The Piano

An odd thing happened in my real estate business this summer. Orphaned Pianos.  Everywhere.  Every home.  It seemed that every home I listed had a traditional piano to sell. To donate. To give away. To … please someone take it.  At one point I had five homes listed with homeowners desperately trying to re-home their treasured instruments. One was a gorgeous Grand Piano meticulously maintained by a Grand Master pianist.  She ended up giving it to the Buyer of the home because she couldn’t find anyone to pay for it and no donation site wanted it.

 

The other commonality about these homeowners is that they were all shocked to find out a not-so-secret secret: very few people, schools, or institutions want traditional pianos.  Like entertainment centers and China cabinets these once treasured and saved-for pieces of furniture are gathering more dust than treadmills with fewer takers at home sale time.

 

The why is simple: like so many things in our lives the technology that makes up digital keyboards has become much more advanced and produces a sound that is often almost indistinguishable from acoustic (traditional) pianos. In many cases, you will have to listen to a digital piano several times before you will be able to detect any differences in the sound between the digital piano and acoustic piano. Digital pianos are smaller, take up less space in a home, and are easier to transport.

 

Digital keyboards can be found cheap.  While the sound may not be the best, it’s perfect for parents who want to start with a minimal investment road-testing their child’s commitment to practice and lessons.  By the time the child’s proficiency grows and commitment is proven, the child’s comfort level is on a keyboard, not necessarily piano keys.

 

True pianists adore their aesthetics and the way that they look in their homes and appreciate the significance of keeping the traditional construction of pianos alive. But, just as the boxy televisions and wedding China that went into the hands of our kids landed on the shelves at Goodwill, so the pianos are finding little audience or space in the homes of any but hard-core loves of Mozart, Beethoven, Chopin, or Rachmaninov.

 

What can a piano-owner do?  Start early.  Call your local piano store.  Many have websites with buy-back options.  Don’t expect big dollars.  Be thrilled to get free pick-up as even the piano stores have become very picky about what they will put on their showroom floors.  Call schools, universities, and nursing homes but IF they want the piano be prepared to be asked to pay the cost of moving the instrument to them. Selling your home?  Ask the Buyer if they want it.  Sometimes the home it’s in is the best home for it.

 

House Call is a blog written by Kathy Chiero, Licensed Realtor and Team Leader of The Kathy Chiero Group of Keller Williams Greater Columbus.  Find Kathy and her team at www.OurOhioHome.com

It might be love at first sight, but make sure your new house can go the distance:

I’ve often said that buying a house is like getting married: you fall in love when you step in the door.  You learn as much as you can during the home inspection.  You don’t really know the house until you’ve lived there a few years. After 5 years you have your list of what you’ll do differently the next time.  Fortunately, the “next time” is more pleasant and easier when buying a house than trading in a spouse!

 

My goal as a Buyer’s agent is that you live happily ever after.  I know that the longer you stay in a home the better the investment.  So, how do you know on Day #1 what you will need in Year 7? While every Buyer and family is different there are common reasons people sell a home. Many of these “reasons to sell” can be avoided, or at least the time frame in your home extended with a little forethought in your purchase.

 

From my 24-year experience selling thousands of homes, here are the top reasons people sell, not necessarily in this order:

 

  • School System. What works when you’re a couple changes when you have a kindergartner.  Think ahead.  Do you plan to use public schools and, if so, what school system is your preference? How important is it that your child be able to walk to the school?  Is bus transportation available or are you willing to make the drive sometimes 3-4 times a day depending on the number and ages of your children?  Private or Parochial School?  Are there geographic boundaries for attendance? Is there bus transportation? I once had a client who purchased a home specifically because it backed to her child’s private school. Upon calling me to sell it she said it was the best decision she ever made.  “It saved me hours on the road” she said, “and sick days, snow days and early closures were never a problem.”

 

  • Room to do what you love: Do you love to cook? A small kitchen will force an earlier move. Do you entertain quite often? Look for large spaces and open rooms.   Lots of sleepovers? A basement playroom is a priority.  Work at home? The dining room table won’t cut it over the years, look for space to create an office. Overall, make sure square footage is adequate for your needs and possible growth through life change: marriage, children, adding a roommate.  Right now, my team is marketing an adorable downtown condo.  It’s under 900 square feet and owned by an equally adorable single woman.  Single woman met single man and, well, 900 square feet isn’t enough for two adorable people.

