Category Archives: Shopping for a Home

When Will Buyers Find Out the House Was Just Foreclosed On?

With many bargain-hunting buyers out there hoping to buy a foreclosure home, you might think that the home’s bank-owned status would be highlighted in the Multiple Listing Service (MLS) and other marketing materials for a property. You might be wrong, according to the article, “Agents advised to keep ‘bank-owned’ quiet,” by Alexandra Clough of the Palm Beach Post.

Clough explains that, in the Palm Beach region of Florida at least, the MLS service does not require that listings specify whether a property is bank-owned — and that some banks, such as Wells Fargo, specifically prefer to hide that fact.

To avoid the “negative connotation” of a foreclosure home, they ask that the former owner be listed as the owner of record. Agents point out that banks are probably also motivated by a desire to make sure that home visitors don’t walk in already assuming they can knock a chunk off the listed purchase price.

Indeed, the public has become increasingly aware of the risks that come with buying a home that’s been through foreclosure — potential poor condition due to lack of maintenance or vengeful vandalism by the departing owners, stolen light fixtures, copper piping, and so on after the house has sat empty for a time, and in some states with “judicial foreclosure,” a “right of redemption” allowing the former owners to buy the house back from the new owners within a statutorily set period of time.

Me, I’d want to know as soon as possible whether a house was the subject of a recent foreclosure. And presumably the seller’s agent would advise you of this soon after you expressed any serious interest in the house, as a matter of basic disclosure obligations.

But in the meantime, it would be worth asking your own agent (which we recommend that every buyer have) whether your regional or state MLS requires banks and lenders to make clear that they have assumed ownership of the property. (This practice is completely up to the local MLS services.) If not, that’s one more question to get answered when visiting a home that has caught your interest — especially if it smells funny or seems to be missing some of its parts!

See the article, “Buying a Foreclosed Home: Your Way Into the Real Estate Market?” for more information on the benefits and risks to this strategy.

 

State of the Real Estate Market: Willing Buyers, Reluctant Sellers

A recent article in the Marin Independent Journal (of California) tells a story we’re hearing a lot of these days: A young couple is actively house-hunting, knowing that the market is unlikely to go any lower, yet unable to find what they want among the limited choices out there. (See “Marin Home Prices Are Down, But for Buyers, Choices Are Scarce,” by Will Jason.) The husband says they’re being patient, but the wife amends that to “Semi-patient.”

They’re a perfect representation of the statistics recently cited by Amy Hoak in The Wall Street Journal‘s MarketWatch: Seventy-one percent of 1,000 people surveyed by Fannie Mae last December said they think now is a good time to buy a house, while only 11% think it’s a good time to sell one. (See “It may be a good time to buy, but not to sell.”) The Marin couple is, unfortunately, also a good example of how buyers who wait too long to see the house they want at a bargain price may ultimately lose out.

The advice for sellers in Hoak’s article is that waiting is a good idea — just one more year, and sales are likely to become faster and more profitable. As soon as prices start to tick up, more sellers will willingly put their houses on the market. Good news for buyers’ choice, but maybe not such good news for buyers when it comes to prices . . . .

 

Did Your City Make the Top Ten List for 2011 Home Price Increases?

Thanks to Inman News for creating a list, complete with pretty pictures and exact percentages, of all the metro areas that saw, according to data from the National Association of Realtors, the greatest hikes in home prices over the last year.

This top-ten list contains good news for sellers and owners in those areas. On its face, it contains bad news for buyers wanting to get into the market . . .  except that, with sellers feeling more assured of receiving a decent price, some of them might decide it’s time to sell after all. That will increase the range of choice for buyers, who have been complaining that they’d happily buy now if they could only find a house they liked.

Just to be a spoiler, I’ll reveal the whole list to you up front. But with no pretty pictures. Here they are, starting with number one:

  • Fort Myers-Cape Coral, Florida
  • Shreveport-Bossier City, Louisiana
  • Metro: Washington, DC (Virginia)
  • Fort Wayne, Indiana
  • San Antonio, Texas
  • Washington, DC
  • Peoria-Pekin, Illinois
  • Fort Lauderdale, Florida
  • Omaha, Nebraska
  • El Paso, Texas

Gee, not even one city in Nolo’s home state of California made the list!

Unexpected Homebuyer Expense: New Cookware for Induction Stove

I thought I knew a thing or two about cooking, but when a friend told me that she’d recently bought a house with an “induction” stove, I had to ask, “What’s that?”

