with the seller, which can make subsequent showings even stronger.

5. Preparing your own paperwork can be tricky

Unless you have a background in contracts or law, you might want to leave the paperwork to the pros. The closing process can entail more than 20 pages of complicated paperwork, including the contract and addendums designed to cover all of the situations that could go wrong, says Ferguson.

For example, houses built before 1978 require an addendum regarding lead-based paint and some states need a release confirming the presence of carbon monoxide detectors.

How an agent can help: Your agent will take care of all property disclosures and corresponding documentation to avoid future liability.

“If the seller does not use an agent and doesn’t know every law and required paperwork specific to their community, they open themselves up to lawsuits,” warns Ferguson.

This article was written by Cathie Ericson is a journalist who writes about real estate, finance, and health. She lives in Portland, OR.

 

Let’s face it, we all don’t have great taste. Some of us have better taste than others, and then there are those of us that have an amazing sense of color and decor (I wish I was one of those people). You might love a bright purple in your living room but would a potential buyer? Today, on Realtor.com, Lindsey Cambell writes about what colors help or hurt your potential home sale.

When decorating a home it’s easy to appeal to your own personal taste: A kitchen painted your favorite shade of red, or a brightly colored statement chair in your living room, can instantly make a new house feel like home.

But, if you’re ever planning to sell your home, you should know how your color choices now will affect a buyers view of your home later.

In a recent survey by Better Homes and Gardens, 400 homeowners were polled on the colors they’re most and least attracted to. The results showed strong preferences—not just for color in general, but also for how and where each hue was used.

Here are a few takeaways to keep in mind:

Avoid these three colors

Orange, black, and violet: Of the homeowners polled, 58% said they’re least likely to decorate with orange, claiming it’s “way too loud.” Black and violet followed, snagging the second and third spots on the list of colors homeowners would rather live without.

A fan of these condemned tones? Well, we’re not saying they’re banned.Just try to limit them to small surfaces and keep them off your walls—they can be overpowering for buyers.

Don’t oversaturate your interior

When it comes to color, the biggest fear among homeowners (read: your potential future buyers) is that they’ll get sick of the color they’ve chosen. That means if you’re going to use saturated hues, you’re going to want to see them limited to certain rooms and decor.

Those polled ranked the living room (63%), kitchen (53%), and bathroom (52%) as the top three spots where color is most likely to be used. In other spots, you’ll want to go easy on the saturated shades—specifically, the foyer (36%), dining room (24%), and adult bedroom (24%).

Think accent, not statement

When it comes to buyer-friendly decor, you can still use the colors you want, but small doses are best: 41% of participants preferred using color as an accent throughout the home.

We think you know what this means. Leave large surfaces—walls, floors, and ceilings—neutral to act as a backdrop for your furnishings and accessories. When it comes time for a walk-through or open house, the potential new owners can imagine their life and belongings in the home without being overwhelmed by your design.

Go bold—outside

Have a penchant for color but afraid of the consequences when you go to sell? Take that personality to the exterior of your home and opt for a front door in a shade other than white.

Bringing a touch of color to the front of your home will feel welcoming.  But keep it to the front door or shutters—only 8% say a bold-colored exterior would be something they’d consider.

Feeling blue is actually a good thing

When it comes to decor, that is.

The calming shade won the most affection from homeowners, with 62% favoring a palette rich in blues. The fervor for earthy hues continues with green as the second favorite; neutrals follow as the most common choice on interior walls.

So, whether you’re hoping your house sells in the next 20 minutes or you’re planning to put it up for sale in 20 years, you should consider the consequences of your color choices.

During your time in a home, decorate for yourself (and enjoy it!). Opt for a throw or a bright piece of artwork to add personality to neutral-colored rooms. And, if you so dare, paint a room in a bold shade—just be ready to repaint or tone it down with neutral furniture when it’s time to move on.

 

 

Lindsey Campbell is a writer living in Brooklyn, NY. She is coffee-obsessed and a lover of travel, photography, and all things with color and shine.