 

  • Storage. This is a big one.  People move because they have too much stuff. This is especially true when you don’t have a basement.  Homes without a basement cost about $15-$20,000 less than homes that have below-ground storage or living areas.  It sounds like a “money saving” move to forego the basement.  But look at it this way:  It costs 8.5% of the value of a home to sell it.  On a $250,000 home that’s $21,250.00.  If you sell 3-5 years earlier because you need storage — you have given away over $20,000 in equity. Look at closets, under the steps, garage, and sheds — make sure the home you’re purchasing has the room you need and can grow into with your “stuff.”

 

  • Number of garages. When you buy your first home, you’re thrilled to get a yard.  After a few years of scraping ice off of your windshield a garage becomes a priority.  You have a home with a one-car garage, and you tire of the “car dance” to get your car and your partner’s vehicle around each other on a daily basis.  Then you have kids and (see #4) the garage becomes a storage locker.  Finally, your kids become teenagers and your two-car household becomes a 3-car household and it’s time to sell.  Think ahead.  Do your best to budget for a least a garage that can give you 8-10 years in a home.

 

  • Number of Bathrooms. Many younger Buyers are coming from apartments that have two full bathrooms.  They are willing to sacrifice a bath to buy a home until they have kids.  Just a few years later and that bath-sharing thing gets old.  This is often why first-time home buyers stay in their homes less than six years.  Stretch to get that 2nd bathroom if at all possible.

 

  • Steps. This is a particular reason to move for the over-50 home buyer.   Steps are essential to space and private living when you’re in your 30’s and 40’s.  Even age 50-60 is often still in the range of health that most of us can tackle a second floor.  If you are buying a new home at age 50-60 and steps are your daily exercise, you still need to think about life at 70+ or you will be moving again.

 

  • Taxes. You are paying for that great school system whether or not you are using it.  Those taxes are subject to go up further by the vote of families using the schools — long after you are not.  Take a hard look at your monthly tax expense.  Even if you don’t hold a mortgage on your home — the State Treasury does.  It’s called taxes and you are subject to the inevitable rise for the length of time you own the home.

 

Your goal should be to be in a home a minimum of 8-10 years.  If you cut out just one home sale over the life of your years of homeownership, you will save $20,000 or more in equity.

 

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com  Ready to sell? Contact us for a no-obligation analysis of the value of your home.

The Downside of a Great Seller’s Market

Central Ohio homeowners have a right to celebrate!  After 8 years of watching your home values depreciate at double digits a year (2005-2012) we are entering our 9th selling season of supply and demand heavily weighted in favor of the Seller.

 

However, here is the dark secret of this great market:  the market for your home is ‘great’ for about a week.  If you overprice your home and it doesn’t sell in the first 3-5 days you have lost the “Seller’s” market and have turned the clock back to 2004.  Why?  Because with homes selling in a weekend, even hours, after a week or so on the market the Buyer begins looking at your home as a stagnant listing.  Your home is suspect: there must be something wrong with it, it’s been on the market so long.  As a Realtor, I can tell you there is only one thing “wrong” with it: the price.

 

The Seller overshot the great market and priced their home too high.

 

Here’s the scenario we see played out every day in Central Ohio:  We list your home for $350,000.  It should be $340,000 but it’s not so overpriced that Buyers will pass it by.  The home gets 35 showings in the first weekend.  Thirty of those Realtors respond for their Buyers telling us that the home is overpriced. This “negative feedback” tells us all the reasons that, even in a hot market, the Buyer is unwilling to give you your price.  However, five Buyers express some interest.  Because we are still in the first few days on the market those five Buyers think everyone is going to make offers.  After all, this is how Buyers have been “trained”.  They know the pace of this market.  So even though the price is a little high we likely will still get offers at or above list price.  I have had the experience of getting only one offer on a home but because it was in the first five days — the buyer thought they were bidding against others and paid over list price and gave the Seller very favorable terms.

 

What are those terms? Far beyond price we are looking for the Buyer with the most favorable financing (or cash!)  They will waive the right to ask for repairs, bring money to closing over appraised value, and give you the closing and possession date you need.

