The Warren Report

The Housing Crisis is Over

Wall Street Journal

By Cyril Moulle-Berteaux

May 6, 2008

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005.

New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high -- but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 -- or seven months of supply -- by the end of 2008.

This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages.

And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year.

Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years.

Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.

Sales of existing single-family homes increasing

Finally, sales of existing single-family homes are on the rise, modestly. Sales rose by 0.5 percent in January, compared to the previous month. This would translate to an adjusted annual rate of 4.34 million homes in January - up from 4.32 million in December, according to a report from the National Association of Realtors. It's the first up-tick in sales volume in the past year.

"The general conclusion of our economists is that we are scratching the bottom of the market," said Iverson Moore, a NAR spokesman. "As new home construction continues to slow and existing home inventories are reduced, reflecting the four million new jobs created during the last two year and there is continuing demand for housing, the overhang should be reduced sufficiently so that a robust expansion of home sales should begin - probably in the second half of this year."

It should be noted that the number of overall home sales in January (including all types of homes) declined slightly - by 0.4 percent, according to the NAR report.

Selling home 'as is' in today's market?

Know that buyers are less willing to take on fix-up work

Wednesday, February 27, 2008

By Dian Hymer
Inman News

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Copyright 2008 Dian Hymer

A listing that is advertised as an "as is" sale can be a put-off to buyers. They might assume that something is wrong with the property that will cost a lot to repair. If they have little free time or money, they might decide before even taking a look that this isn't the house for them.

An "as is" sale can mean a number of different things. So, before you dismiss a listing as unsuitable, find out what "as is" means. It could mean that the property is part of the estate of someone who died. In some states, such properties are sold in their "as is" condition and without warranty in order to protect the heirs who might know nothing about the property.

Let's say you inherited your aunt's farm in Lassen County, Calif. You were there once when you were a kid, but haven't seen it since. You are not in a position to make any disclosures about the property. In this case, "as is" means the seller knows little if anything about the property. The property could be in wonderful condition or not depending on how well it was maintained over the years. "As is" doesn't necessarily mean there is a problem.

When a bank forecloses on a property, the sale is usually an "as is" sale. As with an estate sale, the bank might know nothing about the condition of the property. It's up to the buyers to satisfy themselves before buying. Homeowners who let their homes go into foreclosure because they can't afford to make the mortgage payments also might not have enough money to keep the home well maintained.

HOUSE HUNTING TIP: Don't skimp on inspections if you're going to buy a foreclosure property. You may need to inspect the property -- with the owner's permission -- before you make an offer. But, it is money well spent even if the deal doesn't go through if it keeps you from buying a property that needs more work than you can afford to pay for.

"As is" can have a much more benign connotation. For example, in California, most sales are made "as is" subject to the buyers' right to inspect the property. In this case, "as is" tells you nothing about the property except that the sellers won't warrant the condition. Buyers are encouraged to have the property inspected by professionals. And, they are usually able to withdraw from a purchase contract without penalty if they don't approve the inspections.

However, for a buyer to be protected in this situation, an inspection contingency that gives the buyers the right to withdraw without losing their deposit money needs to be included in the purchase contract.

Be aware that offers made on foreclosures or probate properties that require court confirmation often need to be contingency-free. There could be severe legal consequences if you back out of such a contract. Consult with a knowledgeable real estate attorney before considering backing out of a contingency-free contract.

Several years ago, when the market favored sellers and was highly competitive, some buyers made offers without any contingencies. Often in these cases, sellers had presale inspection reports available for buyers to review before they made an offer. The market was so frenzied that buyers often bought "as is" with respect to work that needed to be done. Many of these buyers stretched to buy and didn't have the resources to have the work done. With the change in the market, today's buyers probably won't be willing to take on the work "as is" without a price concession.

THE CLOSING: Sellers will be in a better position to sell in today's market if they have the work done before they put their homes on the market.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

***

What's your opinion? Send your Letter to the Editor to opinion@inman.com.

Paul Pastore's Top 10 Ways Sellers Can Guarantee Their Home Won't Sell:

1. Be casual, not serious, about selling.
A sage once quipped, "Money is only important when you don't want something enough." Real estate expert R.L. Brown said that if half of the 58,000 sellers in Maricopa County removed their for-sale signs we'd be at normal inventory levels. Actions speak louder than words in this market. Discretionary sellers should wait for a less competitive environment.

2. Price it wrong.
A home properly priced is half sold. No amount of full-color ads, glossy fliers, multiple photos, virtual tours, agent luncheons, Goodyear blimps, pom-pom girls or Saint Joseph statues will compensate for a wrong, timid retail price.

3. Ignore your agent.
Attorneys believe if you represent yourself, you have a fool for a client. Doctors don't self-diagnose. Professionals use professionals. Even though many people believe they're experts on raising kids and real estate, full-time, career pros usually know what's best. Listen to them very carefully.

4. Micromanage the marketing.
If you sold cookware in college, carts in California, or carpeting in Cranston, it does not qualify you to second-guess your agent. If you had a real estate license years ago, save your stories about the "good old days" for your children. You can share your concerns and timelines, but leave the details to the listing pro.

5. Reject staging suggestions.
Someday shag multi-colored, sculptured carpeting will come back. Whitewashed cabinets, Navajo white walls, linoleum flooring, southwest decor, lots of personal photos, and Elvis paintings on black velvet need to go. Now.

6. Let Fido loose.
I recently entered a house and had two frisky, friendly black Labs run up to sniff me. Unfortunately, I had light-gray dress slacks on that day. Both wet stains lasted for hours. Until that day I didn't realize dogs enjoyed chewing the tassels on expensive loafers.

7. Talk to the buyers.
Life gets lonely at times. Why not ask the buyers where they grew up? Or how much they qualify for. Tell them about the vacant rental next door. Maybe they could babysit next weekend! Why not share war stories, horror movies or meatloaf recipes?