 

Congratulations! You have just closed on your new home and are pulling the moving truck into the driveway, and the last thing on your mind is the yearly maintenance needed to keep your home in great shape. We have found a list complied on Zillow.com by See Jane Drill of DIY maintenance that should be done the first 3 months and then organized seasonally. Enjoy!

First three months

You’ll be busy enough moving in and getting settled, so we don’t recommend taking on a lot of work during the first few months. There are, however, a few things you might consider doing right away:

  • Change all the locks, and make spare keys.
  • Implement energy-saving measures right away to save you money on heating and cooling costs:
    • Hang a clothesline in the laundry room and/or outside to cut down on dryer costs.
    • Lower the hot water heater temperature to 120 degrees F. This is generally the hottest water temperature that anyone would need, and lowering the temperature prevents scalding accidents.
    • Install a programmable thermostat, and learn how to use it.
  • If you make your home comfortable for kids and pets first, you’ll be comfortable, too! Babyproof and petproof as needed.

Seasonal maintenance

We organized the tasks by season, but some items are interchangeable. This is simply a recommendation, so make it work for you!

Summer

  • Install ceiling fans to cut cooling costs, or reverse the direction of existing fans. Run your fans counterclockwise in the warm months, and clockwise in the cool months.
  • Inspect the roof for missing, loose, or damaged shingles. You don’t always have to climb up there to do this. In some cases, you can do this from the ground with binoculars.
  • Clean the roof and gutters of leaves and moss.
  • Fix large cracks in the concrete or asphalt driveways. Do this during warm weather, when you can expect a few dry days for proper curing time.
  • Inspect air conditioners, and replace the filter if necessary.
  • Have the fireplace inspected and the chimney swept. You’ll likely pay less for these services by doing it in the offseason.
  • Clean and repair or replace window and patio door screens.

Fall

  • Seal cracks in windows and doors with caulk or weather stripping.
  • Drain exterior plumbing, and cover outdoor faucets.
  • Clean carpets. You can do this anytime, but it’s nice to get it done right before the holidays!
  • Install a new furnace filter.
  • Replace batteries in smoke alarms and carbon monoxide detectors. A good way to remember this task is to do it when you set the clocks back for daylight saving time.
  • Clean the dust from heating vents, and make sure vents are obstruction-free.
  • Inspect and replace — or add — outdoor lighting around the front of your home and walkways. This helps keep people safe when it gets darker earlier.

Winter

  • Clear drains of hair clogs using a Zip-It drain cleaning tool or a drum auger.
  • Clean the oven. While you’re at it, make sure all your kitchen appliances are in good working order prior to the holiday season.
  • Check the insulation in your attic or crawl space, and add more if needed. A good general guideline: have at least 12 inches of insulation in the attic, and up to 16 inches if you live in a region with very cold winters.
  • Create a family fire escape plan, and do a few fire drills to make sure everyone knows what to do in an emergency.
  • Keep snow and ice removal supplies on hand, such as a shovel, snowblower, and salt or sand.
  • Compile an emergency kit for your household with extra water, food, medicines, flashlights, and other necessities.

Spring

  • Clean and refinish (where applicable) decks, porches, and patios to prepare for outdoor living.
  • Bring out the outdoor furniture, and clean grills so they’re ready for backyard barbecues.
  • Spring-clean all windows — inside and out.
  • Plant a tree. This is a fun family activity to do in your new home. Plant the tree strategically for shade in a particularly warm and sunny area of your home.
  • Once you’ve had the last fire of the season, close the fireplace damper to keep dirt and pests out.
  • Assess and inspect garden tools and lawnmowers to make sure they’re ready for a new season of working hard in your yard.
  • Because this is your first season in a new home, take some time to observe your yard before making any major changes. See where the sun shines at different times of the day. Watch which perennials come up at which times. Take notes about what you like about the current landscaping, and what you want to change or add to the landscape.

Most importantly, enjoy your new home! Taking care of these few maintenance jobs will help you love your home for many years to come.