 

Let’s look at this scenario if we priced a $340,000 home at $360,000.   Very likely we would have 35 showings and no offers.  There is a price point at which Buyers are unwilling to overpay.  They will just wait for the next home.

 

“But we’re not in a hurry” homeowners often say.   In it a truth in real estate that time is not your friend.  The longer your home is on the market, the less likely you are to get your asking price.  The price drops every day your home is on the market.

 

Looking at our $340,000 home:  we price it at $360,000 and get no offers.  About 10 days in, you have lost the benefits of the Seller’s market.  You have lost the interest of the 30 buyers who jumped on your home in the first days on the market.  You now will have a showing a week.  The Buyer who comes through your home on Day 10 has a different mindset than the Buyer who came on Day 1.  The Day 10 Buyer is looking for why your home hasn’t sold. They know they aren’t competing with anyone and know they have the opportunity to negotiate the price, get the full benefit of a home inspection with repairs, will insist on sticking with the appraised value of the home and want the keys at closing.

 

The key to getting all the “wins” of a great Seller’s market is to price well.  Hire a Realtor who knows how to accurately price your home to earn multiple offers and let you walk away with all this market owes you!

 

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com  Ready to sell? Contact us for a no-obligation analysis of the value of your home.

Are home buyers foolish for “over-paying” for homes in this heated market?

We are in our 9th (yes, NINE) year of a Seller’s Market in Central Ohio. In some areas and price points there are over 20 buyers for every home on the market.  I have had as many as 41 offers on a single home.  I recently presented an offer on a home that the Realtor later told me had 56 offers.  The home with 56 offers went into contract at $40,000 over list price and the Buyer agreed to pay his offered price no matter what the home appraised for.

 

Is that buyer the “winner” or foolish?

 

We all know someone who has either made a bid far over list price to purchase a home in Central Ohio. Or you have heard that your neighbor’s homes have sold for well over list price. Even crazier — you have heard of Buyer’s paying over appraised value for a property with a willingness to bring additional money to the table if necessary.

 

Are these Buyers going to have a post-purchase hangover in 2022 when they wake up and regret having scrambled to beat 15 other potential buyers with an over-list price offer?  Do they regret having to cancel the trip to Disneyland because they needed the additional $10,000 to cover the “appraisal gap?”

 

First of all, let’s start with a disclaimer that the purchase of real estate in any market is speculative.  Very smart people didn’t foresee the housing crash of 2005-2012.  No one could have predicted that the soaring values we began to see in 2013 would continue to this day.   I sold houses to Buyers in 2013 when multiple offers were new and novel.  Those buyers are now selling again — having watch their home value skyrocket as much as 10% a year.  Those 2013 over-list-price bidders certainly don’t regret having stretched their budget and the credulity of others in 2013.

 

How much over “fair market value” is winning and how much is foolish? A good Buyer’s Agent can advise you, but generally I advise not to bid more than two years appreciation over what is likely to be appraised value.  There are times with when my clients are willing to stretch more, but there is a limit when more is too much.

 

Here is another consideration:  In 2010 a $200,000 home at 5% interest would have a mortgage payment of approximately $1400 a month.  In 2021 a $280,000 home at 2.78% interest has the same mortgage payment.   So, the buying power of the lower interest rate often outweighs the $10,000 or so over list price you paid for the home.  You could wait 2-3 years when the market slows, but if interest rates rise your buying power is equally reduced.

 

Another way to look at the purchase is that buying a home is far more than a financial transaction.  Yes, we hope it’s an investment that pays off in years to come.  But it is also a roof over your head, a place to put the Christmas tree, and walls you can paint purple if you want to.  You’re going to pay to live somewhere, so a good portion of your mortgage would be going to rent.  (In fact, in 2020, with 2.5% interest rates it is often less expensive to buy than to rent, at least at it pertains to the monthly payment.) Even if the value stagnates or goes down — it doesn’t affect you unless you need to sell in a “down” period.  The market is cyclical — stay and the value is likely to come back. As long as the home is maintained it is always worth something.  When the mortgage is paid off, you have a roof over your head and the equity in the home.

