The Uninvited Pest!

When you prepare an offer to purchase a home, be sure that "uninvited guests" don't appear at the closing. The guests I'm talking about are termites! Although termite inspections are not always required, you'll find that most lenders will not approve a loan without one.

A report prepared by a licensed pest control company will show if there is any presence of termite damage, or if there is any evidence of treatment for the wood-destroying insects. It isn't a guarantee that there aren't any termites present - it only reports visual damage or treatment.

Who pays for the inspection? That comes down to local customs and negotiation and between the buyers and the sellers. When buyers pay, it’s easy to avoid any conflict of interest by being sure to use a pest control company that is different from the one currently servicing the home. This ultimately protects the sellers, too, because if problems show up later, it can be shown that the buyers conducted an independent and objective inspection.

Again, understand that the inspection and subsequent report will not prove or disprove the existence of termites, but buyers who ignore this important issue during the purchasing process could be asking for trouble later on down the road. If you have any questions or concerns, consult with the real estate agent and move forward with confidence.

Cause and Effect!

Real estate is experiencing an unusual adjustment these days. Unusual, because in the past, sales declined due to either high interest rates or economic slowdowns. Neither of those factors exist right now, so where does the blame lie?

Quite frankly, one of the biggest reasons that home prices rose to such artificially high levels was because of a frenzied degree of investor speculation. "Flippers" would buy and then sell homes just for a short-term gain. The truly negative effect that this activity had was to drive home prices so high that most median-income families could not afford homeownership.

Now, as prices come back down to realistic levels, more middle-class buyers are capable of making the purchase. Sellers are beginning to realize that they have enjoyed substantial gains in equity and appreciation over the last few years. A price reduction of five or even ten percent is unlikely to erase those gains.

Realistic pricing by sellers encourages more sales. As more sales happen, inventories will again drop. As inventories drop, home prices will begin climbing again (at a more reasonable rate this time). Real estate agents are prepared for the cycle to continue, and you should be too. There is no need to panic when pricing adjustments are actually leading to a positive impact on your financing ability and the long-term value of your home.

Time to Reassess!

We all know that homes in many markets across the country experienced substantial gains in appreciation over the last few years of heated real estate activity. While sale prices are currently leveling out, you may have experienced "sticker shock" if you recently got a property tax assessment that shot way up.

As a matter of fact, property tax collections across the nation were up 35% from 2002 to 2006 (U.S. Census Bureau). That's twice the growth of personal income, spurring some 15 states to consider tax-cut proposals.

If you don't want to wait for new legislation, you can simply "act locally," and challenge your tax bill. It's not a hopeless case, because the American Homeowners Association (AHA) estimates that 60% of homes are in fact assessed too high.

Don't march down to the Assessor's office until you've checked your property data card for errors. Are the number of bedrooms and baths correct? Finished or unfinished basement? Lot size? Assessments are often based on replacement cost or what your home would sell for, so check with your insurance policy and real estate transaction records to determine if those figures are in line with what your tax bill states.

Not enough homeowners bother to make a challenge, but 70% of those who document and report errors manage to lower their tax bill (AHA). It's well worth a look.

Two Sides of the Same Coin!

How would you place a value on your home? More critically, how would you put a price on your home? Sounds like the same question, but it suggests the difference between price and value that's important to understand as you prepare to sell your home.

Two homes may have identical features and prices, but factors like location and condition can impact the homes' perceived value. To arrive at an attractive asking price, you must compare your home's value against its competition, which is easily done through realty websites and advertisements.

Your goal is to set the right price right away. Your best window for a full price offer will come within the first three weeks, so if you don't see any activity in that timeframe, take action. In changing markets, pricing a home becomes an ongoing activity. You need to consider real estate dynamics - new listings, recent transactions, expired listings, shifts in inventory, and so on.

Your best source of information and guidance is your neighborhood real estate agent, whose vocation it is to monitor all those conditions and bring buyers and sellers to the table for a satisfying transaction. Meet with your representative to discuss your motivation and timetable, compare your home's value against the competition, and analyze current trends in this market. The relationship between price and value will become crystal clear!