THE FIRST TIME HOME BUYER/RENOVATOR © Wayne D. Lewis, Sr.

5 THINGS TO BE AWARE OF WHEN YOUR FIRST HOME IS A RENOVATION PROJECT

You have decided to buy your first home, and… you have decided to put your special touches on it.  Congratulations!  But, unless you have the necessary experience in conducting renovations, or supervising contractors, you will need to be aware some very important things B-4 you decide to take on a very serious, and hopefully, avoidably, financially impairing project.  Here are a 5 things to be aware of:

1.  Buying verses Repairs-It is important to know how much you are willing and able to spend.  Whether financing the project, or coming out of pocket, knowing your financial limitations is key.  If, for example, the most you have to spend on a house and repairs is $150,000, it would be important to know the condition of the property before buying it;
2.  Inspections/Estimates-   The most unassuming property may hold more challenges than you can imagine.  Taking the time to inspect a home before buying it will save a tremendous amount of money.  For example, a house valued at $75,000 may leave another $75,000 for repairs, additions and adding decorative ideas.  If of the $75,000, you may have set aside, 20% for repairs, or $15,000, will that be enough if an inspection reveals pluming problems and/or foundation problems?   While either of these maybe addressed within the initial $15,000, was that 20% supposed to also include a new roof, or electrical?  If so, then, that 20% may have to be adjusted to maybe 35%, or $26,500.  It will be important to get several estimates for the necessary work to be done, so as to minimize how much the “must do’s” affect the “want-to-do’s”; 
3. Contractors (family, friends, professionals)-While family and friends maybe professional contractors, Professional Contractors may not always be family and friends.  Please note the difference how each, if not properly insured, or supervised, may cost the first-time home buyer in taking on a first-time renovation project. As you make a decision on how much to spend on repairs and those things that you may want to do the property, you will also want to take into account, who is going to do the work?  Contractors are not in short supply.  They are like Real Estate Agents (no Offense) and Lawyers (no offense).  But the best of the best will be depend on how much you can afford.  Affordability in this instance applies not just to how much they will charge, but also how properly licensed and insured they are.  As a first-time home buyer, you can’t afford to have just anyone doing work on your home who is not properly covered against liability, or workers’ compensation.  A failure to exercise reasonable care when contracting someone to work on your new home cannot be budgeted for, because the amount of liability that begins to grow, may exceed what you may have purchased the home for, as well as what you may have set aside for repairs and updates.  It is suggested that you use the Better Business Bureau and/or (in the State of Louisiana) the Contractor’s Licensing Board, even for Family and Friends;
4. Financing-if you have not met with a lender, you may not be aware of the types of loans that you could apply for that allows you to purchase a home and finance the repairs and upgrades.  There are several loan products, but for now, let us briefly talk about the FHA203K loan (See your lender for further details).  This loan allows a purchaser to buy and repair the home as long as one main condition is met:  the purchaser must agree to live in the home for a certain amount of time (certain conditions may apply).  The important thing to remember is that this process helps the purchaser to fine-tune the purchasing of the home through a structured process that involves an appraisal, an FHA Home Inspection and the opportunity, if necessary, to finance part of the loan without coming out of pocket (your lender can explain).  This and other loan products are available through select lenders, certified in FHA203K loans, please check with your lender first.
5. Insurance-Knowing the right type of insurance for your home is extremely important.  Consult with your insurance provider as you ask them about one of their products called Builder’s Risk.  This particular product is available when a house is not quite ready to be moved into, or is vacant.  It covers the homeowner during renovations, and particularly, while contractors are doing very important work to restore your home.  After the renovations are through, you should already be aware of the cost of homeowner’s insurance and flood insurance.  These are usually required by lenders when a property is being financed.  NOTE:  even if your lender does not require Flood Insurance, or your home is located in a non-flood zone, please be advised of the importance of maintaining adequate flood insurance in the southern portion of Louisiana and along the Gulf Coast.
6. BONUS-Who is watching your stuff? The first thing that jumps out at me as Realtor, is the fact that when a first-time home buyer is looking at a property that is obviously in disrepair, and they want to take that property on as a project.  God Bless’em!  I automatically switch to protective mode on their behalf.  I often ask: “Who are you going to get to do the work?  Will the person(s) be someone you can trust?  Most of the time it is a family member whom they will be getting to do the work, and at the point, I am at ease.  But for those who have yet to encounter what it is like to work with contractors, especially as a first-time home buyer, and you are working your 9-5, or you are out of town a lot, please have someone whom you can trust to ensure that the work you are paying for, is the work that is getting done.  This is not to cast dispersions on contractors in general, but, what if the wrong counter-top goes in?  What if the wrong paint is applied?  Who is watching out for that first time home buyer, if they are not on site?  The outcome of not being able to be hands-on can be financially impactful, even if, for example, the wrong tile is put up in the bathroom.  These types of situations happen, even among the most qualified contractors, with on-site supervision!  So it would be helpful to the first time home buyer to make sure that they are as visible as necessary to help their contractors do their best, on the buyers’ behalf. 

