New settlement statement for real estate closings

December 30th, 2015

Effective Oct 3, 2015 the former settlement statement referred to as HUD1 will no longer be used for real estate closings. The replacement form is call the ‘Master Settlement Statement’. This is a simple one page document that shows all of the numbers related to the sale of real estate. Below is an example of what to expect at your closing. If the buyer gets a new mortgage loan, the loan charges will also appear on this form.

This all comes about because of the financial meltdown and the Dodd-Frank Wall Street Reform and Consumer Protection Act rules that the U.S. Consumer Financial Protection Bureau now requires. In addition to the new settlement statement, buyers will receive new/additional disclosure forms from their mortgage company. All of these changes simplify the home sale process

New Settlement Statement

FHA appraisers don’t look at Zillow

December 11th, 2015

two properties Under Contract with FHA financing. Both appraisals come in below purchase price. In the previous post (2991Dalton Ln, Austell, GA and  2054 Summer View Pl, Marietta, GA) I talked about how fast these two properties had a buyer. The sale prices were just below the Zillow estimate, so I thought everything would work out well, not so.

Dalton was appraised at $135,000, more than $10,000 below the sale price and more than $20,000 below Zillow. Through FHA, the buyer only needs a $5,000 down payment. In this case, the buyer was not able to come up with the additional money, so the deal fell apart. With rents up, this property will be rented for one year and I’ll try again next year.

Summer View appraised at $130,000, more than $5,000 below sale price and more than $7,000 below Zillow. In this case, the buyer came up with a little more cash and the seller lowered the price. Property to close on Dec 15th.

Now, with FHA appraisals, once you have an appraisal done, that appraisal is still good for 120 days. That means, in the case of Dalton, if I try to sell the property again with a buyer using FHA financing, that is the appraised amount FHA will use. In other words, it is impossible to sell for more than the FHA appraised price in the next 120 days. Luckily, there are more renters out there paying more and there are more investors paying cash, so something good will happen very soon.

Myth busted: agents do show FSBO’s

November 21st, 2015

there is this myth that if you list your property with a flat fee mls agent, the other agents will not show the property. This is a myth that is untrue. For over ten years, FSBO.com has been sending Flat Fee MLS sellers to agents in every state. Results: showings and sales continue to increase. The sellers reduces the commission paid at closing and still gets the maximum exposure on the local MLS, Realtor.com, Trulia.com and more. The buyers agent still get the normal buyers agent commission. Here are two recent examples:

2991Dalton Ln, Austell, GA and  2054 Summer View Pl, Marietta, GA

Both properties were cleaned up with new paint, new carpet, move in condition and priced right. Both properties were under contract with lot’s of showings in less then a week. Properties needing work or that were priced too high have not had the same results. Here is the best place to learn more: FSBO.COM/flat-fee-mls

new hardwood floor job completed

October 5th, 2015

Yea, one project that worked like we planned it. We replaced carpet with hardwood floors and blended it in with existing hardwood floors. Sand and stain to make it look like it was all laid at the same time. The total cost was slightly more than if we would have just refinished the existing hardwood plus replaced the carpet with the same quality. The 14 years old carpet and original hardwoods needed something. Now, with all hardwoods we should be good for another 14 years. No more carpet cleaning, dent marks from the furniture or stains from spilled wine, etc. Here are the before and after pics:

hardwood decision is hard

September 22nd, 2015

now that we’re committed to refinish the hardwood floors, we need to decide on the stain. Darker, lighter or the same. It’s a tough call. I’m sure it will look good when finished, but which stain is best? What do you think?

replacing carpet with hardwood floors

September 21st, 2015

owning a home means you are constantly making decisions that have long term ramifications. One decision is what to do when your carpeting wears out. Do I get them professionally cleaned? Do I replace them with more carpet? Do I replace the carpet with a different flooring? I am now in the process of making that decision. I remember back in High School, being a jock was what was ‘cool’, so I did that. In college, long hair is what the girls wanted, so I did that. After college, it was ‘clean cut’, because that is what my customers and boss wanted. When making a decision on appearance for my home, it is what does the buyer want. Not that I plan to sell soon, but eventually. At least once a year I visit home builder models. Builders know what buyers want and they constantly adjust their model homes to appeal to the majority of buyers. Years ago I noticed the kitchen counters getting larger and today with more granite. Master bathrooms with tile, separate shower, separate sinks and separate closets are available. But, what about the main flooring. It is easy to see, hardwood floors are what the buyers want. In almost every room, you see hardwood floors. So, that made my decision easy.  Replace carpet with hardwood and at the same time refinish the existing hardwood floors so it all matches. Even HGTV recommends hardwood floors. Here are a few before photos. In two week when completed I’ll show you the final product.