 

The bottom line?  If you are not comfortable with offering over list price for a home or bringing money to the table to offer more than appraised value — this market is not for you.  Unfortunately, until the steam is out of this overheated housing environment there will be a long line of buyers willing to do so to become homeowners.

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com

Is your home in danger of being electronically stolen?

You’ve heard the commercials.  Is your home in danger of being “stolen” by title thieves?

 

“With the advancement in technology, it’s a huge problem and tremendously unreported as a crime,” says Art Pfizenmayer, Senior Advisor to the CEO of Home Title Lock as reported in the San Diego Union Tribune in 2018.  But is it?  Is the crime so rampant that it is necessary to pay a company like Title Lock hundreds of dollars a year?  We’ve all heard the commercials with the alarming warning that our homes can be stolen with a few keystrokes.  Is it true and is the “protection” provide by Title Lock a good idea?   I spoke to Scott Stevenson, a 26-year attorney and CEO of Northwest Title. Northwest Title is a cornerstone in the Central Ohio title community and has been around for over 50 years.  “Never in my career and never in the history of our company have I heard of it happening,” said Scott.

 

What does Title Lock claim is occurring and what do they promise to do?  According to their website, criminals “go online to find your title and mortgage information. Thieves use this information to transfer you off your home’s title. Once they have the paperwork forged, it’s just a quick trip to the county recorder’s office to file the “updated” paperwork. Also, with the convenience of being online, many offices allow paperwork to be digitally transmitted…no need to leave their keyboard!”  Then, says the Title Lock website, these same individuals take out mortgages on the home, essentially locking your home up in liens that you must remove.

 

Stevenson says if it were as rampant as Title Lock claims, a title company would be ground zero. “We would know, and it’s not” he says. Scott goes on to say that there were rumors of this kind of fraud happening around 2010 in Michigan but unverified and certainly extremely remote.   “Slim to none” he says are the chances that your deed could be stolen.  “More likely that you will be hit by a tornado on Broad Street.”

 

Furthermore, says Stevenson, an examination of Title Lock’s website provides no clear evidence of what you are paying them to do, at least nothing that you couldn’t very easily do yourself.  Calling it a “ridiculous” service, Stevenson says the steps they take to “protect” your title are very simple to do yourself.  You don’t need the “proprietary software” they claim to use.

 

What does Title Lock promise to do for $149.00 a year?  They promise to “monitor” your title and let you know if there is any change to it.

 

OK. I guess. But couldn’t you do that yourself?

 

Pull up the Auditor’s website and look at your home’s record. Is your name on it?  You’re safe.   Pull it up every day if it makes you feel better.  (You’re performing much more due diligence that Title Lock, and it’s free.)  Pay attention to bills coming to your home.  Are you still getting the tax bill? The home is still in your name.  Are you getting mail regarding loans being requested on the address? That’s a clue fraud could be occurring.   If you have your tax payments on any kind of “auto pay” by your bank — make sure you also sign up for paper or electronic notification that it has been paid. This kind of diligence is especially important if you own two homes: mail to vacation homes might not be checked for months at a time.

 

This kind of oversight of yours or a loved one’s home affairs is easy, can be done in a minute and will not result in a recurring charge of $149 a year on your credit card.

 

 

This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group.  Thinking of Buying?  Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com  Ready to sell? Contact us for a no-obligation analysis of the value of your home.

Ten Ways to Win: #10 – Be willing to be a backup contract and consider older listings

What is a “back up” Buyer?  A back up Buyer is first in line to purchase a home if the “Primary” Buyer is unable or unwilling to perform on a contract.   It happens.  The Primary purchaser loses their job or breaks up with a girlfriend.  Three weeks into the transaction, the contract falls apart.  The first phone call is to the “back up” Buyer.

 

If you have made an offer on a great home and your offer wasn’t chosen, ask your Buyer’s Agent to inquire about acceptable terms for a “back up” offer.   The language of a backup offer allows you to continue to look for homes and to rescind the backup offer at any time before being moved to Primary position.  So, it’s a no-harm-no-foul move.  You can be a backup offer for as many homes as you wish.  Sooner or later, one is going to come available, and you will be first in line to grab it.

