What’s the Deal With These Home Warranties Anyway?

Buyers and sellers seem to be confused about home warranties. Questions I hear include: Are they worth it? Does that mean the house has passed some kind of test to qualify? Should a buyer prefer a house because the sellers are offering a warranty?

Here are points to consider:
For Sellers
Are there any old systems in your house that might need to be replaced in the next 1-2 years? (heating and air conditioners, water heater) – Is your house priced to attract 1st time homebuyers in your area? – How much does the warranty cost and what items are included? – If something breaks while the house is on the market, will you have the money to get it fixed?

For Buyers
- When you move into the home you purchase, will you have any money to pay a contractor if something breaks in the first six months? – Are any of the major (ie expensive) systems nearing the end of their life expectancy? (dishwasher, water heater, heating and air conditioning) – Do you know how to maintain a home? When to close crawlspace vents, how often to have your heating and air conditioning checked, how to winterize your outside water faucets in the winter? – Are you familiar with the city or county? Do you know who you would call if something breaks to find a reputable contractor?

-Home warranties can be great for buyers and sellers, especially for the first year you are in a home and getting used to it. Sellers can also pay for the option of having the warranty cover them in most cases while the home is on the market. A home warranty, however, does not replace a thorough home inspection for the buyer and it does not prevent a seller from having to do repairs before closing. A home warranty requires you to use their contractors so you cannot call someone from Angie’s List or who was recommended by a neighbor.

-Warranty companies are 3rd party companies – the house does not have to be tested or inspected to get a warranty. Home warranties cover most mechanical systems but they do not cover structural components. They have exclusions and limits so you should read the contract to know specifically what is covered and what is not. Warranties usually cost between $389-550 depending on the company and the exact level of coverage. If a seller offers a warranty it indicates to the buyer that the seller wants the buyer to feel confident their home will be a good investment. Buyers can also request a warranty from the seller during contract negotiations or purchase the warranty for themselves.

So, what is the final verdict – should you get a home warranty? Well, as my accountant likes to say, it depends.

Ask your real estate professional and then decide for yourself.
Amy Shair, Re/Max Real Estate Professional
Real Estate Agent serving Raleigh North Carolina
Durham NC Realtor
Homes for Sale Cary, NC
“Call Amy for your Shair of the market!”
919-818-5001

http://www.AmyShair.com

Is Crabtree Valley in Raleigh going to be the next North Hills?

Amy Shair
RE/MAX United
amy@amyshair.com

The Crabtree Valley Mall has been in Raleigh for decades. And for those of us that have lived here a long time, we’ve seen the mall change and grow. Residential real estate has been good in that area because of it’s optimal location to downtown Raleigh, the RDU airport and Research Triangle Park (RTP). Plus, great access to the RBC Center, State Fairgrounds and highways.

In the last 5 years the Raleigh’s North Hills area has been revitalized and the new shopping and residences have changed the feeling and the lifestyle of area residents. Meanwhile Crabtree has been making its own changes with new stores and restaurants at the Crabtree Valley Mall. A nearby hotel was demolished to make room for the Solei Center high rise which was to climb high above anything else in the Crabtree Valley area. That project is currently on hold but it’s clear that area is heading for big things in the next few years.

View Larger Map

With more buildings, stores, restaurants and residences comes more cars on the road so the City of Raleigh is trying to determine how that will impact transportation. Having visited my extended family often in Houston, Texas, Raleigh’s traffic shouldn’t be considered congested. In an effort to be prepared, the City is looking at their long-term plans and I’m happy to report they are asking for our input.

The City of Raleigh Transportation Department is doing a transportation study in the Crabtree Valley area on March 1st 2010. If you live in the Raleigh area please participate with this survey link below to help give them accurate information.

If you’re interested in more information about residential real estate near Crabtree Valley Mall, please contact me at 919-818-5001.

____________________________________________________________

From the City of Raleigh site

News

February 18, 2010
Crabtree Valley Transportation Study Open House To Be Held March 1

The City of Raleigh Public Works Department and project consultant Louis Berger Group, Inc. will hold an open house meeting for the Crabtree Valley Transportation Study on Monday, March 1, 7:00 p.m. at the Laurel Hills Community Center, 3808 Edwards Mill Road.