FSBO Hardwoods

FSBO Carpet

Diary of a reluctant landlord

August 28th, 2015

trying to sell a house in 2011 & 2012 was difficult. Prices had plummeted and buyers were scarce. Many homeowners were underwater, but needed to move. So, many decided that for the first time in their lives to become landlords. The strategy was to rent out the property for a couple of years until the market turned around. In 2015, the strategy seemed to work. Prices had rebounded, mortgage rate were still low and more buyers were coming into the market place. In fact, it seemed to good to be true. Now, here are a couple of true stories of removing the tenants. Oh, didn’t think that would be a problem, well, sometimes it is.

House #1: tenant has been in place for over a year. They failed to notify the owner of several problems. One, a tree branch fell on the house knocking off the gutter and part of the siding. With a large hole, critters, such as; squirrels, rats and bats found a new home in the attic. Two, the tenants dog was bitten in a fight with a rat or squirrel and needed stitches, plus could have died. Wait a minute, the lease clearly states ‘… no pets’. That did not stop the tenant. Three, the lease clearly states only one occupant. That did not stop the tenant from having a friend, with another dog move in. The tenant stops paying rent and you try to evict them. At the first court appearance, the judge says the owner did not fill out the paperwork correctly, so they must refile to take possession. Another month passes with no rent, several occupants and two dogs are in your property. In addition, trying to arrange the pest control company with an appointment to go into the attic has been impossible. The tenant won’t talk to the owner or return calls. The situation keeps deteriorating. Court date is set for Sept 8th. Hope it works out. I’ll keep you posted.

FSBO Landlord

House # 2: tenant with elderly mother and two children live in your property for over three years. Rent is paid on the 15th of each month, that’s because that is the date the elderly mother receives her social security check. Six months ago the rent checks start to be late and eventually stopped. I found out the elderly mother had died. Time for them to move out so you can sell the property. Unfortunately, they refuse to move out, so it is back to court for an eviction. Things go smooth at court and you get a court order for possession. They still do not move out, so you schedule the police to be at the property to physically remove all property. This is not a pretty scene. Luckily, in this case, the tenant was gone, so that saved a little aggravation. Unfortunately, they did not take all of their belongings. You hire help and get a dumpster. After all items are removed a new occupant was discovered. German roaches. Thousands of them. I mean, how could anyone live in such conditions. They were all over the place. In the kitchen, in the air ducts, in the electrical outlets, etc. In the old days they used to put a tent over the property and fog it for several days. Now, they fog and vacuum. But, that did not work, so they are going back in to do it again. As soon as the roaches are gone, this property will be sold.

Brick wall between now and closing.

August 14th, 2015

There are many hurdles to overcome to get your property sold. It’s like a brick wall standing in the way to get to closing. You can do it, it’s just one brick at a time. Each brick you take down gets you that much closer to the closing. Some of those bricks you will encounter: First, getting your home in shape to show. Second, marketing to find buyers. Third, a completed purchase agreement. Once you have a purchase agreement, the brick wall is getting smaller, but very important steps are in front of you. You will need to handle any special requirements, such as; repairs, surveys, and inspections. Once these are completed, you will need the appraiser, mortgage company and title company to complete their work. Any problems with these three need to be taken care of. Otherwise, you are back to starting over with a large brick wall. This process takes time and over 5 million homes are successfully sold each year. Don’t feel like you are the only one with minor set backs. You need to keep moving forward by taking down the wall one brick at a time.

FSBo Brick Wall

Saving money by not having an inspection

July 15th, 2015

That’s a bad idea. Even new construction needs a home inspection. I like Bankrate Monitors article explaining the  ‘5 biggest home inspection mistakes‘. I agree with all. You need to pick the right inspector and you need to be there for the full 3-4 hours. You need to ask questions and get explanations. The home inspection is part of your ‘due diligence’ and if there are problems you can back out of the contract. In most cases, there are small problems and this allows you to negotiate with the seller and either have them make the repairs or compensate you so you can make the repairs. I have often told sellers, ‘if you don’t make these repairs for me and I back out, then the next buyer will also request the same repairs so you might as well fix the problem now and we can move forward to the closing’. Sure, the seller is not happy about this fact, but if they want to sell now, they need to fix the problems. Agreeing to fix problems needs to be in writing. Part of the terminology says “the seller agrees to make the requested repairs and the buyer agrees to not come up with any more requests”. It’s a two way street, both parties need to agree.  Nothing worse then a buyer that keeps coming up with more items after you have taken care of the first item. How many times have you heard people say “oh, let me ask you one more thing…” and after answering, they ask another and another.

mortgage rates over 4%, now what?

June 22nd, 2015

wouldn’t it be nice to lock in for the next 30 years the price of gas at $2.50/gallon or your monthly rent payment or even your your monthly health insurance bill? Well, you can’t and you know they are going up. Locking in your house payment at 4% for the next 30 years could be the best financial decision you ever make. Mortgage rates have moved back over 4% for the first time this year. They spent most of 2014 hovering 4.5%. Five years ago, closer to 5% and ten years ago over 6%. Use this mortgage calculator to see the monthly payments. I like to put in different numbers and see what the difference is.