8. Sell personal items.
Wow, maybe the buyers want to buy the patio furniture, rotary lawnmower, or life-size statue of Saint Anthony. You have only four more boxes of Girl Scout cookies to sell. Why not ask for a donation for the March of Dimes, the Humane Society, the local PBS station? Remember the saying, "loose lips sink ships."

9. Discount that smell.
My house doesn't smell of pets, baby diapers, curry powder, garlic, fried fish, coconut incense, cigars, manure, mulch, dairy farms or low tide. The buyer must be confusing my castle with a tract home.

10. Dismiss feedback.
What do buyers know anyway? They can't possibly mind my barbed wire fence, heavy-duty rebar, backyard bomb shelter, airport runway views, lights from the power plant, hum from the high-voltage lines, railroad tremors, scorpion skeletons, termite mud tubes and pet snakes. What are they thinking?

Copyright © 2008 RE/MAX International Inc. 2/4/08

Dump This House: Unloading Your Property in a Slow Market

It could be the kindest cut of all.

Look at the prices of homes getting sold, and the property market's decline seems no worse than a rough day in the stock market. Look at the number of unsold homes, and you realize there's a world of financial pain out there.

True, these unsold homes may eventually get bought at decent prices. But in the meantime, the owners are often bleeding money -- and many of them would be smart to slash their asking price and go for the quick sale.

• Taking time. As you can see from the accompanying chart, home prices are down just 4.5% from their July 2006 peak.

Yet even as prices appear pretty much unchanged, the number of unsold homes has soared. At the current pace of sales, it would take more than 10 months to clear this backlog, according to the National Association of Realtors.

Sure, it would be emotionally draining to have your home on the market for more than 10 months. But it probably wouldn't be a financial disaster -- as long as you're still in the house and you can comfortably cover the mortgage.

Maybe, however, you have an adjustable-rate loan that's now unaffordable. Maybe you're trying to unload a vacation home. Maybe you moved cross-country for a new job, but your old house still hasn't sold.

The monthly cost of carrying a vacant home could equal 1% of a home's value, figures Charles Farrell, an adviser with Denver's Northstar Investment Advisors. After all, you still have to pay utilities, insurance, property taxes, maintenance and, of course, the mortgage.

What if the mortgage is paid off? There's still an opportunity cost. The equity in your home could instead be invested in, say, bonds yielding 5%.

To make matters worse, "prices could be lower a year from now," Mr. Farrell warns. "There's also the risk of owning a physical asset. I'm thinking about things like fire, broken pipes, theft."

• Cutting deeply. Despite all this, sellers are loath to cut their asking price, which is the reason prices have barely budged -- so far.

"People focus on what their home was worth two years ago, or how much they've sunk into it, or on their desire not to bring a check to the closing," notes financial adviser Bert Whitehead, author of "Why Smart People Do Stupid Things With Money."

His advice: Ditch these emotional hangups -- and unload your property now. "If you really want to sell your house, you have to cut deep," Mr. Whitehead says.

Good advice? Here's how to decide for yourself:

• Ask your real-estate agent how many properties are on the market in your town today and how many sold in each of the past six months, advises Chris Mayer, director of Columbia Business School's Milstein Center for Real Estate.

"If there are 2,000 houses on the market and 200 houses sold last month, that means it's taking 10 months to sell a house," Prof. Mayer says. "That's pretty simple math, but nobody ever does it. If you price your house like everybody else, it might take 10 months to sell it."

• Suppose you price your home like everybody else and it does indeed take 10 months to sell. Figure out how much you would be out of pocket over that stretch, either because your home is vacant or because the mortgage has become unaffordably large.

• Spend your Sunday going to open houses in the neighborhood. That should give you an indication of what you need to ask if you want to get your home sold now. Given the cost of carrying your home and the risk prices will fall further, would it be cheaper to slash your asking price?

If you're going to lower your price, Prof. Mayer advises doing it right away -- or waiting until early next year. He notes that very few houses sell between Thanksgiving and mid-January.

"The best scenario is that prices fall through the spring and then stabilize," Prof. Mayer says. "But I'm more pessimistic than that. I would sell now."

By Jonathan Clements

The Wall Street Journal Online

The Long View

The Long View
by Lawrence Yun, Vice President, NAR Research

“How much have real estate investors lost due to the housing market bust?”

That was the (highly loaded) question posed to me recently by a producer of one of the major evening news programs. The show wanted to run a story about the "pains" being felt in the market.

Hmm. Well, exactly how much real pain are we talking about? Let's look at a couple of examples. An investor who bought a property in Las Vegas five years ago would be ahead by $150,000; up $200,000 in Miami. The average investor nationwide – up $54,000. Only the recent buyers (flippers) who bought last year in few specific markets would have encountered a loss.

Not All Losses Are Created Equal
I’m not discounting the discomfort of those who lost big, especially lenders and hedge funds who had large exposures to subprime loans. Investors in homebuilder stocks have certainly experienced pains. But nearly all real estate investors who have a reasonable holding period are doing quite fine. Some of these fortunate buyers who got into the market several years ago will still consider a modest give back as a loss without considering the large gains reaped during the housing boom. That’s the nature of the human mind. A gain of $190,000 in Miami feels like a $10,000 loss considering that the gain had been $200,000.

A Home is Not a Stock Certificate -- Thank God!
Foreclosures are rising and construction workers are being laid off. REALTORS^® are feeling the pinch as well. The median income of a typical REALTOR^® has been falling due to the correction in sales transactions. However, consumers and homeowners who are in it for the long-term are once again coming out well ahead.

Because of the power of leveraging, $10,000 used for a down payment on a typically priced home in the United States at a typical appreciation rate of 5 percent will return $110,000 after 10 years. The same $10,000 invested in the stock market appreciating 10 percent annually will result in $23,600. No wonder the data from the Federal Reserve show consistent results year-after-year of the staggering difference in net worth between homeowners and renters. A typical homeowner had $184,400 in net worth versus only $4,000 for a typical renter.