Turns out it’s touted as the hot new thing (or old thing, among cooking professionals); a method of cooking that’s not gas, not electric (or not exactly), but . . . electromagnetic. Instead of the traditional heat transfer from burner to pot of food, the burner/stovetop elements generate a field that causes the cooking pot to become hot on its own. Or something like that.

It’s fast, it’s precise, and no heat is wasted. Your kitchen doesn’t get as hot, and your cat can walk across the stove without suffering burnt paws.

But here’s the part of it that seems a bit iffy from a home-sales perspective. The seller didn’t tell the buyers about it in the disclosure forms, nor advertise it in the sales literature. My friend didn’t find out until the final walk-through, just before closing.

Which might not be a problem, except that guess what: You can’t necessarily use your normal pots and pans on an induction stove. You have to buy iron or steel ones that will do the right magnetic thing. Bye-bye aluminum, copper, or glass cookware.

“It was frustrating, because we’d just gotten married and had all this beautiful new non-stick cookware,” she says. “Our favorite pots and pans all gave us error messages when we tried them on our new stove. So did the new stuff that my husband laid out money for online, even though it had been advertised as induction-stove friendly. We’ve been eating a lot of microwaved dinners lately.”

How’s that for an unplanned budget item? (Or items, if you count all the prepared-food costs for nights of microwaving.) Sellers, I think buyers might want to know about this one — both because of the pros and the cons. While technically speaking, it might not fall within your disclosure obligations — which mainly include defects (and a high-tech stove can be seen as a property enhancement) — the old maxim about “When in doubt, disclose” seems apt here, if only for the sake of good buyer relations. For more information on what sellers must disclose, see Nolo’s article, “Required Disclosures When Selling Real Estate.”

Hollywood Celebs Sue Home Sellers

Spending millions of dollars on a home is, apparently, no guarantee that it won’t come with defects.  Just ask recording artist Rihanna, who bought a $6.9 million Hollywood property only to discover that it flooded during rains; or MGM-Studios head Roger Birnbaum, who bought a $16.5 million mansion which, he says, “began to leak like a sieve” during winter. Both have recently filed suit against their sellers, asking for monetary damages to cover repairs.

(And we thought it didn’t rain much in Los Angeles!)

Any lessons here for us non-celebrity buyers of non-mansions? How about:

  • No matter how famous the seller, ask lots of questions before the sale. Birnbaum bought his home from a big-name Hollywood talent agent turned house flipper named  Sandy Gallin. The house sure looks nice — in fact, you can peep at its current listing, because Birnbaum is trying to sell the place for $16 million. (Does he really want to claim it’s made of “the finest materials and accoutrements?”) But if what Birnbaum is alleging is true, Gallin’s fame doesn’t translate into a leak-proof roof.
  • Filing suit makes people mad. Witness the TMZ reports about Gallin’s response to Birnbaum’s lawsuit, in which he calls it a reflection of Birnbaum’s “ well-known miserly and parsimonious behavior. ” That’s why I recommend trying a demand letter and mediation before marching into court, as described in this free Nolo article, “Home Defects: Sue the Seller?”
  • Not only should buyers get a home inspection done before buying (duh), but be alert to any signs that the inspector isn’t exhibiting Sherlock-Holmes-like vigilance. In Rihanna’s case, she claims that the inspector initially reported that an improperly sloped exterior door potentially allowed for water intrusion; but when the seller then argued that the area was fully protected by a seven-foot overhang, the inspector basically rolled over (my words, not hers) and said it was fine. No surprise, Rihanna is also suing her home inspector.
  • Litigation is expensive, regardless of the size of your home. Legal experts estimate that Rihanna, for example, may have to spend six-figure amounts for legal fees, hiring teams of experts to demonstrate that the inspector’s conduct fell below the expected standard of care in the industry, getting estimates of repair costs, and more. (This according to the article, “Why high-end buyers of real estate need to be cautious,” by Bradley P. Boyer and Saundra K. Wootton, in the Daily Journal, a legal trade publication.) None of those costs are tied to square footage!
  • Moisture problems lead to big repair costs. (No wonder insurance companies raise your premiums when they hear about them.) When buying a home, look hard for any evidence of staining, dampness, or rot, and don’t rest until you’ve made sure the house has no history of leakage (or that any such history has been dealt with appropriately). You may need to ask for repair reports, or go to your city building department and get records of permits for repairs and improvements.

Here’s some more free info for home buyers: Nolo’s article, “Get a Home Inspection,” which describes how to find a good inspector, what inspections are needed, and more.