Mortgage To Real Estate in The World
Real Estate for Hidden flaw found after home sale
We bought a home eight months ago and had it inspected prior to purchase. Six months after moving in, we found a horizontal crack around the perimeter of the basement. We didn't buy a home warranty. Soon after that, the underground water main in front of the house broke, and who knows how long that had been leaking? The city is still fixing it. What recourse do I have? Should we talk to the previous owners, the city or my insurance agent?
Let's start with the leak. You noted you did not buy a home warranty which, as you've probably discovered, includes most major repairs that your homeowners insurance does not cover, such as damaged or broken air-conditioning and heating units, built-in appliances and, yes, plumbing.
Although you did not specify where the leak was, I will tell you how most water departments view liability in such matters: If a leak is between your curbside water meter and your house -- more commonly called a water line -- the repair responsibility belongs to the home owner. If it is between the meter and the street -- more commonly called a water main -- the responsibility belongs to the city. Now, if your property incurred damage as a result of the leak, that's another story. You can seek damages.
But if this whopper of a leak turns out to be your responsibility, it's a safe bet your homeowners insurance won't cover it. Few, if any, policies do.
It's not readily apparent that the old owners knew about said leak, since it really only became conspicuous months after they moved out. Often, sellers are unaware of such conditions in their properties. In fact, a fairly high percentage of homes have one or more such hidden flaws.
When sellers fill out disclosure forms, they are legally obligated to note all undesirable property conditions, so buyers ordinarily make the assumption that the information will be complete. Sometimes that's not possible, such as in the case of your leak. So it would be very tough to prove they covered up anything.
Minus any visible evidence, home inspectors are not likely to detect such leaks, either. Hence, their liability in such cases is also generally confined to conditions that were visible only at the time of the inspection.
That leads us to the crack. Seasoned inspectors are much more likely to detect cracks in the wall, and then make recommendations about flaws in the foundation or construction, or the potential for water leaks from outside runoff. Since you didn't notice the cracks before purchase and the inspector obviously did not, it would again be tough to prove these were pre-existing, much less that the previous owners knew about them and failed to disclose that information
Sometimes, Kelli, there's no defense against bad luck. Here's hoping repairs don't set you back too much.
Google And Other Search Players Looking At Real Estate Search
Google, Yahoo, MSN, and the other major players in the search industry have certainly taken notice of the arrival of vertical search and have made it clear that they intend to continue their lucrative domination of the search market.
Yahoo has been paying attention. According to this week's Newsweek, it is launching a major endeavor aimed at the non-technical consumer of digital equipment. This site will be a series of vertical sites within a vertical site with special features for consumer groups such as senior citizens and even a five-minute reality show which will allow visitors to submit their problems in a contest to be paired with technology experts who will "make-over" the messy digital areas of their life.
Yahoo, however, has not yet extended its efforts to its real estate search site that, at present, is barely horizontal. The main part of the site seems to contain less information and utility than it did five years ago. Perhaps had we been willing to register with the sponsor - Prudential Real Estate - we could have obtained a full property description but that required filling out all of the information necessary for an agent to contact us - information that may be sold to an agent who would expect or at least hope we were genuine buyers. The Yahoo Classified ads ($49.95 for 21 days) is better but even there only about 60 percent of the ads provided addresses in the towns we searched and of course not every agent or owner wants to put out that kind of money to advertise a property. The only way to make it work is to first do the search and then switch to the classifieds to obtain more information on those properties that are advertised.
Google, however, intends to remain the 500 pound gorilla of search engines as indeed it must to justify and maintain its $400 stock price. It has been widely reported that it was beta testing a vertical real estate site which combined its satellite mapping database with its search capabilities to enable a site which would mark the property location on a map (as well as the locations of "comps" in the area) and enable the user to identify routes to work, area amenities and so forth. Once the buzz about the site started appearing on the blogs the site disappeared but the smart money is betting that it will be rolled out with appropriate fanfare sooner rather than later.
So, assuming that Google's rumored site comes on-line and Yahoo gets its act together, what will be the effect on various market components?