Wire fraud is becoming more and more prevalent in the world. According to the FBI, fraud is a $30-$50 billion dollar problem with 90% of wire fraud being prevented (the numbers are still staggering):

$951 million attempted

$870 million prevented

$81 million lost

They are trying hard at stopping the majority of the fraud cases but the bad guys always seem to be a step ahead. Here is what you can do to help prevent you from being a victim of fraud.

 

Are you ready for the housing market’s Endless Summer? At least it might feel endless, because there seems to be no end in sight for the national housing shortage now that we’re waist-deep in the busiest season for buying and selling, according to a preliminary analysis of June data by realtor.com®.

With limited growth in for-sale homes, prices remained high. Just a few months ago, the nationwide median home price pushed above $250,000 for the first time. We’re predicting it will hit $275,000 when we close out June—an increase of 9% since one year ago.

“The housing market has now gone 24 months in a row seeing inventory drop on a yearly basis, the longest streak in over two decades,” said Javier Vivas, manager of economic research at realtor.com, in a statement. The shortage is hitting even more markets, he added—8 out of every 10 have fewer homes for sale now than this time last year.

And that shortage is reflected in how fast homes are snapped up. Properties in June spend a median 60 days on the market—the same level as May, but five days faster than in June 2016.

It’s not that homes aren’t being listed for sale—in fact, 536,000 new listings entered the market in June. But total inventory is substantially lower than one year ago, at 11%. Plus, those new listings are primarily in the upper tier of the market, leaving middle- and lower-income buyers to fight it out over what’s left.

“Most of this fresh inventory isn’t addressing the largest, most desperate group of buyers,” said Vivas. “With no clear hints of new construction providing short-term relief, there appears to be no end to the inventory shortage on the horizon.”

Amid all this, Vivas’ team assessed the country’s biggest metropolitan markets to find which were buzzing the most with buyer activity, in terms of listings clicked on our site and homes speeding off the market on their way to new owners. As is the norm in recent years, our top 20 is a list dominated by California, but seven other states made a showing, and a couple of big movers hail from the Midwest.

The top two spots are still held by the double threat of Vallejo, CA, and its infinitely swankier neighbor to the south, San Francisco. The San Francisco Bay Area’s economic influence reached eastward to Sacramento, which has absorbed many San Franciscans fleeing that city’s high prices. Sacramento sits at No. 4 on our hot list, after Kennewick, WA. And Columbus, OH, reached the top five for the first time in our ranking. Detroit, which fell just short of joining the club, moved up an impressive 12 spots since last month.

The hot list

Rank (June) 20 Hottest Markets Rank (May) Rank Change
1 Vallejo, CA 1 0
2 San Francisco, CA 2 0
3 Kennewick, WA 5 2
4 Sacramento, CA 4 0
5 Columbus, OH 7 2
6 Detroit, MI 18 12
7 Boston, MA 3 -4
8 Colorado Springs, CO 6 -2
9 San Jose, CA 7 -2
10 San Diego, CA 16 6
11 Dallas, TX 12 1
12 Waco, TX 30 18
13 Grand Rapids, MI 13 0
14 Stockton, CA 10 -4
15 Midland, TX 8 -7
16 Fort Wayne, IN 11 -5
17 Santa Rosa, CA 19 2
18 Denver, CO 17 -1
19 Yuba City, CA 21 2
20 Modesto, CA 23 3

 

Written by

Cicely Wedgeworth is the deputy managing editor of realtor.com. She has worked as a writer and editor at Yahoo, the Los Angeles Times, and Newsday.

Home inspections can make or break a home sale. On Realtor.com Lisa Kaplan Gordon writes about how to prepare your home for inspection.

You’ve got a contract on your home for sale—congratulations! But before you pop the cork on the champagne, you’ve got to go through an ordeal that could make or break that sweet deal: a home inspection.

The home inspection is a contingency written into most offers, meaning that if the buyers aren’t happy with the result, they can cancel the sale without losing their earnest money deposit, or reopen negotiations and ask for a price reduction.

So it’s important to prepare yourself and your home for this important step of the process. How? Hey, we’re glad you asked! Let’s start at the beginning.