 

Another option:  consider the listings still on the market 10 days or more.  These are the listings passed over by other Buyers, but they could be an attractive choice for you.   Why were they passed over?  Most likely because the Seller overpriced their home.  They have missed the opportunity for multiple offers in the first days on the market and now they are waiting for you to come along with all the negotiating options in your hands.

 

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com © 2021 All rights reserved.

Ten Ways to Win: #9 – How Flexible are your plans?

To understand “Win” #9 you must first understand a quirk about the Central Ohio Housing market.  In many states in the United States the law prohibits the Seller from having possession of the home after the closing is complete.  In Ohio we do NOT have this prohibition.  This prohibition of post-closing possession is rooted in good law, insurance practice, and common sense:  a myriad of problems can occur after closing and before the Seller turns over the keys.  What happens if that bed rail gashes the drywall on the way down the stairs?  What happens if close on Friday lightning strikes the roof on Saturday?  What is your recourse if the Seller spills a bucket of paint on the carpet on their way out?  Rare occurrences?  Yes, but I’ve had them all happen between the closing date and the date the Buyer has possession of the home.

 

In Ohio, we call it “courtesy possession” and it is legal.   Better agents will put together a document called an “Occupancy After Transfer of Title” agreement which at least puts in writing the basics of responsibility during this time.  However, “life” happens and, as a Buyer, you need to be prepared for damage or surprises in your home while the Seller is still living there.  There is a simple solution: write the contract to demand the Seller turn over the keys at closing.

 

Sounds simple? It is, unless you’re competing with multiple other buyers for the same home.  In this very common occurrence, your ability to give the Seller the home for whatever length of time they need after closing can be key to you “winning” the bidding war.  For your consideration: are you intellectually and temperamentally OK with taking that risk?  If not, your Realtor should not push you to do so.  However, know that NOT allowing this possession may cost you the house.

 

If you are flexible on possession, what protections can be put in place?  First of all, the agreement cannot be “open ended.” There has to be a date and time at which you can move into your home and, if you have purchased the home with a mortgage, your lender will require you move in within 60 days.   Insist on an Occupancy After Transfer of Title Agreement even if post-closing possession is a weekend.  This agreement lays out the basic tenants of the Seller’s occupancy of your home, sort of like a mini lease agreement.  Ask for proof of “renter’s insurance” to cover the Seller’s belongings while they are living in your home.

 

Does the Seller pay for this time in the home?  It depends.  If another bidder on the home has given them extended possession at no charge you might get beat out if you ask for “rent” during the time they are staying in the home.  However, many homeowners are willing to pay you for the convenience of staying in the home.  A good Buyer’s Agent can advise you.

 

In reality, Sellers tend to move out of the home the same way they lived in it.  Did it show “pride of ownership” when you looked at the home? The homeowners will very likely move out and leave you a pristine home: so, the same ‘pride’ guides their moving out.  This flexibility can be the deciding factor to allow you to “win” in a very competitive market.

 

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com © 2021 All rights reserved.

Ten Ways to Win: #8 – How can I give the homeowner more money?

I won’t show you a house until we have a pre-house-hunt “sit down.” At The Kathy Chiero Group we call it a “Buyer Orientation meeting” and we insist that you take an hour of your time to get informed before we start looking at homes.  We often go a step further and ask you to invite all of the “influencers” in your home purchase decision: parents, Aunts, Uncles, or your Grandparent who is providing the down payment. Everyone is invited to attend this first meeting.  Why?  Because we want you to understand what a “seller’s market” really means.  Unless you “live” in this market — you don’t know and won’t be prepared for the decisions you’ll have to make.  Your parents might remember the “seller’s market” of the 1990s and respond with a “ho hum” — no big deal, you might not get much negotiation off the price, but it’s otherwise business as usual.

 

No, it’s not.  Not even close.  And if you’re not mentally, financially, or temperamentally prepared you are in for a frustrating ride.

