Blog :: 12-2008

Home Inspections prior to Selling

People often ask what they can do to make their house sell faster once they decide to put it on the market.  Before a seller begins to think about pricing, etc., I strongly suggest they have a home inspection done.  That's right, the seller.  While buyers usually choose to have a home inspected prior to purchase, I feel that it's just as important to have the seller conduct an inspection.

Why have a home inspected that you're not going to stay in?  The answer is fairly simple.  First of all, it illustrates to potential buyers that you care about the house and the house's upkeep.  If you're willing to have the home inspected, you're obviously a careful and thorough homeowner who would have taken good care of your home from the start.

In addition, when the inspection is done, you can take care of any issues that come up yourself which saves time during the negotiating process. I can't tell you how many times a buyer will submit a bid, pending a home inspection, only to come back with the list of needed repairs detected through the home inspection, which means the buyer and seller have to  go back to the negotiating table for a price.

There's also the option of not doing the repairs but being honest with potential buyers.  For example, the sellers may need to repair the downspouts and gutters and may take some money off of the selling price, acknowledging that the work needs to be done by the buyer.

So, regardless of whether you are the buyer or the seller, what are the qualifications to look for when choosing a home inspector?  First of all, in North Carolina, they must be licensed by the N.C. Home Inspector Licensing Board.  Also, consider how long they have been in the business and if they have been in the construction business themselves.  You also want to be sure they are bonded and have liability insurance.

Now, you've chosen the inspector.  What can you expect?  Cost will vary according to home size.  In general, up to 1,000 square feet will be about $250 while a 4,000 square foot home will be at least $400.  Beware of anyone who gives you a rock bottom price.

A complete inspection will cover everything from structural defects and foundation problems to plumbing to roofs to porches and decks.  Generally, it is preferable for you to be present during the home inspection so that you can see first hand any issues that the inspector discovers.  Expect a thorough inspection to take two to three hours, again depending on the home size.

According to Dan O'Brien who works in Asheville and Black Mountain with Pillar to Post, a national home inspection franchise, the most common problem he sees during inspections is water damage.  This issue can be caused by not maintaining the gutters, not ensuring the home is properly painted, and improper landscaping so the ground does not slope away from the structure.

Another problem he sees frequently is GFI outlets, those electric outlets near water that are more sensitive, not working properly. 

"It's amazing how a few simple things could be done so there aren't any problems at all," he explains.

That's another reason I strongly suggest a seller's inspection.  Being able to offer a home clear of inspection problems goes a long way toward simplifying the selling process.  And a simple process equals a quicker sale.


Mortgage Market

The past few weeks have been full of dramatic shifts in the stock market and dire predictions about our economy. The financial industry in particular has been in the news, and in watching the national news one can come away with the impression that loans, home mortgages especially, are not available for most people at this time. In fact, a quick survey of local area bankers indicates that funds are still available."I watch television, and I would think it's hard to get a loan too," agrees Christy Bencivenga-Burns of First Citizens Bank. "At First Citizens we were never involved in the sub prime mortgages so we have not been affected by that. We are still doing mortgages. It's just that you have to be qualified...that's the important word...qualified."

So how does that affect the consumer? First of all, it means that potential homebuyers should be able to put something down on their homes prior to purchase, rather than obtaining 100% funding. 

Bencivenga-Burns points out that in the past, Fannie Mae would underwrite a loan with no proof of income and no verifiable assets. In addition, they were willing to finance 100% of the home value. Most of the banks I spoke with in the area, however, have not taken part in that practice, so they have not suffered the consequences that the larger national financial institutions are experiencing.

"We are evaluating and underwriting new loans every day and have not changed our lending standards," says Lee Ann Lewis of BB&T. "It is simply against our philosophy and values to put our clients at financial risk."

"Our bank has plenty of funds," agrees David Begley, of Black Mountain Savings Bank. "We are doing what we have always done, offering 80% of value to folks that have good credit."

"Black Mountain Savings has seen a large increase in deposits due to consumers fleeing to safety and local banks," Begley says. "Black Mountain Savings is one of the few banks nationally that doesn't borrow from other institutions to fund their loans so we haven't been impacted by the national credit crisis."

As a consumer seeking a mortgage, what should someone seeking a loan do to smooth out the process? According to Bencivenga-Burns, the first step is to check your own credit score. 

"Pull the report yourself first," she advises. "Clean up any issues that need to be resolved prior to making the loan application. A high credit score will get you the best rates and improve your chances of being approved."

Another area of concern is the applicant's debt to income ratio. While in the past consumers with rates as high as 65% were approved, area bankers agree that these days, that debt income ratio needs to be much lower.

In short, in speaking with our local bankers, it appears that the mortgage business has changed but primarily for those larger banks who were taking extraordinary risks nationally. For our local financial institutions, loan officers have funds available for their customers who have provable income, solid credit scores, and a down payment for their new home.