The City of Raleigh is conducting a long-range transportation and land-use planning study for the Crabtree Valley area. The area, which includes the Crabtree Valley Mall, is a major center for growth and regional activity. It is envisioned that the area will have interconnected, urban-scale, mixed-use developments within a pedestrian and transit-accessible environment.

The study will provide an in-depth analysis of existing and future travel demand in the area and will provide an evaluation of transportation needs to accommodate future growth. The Louis Berger Group consultant team has developed preliminary recommendations for transportation improvements in the area. Presentations will be made at 7:30 p.m. and 8:00 p.m.

To participate in the study survey visit http://www.keysurvey.com/survey/292204/180b/

Prepared by:
Chris Riley
Senior Public Affairs Specialist
Public Affairs Department

For More Information Contact:
Fleming El-Amin
Transportation Planning
Public Works Department
222 West Hargett Street
Raleigh, NC 27602
919-516-2158

How to Funkify Your Home

Funkify is a word I created to describe when a person makes a change to their home that works for them and doesn’t work for anyone else. Putting built-in wall to wall shelves for your 1000 miniature antique doll collection is not going to work well for resale. Choosing that gorgeous, expensive, one-of-a-kind sink for your master bath might get you oohs and ahs from friends and the salesperson at the design gallery, but buyers might be put off when you go to sell that house in 3 years.

I love when clients call and ask questions like “I want to add a bathroom but I’m going to have to make my master bedroom closet smaller – is that a fair tradeoff?” or “I read that if I add a screened porch I will get back 80% of that for resale, is that true?” THANK YOU! You are smart consumers and spend your money wisely.

So, as I read that more people are thinking about remodeling in 2010, I humbly beg of you:

“For all things good, PLEASE ask your real estate professional how these changes and choices will affect the resale of your home !!!”

Here’s some basic info:

Bathrooms

One of the top things according to a recent survey is adding a bathroom which certainly helps for resale. A little input on choices like tile vs vinyl floor, shower vs tub/shower combination, vanity vs pedestal sink can help ensure that you maximize your investment in your home.

Should your master bath have a private room for the toilet? Can you remove the rarely used garden tub and put in a huge shower instead? If you are finishing your attic into a home theater, should you put in a half bath or a full bath? These are all relevant questions and the answers depend on your area, average price range, and target demographic for your home if you were to sell it.

Kitchens

How about kitchens? Let’s talk pantry. Any buyer interested in cooking walks into the kitchen, surveys the amount of counterspace for preparing and cooking, and then opens the pantry door to see how big the pantry actually is. If you sacrifice space in the pantry to put in more cabinets, the buyer is not going to appreciate it. I promise. Even when it gives you more square feet of storage space. Even when all the cabinets have full-extension pull out shelves. Even when you have a built-in cappuccino machine.

If you buy new cabinets for your kitchen, buyers usually don’t know how much extra it costs for the distressed white raised panel doors. So, go ahead and buy that level 4 cabinet, just realize a buyer is not going to pay you $5,000 more for your kitchen.

In Conclusion

In the end it’s fine for you to do any of the changes you want and enjoy your improvements. Just be aware of how your choices affect resale and how much of the cost you should expect to recoup.

How Long Has it Been Since You Painted Your Bathroom?

I was trying to remember how many years ago I painted my master bathroom. To my amazement, it turned out to be about 10 years! Back then it was cool to use a faux finish but now it’s very dated. When I think about what color I would paint it today, I’m inspired to go back in and also replace the light fixture and faucet but then I’m drying my hair and forget all about it.

When sellers get ready to sell I recommend they add many of those popular features like granite countertops, oil rubbed bronze door knobs, and popular neutral palette color-scheme. If a seller only does half of those things, it just doesn’t work, especially if a brand new home is competition. Brass fixtures, wallpaper or borders scream “I’m not a new house”.