 

Here is how I describe the current Seller’s market:  You are sitting at a poker table.  The Seller of the home you want sits across from you.  Also at the table are 10 other poker players with varying stacks of chips who are competing against you to “win” the same home.  How do you win? You put two hands around your chips and shove them all over to the Seller’s side.  And, in doing so, you hope that the other ten players have fewer chips than you do because they are all doing the same thing.  Bottom line:  there is no negotiation.  On anything.  The offered price begins at list and goes up.  The financing has to be strong, preferably cash with a letter from a known, local lender (See Ten Ways to Win #1) You waive your right to ask for repairs after the home inspection. In fact, while we don’t recommend it, some buyers will waive the home inspection completely.  You must have extra cash to give the Seller over and above what the house appraised for (see Ten Ways to Win #7).  You offer non-refundable earnest money.  You close when the Seller wants to close.  You give the Seller as much time as they need in the home after closing. At no charge.  If you do ALL of these things — you are doing what most of your competitors around the table are doing.  In other words, these (non) negotiables are just a start.  What else can you do?

 

How can you put money in the Seller’s pocket in creative, non-traditional ways?  This is where a good Buyer’s Agent can help you.  Your Buyer’s Agent can make a phone call to the listing agent to find out what the Seller needs: is the home in need of clean out?  Are you willing to do the clean out so that the Seller doesn’t have to?  What are their moving plans?  Can you contribute $500 to the rental of a truck for their move?  Instead of raising the purchase price, can you contribute $1000 toward their closing costs, thus increasing their “net” at closing?  These are the “extras” that often tilt a decision your way.

 

As you read this over you begin to see why it’s important to have all of your “influencers” on board because most of what this market requires runs completely contrary to traditional negotiating.  That is because this market is NOT a traditional market.  It is an historic market that we may not see again in our lifetime.  To “win” in this market requires very non-traditional methods and a sharp Buyer’s Agent who knows how to negotiate: giving enough, but not outside your comfort level.

 

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com © 2021 All rights reserved.

Ten Ways to Win: #7 – Should I limit my offer to the  appraised value of the home?

While this Tip is #7, it should be #1 in the Central Ohio Seller’s market.  Let’s start with the harsh truth and then I will break it down:  It is virtually impossible to purchase a newly listed home without a willingness and ability to pay above the appraised value of the home.

 

Let’s picture the Central Ohio housing market as the bread aisle in the grocery store.   There are five loaves of bread on the shelves marked at $3 each and 30 buyers who have come to the store to buy a loaf.  With this uneven supply and demand, why are there even five loaves on the shelf?  Because those loaves have mold.  Or they are two weeks old.  Or they are burnt on the bottom.  The consumer has already looked over the existing bread inventory and (even in a time of bread shortage) has determined the loaves are not worth $3.  These loaves of bread won’t sell unless the price is reduced to overcome the consumer’s objections.

 

The baker brings out a just-out-of-the-oven fresh loaf of bread.  The 30 waiting buyers pass the day-old offerings and fight over the new loaf.  The loaf is priced at $3.  Because there are 30 people who want it, the baker pulls the loaf onto his side of the counter and says he will sell to the highest bidder.   Some bid $4 or $5.  Some have to leave the store because they only brought $3.  Some are angry and feel it’s unfair to have to pay more than the sticker price. One person bids $10 and the remaining crowd leaves thinking the $10 bidder is foolish.  The “value” of the bread is shown on the price tag and its only “appraised at” $3.  But is it?  Everyone is mad at the baker for being greedy.  But is he?  The $10 Buyer goes home with the fresh loaf. The baker pockets his $7 profit.

 

This is how appraisals work: An appraisal is a document ordered by the bank or mortgage provider to give the lender some assurance that the home is worth, at minimum, the mortgage they are prepared to provide.  That’s it.  Beyond the day of closing that piece of paper is virtually worthless.   A Buyer in a Seller’s market must understand, grasp completely and “buy into” the understanding that appraisals are not concrete values.  They are the opinion of one licensed professional on one day.  If I were to have ten licensed appraisers go to a home on the same day to tell me it’s value, I would likely get ten different values.  The values will likely be close, but different.   When demand for a home is so high that someone has the funds and willingness to pay significantly over appraised value, the unwilling or unable consumers are going to lose.  Every time.  So, is the value only $3 if someone is willing to pay $10?  Is the Seller “greedy?”  They simply accepted the offer of a willing Buyer.

