Selling Your Home - Here's What to Look For

1. A Few Words From Our Sponsor
2. All Real Estate Agents Are NOT Created Equal
3. Fiduciary Duties Of A Real Estate Agent
4. Some Basic Steps at the Beginning of the Marketing Process
5. Preparing Your Home For Marketing
6. How to Price Your Home
7. Choosing a Price to Market Your Home: What is “Market Value?”
8. Showing the Home
9. The Truth about Open Houses
10. Writing the Contract
11.How to Prepare Your Home for the Home Inspector

A Few Words From Our Sponsor

When it comes to selling homes, besides price, the question I most often get asked is, “Why should I use a Realtor to sell my home?” Well after 23 years in the business and hundreds of transactions, the question I would ask is “Why wouldn’t you?!” Of course it all boils down to one thing, the almighty dollar and with an average 6 percent commission on the line for Sellers to part with, it seems reasonable to question such a move. After all, a Seller can technically do some of the things themselves right? They can put a sign out, They can advertise it on the web can’t they? Yes, but if a Seller investigates the range of steps and nuances that are involved in a Real Estate transaction and really understood the liability they might be exposing themselves to, they would think again. And if a Seller was really concentrating on the net amount they would walk away from the table with and realize that it’s statistically proven that a Realtor can actually help a Seller NET 3-5 % more from the sale even after paying a commission then I ask again, Why WOULDN’T they use a Realtor? On a listing consultation where I sit with a Seller and discuss the value of my services, I cover all those points based on their specific situation and it’s almost 8 out of 10 times I end up being hired to market and follow the transaction through to a successful close. But in the absence of the particulars of a specific situation, I’ve put together an outline of the some of the steps that are necessary and some the things a Seller needs to be aware of in general if they are looking to sell a home whether they use a Realtor or not. One thing is for certain though. I would absolutely recommend that a Seller sit down and talk to a Realtor before going it alone. The consultation is free and a lot of insights can be gained from the meeting no matter which direction is chosen. So here is some valuable information on the home selling process. Back to top

All Real Estate Agents Are NOT Created Equal

All real estate licensees are not the same. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the REALTOR “®” logo on the business card or other marketing and sales literature. REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reports that 84% of home buyers would use the same REALTOR® again. Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be foolish to consider a deal in real estate without the professional assistance of a REALTOR®. But if you’re still not convinced of the value of a REALTOR®, here are a dozen more reasons to use one: 1. Your REALTOR® can help you determine your buying power — that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices. 2. Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties. 3. Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell? 4. Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required. 5. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date. 6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders. 7. Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly. 8. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle. 9. Your REALTOR® markets your property to other real estate agents and the public. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients. 10. Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally pre-screen and accompany qualified prospects through your property. 11. Your REALTOR® can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing — a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process. 12. Your REALTOR® can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement). Back to top

Fiduciary Duties Of A Real Estate Agent

A real estate broker who becomes an agent of a seller or buyer is deemed to be a fiduciary. Other examples of fiduciaries are trustees, executors, and guardians. As a fiduciary, a real estate broker is held by law to owe specific duties to his/her principal (the person who they are representing), in addition to duties or obligations set forth in a listing agreement, buyer representation agreement, or other contract of employment. Subagents of the broker also owe the same fiduciary duties to the broker’s principal. These specific fiduciary duties include:

Loyalty One of the most fundamental fiduciary duties an agent owes to the principal. The duty obligates a real estate broker to act at all times, solely in the best interests of the principal, excluding all other interests, including that of the broker. An example of breach of loyalty is when a broker purchases a property listed with his/her firm, and immediately resells it at a profit. Such conduct is usually considered appropriate and lawful by persons who act at arms length, but a fiduciary would be considered to have stolen an opportunity for profit that rightfully belongs to the principal. Obedience An agent is obligated to promptly and efficiently obey all lawful instructions of his/her principal that conform to the purpose of the agency relationship. However, the duty does not include an obligation to obey unlawful instructions, such as instructions to not market a property to minorities or to misrepresent the condition of a property. Disclosure An agent must disclose to the principal all known relevant and material information that pertains to the scope of the agency. The duty includes any facts affecting the value or desirability of the property, as well as any other relevant information pertaining to the transaction, such as the other party’s bargaining position, the identity of all potential purchasers, information concerning the ability or willingness of the buyer to offer a higher price, any intent to subdivide or resell the property for a profit. An agent’s duty of disclosure to his/her principal must not be confused with a real estate broker’s duty to disclose any know material facts about the property value to non-principals. The duty to disclose known material facts is based on a real estate broker’s duty to treat all persons honestly. The duty of honesty does not depend on the existence of an agency relationship. Confidentiality An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold know material facts about the condition of the seller’s property from the buyer, or to misrepresent the property’s condition. To do so constitutes misrepresentation and impose liability on both the broker and the seller. Reasonable care and diligence An agent is obligated to use reasonable care and diligence when pursuing the principal’s affairs. The standard of care expected of a buyer’s or seller’s real estate broker is that of a competent real estate professional. By reason of his/her license, a broker is considered to have skill and expertise in real estate matters superior to that of the average person. As an agent who represents others in their real estate dealings, a broker or salesperson is under a duty to use superior skill and knowledge while pursuing the principal’s affairs. However, no broker is expected to perform tasks or know information outside the scope of his/her real estate license. Real estate licensees are not expected to perform services normally provided by engineers, lawyers, accountants, or other professionals. If concerns arise outside the scope of a broker’s responsibility, the broker should acknowledge that and suggest that the principal seek assistance from a reliable outside source. Accounting An agent is obligated to account for all money or property that belongs to his/her principal entrusted to that agent. The duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to them relative to their client’s transactions of affairs. Whether a principal is a buyer or a seller, an agent always owes that person the above six fiduciary duties. These duties are inherent in all agency relationships and enforced by all courts of law in the United States. Back to top

Some Basic Steps at the Beginning of the Marketing Process

If you’ve decided to choose a Realtor to be involved in the sale of your home it’s best to understand the role each of you play in the partnership and indeed it is a partnership where communication is key and everyone performs to their utmost ability, the things they are responsible for. The Realtor’s advice and expertise is important in all roles but the Seller is the person ultimately responsible to make the final decisions on important factors in his/her control. In the absence of using a Realtor, the Seller is responsible for all the roles. Seller:

Condition of the Home

Choosing the Price and Terms

Realtor:

Exposure Through Marketing

Handling the Transaction

Important Factors in No One’s Control:

Interest Rate and Banking Condition

State of the Economy

Amount of Inventory to Compete With

As we can see, there are many factors that are in no one’s control. The challenge for many Sellers is to separate themselves emotionally from the process and listen objectively to information that is vital to making good common sense decisions Back to top

Preparing Your Home For Marketing

In many ways, the selling of your home is similar to the selling of a product. From the moment you make the decision to place your home on the market, you are no longer simply a homeowner and a resident in the property. You must now view yourself as the seller of a unique and valuable commodity. The price of this commodity will be determined in the same way that other products are bought and sold. First, there must be a demand for your property given its condition and price relative to the current marketplace. Second, there must be viable and affordable vehicles for you to advertise your property in. Third, the potential buyers of your property must have easy access to it to allow them to inspect it as they shop for their most suitable choice. Fourth, and perhaps most importantly, you must be willing and able to separate your personal and emotional ties to the home from the property itself.

Appearance

There is nothing like a good first impression to drive a sale. There is nothing more lasting than a bad first impression.

Outside

Begin the process of readying your house for sale by stepping outside and evaluating the property from curbside. Trying to be objective, ask yourself what a newcomer will notice as they drive up to the property. What is the general first impression? Has the exterior of the house been well taken care of? * How does it compare with the other homes in the neighborhood? * Has the landscaping surrounding the house been maintained? * Do toys, tools, or trash litter the landscape and detract from the appeal of the house? Complete your inspection by walking around the house and into the back yard. Remain critical! Keep in mind that you are pretending to wear the shoes of a potential buyer. You are also following a path that will be walked by a home inspector or other individuals hired by the buyer to give professional opinions about the property’s façade and exterior characteristics. Prepare a list of action items that will need attention immediately and that can be completed without undue cost.

