Waiving a Home Inspection

Waiving a Home Inspection

by | Mar 30, 2022 | Buyers, Buying Conditions, Contracts, Helpful Tips, Inspections, Listings, Market Trends, Property Updates, Property Value, Real Estate, Sellers

The market is so hot right now and we aren’t having any luck getting a home – should we waive home inspections? 

You are correct –the market under $1million is very fast paced right now, and in many instances, the winning bidder has waived home inspections.  That does seem to be what it may take to “win” right now but I cannot recommend that you make that choice.  Now several months into the “waive inspections” craze we are starting to hear stories about the expected fallout from this hasty decision.

From the seller’s perspective, I highly recommend that you have your home pre-inspected and repair or disclose the relevant items.  While an inspection might cost you upwards of $500, it is money well spent toward a smooth closing.  If you have pre-inspected your home and provide the report to prospective buyers, you are doing your part to make sure your buyer is well-informed.  In the absence of a pre-inspection, I do not recommend that you accept an offer from a buyer who has not inspected your home.  I have started hearing from home inspectors that disgruntled buyers are seeking post closing inspections to find problematic items and sue the sellers for failure to disclose. You don’t want that to be you. If you have not pre-inspected, we can discuss strategies to allow a buyer’s inspection and still protect you.

From a buyer’s perspective, as we all imagined would happen, the post-closing stories are starting to mount about buyers who purchased without an inspection and are now having all sorts of forseeable issues – roofs leaking, furnaces failing… If you are going to make this risky choice, you need to do so knowing that you will be assuming the risk of potentially tens of thousands of dollars of issues The contract specifically states that your inspection is your opportunity to find issues – if you waive that, you will be fighting an uphill battle to recover against anyone. Before you make an offer without an inspection contingency, you really do need to ask yourself if you are prepared to absorb those costs!

Experience Makes

The Difference

If you’re moving across town, from elsewhere in the state, or even relocating
across the country, I can help you find the perfect home! 

Connect With Kathe

The Effects of Rising Interest Rates

The Effects of Rising Interest Rates

by | Feb 10, 2022 | Blog, Buyers, Buying Conditions, Contracts, Investment Properties, Listings, Market Trends, Mortgage, Property Value, Real Estate

What impact do you think rising interest rates will have on the real estate market? 

I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured at rates below 3% fixed. Now they have inched up to 3.75% for conforming loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching upward.

What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.

However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!

Experience Makes

The Difference

If you’re moving across town, from elsewhere in the state, or even relocating
across the country, I can help you find the perfect home! 

Connect With Kathe

Investment Properties

Investment Properties

by | Jan 27, 2022 | Blog, Buyers, Buying Conditions, Contracts, Investment Properties, Market Trends, Mortgage, Property Value, Real Estate

We are interested in diversifying our portfolio and purchasing rental properties – any thoughts?

 The first thing to keep in mind when considering a rental property is how you intend to pay for it. Rental properties are investment properties and subject to different lending rules than the home that you live in. Therefore, a lender will expect that you put more down as a down payment on a rental property and you will pay a higher rate of interest. Typically, lenders are looking for no less than 20% down on your purchase.  And of course until you establish yourself as a successful landlord, your income is going to need to be sufficient to support the mortgage on your primary residence as well as any debt on your rental investments.

The second thing you need to think about is what kind of tenant you are interested in renting to. If you are hoping to rent to a family who might be in town for a couple of years with a temporary job assignment, then purchasing an apartment building with one and two bedroom apartments is unlikely to attract the type of tenant you hope to find. In that scenario, you would be looking for a single-family home in all likelihood (or possibly a townhome) in a good school district such as Quaker Valley. If you are hoping to find young professionals, you might look for something closer to downtown that has a trendier vibe to it.

You also need to take a look at the return on investment that you are seeking from the property. You will need to consider how much you are putting down on the property, how much you were paying in interest on any mortgage that you take out, your property taxes, maintenance of the building, any homeowners association fees, and any utilities that might be the responsibility of the landlord (these are typically utilities that are not separately divided in the particular structure, such as water).  Putting together a spreadsheet with all of the expenses and your expected income will help you to determine whether or not the anticipated net income is worth the risk of investment to you.  Be sure to build in some vacancy months – most properties are not leased 100% of the time.

Finally, you need to give some thought to how you will manage the property. Are you going to hire a property management company to handle that for you, or will you be more hands-on? Who is going to handle maintenance requests when something goes wrong? The beauty of being a tenant is that if something breaks, it’s not your responsibility to get it fixed. But as the landlord, are you going to be taking care of the repairs and if not, do you have a reliable handyman on-call that is willing to handle those items for you. If you are planning for others to manage the property on your behalf, you will need to build those costs into your financial projections as well.  If investment properties are something you would like to consider, feel free to reach out to me and we can discuss these opportunities further.

Experience Makes

The Difference

If you’re moving across town, from elsewhere in the state, or even relocating
across the country, I can help you find the perfect home! 

Connect With Kathe