Sorry, this is not a blog about parenting and children's allowances!
Here, we are talking about sellers offering an allowance for repairs.
I am often approached by sellers who tell me they know their home needs "X" (fill in the blank - new carpet, refinished wood floors, repainting, new hvac, etc). But, they say they would like to avoid doing the work now and just offer their buyer an "allowance". They want to know if this is a good idea? The short answer is NO! Despite the many explanations I hear, I stand firm that an allowance is rarely if ever a good idea.
Why? For every reason/excuse to offer an allowance, there is a reason NOT to;
1. "They will want to pick their own ___". Hogwash. The buyer may want to pick their own colors or finishes, but most do not unless they are buying a true "fixer upper" and planning a full remodel. When you say, "seller allowance for __" in a listing, you are pointing out a problem. Essentially, you are saying, "Our house needs work and we don't want to do it. We're going to give you our problem.... but we'll give you some money to handle it". Inevitably, you want to list your house at the full retail price of a move-in ready home, but offer the "cost" to replace carpet/paint, etc. But, you must remember that no one wants your problem or to do your work. In their eyes, you can't begin to compensate them for the hassle of organizing and orchestrating the work. Or, the house should be priced as a fixer upper. Buyers paying retail want simplicity and a move in ready home.
2. "They will see beyond the paint/carpet/flooring, etc". Wrong again. Most buyers actually lack the ability to visualize transformation. While a small percentage can visualize transformation, you lose the "first impression" of an appealing home. You can immediately translate this to dollars. If the buyer is forced to visualize, the buyer expects to be compensated. See The Shiny Penny
3. "I like the personality color/wallpaper/finish someone else will too". Here you are partially right. Someone probably will. But, most everyone will not. Would you rather fish in a pond with 100 fish, or 1 fish? Someone out there will like purple paint and have a great emotional response to it, but 99 people out of 100 will not and will see it as a negative. Why would you want to present a negative, when you can easily change it to appeal to 99%?
4. "I can't afford to do the work". This is the one valid reason presented. But, the allowance is not the answer. If you can't afford to do the work, price the house accordingly. And, know that houses that need work don't usually sell at 100% of retail price (there are market exceptions). So, your "allowance" will be part of the negotiation of the contract price. Also know that most lenders and most loan products won't allow the buyer to get cash back to make the repair or improvement anyway. The buyer is going to have be someone who can afford to make the repair from their own cash after closing unless they obtain a special type of loan.
Final thought; selling a house is a marketing task. Your goal is to present the best product possible in the best light possible using the best images/marketing materials possible. An allowance would be like an ad that says, "Buy our car. It has scratched up paint, a missing fender, needs a new seat, and the brakes need to be replaced... so you can't drive it right away. But, we'll give you the cost of the parts off the MSRP so you can get it fixed. Why would anyone buy that car? Why would they not go down the road and buy a different car, at the same net cost, that's in perfect condition that they can drive to work tomorrow?
Saturday, July 16, 2016
Stinky hot water? Replace your water heater anode. An unusual post!
OK, so this is a bit of an unusual post for a real estate broker. But, I just HAD to share!
To paint a picture: I live in a home served by a well. Because we have sulfur in our water, we have an expensive water treatment system with softener.
My husband and I began to notice that our hot water was a little stinky... like rotten eggs. So, we immediately called our water treatment installer/servicer. They asked if it was just hot water. Well, I said, "Yes, now that I think about it, it is". I was told that it was not the treatment system, it was the water heater. Huh?
It turns out that there are sort of "sacrificial" anode rods in most conventional water heaters. Apparently, higher end units with long warranties even have 2. These rods take the hit from corrosive substances to protect your water heater from rusting. They essentially deteriorate instead of your water heater deteriorating. But, when the rod itself becomes so corroded that it can no longer do its job, the water heater tank will rust out, leak and need replacement. And, in some cases, the water starts to smell foul.