Buyers want it all and since rumor has it that it is still a buyer’s market, they will wait until they find a house that has all of it already done for them. Even, if the house is smaller. Even if the house is on a tiny lot with only two 6 foot tall starter trees.

Sellers often say after they’ve made the improvements they wish they had done them earlier so they could have enjoyed them since the house looks so great. But, as you know it’s easy to just dry your hair everyday and them forget as you run out the door to the gym or to work.

Here is an article about the 2010 top “must haves” for new construction : check it out and see how many you think are must haves in your house:

Must Have’s for New Construction

If you’re thinking about doing some of these improvements and want to know which ones are going to have the longest desirability for resale, contact me and I can help you determine what is appropriate for your area and price range of home.

How do you receive the homebuyer tax credit on your 2009 tax return

As ironic as this may sound, here is a succinct IRS publication that explains some of the details of the homebuyer tax credit.

Included in the document is how you can buy a house in 2010 and file a form to get the credit on your 2009 tax return.

Homebuyer Tax Credit Info 2009 2010

Please tell me what a short sale is again in real estate…

I’ve heard at least 3 times this week, “Tell me what a short sale is again, Amy.” So…

A short sale is when a lender accepts less than the total amount owed to pay off the mortgage when the property is sold. The homeowner (aka borrower) must show a qualified hardship for the bank to consider doing a short sale. Just owing the bank more than you can sell your house for right now is not enough.

The homeowner has to provide proof of the hardship and detailed financial information to show they will be unable to fix their problem. When a seller has their home listed as a short sale or possible short sale it means they are telling real estate agents and potential buyers that the bank will have to approve the sale of the home after the seller/homeowner accepts an offer and probably don’t have any money for repairs.

Why would the bank agree to accept less than what is owed? The bank will work with people on short sales because short sales are often better than a foreclosure for the bank. On a foreclosure there are more costs (attorney fees, eviction proceedings, utility bills, cost to secure and re-key the home, property insurance) and more time involved to get the property off their books. In some cases, the bank retains the rights to pursue the seller/homeowner later to recoup the rest of the money.

As a seller, you have to spend a lot of time talking to the bank to work on a short sale. It means you don’t have to sit by and wait for the bank to foreclose on your home. You can call them and communicate to see if you qualify for a short sale. You can contact an experienced real estate professional for assistance. You might be able to lower your price to a realistic point to get your home sold so you can move on. As a seller you have to be proactive, even when the person at the bank may not be telling you the same thing you heard last week. You cannot get any money from the sale at closing, regardless of how much you’ve paid or how much you put as a down payment. Zero. A short sale will have a negative impact on your credit score, but hopefully it is less than a foreclosure. The impact on your score depends on when you make payments and if you made any partial payments. The difference in the amount owed and what the house sells for can be charged to you as income for tax purposes so you need to talk to a tax advisor to understand your options and liabilities.

As a buyer, you need to understand that you may make an offer on a home and that it can take weeks (and I mean many weeks) to hear back from the bank. You may have to be flexible on the closing date. As a buyer understand that you’re buying a property that needs some repairs or TLC and in many cases the seller and bank will not do them or give you money to have them done. That’s why you’re getting it at a low price to compensate for the risk and hassle. If you have a house to sell and want to buy a short sale, the bank is probably not going to let your buyer’s agent write in a clause that makes the purchase of the short sale home contingent on closing of your current home. You may need to move twice because the closings don’t coincide.

Short sales are not for the faint of heart, but they are an opportunity for a buyer and a seller to get what they want without having to wait and deal with a foreclosure.

I have a designation called the CDPE, which stands for Certified Distressed Property Expert. That means I have training in short sales and working with distressed properties. Years of market experience help, but the market is changing and you need a full-time committed real estate agent who knows the market and how to deal with the banks.

Amy Shair is a licensed real estate associate with almost 20 years experience in residential real estate in the Raleigh, Durham, Cary, Chapel Hill area of NC. She is affiliated with RE/MAX United in North Carolina. She can be reached at 919-469-6539 or amy@amyshair.com

Next blog post: Sellers: what short sales and foreclosures in your neighborhood do to the value of your home in 2010.