The above 5 areas and Bonus suggestion, are only a snapshot of what the first time home buyer/renovator should be concerned about before signing off on the final papers.  There are more things to be concerned about, but it is recommended that the first-time home buyer consult with each professional along the way.  From the proposed contractor(s), to the lenders, Inspectors, and of course, Realtors, the important thing is to leave nothing to chance when it comes to investing in a home that needs to be renovated.  The first time home buyer encounters a tremendous number of challenges already.  If they are not prepared for what renovating their new home involves, the financial repercussions may cause extensive more problems than had they chosen to purchase a move-in ready home.  Good luck on the purchase of your new home, and as always: Make Your Best Offer!

SPEAKER: If interested in having Wayne Lewis speak before your community group, please email him at waynelewissoldit@yahoo.com

 

DISCLAIMER: ALL INFORMATION PROVIDED IS DEEMED TO BE FROM RELIABLE SOURCES, BUT NOT GUARANTEED.  NOT AN INTENT TO SOLICIT THE AGENTS CUSTOMERS OR BUSINESS OF ANY OTHER AGENT OR BROKER.

VACANT AND SECURED © 2014 by Wayne D. Lewis, Sr.

 The selling of a home is just as much a challenge as buying one. Ask any seller.  While some homes may sell very quickly in less than 24 hours, others may sit on the market for 24 months, or greater.  The dynamics aren’t necessarily a secret, but it all starts and ends with pricing for the marketing of the respective home.  That may mean that the home may bring offers for far less than the seller intended, with the seller leaving the home on the market for an extended period of time, in hopes of receiving the perfect offer.  Whether the home sells immediately, or over a given period of time, one important concern for the seller is the fact that the home is vacant.

In this post, we will focus on vacant homes and the challenges and possible solutions that maybe enacted to ensure that the vacant home does not become any more of a cost than necessary to sell it.  Here are 4 things to be aware of (Not an exhaustive list):

•  How is the property secured
• How often is it checked
• How to minimize potential vandalism or break-ins
• What to do if the property is broken into?

How is the property secured?

A.     Lock the doors-Obviously, a no-brainer, but even the best of us forget to lock our doors while we are living in a property.  So, while it should go without saying, we will go with saying it: lock all doors

B.     Lock the windows-Obviously, there are latches on windows, but that may not be enough.  All windows are not designed equally, as you are aware.  One of the  most important set of windows to secure is a sliding door.  If not properly aligned, it can appear to be secured and still be opened.  Check all windows and sliding glass entrances to be sure they are secured. 

C.     Local or Monitored Alarm systems- If you have moved out of the home to another home, you may have already had an alarm service in place.  It can’t hurt to still have the home monitored after moving out.  Or, if you have disconnected the service, the system, with its back up battery can still be used. Perhaps have the alarm set for the house and have a neighbor call you should it go off.

How often is your home checked?

            Depending on whether you live near your home on the market or across the country, if it is on the market, it is still worth checking on the property, as often as once a week, or no more than a month.  If you are not sure at first, you may want to hire a property manager to check the property on an agreed upon time frame.  You will want to have checked the doors, windows, and if there is an alarm system, make sure that it is operating properly, or at set to AWAY.  You may also want to check to make sure that your home has not been tagged by those who love to spray paint empty homes.  This is very much likely to happen on homes that have been empty for a long time, whether on the market or not.

How to minimize potential vandalism

There are times that when your home is on the market, you may want to stage it to give it a lived-in look.  This however works best for those who actually go into the home, or look into the house through the windows.  Staging minimizes those who may have a criminal intent to target a vacant home, that while vacant, is not necessarily at the top of the list to break into, if there is the possibility that the home appears to be lived-in (not statistically proven, but would seem probable).  Minimizing the potential for vandalism or breaking into a vacant home may work best if the seller tries the following two suggestions:

1. The amount of staging is important.  Placing a spattering of furniture in the home at strategic locations without overwhelming the buyer, helps the buyer get an impression of what the home looks like when they may mentally place their own furniture.  In addition, that strategic placement helps create a sense of occupancy, warmth and that, possibly, someone maybe frequenting if not actually living in/on the property.  One bed in the staging process may also help to create a strong impression of occupancy.
2. It’s important that if someone asks if anyone lives or stays in the home, you may want to have a prepared answer. Perhaps something to the effect:  We have a neighbor come over, or maybe, we have a relative to come by check frequently.  It doesn’t have to be true, or untrue, but it is important that anyone who asks not have a sense that no one ever comes by the home, even as it appears totally vacant.

 What to do if your vacant home is broken into?

1.  Call the Police, make a report;
2.  Note any damage and notify your insurance company;
3.  Secure the house against any further damage, such as vandalism, or unauthorized  persons moving in and occupying your home;
4.  Remove any items that may cause injury or harm to potential buyers
5.  Repair, as needed, any damages that may affect your intent to get the best price for your home;
6.  You may want to note any major damages on your property disclosure, as well as repairs, where necessary;

The above suggestions are based on observations of properties that have suffered damage possibly because of their vacant status.  It may not have mattered that they were on the market, or that they were vacant.  Who can say what prompts the criminal mind, or the mischievous minds of those who break who into our homes.  The point is, to do as much as creatively possible to protect our homes, whether vacant, or occupied, from those who would seek to commit such offenses.  How proactive we are to minimize such an occurrence, is just as important as how reactive we are in the event of such an occurrence.  If our properties are broken into, we should be quick to repair the damage to prevent further damage or any other unauthorized activities in our homes.  A very important thing to also remember, is to strive to give our homes as much of an active, and attractive presentation as possible, especially, when it is on the market.