The Spooky Thing
The lack of buyer confidence to enter the market has been the one principal reason in holding back home sales. Many would-be buyers are spooked of a possible home price decline. And the media is fueling that fear. Some of the most popular market gurus who offer their advice on television and other media say so. Caution is in order, however. As a recent Barron’s article pointed out, stock picks made by one such expert actually underperformed the market.

Opportunities to Seize
It’s also important to point out that times of crisis often turn out to have been times of opportunity in hindsight. With over four million net new job additions in the past two years– the time frame during which home sales have steadily fallen – a significant pent-up demand has developed. Home sales and home prices will be higher in 2008 compared to 2007. And, as with any investment, look longer term. Those investing in a home and keeping it for a typical holding period of six to ten years will likely see their investment pay off; those homes will have been a good investment.

As for stocks, they are not the enemy of real estate. Many REALTORS^® own stocks. (So do many economists!) The latest NAR research on vacation-home buyers reveals that many of them rely on stock market wealth to fund that second-home purchase. Stocks and real estate both promote the importance of private ownership.

Where to Throw the Darts
Of course, with housing figures down, all eyes at looking to the stock market. Indeed, the stock market is at an all-time high. That's terrific in and of itself and reflects confidence in the U.S. economic outlook. Just be careful about taking specific advice from any hyper-emotional TV personality. Darts should not be thrown at publicity posters of any "mad money" host. You’ll likely have just as good of luck by reining in your emotions (and money) and throwing them randomly on the financial pages of your newspaper for your next stock pickings.

Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.

Coming next... New Home Sales Rebound in September

Counteroffer is Rejection Of The Earlier Offer

A counteroffer is a rejection of the offer (or a previous counteroffer) to which it is a response. This is an important point for sellers to remember in this "normal" market in which we now find ourselves. Of course, it is an important point for buyers to remember as well.

Imagine the following scenario:

The Smiths have had their home on the market for about five months now. When the property first came on the market, both they and their agent agreed that the property stood a chance of fetching $625,000. It turned out that they were wrong. After the first couple of months of no buyer interest at all, they dropped the price to $610,000. Now it is it at $585,000, and they have yet to have what seemed even a serious offer. That is why they were pretty excited about the offer on the table Monday. The buyer had a good deposit; there was no for-sale contingency; the escrow period was agreeable; and the buyer already pre-approved for a loan. The only hitch was the price of $565,000. The offer gave them seven days to respond.

Actually, Mr. Smith confided with his agent, the $565,000 was a price they could live with -- they never had counted on being in the $600,000s. Still, though, they wanted as much as they could possibly get -- who wouldn't? -- so they made a written counter offer of $575,000. They gave the buyer two days to reply.

Not having heard back from the buyers by Thursday, the Smiths decided to accept the original offer. They provided a signed acceptance to the buyer's agent on Friday morning. To the Smith's dismay, the buyer's agent informed them that there would be no contract. The buyers had changed their minds.

Can they do that? Can they withdraw their offer after the Smiths gave them a signed acceptance? They sure can, in this situation. That is because, when the Smiths made a counteroffer, that took the original offer off the table.

A recent memo from the National Association of Realtors® (NAR) legal department emphasizes the point that, when one makes a counteroffer, that constitutes a rejection of the earlier offer. The NAR memo refers to a recent case, Theresa Polk v. BHRGU Avon Properties, in Florida's Second District Court of Appeal. There it was the buyer and not the seller who, having counteroffered, tried to "resuscitate" the original offer. Although the roles were thus reversed, and the facts quite different from our scenario, the point remains the same. In explaining how a counteroffer is a rejection, the Florida court quoted from the Restatement (Second) of Contracts: "The termination of the power of acceptance by a counter-offer merely carries out the usual understanding of bargainers that one proposal is dropped when another is taken under consideration."

To be sure, a counteroffer is not simply a rejection. It is also an offer. And, typically, it incorporates many of the elements of the original offer. This is generally made clear by a standard counteroffer form. Nonetheless, it is central to the concept of a counteroffer that it constitutes a rejection of the earlier offer.

The point for those who are "close," but still trying to squeeze a little bit more out of the negotiation? Remember, when you make a counter, you are rejecting what is in front of you. You should be sure that you want to do that.


Written by Bob Hunt

Coming next... Windows of Opportunity

Avoiding 7 Costly Mistakes of Selling Your Home

There are inappropriate steps sellers can take when it comes time to put their house on the market.

For instance, the seller in Virginia, who thought the half bath the builder had located at the front of the house would really be better situated toward the back of the main level (though all the other similar models had the powder room in the same place for the previous 20 years). He got hung up on this detail so much, that he just had to move it -- and did -- for thousands of dollars, just so he could get it on the market the "right way." His hang-up may have settled some deep-seated emotional need for him, but it didn't draw any more buyers, and it drained his bottom line. You might say, that was a costly mistake.

Real estate broker and author Sid Davis has identified in his book, "A Survival Guide to Selling a Home," seven costly mistakes that many sellers make when it comes time to put their home on the market. In my business, I've seen each one of these mistakes played out and it just makes me shake my head as to why sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional.

Mistake 1: Putting the home on the market before it's ready. Most times this happens because the seller gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-sale work done. So it comes on the market with the horrible carpet (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything -- so get the work done before marketing the property.

Mistake 2: Over improving the home for the neighborhood. This happens with additions, bump outs, and upgrades that make the home stick out from among its competitors so much that it's an anomaly, instead of a nice addition to the community.

Mistake 3: Pricing the home based on what the seller wants to net. This pricing strategy always ends in failure. Sellers can control the "asking" price, but they don't control the "sales" price. The market does. It doesn't matter what the seller wants, the price is determined by the black-and-white, matter-of-fact reality of the market.

Mistake 4: Hiring an agent based on non-business factors. It might be nice to hand over your largest asset to your nephew who just got his license -- but make sure you understand the consequences if your deal starts going south.

Mistake 5: Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the market. Once you decide to sell your house, it's no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn't matter what you "want," only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can't get emotional about how they may or may not appreciate the nuances of your home of seven years.