Will there always be a home inspection?

If your buyers are planning to tear down your home and build their own dream house, you might feel a pang of regret, but at least you won’t need to worry about the quality and condition of your property. These buyers are trying to get the lowest price possible and, if they think a clean contract without an inspection contingency will make them an attractive buyer in a competitive market, they’ll often forgo an inspection contingency.

But most buyers who are planning to live in your home want to know what they’re getting into. They want to know which systems work, and which don’t. They want to know how much money they’ll need to plow into the purchase, and which items you, dear seller, are willing to fix or replace to seal the deal.

The results of home inspections can give buyers peace of mind, or a tool they can use to bargain down the price. In the worst case, people with buyer’s remorse will use results of a home inspection to back out of the deal without penalty.

Sound scary? Don’t fret just yet. That first home inspection will let you know everything that’s wrong with your home. Armed with that information, you can fix problems before the next buyer shows up, adjust the price to reflect necessary repairs, or simply have a ready response when the issue comes up again.

Inspectors will look at everything

A home inspection is no quick once-over. Inspectors have a 1,600-item checklist, according to the National Association of Home Inspectors. Yep, you read that right—1,600. 

“If we can get to it, we’ll inspect it,” says Frank Lesh, executive director of the American Society of Home Inspectors.

Here are just some of the areas of the home your inspector is checking, and what a home inspector is looking for:

  • Grounds: Standing water, faulty grading, sick or dying trees and shrubs, crumbling paths and walls
  • Structure: Foundation integrity, rotting or out-of-plumb window and door frames
  • Roof: Defects in shingles, flashing, and fascia; loose and hanging gutters; defects in chimneys and skylights
  • Exterior: Cracks or rot; dents or bowing in vinyl; blistering or flaking paint; adequate clearing between siding and earth
  • Window, doors, trim: Rotting frames, peeling caulk, damaged glass
  • Interior rooms: Water-stained ceilings, adequate insulation, and sufficient heating vents
  • Kitchen: Proper venting, no leaks under the sink, and cabinet doors and drawers operate properly
  • Bathrooms: Toilets flush properly, showers spray, and tubs are securely fastened
  • Plumbing: Drains flow properly; water has proper temperature and pressure
  • Electrical: Proper electrical panels and working light switches and outlets

How can you prepare?

The home inspection isn’t a test that you need to study for. But there are some things you can do before a home inspection to make the process go more smoothly.

  • Clean and de-clutter your home: Yes, inspectors will look way beyond the superficial clean home. But you want to make sure they have easy access to attics, basements, and electrical panels—and aren’t tripping over your kids’ toys while trying to do their job. Think of it as an early start to your packing.
  • Get your paperwork together: You should create a file with documentation of all maintenance and repairs you’ve done on your home. If you’ve had an insurance claim on your house, keep those papers together, too, so you can prove that you took care of the problem.
  • Provide complete access to your home: Make sure you unlock gates and doors to a shed or garage that doesn’t have lockbox access.

You could consider getting a pre-inspection to eliminate any surprises; some sellers choose to hire their own inspector to give the house a once-over and point out any problems, so they can fix them before the buyer’s home inspector arrives on the scene.

But be careful with this tactic.

“It’s not a good idea,” says Bill Golden, an Atlanta area real estate agent. “If you have five different inspectors inspect the home, you’ll get five different lists of items they’re concerned about. Just because your inspector didn’t have a problem with something doesn’t mean the buyer’s inspector won’t.”

More important, if your inspector points out a problem, you’re obligated to disclose it to buyers.

“This could be a potential turn-off to buyers,” Golden says.

Do yourself a favor, and leave

Unless you’re a glutton for punishment, give the inspector your cellphone number, grab your car keys, and go to a movie or out to lunch when the home inspector shows up. Your anxiety will only make everyone uncomfortable, which isn’t a productive atmosphere during an inspection.

“Inspectors and buyers are not at all comfortable with the seller being present during an inspection,” Golden says. “They need to be able to freely inspect and discuss any and everything they come across. You may think you are being helpful by being present, but you are not; you are impeding the process.”