Newspapers are probably not an issue. Real estate newspaper ad linage is already down as agents are diverting money to websites and web advertising. It seems, anecdotally at least, that even television is getting increased attention from large national firms and some companies that assist FSBOs with marketing. Newspapers are far from dead, but they are certainly no longer the only game in town and their influence is likely to continue to diminish.
We have already talked about the advantage some of the new entries in real estate searches would have over older competitors because of the advantages of specialization. But, if these innovators bump up against the sheer weight and money of Yahoo and especially Google, they may not have much of an opportunity to prove themselves. Both of the big companies as well as MSN have already catalogued billions of pages of content and are known and well traveled destinations for consumers; both are valuable assets from which they can build their vertical search capabilities.
But even Google may have to tread lightly. Pay per click and other ads from real estate companies, their affiliated mortgage companies, and individual agents are a huge source of revenue for the company. Any move that is interpreted by these paying customers as interference with the control of their listings or their brand identity, misusing copyrighted information or in any way cutting into their profits could cost Google or Yahoo dearly.
One emerging player - and one with a dog in the fight - is Trulia real estate search. In a recent "white paper" titled The Truth about Real Estate Search" it offered a number of warnings and safeguards to agents and companies entering this brave new world. Trulia suggests a proactive approach. Companies and agents should research vertical search companies and decide if their business models are good or bad for that company or agent, determine what sets one search company apart from another; what the companies' true objectives are, and which are the friends and which are the enemies of the industry of a whole.
Trulia points out those agents with web sites displaying their listings do not have to be at the mercy of these search engines and their "spiders." The technology exists to limit access to all or part of a web site and an informed listing broker can, with the research suggested above, hand pick those companies they wish to allow to partner with them so as to maximize the benefits of the cost and effort that has gone into that website.
A Bad Inspection Should Not Be The End Of The World (Cont)
That inspection contingency on your offer to purchase is not a permission slip to nit-pick. Chipped paint, a dead tree, stained countertops are things that are easily visible to the untrained eye and should have been noted by the buyer before the offer, not used as a reason for withdrawing or renegotiating it. Rotting cills, non-functioning built-in appliances, outdated wiring, small but urgent repairs that add up to more than two or three percent of the offering price may be a reason for revisiting that offer.
Or not.
Keeping in mind at all times that there are no perfect houses and few problems that money can't fix; you need to review the last four of the six questions we laid out in our previous article.
• Is this a problem that must be dealt with immediately or just something that should be done eventually?
Again we come back to the immediacy of the problem. There are bound to be a lot of changes you would like to make to the property "someday." Are the repairs noted in the inspection report merely more of those someday items or do they represent a safety concern or a deteriorating condition that must be addressed immediately? If either of the latter is true and these are big ticket items, you need to talk with your agent.
• Given what you know about house prices in your locality, might this problem have already been taken into consideration in pricing the house?
A savvy agent will often discount a listing price to compensate for a roof needing repair or a required exterior paint job. A savvy agent also notes this in the listing agreement; i.e. "Listing price takes into consideration that the roof is near the end of its useful life" but some agents are leery of spelling out a problem so blatantly. Take a look at comparables in the area that have newer roofs or spiffy paint jobs to better evaluation the problem.
• Do these negatives merit further investigation?
Before you panic, get a rough estimate of the repair costs. You may be overstating the expense of rewiring the house or, more critically, underestimating it. Try to get a contractor's estimate for the work but realistically the time available for responding to an inspection is often too tight for a thorough investigation . www.get-a-quote.net is a good source to do a quick and dirty estimate on your own.
• Are you willing to walk away from the house because of the negatives on the report?
If you are desperate to own the house no matter what, then temper any request for repairs or contract adjustments accordingly. If you make an overly aggressive demand or make it in an undiplomatic way you risk making the seller so irate that you will not have a chance to back down.
How do you approach the seller and renegotiate the contract?