Mistake 6: Trying to cover up problems, or not disclosing them. Most states have a property disclosure/disclaimer form -- use it wisely. Just because you disclaim doesn't mean you cannot be sued later for the leaky basement, or dilapidated heating/air system that's discovered 30 days after settlement.

Mistake 7: Not getting your ducks lined up before trying to sell. This would involve financing, reading the fine print on your current mortgage to ensure no pre-payment penalties, not listening to the particulars of your local market, etc. If your local market is dictating lower home prices, then lower it early, not later -- it will cost you more. If the local market dictates selling your home first, then buying second, do it in that order, or vice versa.

Avoiding these mistakes is not that difficult. Your REALTOR® is there to help you step over the pitfalls.

Written by M. Anthony Carr

Coming next... Counteroffer is Rejection Of The Earlier Offer

Selling Your Home in a Slumping Market

When your local housing market is down and you have to sell, what do you do? You want top dollar, you may also need to sell in a hurry -- especially if moving day is right around the corner.

In a tight housing market, remember that you are competing with all of the other homes for sale in your neighborhood. The key to success is to make your home and the deal itself more attractive than what the competition is offering without giving away too much.

If you find yourself having to sell into a slow market, here are some tips to help you make your home more attractive and sweeten the deal to generate more interest in your home:

Price it to the market, don't be greedy. Most sellers tend to set the price too high, thinking their home is worth more than it really is. Check the sales prices of comparable homes that recently sold and the asking prices of comparable homes that are currently for sale in your neighborhood.

Obtain an appraisal in advance, so you know what the house is officially worth (based on the appraiser's professional opinion).

Use a seasoned Realtor. Your Realtor has already experienced price wars in the housing market. According to the National Association of Realtors®, a home sells on average for 16-percent more when the seller uses as certified Realtor.

Have your home professionally inspected before showing it. Get everything repaired so lookers won't have an excuse not to buy.

Have your home professionally staged. A professional stager can transform an empty or overly cluttered house into a warm and welcoming home.

Don't move out before it sells, or if you have to move out, make sure you leave the home staged, so it looks lived-in. Vacant houses feel more like uninhabited caves than homes.

Be willing to pay closing costs for the purchaser, up to 6 percent. A slow market is usually that way due to a slow economy. Buyers are strapped for cash and may need you to help in some way with the financing.

Give your Realtor copies of all improvements to the home and any guarantees for anything like a new roof, furnace, or hot water tank.

Realtor commissions are negotiable. Consider offering a higher commission to your Realtor as an added incentive.

Keep your home in ready-to-show condition at all times. Do not require a 24-hour notice.

Focus on curb appeal and making a good first impression. You do not get a second chance to make a good first impression.

Be open to negotiating on things like leaving furniture or appliances behind.

Although you may be tempted to take the first offer that comes along, be careful. Not all offers are created equal. Here are some warning signs to watch out for:

Someone tells you to take your house off the market for a period of time, and in exchange, the person will pay you more than the asking price later. This is usually a sign that the person plans on using your home as part of a mortgage fraud scheme in which he obtains a loan for more than the house is worth, pays you a little more than what you were asking, and pockets the excess proceeds.

A cash back at closing deal in which the person offers you more than the home is worth if you agree to kick back the extra money at closing.

The buyer is not pre-approved for a mortgage loan. This person can tie up your home, preventing you from considering better offers.

The person is offering no or very little Earnest Money Deposit. The lower the deposit, the more likely the deal will fall through.

The prospective buyers make the purchase agreement contingent upon their home selling, and for that to happen, several other transactions must occur first. This is known as the domino effect, and you should avoid it, if possible.

You can successfully sell a home in a declining market, and even profit from the sale, if you set realistic goals and work a little harder at it than your competitors. Just remember to work hard, stick to it, and avoid some of the common pitfalls described in this article.


Written by Ralph Roberts

Coming next... When Should Homebuyers Jump In?

Foreclosure Scams Can Be Complex Enough To Fool Most

Foreclosure scammers have a wide variety of modes of operation and no limit to the kinds of people they target. Particular favorites are the elderly and non-English speaking populations, but given the complexities of mortgage lending and foreclosure laws, almost anyone can find himself a victim.

Probably the simplest scam is pulled by the company that claims to be able to save a house but demands an upfront fee; perhaps one month's mortgage payment. Once the fee is paid, the company vanishes, content with its quick and easy if small profit. A variation on this is to insist that the homeowner make all mortgage payments to the rescuer while he "negotiates" with the mortgage company to resolve the delinquency. He, of course, is doing no such thing and if he is lucky, might collect three or four months worth of payments before the homeowner spots the auctioneer on his front lawn.

Scammers can make a much greater profit by equity stripping; i.e. helping themselves to any home value above and beyond that owed to the mortgage company. One of the oldest versions of equity stripping is hard money lending which, if done correctly is not illegal but isn't real helpful to the homeowner. The lender is more interested in the equity in the property, (he usually looks for less than 50 percent loan to value) than in the owner's ability to repay the loan. The lender pays off the delinquent loan and puts his mortgage in place at close to a usurious rate. The homeowner is now confronting much larger payments than those he was previously unable to meet and he finds his home again in foreclosure.

A variation on this is for the lender to repeatedly bail out the homeowner, each time with a higher loan to cover the lender's "fees and costs" until the homeowner has no equity remaining in the property. The lender can now foreclose without fearing he will have to return any excess proceeds of the sale to the homeowner.

Other schemes are much more complex. The National Consumer Law Center issued a report two years ago entitled "Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-Stripping Foreclosure 'Rescue' Scams" that looked at rip-offs in every state in the union. We culled some examples from that report.

The rescuer approaches a homeowner who may be only hours away from a foreclosure sale and offers a loan. The homeowner assumes he is borrowing money when in fact the documents he signs are an agreement to sell the property and rent it back for a period of time before repurchasing the home, usually well above market value. However, the existing mortgage is not paid off and the rents are used to service the mortgage on a house the victim no longer owns. The rescuer makes it nearly impossible for the victim to exercise his right to repurchase, rents escalate, and the former homeowner, once he misses rent payments, is evicted, leaving the rescuer free to sell the house on the open market.