Inside

Conduct the internal inspection starting at the front door and walking through the house as a buyer might. At each threshold stop and review individual rooms to gain a general first impression. Make a list of action items pertaining to the inside of the house. Things to watch out for include: Clutter – Piles of newspapers, magazines, toys and other objects, and even mail distract from the fine points of a room and contribute to making the room seem smaller. Poor lighting – Inspect those things that contribute to the brightness of the room. Open curtains and shades, make sure windows sparkle from inside and out, replace burned out light bulbs, and wipe down walls that contain smudges or marks. Good lighting can contribute to a feeling of spaciousness. Dirt – It appears in obvious places like heavily trafficked kitchens and baths, and some inconspicuous places that a serious buyer could investigate such as under furniture and appliances, in closets, on windowsills, and inside of cupboards. If your property is in a competitive market, it is strongly recommended that you hire a professional cleaning service to completely clean your house. A clean house gives the impression of being well cared for and offers a subtle assurance to most buyers. Too much furniture This is often a problem when you have occupied a property for a number of years. In some cases, moving furniture from one room to another or removing certain pieces altogether can greatly improve the look and feel of a room. Poor decor – Keep an eye out for shabby fabric, colors than clash, or decorations that are so personal that they make the buyer focus on you rather than on your property. Also keep an eye out for empty spaces that could be filled by inexpensive silk flowers or plants, or other decorations that would spruce up the room. Summary Make a list of positive and negative features of each room and prepare to maximize the positives. Write down the finer points of the home and provide this information to your Realtor to be used in creating promotional materials. If you feel that there are major upgrades or changes that must be completed in order for the house to sell seek the advice of a real estate professional to get a second opinion before you invest your money on renovations. Unfortunately, in markets where there are more listings than buyers it is sometimes necessary to complete major repairs even though the cost will not be recouped through the sale of the house. If your goal is to sell, you will have to do whatever it takes to make sure the house sells. Stay focused on the goal. The process of readying your house for sale requires a critical eye, an impersonal attitude, and in some cases nominal money. Do it right, and you will be rewarded by a timely sale! Back to top

How to Price Your Home

Pricing decisions should be grounded in reality rather than wishful thinking. When the time comes to price your home for sale, you may be tempted to start with the price you paid for it, add a healthy markup and call it a day. Unfortunately, that strategy is unlikely to result in a true reflection of your home’s market value. Here are six strategies to help you figure out how much your home is worth: 1.Abandon your personal point of view. How much will a ready, willing and able buyer be willing to pay for your home? Buyers don’t care how much you paid for the home, how many memorable moments you and your family shared in the home, how much cash you need for the down payment on your next home or how much time and money you’ve invested in your home’s hardwood floors, fresh paint, lush landscaping or other improvements. 2. Get a couple of CMAs. Invite at least three real estate agents to visit your home and give you their opinion of its likely selling price. Ask for a “comparative market analysis” (CMA), which shows the prices of comparable recently sold homes, on-the-market homes and homes that were on the market, but weren’t sold. The on-the-market homes are the “competition” for your home. Ask the agents why each home was included in the CMA and whether any other comparable homes were eliminated from the CMA. Price recommendations based on CMAs aren’t gospel. Some agents will tell you to under-price your home in hope of sparking a bidding war. Others will suggest a flatteringly high price to “buy” your listing only to demand a price reduction a few weeks later. 3. Do your own market research. Go to open houses in your neighborhood and try to make an impartial assessment of how those homes compare to yours in terms of location, size, amenities and condition. Assuming all the asking prices were the same, would you buy your home or someone else’s? 4. Calculate the price per square foot. The average price per square foot for homes in your neighborhood shouldn’t be the sole determinant of the asking price for your home, but it can be a useful starting point. Keep in mind that various methodologies can be used to calculate square footage. 5. Consider market conditions. Are home prices in your area trending upwards or downwards? Are homes selling quickly or languishing? Will your home be on the market in the spring home-buying season or the dead of winter? Are interest rates attractive? Is the economy hot or cold? Will you be selling in a buyer’s market or a seller’s market? Is the local job market strong or are employees fearful of staff reductions? 6. Sweeten the transaction terms. Some buyers have needs that go beyond the bottom line. If you’re willing to close escrow quickly, you’ll attract buyers who want to move in right away. If you can offer seller-financing, your home will appeal to buyers who need to stretch their financial resources. A lease-option can help first-timers who need down payment assistance. The more creative and flexible you can be in meeting the buyer’s needs, the more success you’ll have in pricing your home to sell. Back to top

Choosing a Price to Market Your Home: What is “Market Value?”