SPEAKER-If you are looking for a speaker for any of your community groups, please don’t hesitate to email me to so that I can bring you the latest on New Orleans and the Home Buying process.  I am ready to help you, to Make Your Best Offer.  Email: waynelewissoldit@gmail.com

Disclaimer:  Not an intent to solicit the business or clients of any agent or broker.  Information provided is deemed to be from reliable sources, but is not guaranteed.  No information should be determined to be legal advice, please consult an attorney or your Realtor regarding this subject matter.

HOME INSPECTIONS AND 4 THINGS TO NOTE! © 2014 Wayne D. Lewis, Sr.

Home inspections are an integral part of buying a home, and selling a home.  For the seller, it means discovering things that they may have either overlooked, or were unaware of, even as their near perfect home surrounded them every day for the past 5, 10 or so years.  Even the best home, despite its pristine appearance holds some very important challenges, that if not addressed, may result in a greater cost, whether the home sells or not.

Home inspectors are required to be licensed to conduct their work, and to advise of any safety concerns that are obviously visible.  Their paperwork often stipulates that their inspections are only to the extent that they are able to access under property, within the property or on top of the property.  So anything that a home inspector is not able to gain access to because it is blocked, covered, no utilities, or for the most part would require moving, or damaging the home, they are not able to reveal.  With that said, what do we know about the home inspection?

We know that for the buyer, it may mean an eye-opening experience.  If the buyer has not been prepared for an inspection report and what it could contain, the buyer may believe that the home should be torn down.  But that is hardly the case.  In many cases, the inspection may reveal a couple of minor code violations, an improperly installed door frame, a loose door knob, or a slight deviation in the foundation.  Any of these observations, as pointed out by the inspection, when lumped in with similar observations, say 30 of them, may suggest that the home is in terrible shape.  But for the buyer, it would be helpful to listen to the inspector when he/she gives his/her summary about the property.  Also, it would be helpful if the buyer would step away from the inspection report after first viewing it, so that they can get a better perspective of what the inspection report means.

While Home Inspectors are not all licensed in the areas of that which they point out as in need of attention, it is important that they note to the buyer that the area in question may require further inspection by a licensed or certified technician.  This caveat, for the benefit of the buyer and seller, proposes an additional set of eyes and a deeper technical perspective on the issue at hand.  Depending on the contractual agreement, the buyer, or the seller, may choose to have the matter taken care of to their satisfaction, before going forward.  Here are four ways a safety issue can be addressed by the buyer:

1. The buyer can decide not to buy the house and cancel the agreement;
2.  A technician can be called out by the buyer and determine the cost to repair or replace if necessary;
3. The buyer and seller can disregard the matter based on the technician’s assessment and move to close;
4. The buyer or seller can agree that the matter should be repaired or corrected, with certain conditions (those conditions would have to be worked out between the buyer and seller and their respective agents, with timelines and costs limitations set).

The above four approaches maybe determined individually based on a set of observations revealed by the Home Inspection, or what is revealed in the entire report.  No two responses by buyers are ever the same.  But here is something to be aware of:  if a buyer is aware of a problem before a purchase, and decides not to address it, or decides to repair the problem themselves, after the close, generally the matter relieves the seller of any further responsibility. 

Secondly, a technician being called out to address an observation revealed in a Home Inspection, maybe the choice of the buyer, and or the seller, or both, depending on what was revealed in the Home Inspection.  For example, a faulty gas line behind the stove, that would be something the sellers may want to repair themselves, especially if they are living in the home already. 

If an Inspection Report reveals that there are 2 or 3 piers in need of leveling, or appear to have termite damage, this may be an opportunity for the seller and the buyer to renegotiate the contract. Or, the buyer may accept the house in its present condition, and proceed to close.

For the buyer, as much as the seller, a Home Inspection may not produce a home’s best side, but not doing an inspection is a crapshoot that many, unfortunately, are willing to take.  

We can’t say exactly what may happen as a result of inspection, but the important thing is, that a buyer should not buy a home without a certified, licensed professional to give them a reasonable indication of the viability of a home.  There are always options after a home inspection, and while the four approaches above are not exhaustive, the most important thing to know, is that there are options, after a home inspection.

If you are looking for a speaker for any of your groups, please don’t hesitate to call me or email me to discuss New Orleans and the Home Buying process and how I can be of help to you, as you Make Your Best Offer.  Email: waynelewissoldit@gmail.com

Disclaimer:  Not an intent to solicit the business or clients of any agent or broker.  Information provided is deemed to be from reliable sources, but is not guaranteed.  No information should be determined to be legal advice, please consult an attorney or your Realtor regarding this subject matter.