In California a borrower has 90 days to cure a default and 21 days to stop the foreclosure sale. The approach used by some scammers is to promise a refinancing in order to cure the default but then they fritter away most of that time before informing the homeowner that he does not qualify for a new loan. At that point the solution proposed by the rescuer is to sign over the house so that any foreclosure "will be against the rescuer" rather than the homeowner and, with time and choices dwindling, the homeowner often accepts.

Scammers frequently use "affinity" marketing to lure homeowners - sending African-Americans into Black communities, Spanish speakers to talk with Hispanics, elderly persons to approach the elderly. The idea is that being approached by someone who looks like them or speaks like them will make troubled homeowners more comfortable and trusting.

Another technique is to seal the homeowner off from legitimate help or legal relief. He is advised not to talk with the mortgage company, not to file for bankruptcy, not to seek out recommended credit counseling companies. The rescuer will, he assures the homeowner, handle those details. When it is too late for the homeowner to actually avail himself of real help he has little choice but to let the rescuer cut a deal on his own terms.

Mortgage News Daily 09/24/2007

Coming next... Homeownership is Good for You

Pro's Guide to Painting a House

By Paul Bianchina

So you've finally decided that it's time to spruce up the outside of the house with a fresh coat of paint. Well before you have the paint mixed and start dragging out the ladders and brushes, you need to take some time getting the house ready. The more time and effort you put into proper preparation, the easier your painting tasks will be and, even more importantly, the longer the paint job will last.

INITIAL PRECAUTIONS

All of the steps involved in preparing a house for painting also require some precautions that are serious enough that they can't be ignored. Eye protection is essential to guard against dust and flying paint chips, and you need to wear a dust mask or respirator for protection against dust inhalation while sanding.

If you own an older house, you need to very aware of the potential dangers posed by lead paint. Prior to the government's ban on lead paint in 1978, many homes were painted with materials containing lead, and sanding or scraping lead paint can pose some serious health risks. If you have a home that was built prior to the early 1980s and you suspect that your house has lead paint, be sure to have it tested prior to undertaking any paint repairs. You can get more information from the Environmental Protection Agency at www.epa.gov/lead/ or by calling the National Lead Information Center (NLIC) at 1-800-424-LEAD (5323).

FIX IT AND CLEAN IT

First, you need to complete any necessary repairs. If the weather has rotted or splintered siding or trim boards, for example, they need to be replaced or re-secured before proceeding. This includes repairs to windows and doors, weatherstripping, roofing and any other damaged areas. Don't think that fresh paint over a cracked board is going to be the answer -- you're just asking for trouble down the road.

The next step is to clean the house, which removes surface dirt that will prevent the new paint from sticking well, and will help expose areas of peeling or damaged paint that require additional attention. You can use a garden hose or a pressure washer, but stick to a wide spray nozzle that doesn't concentrate a strong stream of water onto the siding. Most pressure washers have soap injectors, which allow a small amount of soap to be mixed with the water stream -- that may help if the house is particularly dirty. Use a soft- or medium-bristle nylon brush on a pole for best dirt removal.

Now you need to remove any loose or peeling paint, working back until you are certain you're into undamaged paint that is well adhered to the underlying surface. There's really no easy way to accomplish this -- it just takes time and elbow grease. One tried and true method is to use a paint scraper. Hold the scraper at a low angle, relatively parallel with the board you're scraping, and work with short, firm strokes to scrape the paint off. Work with the grain of the wood to avoid raising grain fibers, and be careful not to dig into the wood's surface.

Another option is to use a sander. For small areas, a pad or belt sander will work fine. For larger areas, you might consider renting a disk sander that is specially designed for paint removal. Either way, sand only enough to remove the loose paint -- well-adhered paint can remain, and you want to be sure you don't sand down into the siding itself.

Avoid the temptation to use a pressure washer to remove the loose paint. Getting a strong enough water stream to be effective at removing paint requires the use of a small nozzle that really concentrates the water pressure, which in turn can damage the siding and drive moisture deep into it.

If the siding, trim or other surfaces you're working on have been painted several times in the past, when you have scraped down to bare wood you may notice that the surrounding areas of existing paint are considerably higher than the surface of the wood. This will show through your final paint job, so take some sandpaper and feather the sharp edges of the old paint so that it blends more smoothly down to the bare wood areas.

Make sure all the surfaces are completely dry, both from washing and from the effects of winter weather. Painting over damp wood will simply cause the paint to fail prematurely.

Now, apply a good-quality primer over any bare spots. Use a primer that is compatible with the final paint you'll be using, and that is compatible with the surface material (wood, brick, concrete, etc.). Your paint store can assist you with selecting the best primer for your particular application. For areas that are very dry or badly weathered, apply two coats of primer to equalize paint absorption with the rest of the siding.

Finally, re-caulk any areas that require it, closing up all the gaps in the siding and trim before painting. If you have done a lot of sanding and scraping, a light final washing may be required to remove residual dust. Once again, be sure the house is completely dry before painting.

Coming next... Is Now a Good Time to Buy a House?

Remodel or Move?

Do you need more space? Are you thinking about remodeling your home, or is it time to make a move?

For many people, this can be a difficult decision. Once you've been in a house for a few years, you can get attached to your home and your neighborhood. It's where you know the stores, the parks, the theaters, and the best commute to work. If you have children, they may love their school. So what can you do?

Consider remodeling if you love your house and neighborhood, have the room and budget to expand on your existing property, and can potentially realize a profit on the remodel. For a major remodel, also consider that you may need to move out to avoid exposure to dust and construction chemicals.

Finally, remodeling almost always takes more time and costs more money than you may have estimated. So make sure you budget realistically. Avoid making your home more expensive than typical homes in your neighborhood or you may be unable to recoup your investment when selling later.