Part 2: The Benefits of Buying a Foreclosure

Buying a foreclosure is exciting and potentially quite profitable. Now that you understand some of the risks that can be overlooked, here are the benefits of buying a foreclosure:

1) You can make it your own. Foreclosures often need work and you can do things to personalize it like colors, flooring, and new appliances.

2) You’re improving the neighborhood by moving into a vacant home and contributing to the neighborhood and keep a house from falling further into disrepair.

3) You move in with instant equity. (Well, you shouldn’t buy a foreclosure unless this is the case.)

4) You will likely be stimulating the economy in 2010. Either by buying supplies at local stores or hiring local contractors to do work on the house.

5) You might be able to take advantage of the $8,000 first-time homebuyer tax credit or the move-up homebuyer tax credit.

6) If passed by Congress, you will also have the opportunity to taking advantage of the energy efficient tax credit and get even more equity and lower your utility bills.

7) You’re helping to stabilize the real estate market by taking a potentially hard-to-sell property out of inventory. Not all buyers are visual enough to see the potential in some of the foreclosures that have been neglected and damaged by previous occupants.

8 ) You get all the regular benefits of owning a home too!

If you want to buy a foreclosure in Raleigh, Durham, Cary, Apex, Chapel Hill, Hillsborough, Holly Springs, Garner or Clayton, contact Amy Shair with RE/MAX United. 919-818-5001 amy@amyshair.com North Carolina Real Estate

Buying a Foreclosure – Risks vs Benefits

Part 1: Risks

If you ask homebuyers why they are looking at foreclosures, the answer often is, “Because they’re such a good deal.” The word “deal” for me is on par with other four letter words which I won’t mention (but you can guess). Deal is a selfish word. Deal is one of those temptation words. What kind of deal comes with no risk? You get a deal on that car – do you really expect that ugly orange color to be good at trade-in? You get a deal on clothes – are you sure they’re going to be in style long enough to wear them more than a few times? What kind of deal do you get on food that has less than 1,000 calories or 200% of your daily sodium allowance? Are those really a deal?

Well, buying a foreclosure home CAN be a good deal for those buyers who have some cash to put into the houses when they buy them. As a realestate agent I have discovered that many buyers have a down payment in this market but not additional money to fix up everything they feel needs to be done in the first 6 months they own the foreclosure.

Hidden defects are what homeowners fail to factor into their budget for improvements. When you cannot turn on utilities before closing you cannot check heating and air conditioning or kitchen appliances. The water is off so you can’t check the plumbing or the well and septic.

Risk = reward

Naiveté = financial distress

Delusion = lack of equity

Next – Part 2: Buying the benefits of buying a foreclosure

Why Buyers Need a Buyer’s Agent for New Construction

Buyers are often confused at the role of a good residential real estate agent. They think that the agent takes them out, shows them houses and sells them one. The agent is just the gatekeeper of the lockbox and keeps them from having to attend open houses. So these misinformed buyers think that they can drive themselves to the new home community, tour the homes and buy one without any assistance. That is comparable to going to your local drugstore and buying an over the counter medication for a cold versus walking behind the pharmacist’s counter and helping yourself to get a bottle of prescription medicine.

 

Then there’s the myth that the buyer will get a better deal if they buy without an agent. (There is a reason the prescription medication behind the counter is taken and dispensed based on the recommendation of a trained doctor.) In some new home communities, the “on-site agent” is not even a licensed real estate agent so they can operate under different rules and laws. A good buyer’s agent will ask the right questions and make sure his or her  client is getting all the available information. Here are some examples:

 