The explanation of “market value” in this example applies to single family houses only. Different methods apply to apartments and other commercial properties. The meaning of “market value” confuses many people. As consumers, most people shop at retail stores and pay the price printed on the price tag. A sweater is worth $24.95 because the price tag says so. A hammer is worth $10.95 because the price tag says so. We really don’t question it, because we are programmed to pay the amount of money listed on the price tag. When stores have sales on certain items, it is because the store did not sell all of these items for the listed price within a certain period of time. The sweater was not worth $24.95 to enough people. Therefore, the store must now lower the price to persuade people to buy the remaining sweaters. At the beginning of the Fall clothing season, the market value of the sweater was $24.95. In March, when we have more interest in Spring clothes, the market value may drop to $9.95. Market value is simply the price at which something will sell within a reasonable period of time. In a normal or average real estate market, “reasonable” means one to three months. Here is our definition:

Market value is the price at which a particular house, in its current condition, will sell within 30 to 90 days.

This definition contains three elements: 1. Particular house 2. Current condition 3. 30 to 90 days The only real measure of market value is what a particular house sells for. Period. However, unless you have a crystal ball, you might think you cannot predict how much someone will pay for the house in the future. Not true. You can learn to come very close to predicting the true market value of any house even without a crystal ball. Real estate appraisers do it every day. Even so, the appraisal of real estate is more art than science. An appraisal is only an opinion, an educated guess. Let’s start learning to predict market value by analyzing each of the three elements of our definition. The Particular House When you determine market value, you must always remember that you are estimating the market value of one particular house. The location, or neighborhood, of this particular house is the starting point for your investigation. The exact same house in the next city, or even on the other side of the same city, is not relevant to this determination. For example, a house located in Paradise Valley, Arizona could be worth half a million dollars. But if the exact same house were located in Surprise (a city further west) it might be worth only $225,000. That’s still a hefty price. But it’s less than half the price of the Paradise Valley house. Although this may seem like an extreme example, house prices throughout the country fluctuate significantly from city to city and from neighborhood to neighborhood. Therefore, whenever you determine the market value of one particular house, you must compare it only with similar houses in the same or nearby neighborhoods. Current Condition Next, you must assess the current condition of the particular house. The current condition determines the number of buyers who are interested in purchasing the property, which affects the amount of time the house remains for sale on the market before it is sold. Most home buyers want to buy the prettiest house on the block. Is the house gorgeous and ready to move into? Or is it a dump that needs a major renovation? Simply subtracting the amount of estimated fix-up costs from the selling price of other similar houses in the same neighborhood is not an accurate way to determine current market value for a particular house. If a house in good condition could sell for $80,000 and the house you are interested in needs $4,000 worth of repairs, that does not mean the current market value of your house is $76,000. Here’s why: Far fewer buyers want to buy a house that doesn’t look pretty. When a house attracts fewer buyers, it takes longer for the house to sell. To attract more buyers and sell the house sooner, the price must be reduced by much more than the mere cost of repairs. Although the current condition of the house is an essential element of market value, it is almost impossible to determine exactly how much the physical condition of the house affects its value. This simply is not an exact science. As a general rule, you should be fairly safe if you subtract two to three times the amount of the fix-up costs. 30 To 90 Days In a normal real estate market, if a house doesn’t sell within one to three months (30 to 90 days), the reason is simple: The price is too high. Dropping Your Price…Too Late Later, when you drop your price, your house is “old news.” You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell. Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won’t appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your house could go “back on the market.” Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received Back to top

Showing the Home

Why You Should Not Be Home

Homebuyers will feel like intruders if you are home when they visit, and they might not be as receptive toward viewing your home. Visit the local coffee house, yogurt shop, or take the kids to the local park. If you absolutely cannot leave, try to remain in an out of they way area of the house and do not move from room to room. Do not volunteer any information, but answer any questions the agent may ask.

Showing the House to Potential Home Buyers

Your house should always be available for show, even though it may occasionally be inconvenient for you. Let your listing agent put a lock box in a convenient place, to make it easy for other agents to show your home to homebuyers. Otherwise, agents will have to schedule appointments, which is an inconvenience. Most will just skip your home to show the house of someone else who is more cooperative. Most agents will call and give you at least a couple of hours notice before showing your property. If you refuse to let them show it at that time, they will just skip your house. Even if they come back another time, it will probably be with different buyers and you may have just lost a chance to sell your home.