If remodeling isn't a good choice for your family, moving to a different neighborhood may have many advantages, including the opportunity to buy a larger or newer house, live closer to desirable schools or businesses, or shorten your commute time.

If you're interested in seeing what is currently available on the market in your price range, please don't hesitate to email or call us. Our Atlanta local number is 770-722-0099 or call 1-800-717-OWEN (6936) Nationwide Toll Free.

Coming next... Pro's Guide to Painting a House

Getting Your Home READY to Show

While your home is listed for sale, it is all important that you keep it as attractive and inviting as possible. You have probably read the articles concerning preparing your home to show and actually showing it to potential home buyers. Most of these ideas are obvious, but I have summarized them here.

First Impressions - Remember that the front door to your home makes that all-important first impression. Be sure that the paint or stain on the door is pristine and that the frame is freshly painted. The locks should be shiny and easy to operate and the doorbell should work. Keep the porch swept and free of toys and pet items.

Lighting - Think about lighting. Always leave dark rooms lighted with an accent lamp, particularly if a wall switch does not light the room. Too much light in a room such as the kitchen can make it feel stark and sterile. Warm the room up with just the right combination of light to make it feel cozy. Outside light is the best. Keep the drapes and blinds open and let the sun shine in! For evening showings, a well-lighted home is very inviting. Do not forget to turn on the porch light!

Distractions - Televisions and stereos are distracting to the Buyer. The best bet is to keep them turned off. A little soft background music may be okay, but remember everyone’s musical tastes are different. Keep it very low key.

Closets - Empty those closets. You are getting ready to move anyway (always think positively!), so pack up your off-season clothes and throw away those shoe boxes to try to make your closets as empty as possible. It makes them look larger. The same is true of kitchen cabinets and pantries

Clutter - Eliminate clutter. Throw away old magazines and junk mail and organize those bills. Many people have collections of knickknacks that have accumulated over the years and have great sentimental value. Try to put away as many as possible to create more open space and roominess.

Paint - If your interior or exterior walls or trim work needs to be painted, this small investment will pay you back handsomely at sale time. Buyers will typically overestimate the cost of repainting and repairs, sometimes by as much as two or three times. Doing these obvious repairs and touchups will enhance the salability and attractiveness of your home resulting in a quicker sale at a higher price. Buyers will also overestimate the cost of carpet and roof replacement. These items can make or break the sale of your home. Certain contractors will even allow their payment to be withheld from the closing proceeds.

Housekeeping - If you are not a fastidious housekeeper (who has time these days?), hire a maid service to come in every couple of weeks to help you out. Even having a service come only once will give you a head start. Always keep the baths completely fresh and dainty. Potpourri and scented candles work great here. Keep your intimate apparel and dirty clothes picked up and make sure you make the beds each morning. It is best to work on the assumption that someone is going to see your home every day.

Kitchen - Kitchen odors can often be objectionable. Keep the garbage can empty and the dirty dishes in the dishwasher. Put away the cereal boxes before the kids get on the school bus. Certain cooking odors linger and you may not be consciously aware of them. Just in case, slow cook some potpourri (apple-cinnamon is great) in a crock pot to mask these scents, or slow bake some instant Toll House cookies. What a wonderful homecoming smell!

Pets - Pets can often be a detriment to certain buyers, particularly those with allergies. Get a second opinion with a fresh nose to be assured that no objectionable pet odors exist. Cat boxes should be cleaned daily! Do not forget about smelly pet foods and keep the bags tightly closed. Many agents will not enter a home with the sound of a large (or sometimes small) dog. Make sure your overly friendly pets are restrained or in a run. Agents object to being responsible for "escape" cats, but they will do their best to keep them inside. Do not forget that the potential buyer will want to look at the exterior of your home and walk around the yard. Do not let them find any nasty surprises here.

Exterior - Do not forget about the outside appearance of your home. Now is the time to find someone that "does windows". Shiny glass looks great and I recommend removing the screens from the front windows to add sparkle. Pressure washing can save repainting in many cases. It will also make your driveways brilliant white again. Do not forget the deck. Pressure washing followed by a treatment of water sealer will make it look brand new. Overgrown shrubs should be cut back and the yard mowed and edged regularly. A couple of flats of seasonal flowers really welcomes new buyers.

Valuables - If you own items of great intrinsic or sentimental value, you should consider putting them away in a safe place. Agents typically bring customers to your home whom they have pre-qualified and about whom they have some amount of background information, but this is no guarantee. Just to be safe, pack up easily pocketable valuables in an unmarked box. Do not forget about stamp and coin collections. A word about guns: some buyers are intimidated by the presence of firearms. I recommend that firearms be stored unobtrusively and locked for safety. Financial instruments are a temptation, so stash your bank books, investment account statements and check books in an unexpected place.

Security - The presence of a security system is often a desirable feature, but agents who are unsure how to operate an alarm will often not show a home for just that reason. Unless you have some particular security concerns, leave the system turned off to insure as many buyers as possible see your home. The lockboxes we use are programmed to be operable only between 8:00 am and 9:00 p.m. EST (9:00 a.m. to 10:00 p.m. EDST), but they can be reprogrammed for 24 hour access, according to your needs.

Coming next... Seven Questions Every homebuyer Should Ask Before Selecting an Agent

Making Your Home EASY to Show

When a Buyer is coming to visit your home, it is all important that you eliminate any barriers to that visit. Real Estate is a numbers game. You want to have as many Buyers see your home as possible. Professional real estate agents will make a courtesy call giving you as much notice of their intended showing as possible, but sometimes plans change at the last minute and you will receive a call wanting to show on short notice. If you are not home, they will leave you a message with the approximate time of their visit. The agent should leave a number to call them back, but it is generally unnecessary to call back to confirm unless it is inconvenient for you to allow your home to be shown. If they do ask you to call back, be sure to include your address if you leave a message, so they can identify your property. It is impractical for them to remember all the names of the homeowners of the homes they are going to show.