• Zoning and possible uses of land adjacent to the community
• What land behind your lot belongs to you vs someone else
• Builder reputation
• Developer reputation
• Desirable options/upgrades/finishes
• How restrictive covenants may be perceived for resale
• Commuting times
• Review the contract – builders usually use their own contract rather than the standard contract for your state
• Clarifying the difference between builder deposit vs earnest money
• Amount of possible negotiation room on price
• Amount of possible negotiation room on other items
• Lot selection – direction the house faces, placement of house on the lot, slope of lot
• Expected appreciation on lot choices such as cul-de-sac, wooded lots and other premium lots
• Having a witness and advocate at builder meetings
• Helping explain what is involved in finishing that unfinished attic or basement and things the builder can do at new construction to make it easier or less expensive later
• Clarifying what is covered under warranty and what should be fixed by the builder PRIOR to closing or it won’t get done
• What are acceptable building practices for the area
• Expectation of what you will add in upgrades beyond the base price
• What items have been offered or discussed by the sales agent but are not in writing anywhere on the purchase paperwork
• Evaluate financing offers from the builder
• Financing contingencies

 

Buyers become sellers down the line and then realize that they did not have a key piece of information that would have changed what home they purchased or that the key piece of information is an issue for resale.

 

A good buyer’s agent is an asset that will ultimately save buyers money and prevent them from buying a home that becomes hard to sell later or costs money long-term that undermines that “great deal” they thought you were getting. This is especially important when some subdivisions are not getting finished due to builders going out of business and builders are dropping prices on their homes to get them sold in this market.

When are mortgage borrowers going to learn?

On Friday I heard one of the big three networks is doing yet another expose-style story about how homebuyers got duped into bad mortgages contributing to the foreclosure crisis. All of these stories seem to have one consistent theme – the property buyer/borrower fails to take any responsibility for their situation. Blame the mortgage company, blame the real estate agent, blame the closing agent, blame the government.

 

The preview showed a woman who said that her mortgage lender significantly overstated her income on her loan application and that her mortgage payment was more than what she actually made per month, not even counting her other monthly debts like utilities, gas, food, etc.. (These types of mortgages are legal – they are called stated income mortgages. The lender does not require any documentation to prove the income such as a paystub. But you are not supposed to lie about your income either.)

 

Let’s go back to what we learned when we were kids:

 

• If it sounds too good to be true, it probably is.
• There’s no such thing as a stupid question.
• Stop, look and listen. 
• Caveat Emptor (Let the buyer beware)
• If everyone else jumped off the Golden Gate Bridge, does that mean you should do it?
• 1+1 = 2
• Look both ways before you cross the street.
• Money doesn’t grow on trees.

C’mon people. How did that person think she was going to make the payment every month when it was more than she earned? A first-grader can do that math in a minute. Perhaps the woman on the tv program claims she didn’t know what her payment would be; then let’s review when she should have known:

 

1)      When she spoke with a lender to get prequalified BEFORE going out to look at homes.

2)      When she asked the lender what the payment would be.

3)      The estimated payment on the Good Faith Estimate (GFE) she was provided with at loan application.

4)      At closing when she was shown her estimated payment and probably her payment coupon to make her first payment.

 

The lender wants to profit from the mortgage. Foreclosing on the mortgage is not profitable compared to earning interest for the next 30 years. Again, easy math. The loan officer may have wanted his/her commission so he/she pushed the buyer to get the mortgage. Maybe the real estate agent said it was a great investment. Well, as an adult it is your responsibility to make your own decisions. Each of us get bombarded with advertisements and solicitations 100s of times a day but don’t buy every product or service.

 

If you’re looking to refinance or buy a home, consider those sayings we learned back when we were kids while deciding whether to buy or refinance. Read all the paperwork and ask questions before assuming that just because you qualify that you can afford the mortgage. Get out a calculator and do a budget. Write your budget on paper so it’s real and you can see the whole picture. If you take your income and subtract the average monthly bills and debts and there’s no money left at the end of each month, please don’t get the mortgage. Lenders don’t know everything about your monthly expenses and your lifestyle. By the way, a refinance that lowers your monthly payment isn’t always a good idea. Ask questions and don’t accept an answer that doesn’t make sense or doesn’t match other information you have. If anyone you deal with to buy your home or get a mortgage starts a sentence with “Trust me..” or “It doesn’t say it exactly but…” – RUN. Run fast and far.

 

Come back and read the next blog post for tips –

How to get a mortgage and home that even Mama will like.