You don't! It is when working through an unfavorable inspection report that a good real estate agent really earns their commission. The seller has already, in his mind, spent the proceeds from the sale of his house and also has a certain amount of pride of ownership involved. Therefore, keep your agent and the seller's agent between you and the seller at all times. Under no circumstances should you speak to the seller - and if you are dealing with a FSBO you are about to get a lesson on in the value of a full service agent. Inform your agent that you have problems with the inspection report and provide the following:
1. A copy of the relevant portion(s) of the inspection report (and only the relevant portions);
2. A straightforward, specific, non-judgmental, and non-threatening statement of your request for remedy;
3. Any back-up materials you have been able to obtain such as contractor's quotes.
Pay at least some attention to your agent. If they review your request then kindly suggests that you are being a real jerk about a noisy attic fan, at least consider their opinion. Again, nothing is perfect and the next house could be worse.
What kinds of concessions can you request if an inspection report is unfavorable?
1. The sellers to correct the situation prior to closing. This removes uncertainty about costs. If the problems turn out to be larger than anticipated, it is the seller's problem. However, you will lose all control over the fix. The seller might slap together the repair himself, use substandard materials, or employ his hapless Uncle Max to do a job that requires a licensed tradesman.
2. A reduction in the purchase price. Sellers like this one because it reduces those closing costs based on purchase price such as tax stamps, land bank charges, and real estate commissions. But such savings are really negligible; for example, a $2500 reduction to compensate for a dead furnace would reduce the real estate commission by $125.00. From the buyers prospective, any such adjustment has the effect of reducing the size of the mortgage rather than freeing up cash to get the furnace fixed.
3. Cash back at closing. This is usually the best option for the buyer as it is real money and can be applied in total to correcting the problem or problems.
How should you respond to a demand for renegotiation if you are the seller? In much the same way as if you were the buyer. Let your agent handle it. Keep calm and be reasonable. If possible get a repair quote or even a second opinion as to whether the problem actually exists. Decide how much it is worth to you to save the existing offer. A bird in the hand, time is money, and all of that, but especially relevant is that some types of negative information may need to be disclosed to subsequent buyers and that most of the bad news will probably emerge again when the next buyer has his inspection.
We bought a home eight months ago and had it inspected prior to purchase. Six months after moving in, we found a horizontal crack around the perimeter of the basement. We didn't buy a home warranty. Soon after that, the underground water main in front of the house broke, and who knows how long that had been leaking? The city is still fixing it. What recourse do I have? Should we talk to the previous owners, the city or my insurance agent?
Let's start with the leak. You noted you did not buy a home warranty which, as you've probably discovered, includes most major repairs that your homeowners insurance does not cover, such as damaged or broken air-conditioning and heating units, built-in appliances and, yes, plumbing.
Although you did not specify where the leak was, I will tell you how most water departments view liability in such matters: If a leak is between your curbside water meter and your house -- more commonly called a water line -- the repair responsibility belongs to the home owner. If it is between the meter and the street -- more commonly called a water main -- the responsibility belongs to the city. Now, if your property incurred damage as a result of the leak, that's another story. You can seek damages.
But if this whopper of a leak turns out to be your responsibility, it's a safe bet your homeowners insurance won't cover it. Few, if any, policies do.
It's not readily apparent that the old owners knew about said leak, since it really only became conspicuous months after they moved out. Often, sellers are unaware of such conditions in their properties. In fact, a fairly high percentage of homes have one or more such hidden flaws.
When sellers fill out disclosure forms, they are legally obligated to note all undesirable property conditions, so buyers ordinarily make the assumption that the information will be complete. Sometimes that's not possible, such as in the case of your leak. So it would be very tough to prove they covered up anything.
Minus any visible evidence, home inspectors are not likely to detect such leaks, either. Hence, their liability in such cases is also generally confined to conditions that were visible only at the time of the inspection.
That leads us to the crack. Seasoned inspectors are much more likely to detect cracks in the wall, and then make recommendations about flaws in the foundation or construction, or the potential for water leaks from outside runoff. Since you didn't notice the cracks before purchase and the inspector obviously did not, it would again be tough to prove these were pre-existing, much less that the previous owners knew about them and failed to disclose that information
Sometimes, Kelli, there's no defense against bad luck. Here's hoping repairs don't set you back too much.
