Appearances are Important, But Housebuying Involves More Than Looks

Everyone has heard of "flips". They were often foreclosed houses or condos bought, usually by an investor or some legal entity for the purpose of "fix and sell".

 

Often, they have updated or completely remodeled interiors that usually include granite countertops in the kitchen, new ceramic tile flooring in the baths plus new shower and tub tiled walls, all new sinks and toilets, stainless steel (or brushed stainless look) appliances in the kitchen, new paint, new carpet or newly refinished floors, sometimes new landscaping outside, maybe a new garage door, and if you're really lucky, a new roof.  What's not to love?   Anyone could get excited about moving into a new home that has that new look that will not need work for quite a while.

But since most buyers are obtaining financing (all cash buyers are about 30% of the market overall), the loan people have requirements.

What You Need to Find Out Before Making An Offer:

Did the seller acquire this property less than 30 days ago? If you're a "regular" buyer with standard financing, you will be locked out of making an offer on this property UNLESS is it a Fannie or Freddie property, owned by a state or government agency, an approved non-profit which handles HUD REOs or one connected to "Neighborhood Community Stabilization Program".

If the seller has owned the property up to 90 days, and the new sales price is 20% or more higher than what the seller paid for the property, then there are more issues: There must be a second appraisal (on top of the first one by the buyer's lender), not at the buyer's expense, but at someone else's, which could be another $500 to be paid up front when it's completely unknown if the two appraisals can somehow agree with each other (and many times appraiser don't agree with each other); additionally, another property inspection must be performed and paid up front by the loan officer.   THEN, copies of all work performed by the seller in renovation must be produced, which only a very caring property flipper will probably have on hand. Remember, property flips are often financed by short term loans by sellers who have never lived in the property and have no attachment to it, and whose disclosures to the buyer will probably be very minimal.  And even if you find a loan officer willing to front another $800 up front, this will not all be accomplished in a 30-day escrow. 

After 90 days? You're good to go.

Who the seller is, the length of time it's been on the market, these are very critical to know before an offer is made. And then the buyer will have to realize that should any items be called out on the home inspection by your inspector (there is no such thing as a perfect home), the seller almost always will refuse to do any additional repair because it's "already been done".  Perhaps, but anything your lender notes on the appraisal(s) will be critical before the loan can close, and if the seller refuses, you may decide to walk. 

SO, let your agent help you with finding properties that will meet your buying and lender criteria. Professional help can save you a lot of time and wrong directions.

Just Listed in The Lafayette

Lovely 10th floor studio unit in The Lafayette in downtown Long Beach. Faces south for panoramic city, neighborhood,

and ocean views. Lots of light in this spacious unit. Kitchen upgraded in 1995 with cabinetry, counters and ceramic tile flooring in kitchen/dining areas. The bathroom tile reflects the Art Deco historic style. Unit is close to the elevator. Visit the solarium on the 11th floor for more views, and the patio on the 7th floor. Extra storage units (see HOA for fee) are on availability basis. A former ballroom has become the association gym. Tax records show as one-bedroom, however, this is a studio unit with a Murphy bed in a double-door enclosed area in the living room area. Dining area offers direct views to the south. The historic Lafayette has a beautiful lobby reflecting its Art Deco past, and is located in prime urban downtown with shops, restaurants.

List price $193,000.  Lic 01188996

 

Note: Sold 4/28/2014 for $203,500. If you want a free market analysis for your property, please contact me!

 

A Few Things I Have Learned From My Clients and Selling Homes

Learning does not necessarily come in the form you think it will--sometimes you learn from mistakes, or you learn from what others tell you and what they know, or you learn from having been around that bend in the road before.  We are in the business of having to explain to our clients what they must do before, during and after transaction, and hence, we are constantly in the business of explaining and talking.  But the learning process goes in both directions.

I was so surprised when I was helping a buyer in  a purchase transaction for a WWI era Craftsman-style home to find out that those foundation blocks that look like solid concrete are in fact . . . hollow.  It turned out the particular house in question had a very poor deteriorated foundation on 3 sides.  The remaining side with hollow ornamental concrete block was providing the most support, which was not full support either. It turned out my buyer, who had prior experience with this type of foundation and didn't like them, knew and expected the concrete block to be hollow, a fact I ended up learning from this one client and which was emphasized by his physical inspector as well. Yes,  they finally bought the house anyway because in the end, he wanted an older house style.

I've learned this more than once:  Sometimes what people think they must have and they can't live without can be laid to rest if they find something that's desirable enough to make them forget their first "must have".  When working with a couple who had the expectation of buying at the standard of the brand new housing their parents could buy in the 1950s, I was beginning to wonder if I could sell them a home in a city of 50-year-old homes. After all, most houses have cracks in the driveway if it isn't brand new concrete.  I pulled up to preview a property and thought twice about going in--it had cracks in the driveway, among other things.  But I thought, what the heck, I'm here so I may as well look.  After seeing the vaulted and beamed ceiling family room, I knew I had to get them in there.  It turned out that was the feature that sold them on it, and even though the cracks in the driveway were noticed, they paled in comparison to the family room.

Sometimes the talkative partner who says they have the final word just turns out to not be the ultimate decision-maker.  If you have to talk about it too much, you're probably not it.  Like these birds milling around in the parking lot and not going anywhere, such people don't buy or sell because they don't come to an agreement.  "Meeting of the minds" is what makes everything move forward.

As Realtors helping our clients understand the market, we get used to telling them things, sometimes over and over.  And then again and again, because there's a lot to know in all that paperwork, and data about the market, and what comes from our knowledge and experience.  But, sometimes (and I learned this from a garage mechanic one time who was good at listening to me ramble on about my car's symptoms) people have their own intuition about their own deal. In the midst of a counter-offer meeting, the buyer insisted on a low price I believed the seller was unlikely to take, even though that market had more sellers than buyers. Maybe it was the glint in the his eye, but I decided to go ahead and print up the counter offer with the buyer's price.  With no further ado, the next day the seller accepted it, and escrow was opened.

So sometimes you know a lot, but you still have to keep your alert system on for incoming unrecognized sources.