 

The Central Ohio purchase contract provides a protective contingency to the Buyer: if the home does not appraise at or above the contracted purchase price, the Buyer is not required to purchase the property.  Neither is the Seller required to sell it for less than what the Buyer offered.   When there are multiple offers on a property it is common for a Buyer to put in writing that they voluntarily waive this contingency and will pay the offered price no matter what the home appraises for. Or they may limit that overage by saying “Buyer agrees to pay $5000 over appraised value, not to exceed a purchase price of $__________.”

 

In real numbers:  You find a house you love for $300,000.  You have loan terms agreed upon with your lender that you are putting down 5% of the offered price on the home you buy.  On a $300,000 home, you must bring $15,000 to closing as your down payment.   You really love this home and offer $310,000 and waive the contingency that the home must appraise.  If the home only appraises for $300,000 you must bring $15,000 as your agreed upon down payment AND an additional $10,000 to cover your offered price.  The lender will not “mortgage” any more than what the home appraised for.

 

Why would a Buyer do this? Because when a home is a new listing it is likely the only way to “win” the competitive bid battle.   What are your options if you don’t want to pay over appraised value?  You’ll notice I’ve addressed these bid battles under the umbrella of “new” listings.  Let’s go back to the five unsold loaves of bread on the shelf.  If you find a home that has been on the market 10+ days, it likely means the home is overpriced and the Seller has put their home back into a “Buyer’s Market.”  All of the negotiating options are in your hands, including limiting your price liability to appraised value.

 

If it is a new listing (7 days or less) a buyer has virtually no chance of “winning” the bidding war unless they have and are willing to offer cash above appraised value.

 

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com © 2021 All rights reserved.

Ten Ways to Win: #6 – Are you willing to let the Seller off the hook for repairs?

The purchase contract you will sign offers you, the Buyer, the protection of a home inspection.  The inspection is usually done by a professional and can take three or more hours to thoroughly look over your new home.  Following the inspection, you have three choices: the right to move forward with no repair requests, the right to terminate the contract, or the right to ask the Seller to do repairs on the home prior to closing.

 

In a typical market the choice most often made by home buyers is the third: move forward but ask the Seller to do repairs to the home.  We call this a “Request to Remedy”.  The Seller either agrees to all of your requests or both parties come to a compromise.  If neither of these outcomes is possible, the Buyer has the right to walk away from the purchase.  In this competitive market you can make your offer more attractive by retaining the right to terminate and the right to move forward but by waiving your right to ask for any repairs.  This means that unless something is a catastrophic condition you are willing to take on deferred maintenance or needed repairs as your own post-closing projects.

 

How risky is this? I asked Jim and Laura Troth, owners of Habitation Investigations LLC, one of the top home inspection companies in Central Ohio.   With 18 years and thousands of Inspections under their belts Jim and Laura have seen it all.  How often do they see “walk away” issues with a home?  “Almost never,” says Jim.  Unless it is a vacant home in great disrepair the vast majority of issues in a home are very “fixable” and not worth sacrificing the purchase of a home.”  “It depends on the Buyer’s personal skills,” says Laura. “if they are a little bit handy or have friends or family members who have home maintenance experience, most home repairs are manageable and not emergencies.” Jim says the Buyer should be concerned about the immediate repair of safety issues and keep a budget in mind for bigger repairs.  “We leave the Buyer with a detailed report including pictures and a repair so that the Buyer can begin prioritizing needed repairs” says Jim.

 

Jim and Laura have a list of items that often scare buyers: and they shouldn’t.  “Minor cracks in the walls, moisture in the basement or crawl space, mold in the attic or basement: these are common, not a tragedy” says Jim, and certainly not a reason not to buy a house.  Laura notes that they have taught their own daughters to change out plumbing fixtures and even things like switching out windows is not hard once you’ve done it a few times.  “Understand the real cost of some of these repairs,” says Jim.  “Often you’ll find it’s not as expensive as you thought.”

 

Besides giving the Seller a huge incentive to choose your offer, this willingness to take on repairs after closing gives you the peace mind that the repairs were done correctly because YOU did them or hired your preferred professional.

 

 

This blog is written by Kathy Chiero.  Kathy is the Team Lead for The Kathy Chiero Group of Keller Williams Greater Columbus Realtors.  Thinking of Buying or Selling?  Find us www.OurOhioHome.com © 2021 All rights reserved.