Google And Other Search Players Looking At Real Estate Search
Google, Yahoo, MSN, and the other major players in the search industry have certainly taken notice of the arrival of vertical search and have made it clear that they intend to continue their lucrative domination of the search market.
Yahoo has been paying attention. According to this week's Newsweek, it is launching a major endeavor aimed at the non-technical consumer of digital equipment. This site will be a series of vertical sites within a vertical site with special features for consumer groups such as senior citizens and even a five-minute reality show which will allow visitors to submit their problems in a contest to be paired with technology experts who will "make-over" the messy digital areas of their life.
Yahoo, however, has not yet extended its efforts to its real estate search site that, at present, is barely horizontal. The main part of the site seems to contain less information and utility than it did five years ago. Perhaps had we been willing to register with the sponsor - Prudential Real Estate - we could have obtained a full property description but that required filling out all of the information necessary for an agent to contact us - information that may be sold to an agent who would expect or at least hope we were genuine buyers. The Yahoo Classified ads ($49.95 for 21 days) is better but even there only about 60 percent of the ads provided addresses in the towns we searched and of course not every agent or owner wants to put out that kind of money to advertise a property. The only way to make it work is to first do the search and then switch to the classifieds to obtain more information on those properties that are advertised.
Google, however, intends to remain the 500 pound gorilla of search engines as indeed it must to justify and maintain its $400 stock price. It has been widely reported that it was beta testing a vertical real estate site which combined its satellite mapping database with its search capabilities to enable a site which would mark the property location on a map (as well as the locations of "comps" in the area) and enable the user to identify routes to work, area amenities and so forth. Once the buzz about the site started appearing on the blogs the site disappeared but the smart money is betting that it will be rolled out with appropriate fanfare sooner rather than later.
So, assuming that Google's rumored site comes on-line and Yahoo gets its act together, what will be the effect on various market components?
Newspapers are probably not an issue. Real estate newspaper ad linage is already down as agents are diverting money to websites and web advertising. It seems, anecdotally at least, that even television is getting increased attention from large national firms and some companies that assist FSBOs with marketing. Newspapers are far from dead, but they are certainly no longer the only game in town and their influence is likely to continue to diminish.
We have already talked about the advantage some of the new entries in real estate searches would have over older competitors because of the advantages of specialization. But, if these innovators bump up against the sheer weight and money of Yahoo and especially Google, they may not have much of an opportunity to prove themselves. Both of the big companies as well as MSN have already catalogued billions of pages of content and are known and well traveled destinations for consumers; both are valuable assets from which they can build their vertical search capabilities.
But even Google may have to tread lightly. Pay per click and other ads from real estate companies, their affiliated mortgage companies, and individual agents are a huge source of revenue for the company. Any move that is interpreted by these paying customers as interference with the control of their listings or their brand identity, misusing copyrighted information or in any way cutting into their profits could cost Google or Yahoo dearly.
One emerging player - and one with a dog in the fight - is Trulia real estate search. In a recent "white paper" titled The Truth about Real Estate Search" it offered a number of warnings and safeguards to agents and companies entering this brave new world. Trulia suggests a proactive approach. Companies and agents should research vertical search companies and decide if their business models are good or bad for that company or agent, determine what sets one search company apart from another; what the companies' true objectives are, and which are the friends and which are the enemies of the industry of a whole.
Trulia points out those agents with web sites displaying their listings do not have to be at the mercy of these search engines and their "spiders." The technology exists to limit access to all or part of a web site and an informed listing broker can, with the research suggested above, hand pick those companies they wish to allow to partner with them so as to maximize the benefits of the cost and effort that has gone into that website.
A Bad Inspection Should Not Be The End Of The World (Cont)
That inspection contingency on your offer to purchase is not a permission slip to nit-pick. Chipped paint, a dead tree, stained countertops are things that are easily visible to the untrained eye and should have been noted by the buyer before the offer, not used as a reason for withdrawing or renegotiating it. Rotting cills, non-functioning built-in appliances, outdated wiring, small but urgent repairs that add up to more than two or three percent of the offering price may be a reason for revisiting that offer.
