5 Inspection Problems Buyers Shouldn’t Ignore

5 Inspection Problems Buyers Shouldn’t Ignore. Image courtesy of ddpavumba / FreeDigitalPhotos.net

Home buyers need to be extra vigilant about inspections in the early stages of a purchase because if problems are discovered too late in the process, it can “dash home owners’ dreams and budgets,” writes Yahoo! Finance in a recent article.

One home buyer in Long Island, N.Y., explains in the story that she didn’t discover the fixer-upper she bought needed $225,000 in repairs until after she purchased it.

Jonathan and Drew Scott, who educate viewers about transforming fixer-uppers on HGTV’s “Property Brothers,” offers up a checklist of five things buyers should look for to ensure they don’t buy a lemon.

• Mold: Buyers should note any musty smells in the home and be on the lookout for any mold. Mold can be caused by improper air circulation as well as water leaks.
• Pests: Termite damage can be widespread and costly to repair.
• Outdated fixtures and wiring: Electrical problems in a home can cause fire hazards. Buyers should take note of any indication of faulty wiring, such as cable coming out of drywall.
• Poor DIY jobs: Buyers should make sure that the previous home owner’s do-it-yourself projects were done correctly and are up to code. For example, poorly done flooring and painted-over wallpaper can be time-consuming and costly to fix.
• Drainage problems: Sloping sod can cause flooding problems in a backyard, and a slow-draining sink could be an indication of a bigger problem. Buyers should test sinks and flush toilets to test for any potential problems.

Source: “Property Brothers: Don’t Buy a House Without Checking These 5 Things,” Yahoo! Finance (Aug. 19, 2013)

Pa. Woman May Not Lose Home Over $6

Pa. Woman May Not Lose Home Over $6. Image courtesy of ponsulak / FreeDigitalPhotos.net

A western Pennsylvania widow has won a chance to argue that she should not lose her $280,000 home over $6.30 in unpaid interest on taxes.

AP reported that the state’s Commonwealth Court ruled it was a mistake for a Beaver County judge to rule against the woman, Eileen Battisti, without holding an evidentiary hearing first.

Judge Mary Hannah Leavitt said that under the state’s Supreme Court precedents, “due process under both the United States and Pennsylvania Constitutions must be satisfied whenever the government subjects a citizen’s property to forfeiture for nonpayment of taxes.”

Battisti and her husband bought the property outside Pittsburgh in 1999. AP reports that she paid off the property after he died in 2004 with proceeds from his life insurance policy. After some personal setbacks, she had difficulty taking over all of the financial matters and fell behind on various tax bills. She believed she had paid them all off even though some were late. The $6.30 penalty was added to her tax bill in 2009 and grew with interests and costs to $235 by late 2011. Battisti still lives in the property, according to AP, even though it was sold nearly two years ago at auction for $116,000.

In her decision, Leavitt wrote that the auction was “particularly inappropriate because the outstanding liability was small and the value of the home was far greater than the amount paid by [the] purchaser.”

Source: “Widow who lost $280k home over $6 gets hearing,” NBC 2 News (8/20/2013)

Study: Price Home Higher, Get a Better Offer

Study: Price Home Higher, Get a Better Offer. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

The higher a home is priced at the outset, the more likely it is that it will get a higher offer from a buyer, according to a new study by researchers Grace Bucchianeri and Julia Minson. The study appeared in the May issue of the Journal of Economic Behavior & Organization. The researchers factored in geographical location and timing of sales in evaluating the pricing strategy of 14,000 real estate transactions.

“A home that is listed 10 to 20 percent higher than other homes in the neighborhood will command an additional increase of 0.05 percent to 0.07 percent in the sale price for each 10 percent increase in the expected price,” the study notes.

A popular pricing strategy popular among some real estate professionals is to underprice a home in order to ignite a bidding war. However, the researchers say that this isn’t effective because there are seldom enough buyers in a market to create a “herding effect” to increase prices. They found that under-pricing a home could actually lead to a lower sales price.

“Pricing a home 10 percent to 20 percent lower than comparable homes led to a 0.05 percent to 0.08 percent decrease in the expected price,” the study notes.

The researchers suggest that first impressions on price have a strong influence on buyers. A buyer may consider a range of prices when house hunting, but they always refer back to the original list price when making a decision.

Critics point out that the study’s findings aren’t completely conclusive in determining the best pricing strategy. The researchers evaluated transactions that had an average sales price of $234,000. Given the price variations found in the study, the amounts in final sales prices only ranged from $117 to $187, critics say.

Source: “What is the Correct Way to Price a Listing?” RealtyTimes (Aug. 20, 2013)