And don’t play eager hostess. You don’t need to set out cookies and drinks; or provide ladders and other tools the inspector needs. He’ll bring his own.

Check your ego at your own door

Buying and selling a house is a competition: Sellers want to get the highest price, and buyers want the lowest. It’s not personal—it’s business. Remember that when a home inspector presents list of problems with your home as long as your arm.

“A home inspector’s job is to point out each and every deficiency and safety violation they see,” Golden says. “Arguing with the buyers about an inspector’s findings is not helpful.”

Keep your head in the game, and solve the problem with the buyer.

“It may be agreeing to fix an item, it may mean giving them some money toward a repair, or it may simply be providing documentation,” Golden says.

And that’s where an experienced real estate agent earns his or her commission. Agents know how to interpret inspection reports, which issues are vital to address, and which are red herrings designed to reopen price negotiations.

Lisa Kaplan Gordon is an award-winning writer who’s covered real estate and home improvement for realtor.com, Yahoo, AOL, and many others

I was looking at Realtor.com the other day and came across this post about how comps are tricking people into thinking their home is worth more or less than what the home is really worth. I thought I would share this article written by Cathie Ericsson. She is a journalist who writes about real estate, finance, and health. She lives in Portland.

“Unlike most things we buy in life, homes don’t come with a sticker price. Sure, the real estate listing may say the price of the home is $320,000, but that’s just a starting point. Buyers can—and should—offer more or less money for the house based on something called real estate comps, short for “comparables.”

Real estate comps are properties that have similar characteristics to the house you’re trying to determine the value of. They’re critical tools used by real estate agents when you’re ready to buy or sell.

Because it’s easier to compare apples to apples, the best comps are houses that are as similar as possible to the one being valued.

But sometimes the comps are incorrect, which makes it hard for you to arrive at an appropriate value for your home. Using comps to determine a home’s valuation is not entirely a science, but there are some signs your real estate comps are not accurate.

Sign No. 1: The comps are far away

When we say location is key in real estate, that doesn’t just pertain to the location of your home. Your comps’ location is important because they take into account the desirability of the school system and neighborhood, among other factors, explains Jon Boyd, broker and manager of The Home Buyer’s Agent in Ann Arbor, MI.

If there aren’t sufficient nearby comps (as can happen if you’re in a rural area), your agent might need to widen the search area. Ideally you’ll look at homes within roughly a half-mile so you are truly comparing houses that are being valued equally.

Sign No. 2: The comps are stale

Markets move fast, and using a comp from a year ago will give you an incorrect idea of home values in your area. Boyd recommends sticking with homes that have sold within the past six months; the more recent, the better.

Sign No. 3: The comps are really appraisals

Does your comp use a strict formula of square footage, bedrooms, etc. to arrive at a market value? If so, that sounds more like an appraisal, which is an entirely different way of determining the value of the home. Be careful not to confuse the data provided by these two documents, warns Molly Stehman, real estate broker with Premiere Property Group in Lake Oswego, OR.

“Comps are totally subjective and a lot of opinion goes into the numbers,” she says. Appraisers must follow rules that standardize the process of determining a home’s value. So when coming up with comps, in addition to objective measures like square footage and number of rooms, Stehman will add factors like whether the home has been updated or remodeled, whether the floors are hardwood or laminate, the walkability score, the age of the roof and furnace, and even what she calls the “charm factor.”

That’s why the picturesque remodel you’re looking at might be priced higher than the plain-Jane house down the street, even if the facts on the appraisal sheet are basically identical.

Sign No. 4: The comps include homes that are still on the market

To be useful, a comp has to tell you what the home sold for, not what the asking price is. The best indicator of a house’s value is what people have paid for it, not what they might be willing to pay (the seller hopes). Be sure your comps contain only homes that are off the market.

Ultimately, the seller or buyer decides how much they want to ask or what they’re willing to offer for a house, Stehman points out. But by making sure your comps aren’t off-base to start with, you can step up to the negotiating table feeling as informed as possible.

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