Lighting, Fragrances, Pet Control and More

Lighting

When you know someone is coming by to tour your home, turn on all the indoor and outdoor lights – even during the day. At night, a lit house gives a “homey” impression when viewed from the street. During the daytime, turning on the lights prevents harsh shadows from sunlight and it brightens up any dim areas. Your house looks more homey and cheerful with the lights on.

Fragrances

Do not use scented sprays to prepare for visitors. It is too obvious and many people find the smells of those sprays offensive, not to mention that some may be allergic. If you want to have a pleasant aroma in your house, have a potpourri pot or something natural. Or turn on a stove burner for a moment and put a drop of vanilla extract on it. It will smell like you have been cooking.

Pet Control

If you have pets, make sure your listing agent puts a notice with your listing in the multiple listing service. The last thing you want is to have your pet running out the front door and getting lost. If you know someone is coming, it would be best to try to take the pets with your while the homebuyers tour your home. If you cannot do that, It is best to keep dogs in a penned area in the back yard. Try to keep indoor cats in a specific room when you expect visitors, and put a sign on the door. Most of the time, an indoor cat will hide when buyers come to view your property, but they may panic and try to escape.

The Kitchen Trash

Especially if your kitchen trash can does not have a lid, make sure you empty it every time someone comes to look at your home – even if your trash can is kept under the kitchen sink. Remember that you want to send a positive image about every aspect of your home. Kitchen trash does not send a positive message. You may go through more plastic bags than usual, but it will be worth it.

Keeping the House Tidy and Neat

Not everyone makes his or her bed every day, but when selling a home it is recommended that you develop the habit. Pick up papers, do not leave empty glasses in the family room, keep everything freshly dusted and vacuumed. Try your best to have it look like a model home – a home with furniture but nobody really lives there. Back to top

The Truth about Open Houses

An open house when your property is first placed on the market can be very important, but not for the reasons most homeowners think. Just like with advertising, most visitors to open houses rarely buy the house they come to look at. They may not even know the price of your home when they stop by to visit – they probably just followed an “Open House” sign to your door. An open house performs a similar function to the neighborhood announcements – it lets all of your neighbors know that your house is for sale, and it practically invites them to come “take a look.” Being generally nosy, a lot of your neighbors will take advantage of the invitation. And they may tell their friends about your house, creating more “word of mouth” advertising. Of course, there are other reasons for holding open houses, too. Listing agents who “farm” a particular neighborhood use them as an opportunity to meet with other local homeowners who will someday be selling their home. Your agent may hope to list their homes in the future. Open houses held after your home has been on the market awhile do not usually serve a useful purpose in selling your home. Most of the neighbors already know your house is for sale and open house visitors rarely buy the homes they visit. However, if you really want more open houses, your listing agent may allow other agents to hold it open. Open houses attract prospective homebuyers and agents hope to convince some of those homebuyers to become their clients. Back to top

Writing the Contract

Once you’ve found the buyer who wants to purchase your home, it’s time to write out a contract. The real estate purchase contract varies from location to location. If you are working with a real estate agent, he or she will probably use the standard contract that is approved by the local Board of Realtors. Buyers who are not using a real estate agent can obtain a real estate purchase contract from a local attorney a title company or your local stationery store will have some basic ones in stock. Whether you are using a real estate agent or handling the purchase agreement on your own, these 16 major items should be included:

The full legal description of the property (should include street address).
The amount of earnest money.
The length of time the offer is valid.
The projected closing date.
The owner’s and seller’s name(s).
The names to appear on the Deed.
The purchase price.
The name of the person or agency that will be holding the earnest money.
The financing details.
A detailed description of the items each of the parties has agreed to pay for as conditions of the sale.
Title warranty.
The inspection contingency.
The damage clause (spells out who is responsible for any damage to the house while under contract).
The default statement (if buyer backs out of the deal, the seller keeps the earnest money).
Other stipulations or items clause (lists any verbal agreements between the buyer and seller).
Signatures and date.

