Tuesday, October 30, 2012

Don’t let surprises derail your home sale

5 important tips for completing a property disclosure

I am representing buyers in the purchase of a home and the contract is signed and everyone is ready to go.  We just received the Seller’s property disclosure and now things are suddenly up in the air.  What happened?  The seller did not take the time to carefully read and consider the property disclosure and now the sale may be in jeopardy.  This is an unnecessary obstacle that can be easily avoided.

No seller is required to provide a property disclosure but every seller IS required to disclose any ‘material defects’ of which they are aware and failure to disclose a known material defect may result in legal liability. What is a material defect? The legal definition of a material defect is as follows:

According to 15 USCS § 6602 (4), [Title 15. Commerce and Trade; Chapter 92. Year 2000 Computer Date Change] the term material defect means “a defect in any item, whether tangible or intangible, or in the provision of a service, that substantially prevents the item or service from operating or functioning as designed or according to its specifications.

Basically, if the seller knows something is not working properly or is not performing  it’s intended function, they MUST disclose this issue. For example:  a roof that is leaking (not providing it’s intended function;  a sewer line that is backed up; a furnace that is not working properly or the presence of potentially troublesome materials such as aluminum wiring. The seller’s property disclosure is a relatively simple way to ensure any material defects are disclosed.

So what can seller’s do to ensure the process of selling the home can move forward smoothly?:
  1. Carefully consider each item on the disclosure and complete the form as clearly and concisely as possible.  If you know something is wrong,  disclose it.  If everything is working fine then say it is. If you honestly “do not know” then say so.
  2. Don’t simply go through the entire document and say ‘Do Not Know’. Even if you’re a landlord and have not lived in the home for a number of years it is highly unlikely that you do not know whether the dishwasher is working or not. As a buyer I would find it hard to believe that your renter didn’t notify you and it puts the negotiations in jeopardy.
  3.  Give details whenever possible.  If the roof is ‘new’ say when it was installed.  Give any other information you can relating to permits, warranties or other items.
  4. Do not leave items blank.  Fill in every item.  When things are left blank it creates questions about why that item was skipped.  Carefully review the document before signing.
  5. The seller is the only one who can complete the disclosure.  Your real estate broker should have enough experience to give you guidance as you go through the document and answer any questions and you should rely on their expertise, but in the end you are the one responsible.  
Here is a link to a copy of the Colorado Real Estate Commissions "Seller's Property Disclosure".

 If you live in the Metro Denver area and are considering buying or selling a home, please give me a call.  I have more than 10 years of comprehensive experience as an inspector, teacher, landlord, homeowner, student and handywoman. I have inspected over 350 homes, taught more than 500 homeowners, owned and managed investment properties and have  volunteered for 11 years building homes with Habitat for Humanity. My range of knowledge and experience will insure your home sells quickly, easily and with no surprises.

Monday, October 15, 2012

Upside Down? Refinance with HARP 2.0

Are you upside down on the mortgage for your home, 2nd home or investment property?  Would you like to take advantage of the low interest rates but assumed you couldn't?

My husband and I own a rental property in N Aurora.  The loan was an "interest only" loan and the property is worth about $10,000 LESS than what we owe.  We have been frustrated wishing we could refinance but not being able to afford to bring that much money to the closing table.

Earlier this summer I heard about the HARP 2.0 program.  HARP stands for Home Affordable Refinance Program.
"Home Affordable Refinance addresses the problem faced by millions of homeowners who have been unable to take advantage of low mortgage rates to refinance because their property value has fallen. The loan modification program is intended to prevent foreclosure for borrowers in default or in imminent danger of default, and has clear guidelines regarding qualification and terms."

 We have been approved for a new loan at a lower interest rate for a monthly payment that is slightly less than what we were paying for the interest only portion of our previous loan.  No appraisal was required, either.  I can't explain what a relief it is to know that we no longer have to worry about the payments on that property going up.  Our rent barely covers the mortgage payment and other expenses and any increase could easily put us in a serious financial bind.

For specific details about the program you can go to http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx, then contact your mortgage broker or current lender and ask for help getting the refinance started.

Here is a brief summary of the eligibility requirements:

  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. You can check to see if your current mortgage is eligible by going to the Freddie Mac and/or Fannie Mae  websites.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.
Additional information:
  • There is NO maximum loan to value ratio if you currently have a fixed rate mortgage. If you have an adjustable rate mortgage the loan to value ratio cannot be above 105%.
  • They've also tried to streamline the process by using an automated valuation model (AVM), which in many cases will not require you pay for an appraisal.
I am not a lender or mortgage broker and don't intend for this blog post to cover all of the details and requirements but to let you know that there may be some help for you.  Be prepared to spend many hours getting your documentation together for the underwriter's but in our experience it was time well spent.

If you live in the Metro Denver area would like some referrals to mortgage brokers that can help you get started, please feel free to contact me.

Wednesday, October 10, 2012

Fall Maintenance Checklist

I know it's tough to resign yourself to the end of summer but you don't want to put off those fall maintenance chores too much longer.
Here is a checklist of things you should be completing over the next few weeks.  For those of you in Colorado you may have been as surprised as I was by the snow we got last week, but it certainly got my husband and I moving on getting our list at least started.

Fall Maintenance Checklist
    Heating System - Replace your furnace filter.  If you have central air-conditioning you should be doing this year round, but for those of you who don't you should start the heating season with a nice clean filter, your blower motor will thank you. Check out my blog post on furnace filters. http://homeinfosource.blogspot.com/2009/01/buy-cheap-change-often.html  If you don't know where your filter is located or how to change it here is an article that might be helpful http://www.filtersusa.com/filterchanging.cfm.  Feel free to contact me directly you need some advice.
    Cooling System - Shut down your evaporative (swamp) for the winter.  Don't forget to seal off the vents going into your home, too!  Here's an article on simple swamp cooler maintenance.  http://homeinfosource.blogspot.com/2012/06/simple-maintenance-for-evaporative.html
    Irrigation System - Shut down, drain and in some cases have your sprinkler system 'blown out'.  Depending on where you are located and how your system was installed you may be able to simply shut down and drain your system.  In other cases you may also need to have your system blown out with compressed air.  If you aren't sure I suggest you air on the side of caution and have the system blown out.  Shutting down and draining your system is well with in the average homeowner's skill level.  If you're paying someone to do it this year, follow them around and take notes so you can do it yourself next year.  Here's an article I wrote on how to start up your system, http://homeinfosource.blogspot.com/2010/03/how-to-start-up-your-sprinkler-system.html, if you do this in reverse you should be okay.
    Gutters and Roof - Clean your gutters.  Do this now and again once most of the leaves have fallen from the trees.  You might be tempted to wait until later on this one, but if you live in an area like Colorado when it can snow one day and be 65 degrees the next you'll want your gutters clean so all that snow has a place to go when it melts.  Clean debris from your roof, cut back any tree limbs that might be touching your roof and make any repairs to shingles, flashing, or around penetrations. If you're doing it yourself please be careful and follow these ladder safety guidelines. http://homeinfosource.blogspot.com/2009/05/ladder-safety-read-this.html.
     Protect exterior water pipes, faucets, etc - Remove all hoses connected to outside faucets (aka hose bibs) and cover any exposed water pipes or irrigation back flow devices.
    Caulk your windows and doors to help protect against leaks and improve your home's energy efficiency.  Here's an article on how to caulk. http://homeinfosource.blogspot.com/2010/11/how-to-caulk-tubs-showers-sinks-and.html 

    If you live in the Denver Metro Area check out my calendar of home improvement classes.