Unless it is just terribly inconvenient, always allow agents to show your home. This may be the only opportunity this particular Buyer may get to view your home. Some are only in town for a short period or they may not plan to be in your area again. If your home is not perfectly neat and clean, do not be concerned. The Buyer is coming to see the house and a lived-in house looks like a home. Don’t be concerned if two or more agents want to come in the same time period. While it is unusual for two agents to arrive simultaneously, it is never a problem. The second one to arrive just waits for the first to complete their viewing.

Rarely will agents want to show your home very early or very late. If you are a late sleeper or day sleeper, I can add notes to the remarks in the computer listing asking them not to call or visit during inconvenient hours. If your personal beliefs require certain days to be set aside for worship, similar notes can be added to prevent showings or calls on these days.

Unless there is some compelling reason, I urge you not to list your home as "Appointment Only" It is very difficult for agents to coordinate showings at an exact time and many agents will exclude from showing any home listed "Appointment Only" and will only "drive by". It is very important that everyone has the opportunity to see the interior of your home as conveniently as possible.

If you are home, even if you are out on the deck, working in the office or down in the basement, the Buyer will not feel free to voice their objections for fear that you may overhear them and be insulted. They will "tip toe" through your home, whispering their comments, afraid to look in closets or cabinets. It is important that they be able to relax and enjoy their visit. If they are unable or unwilling to voice their objections, then their agent will be unable to help them work through them. The Buyer will come away from your home with unresolved conflicts and objections. The Buyer will soon forget the specifics of their objections, but the general objections will still loom in their mind. Your home will end up on the reject pile when it could have been the perfect home for them.

The most critical element to showing your home is allowing the potential Buyer to do so in private. This means allowing the Buyer and their agent to view your home while no one else is home. The Buyer is very sensitive to the fact that they are a guest in your home and are invading your privacy, but they have big decisions to make and must be able to do so freely. Part of this decision making process is voicing their objections to your home. No single home is going to have every feature that their mythical "Dream Home" has, so the decision is one of compromise. One of the most important abilities agents have is listening to objections and helping the Buyer resolve them.

If you are home, make it very clear to the Buyer that you are leaving the house and are going to the store, your neighbor’s or taking the dog for a walk and then DISAPPEAR. Most Buyers will only stay for 10 to 20 minutes and then you can resume your schedule. Do not assume that the Buyer wants to meet the owner or even ask questions. Most do not. If the Buyer is back for a second or third visit, it is appropriate to ask the agent if you can answer any questions. If that answer is no, then respect the agent’s ability to help his client in the best way he knows.

Most Buyers would rather not know the personality of the Seller. Never volunteer any information because you may be damaging your own negotiating position. Remember that the showing of your home is not a social call.

Coming next... Getting Your Home READY to Show.

Pricing Your Home

I describe the marketability of any given home in terms of a triangle. The base of the triangle is the home’s location and this is fixed. There is nothing we can do to alter the location or to change the fundamentals of this location. If you are on a busy road or on a steep lot or near a power line, it is very unlikely that these fundamentals will change. The other two sides of the triangle are price and condition and these factors are very much subject to change. When all sides of the triangle are equal or in balance, then I consider your home an A+ home. A+ homes sell quickly and close to full price. If your home does not sell quickly (in less than 30 days) or at least receive positive feedback from agents, then we need to re-analyze it in terms of pricing and condition. An A+ home does not need to be a showplace to be rated A+. It only needs to be priced appropriately for its condition and location.

It is easy to turn a less than ideal home into an A+ home by either changing the price or improving the condition. There is a market for every home, but the important thing is to find the correct balance of location, price and condition. The balancing act is to find a price that will attract buyers without selling your home too low.

I also describe the overall inventory of available homes in terms of a triangle. The the A+ homes are at the top and the D- homes are at the bottom. By definition, there are very few A+ homes, but these are the first to go and sell at or near full price. The D- homes take the longest and sell at the greatest discount, but there are lots of them from which to choose. You can move your home up to the top of the triangle by either the lowering price or improving the condition or both.

The tendency of most sellers is to build in a negotiating cushion on the assumption that every buyer is going to make a lower offer. If you overprice your home, it is very likely that some viable buyers will never see your home. If you price it close to its true value those same buyers will rush to see it and make a quick, high offer to avoid losing it. Generally homes priced near their optimal price will sell much more quickly and at a higher price than those with a big cushion built in.

If you are unsure about pricing after reviewing my Market Analysis, there is a good way to compare your home to the competition. We can go shop the homes currently for sale and compare your home to them. These homes are your real competition and the best way to make a comparative evaluation is actually seeing them.

One of the most difficult things a Seller must face in deciding to put their home on the market or in deciding where to price their home, is coming to the realization of its true value. During a period of ownership, owners expect that their home to appreciate in value and this is not an unrealistic expectation. Appreciation is dependent on many factors, some of which the owner can control and others he cannot.

The important thing to realize about appreciation is that it most fundamentally about price comparables of similar homes in your area. It is most definitely not based upon how much you have spent on your home while you lived there. Homeownership is not free. It is necessary and desirable that you perform periodic maintenance and replacement of worn components. If your home is ten years old and you have just repainted and replaced the carpet in anticipation of putting your home on the market, these "improvements" are not improvements at all, but rather put your home in proper condition for sale. Not spending money to do these things will simply mean that potential Buyers will discount their perception of its value, often by much more than it would take to do the work later. This diminution of value will also be reflected in the value set by the real estate appraiser. Needed paint, carpet or other repairs are considered "deferred maintenance" and will cause the appraiser to assign a lower value to take these factors into account.

Some improvements, such as additional bathrooms or significant upgrades of existing kitchens and bathrooms do add real value, although the addition to value may not be as great as the cost to make the improvements. This is often offset by the "value" to you of a quicker sale. I do not recommend spending money immediately prior to putting your house on the market on anything other than cosmetic improvements or repairs.