This is the basic structure and does not take into consideration any contingencies or special situations that are pertinent to the sale. If unsure, always consult legal counsel. Back to top

How to Prepare Your Home for the Home Inspector

Many home sellers contract for an inspection report prior to the listing of a home. Such an inspection report will determine if any easily remedied defects can be repaired prior to the listing of the property; thus improving the quality of the listing. It can also be used as a potential tool in the sale of the house. However, by having the home inspected prior to listing the home, the seller may become aware of new information about defects in the home. Such new information may have to be disclosed to any potential buyer. Sellers are advised to consult with their attorneys about locally applicable disclosure laws, and how these laws apply to the information gained from a pre-listing inspection. A pre-listing inspection may also not eliminate the desire of the prospective buyer of the property to have an independent inspection performed. The prospective usually decides on their own home inspection anyway. More importantly, the prospective buyer may decide that their inspection is needed in order to make preliminary determinations regarding their proposed use and modifications of the structure in question. For example, the prospective buyer may want to know if the electrical system is adequate for its existing use, and for any planned additions of a bathroom, hot tub, or the use of various power tools.

Preparing Your Home for an Inspection

As a general rule, it is unwise to try to anticipate the results of a home inspection, or to make any last minute corrections. It might be a good idea to reattach missing gutter downspouts, reposition splash blocks, or replace missing electrical cover plates. Such detailed corrections may give the house a neater appearance, but are unlikely to affect major findings about drainage systems, electrical wiring, or the life expectancy of a roof system. Making the house accessible and easier to inspect would help the inspector. It will not change the material findings of the inspection, but could eliminate some unnecessary aggravations.

A Few Suggestions:

* Remove any furniture and stored material from access panels to crawl spaces, electrical panel boxes, furnaces, and spa pump motors. * If the access panel to the attic crawl space is in a closet, you might remove the clothes from that closet, or cover the clothes with a sheet, in order to protect them from bits of insulation and debris that fall down in the process of removing the access panel. * Overly friendly or unfriendly dogs can complicate the inspection process and are best kept away from the house during the period of an inspection. * A copy of building permits, construction contracts and drawings, septic tank service reports, utility bills and similar documents can be helpful to an inspector. If you have such documents, you may want to collect them prior to the inspection and have them available at the time of inspection. If you do not have such documents, don’t go out of your way to search for copies. * Most inspectors will perform the inspection in the company of the prospective buyer. This is a time for the buyer to take another look at the house and discuss various items with assistance, and then provide full access to the house. It is customary and recommended that the seller be absent from the house during the actual inspection, or remain in portions of the house not being inspected. * The ASHI Code of Ethics clearly states that the inspector must have prior permission from the customer to discuss the inspection report with a third party. As such, it would be best to refrain from asking the inspector about the inspection report, unless you have contracted for the report.

Special Inspections

The home inspector is the general practitioner, familiar with most of the standard systems in a residential structure. However, he/she is unlikely to have the licensing or expertise necessary to analyze all of the specialty problems that may arise in some inspections. In addition, the inspector is prohibited from doing any sort of destructive testing, which precludes the inspector from making a complete examination of certain portions of systems, such as furnaces. The home inspector may find conditions in a particular structure that require further analysis. Such analysis may have to be performed by a specialty inspector; for example, a soil engineer, a testing laboratory, a furnace service company, or a licensed electrical contractor.

Did My House Pass the Inspection?

Home inspections do not result in passing or failing grades. The inspection report is an analysis of the condition of the various systems in the house. It is the customer of the inspection who determines whether the inspection results are satisfactory. An inspection report indicating that the roof of a structure needs immediate replacement may be an acceptable finding to the customer who expects to do some rehabilitation to the structure. The same report can result in significant concerns to the customer who expected few (if any) short-term major maintenance requirements. Very few inspection reports result in a completely clean bill of health. There are always a few maintenance items that will need attention or repair in the near future. Experience suggests that the average home requires 1-2% of the value of the structure in annual maintenance and repair costs. Most inspection findings show a need for 2-4 years worth of normal annual repairs, or 2-8% of the value of the structure. The most common items found to require repair, or maintenance include the following: * Wood rot, as a result of moisture and soil-wood contact in areas such as decks, foundations and porches. * Roofs and roof venting systems, including flashing and deteriorating chimneys. * Tub and shower walls, as well as, bathroom floors. * Furnaces that have not been serviced or cleaned in several years. * Outdated electrical systems and unsafe electrical wiring. * Gutters, downspouts and improper downspout drains. * Asbestos containing material, especially in homes built or remodeled prior to 1978.

Conflict of Interest

The Code of Ethics of the American Society of Home Inspectors® (ASHI) states that a home inspector is not to use a home inspection “as a vehicle” for gaining additional work in a related field. For example, a home inspector is prohibited from offering roofing services for a home he/she has found to need roof repairs. Back to top

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