Or not.
Keeping in mind at all times that there are no perfect houses and few problems that money can't fix; you need to review the last four of the six questions we laid out in our previous article.
• Is this a problem that must be dealt with immediately or just something that should be done eventually?
Again we come back to the immediacy of the problem. There are bound to be a lot of changes you would like to make to the property "someday." Are the repairs noted in the inspection report merely more of those someday items or do they represent a safety concern or a deteriorating condition that must be addressed immediately? If either of the latter is true and these are big ticket items, you need to talk with your agent.
• Given what you know about house prices in your locality, might this problem have already been taken into consideration in pricing the house?
A savvy agent will often discount a listing price to compensate for a roof needing repair or a required exterior paint job. A savvy agent also notes this in the listing agreement; i.e. "Listing price takes into consideration that the roof is near the end of its useful life" but some agents are leery of spelling out a problem so blatantly. Take a look at comparables in the area that have newer roofs or spiffy paint jobs to better evaluation the problem.
• Do these negatives merit further investigation?
Before you panic, get a rough estimate of the repair costs. You may be overstating the expense of rewiring the house or, more critically, underestimating it. Try to get a contractor's estimate for the work but realistically the time available for responding to an inspection is often too tight for a thorough investigation . www.get-a-quote.net is a good source to do a quick and dirty estimate on your own.
• Are you willing to walk away from the house because of the negatives on the report?
If you are desperate to own the house no matter what, then temper any request for repairs or contract adjustments accordingly. If you make an overly aggressive demand or make it in an undiplomatic way you risk making the seller so irate that you will not have a chance to back down.
How do you approach the seller and renegotiate the contract?
You don't! It is when working through an unfavorable inspection report that a good real estate agent really earns their commission. The seller has already, in his mind, spent the proceeds from the sale of his house and also has a certain amount of pride of ownership involved. Therefore, keep your agent and the seller's agent between you and the seller at all times. Under no circumstances should you speak to the seller - and if you are dealing with a FSBO you are about to get a lesson on in the value of a full service agent. Inform your agent that you have problems with the inspection report and provide the following:
1. A copy of the relevant portion(s) of the inspection report (and only the relevant portions);
2. A straightforward, specific, non-judgmental, and non-threatening statement of your request for remedy;
3. Any back-up materials you have been able to obtain such as contractor's quotes.
Pay at least some attention to your agent. If they review your request then kindly suggests that you are being a real jerk about a noisy attic fan, at least consider their opinion. Again, nothing is perfect and the next house could be worse.
What kinds of concessions can you request if an inspection report is unfavorable?
1. The sellers to correct the situation prior to closing. This removes uncertainty about costs. If the problems turn out to be larger than anticipated, it is the seller's problem. However, you will lose all control over the fix. The seller might slap together the repair himself, use substandard materials, or employ his hapless Uncle Max to do a job that requires a licensed tradesman.
2. A reduction in the purchase price. Sellers like this one because it reduces those closing costs based on purchase price such as tax stamps, land bank charges, and real estate commissions. But such savings are really negligible; for example, a $2500 reduction to compensate for a dead furnace would reduce the real estate commission by $125.00. From the buyers prospective, any such adjustment has the effect of reducing the size of the mortgage rather than freeing up cash to get the furnace fixed.
3. Cash back at closing. This is usually the best option for the buyer as it is real money and can be applied in total to correcting the problem or problems.
How should you respond to a demand for renegotiation if you are the seller? In much the same way as if you were the buyer. Let your agent handle it. Keep calm and be reasonable. If possible get a repair quote or even a second opinion as to whether the problem actually exists. Decide how much it is worth to you to save the existing offer. A bird in the hand, time is money, and all of that, but especially relevant is that some types of negative information may need to be disclosed to subsequent buyers and that most of the bad news will probably emerge again when the next buyer has his inspection.
posted by !GOD BLESS YOU! at 03:32
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