Another aspect that must be looked at objectively is your own personal motivation to sell your home. If you have already found a home to buy and you must sell your present home first, then your motivation is obviously higher than it would be if you only planned to search for a home after your present home is sold. Likewise, if you have been transferred and the "buyout" by your company is lower than you want to take or if you are commuting a great distance, then it is in your long term best interest to price your home so that it will sell quickly. Chasing after every last dollar of sales price can actually cost you if the price of the home you want to buy is going up.

One of the facts a Home Seller must accept is that ultimately the marketplace determines what their home is worth. Analysis of comparable sales and evaluation of improvements is an excellent predictor of the eventual selling price, but it is the Buyer that actually determines the value of a given home.

It is almost impossible to "sell" a Buyer on the fact that your home is worth what you believe. Atlanta is a huge housing market and individual Buyers become virtual experts on home values, within the narrow confines of their search parameters. The Buyer sees all that is available and has had the opportunity to take a "snapshot" of the market. They know the relative size, location, condition, and price of all of your competition and will choose the home that offers the most value.

The individual Buyer may not assign the same value as you to the various factors that determine value. The cul-de-sac location that provided a safe haven for your children may be seen as a negative to a Buyer that seeks an expansive front yard. The media room in the basement may not be valuable to a Buyer with a woodworking hobby that needs an unfinished basement for his workshop.

For every house there is a Buyer, but only at its value point. If you get very few showings after your home goes on the market, then it is obvious that we have made an error in pricing and an adjustment in price is warranted. If you get plenty of showings, but no offers, then you may want to reexamine its condition or make an adjustment due to negative factors beyond your control, such as a steep driveway .

Coming next... Making Your home EASY to Show

The Seven Fatal Errors

The Seven Fatal Errors Many Home Sellers Make… and How You Can Avoid Them

You have decided that the time has come to sell your home. It can be for one or more of many reasons. You may have a job transfer or new job that is taking you out of town. You may want to move your children into a better school district. Your family size may have changed and now your home is too small or too large. You may have received an increase in salary and can now afford a larger home, or you may just feel that it is time for a change. In a difficult market, it is imperative that the Seller look at the Big Picture and do anything and everything necessary to get from where you are to where you want to be. In doing so, use the following guidelines to avoid the Seven Fatal Errors.

1. Seller Prices Their Home Too High.

2. Seller Does Not Make it Easy for Buyers to View Their Home.

3. Seller Does Not Get Their Home Ready to Show its Best.

4. Seller Does Not Look at Their Situation Objectively.

5. Seller Gets too Greedy, No 0ffer Looks Good Enough.

6. Seller Does Not Stay Focused on the Big Picture.

7. Seller Selects the Wrong Agent to Market Their Home.

Coming next... Pricing Your Home

Sellers Can Prepare Early for a Home Inspection

Given today’s real estate market, every seller breathes a deep sigh of relief when an offer to purchase is presented. And once all parties sign the contract, both sides want the sale to close. But as you know, a home inspection report detailing a long list of imperfections can hurt and sometimes even squash the deal.

How can sellers prepare for a home inspection?  The list below will help sellers prepare for the home inspection, with little or no cost. While many of these items are considered routine home maintenance rather than a defect, today’s buyers know they have more bargaining power than ever before and will use the information listed in the home inspection report to their financial advantage.

The list begins with tasks that can be performed immediately and items further down the list can be done later, once the offer comes in. Some items are applicable to other regions.

1. Divert all water away from the house; i.e. downspouts, sump pump drainage, condensation drains, etc. 
2. The slope or grade of the property should carry water away from the structure. 
3. Ensure that proper grading is followed under a deck. 
4. Trim trees, roots and bushes back from the foundation, and away from the roof, siding and chimney.
5. Seal any cracks in an asphalt driveway.
6. Paint any weathered exterior wood and caulk around the trim, windows, door frames and chimney. 
7. Point up any failing mortar joints in brick or block.
8. Caulk all exterior wall penetrations. 
9. Update attic ventilation if none is present. 
10. Have the chimney, fireplace or woodstove cleaned and provide the buyer with a copy of the service agreement. 
11. Seal or point up masonry chimney caps. Install a metal flue cap. 
12. Seal masonry walls in the basement if cracks are present. 
13. Make sure the crawlspace is dry and install a proper vapor barrier if necessary.
14. Remove any visible moisture from crawlspaces. Moisture levels in wood should be below 18% to deter rot and mildew. 
15. Test the sump pump for proper operation. 
16. Clean out basement entry drains. 
17. If windows are at or below grade, install window wells and covers. 
18. Make sure all doors and windows are in proper operating condition and replace any cracked windowpanes. 
19. All plumbing fixtures (sinks, tubs, toilets, and showers) should be in proper working condition. Check for and fix any leaks. If caulk around a plumbing fixture is non-existent, discolored or old, strip out any old caulk, clean the area and seal with new caulk. 
20. Test all present GFCI receptacles for proper operation.
21. Check that bath vents are properly vented and in working condition.
22. Replace regular electrical outlets with GFCI receptacles near all water sources. 
23. Remove grade or mulch from contact with siding. Six (6) or more inches of clearance is preferred and should slope away from the structure. 
24. Clear access to attic, crawlspace, heating system, garage and other areas that will be inspected. 
25. Clean the gutters and clear any debris from the roof. 
26. Remove rotting wood and/or firewood from contact with the house. 
27. Remove paints, solvents, gas, etc., from crawlspace, basement, attic, porch, etc. 
28. Clean or replace the HVAC filter. Clean dirty air returns and vents. 
29. Test all smoke detectors to ensure they are in safe working condition.
30. Replace any burned out light bulbs.
31. If the house is vacant, make sure that all utilities are turned on for the inspection, including water, electric and gas. The hot water heater should be turned on as well as all breakers in the main electrical panel.

Provided courtesy of: Southern Home Inspection Services

929 Cove Rd., Suite D

Jasper GA 30143

Office 770-645-2132

Email: support@WeInspect4U.com

Web Site http://weinspect4u.com

Coming next... The Seven Fatal Errors Many Home Sellers Make and...