At the suggestion of our water treatment company (who does not replace anodes), we called a plumber. The plumber arrived, looked at the age of the water heater, and refused to do the replacement. He said there was significant risk that the anode would not come out, would strip out the threads, or the new would not go in and seal properly. Also, he said the water heater would need to be drained partialy to create space to put hydrogen peroxide in the tank to neutralize the smell in the water already in the tank. He wasn't confident that the drain valve would close back and seal properly either. So he left!
Not ones to settle for "no", and definitely not wanting a new water heater for lack of a $75 anode rod, my husband and I decided we'd try to replace it ourselves. We had nothing to lose. If we failed, we'd need a new water heater. But, this plumber was already telling us to just replace it now instead of even trying to replace the rod.
So, here's what we did;
1. I purchased a tri-metal replacement rod. My water treatment guys said this is the only kind I should use.
2. I turned OFF the circuit breaker to stop power to the water heater - CRITICAL STEP
3. I turned off the water supply to the water heater
4. The HARD part - Both my husband and I worked for about 20 minutes to get the old anode rod loose. This is really a challenge. It involved a socket wrench and an extension bar, rust release fluid, and a LOT of elbow grease. After working diligently, it finally loosened and we could unscrew it.
5. I screwed on a hose and opened the drain valve at the bottom of the tank to drain out some water. I drained a lot because our water heater is in the basement and we could let it all flow outside. Then, I closed the valve tightly.
6. I poured 4 quarts of hydrogen peroxide into the tank through the hole where the anode rod was.
7. I applied "pipe dope" or liquid teflon sealant to the threads of the new rod and then inserted the rod back into the water heater and tightened it back down.
8. I opened the water valve just for about 10 seconds to let some water in and stir up the tank. Then turned it right back off.
9. We let the tank "sit" for 4 hours with the peroxide and did not use any hot water at all for 4 hours.
10. I turned the power back on and opened the water valve, and then checked for leaks.
The water heater refilled fully. We opened all of our faucets in the house and turned on "hot"... they vented out gas and we let them run for about 2 minutes then shut all off.
Now, our water is back to normal! We hope this has "saved" our water heater and it will serve us many more years. My research, aka my "google" degree, tells me that replacing your anode road can double the life of your water heater. I hope so!
**Note; I am not a plumber and make no recommendations to others about trying this. I am just sharing my story! (photos below)
removing plastic cover from top of water heater
Removing the old anode... this took some work!
The old beside the new!
The new adode in place
Screwing in the new anode
To paint a picture: I live in a home served by a well. Because we have sulfur in our water, we have an expensive water treatment system with softener.
My husband and I began to notice that our hot water was a little stinky... like rotten eggs. So, we immediately called our water treatment installer/servicer. They asked if it was just hot water. Well, I said, "Yes, now that I think about it, it is". I was told that it was not the treatment system, it was the water heater. Huh?
It turns out that there are sort of "sacrificial" anode rods in most conventional water heaters. Apparently, higher end units with long warranties even have 2. These rods take the hit from corrosive substances to protect your water heater from rusting. They essentially deteriorate instead of your water heater deteriorating. But, when the rod itself becomes so corroded that it can no longer do its job, the water heater tank will rust out, leak and need replacement. And, in some cases, the water starts to smell foul.
At the suggestion of our water treatment company (who does not replace anodes), we called a plumber. The plumber arrived, looked at the age of the water heater, and refused to do the replacement. He said there was significant risk that the anode would not come out, would strip out the threads, or the new would not go in and seal properly. Also, he said the water heater would need to be drained partialy to create space to put hydrogen peroxide in the tank to neutralize the smell in the water already in the tank. He wasn't confident that the drain valve would close back and seal properly either. So he left!
Not ones to settle for "no", and definitely not wanting a new water heater for lack of a $75 anode rod, my husband and I decided we'd try to replace it ourselves. We had nothing to lose. If we failed, we'd need a new water heater. But, this plumber was already telling us to just replace it now instead of even trying to replace the rod.
So, here's what we did;
1. I purchased a tri-metal replacement rod. My water treatment guys said this is the only kind I should use.
2. I turned OFF the circuit breaker to stop power to the water heater - CRITICAL STEP
3. I turned off the water supply to the water heater
4. The HARD part - Both my husband and I worked for about 20 minutes to get the old anode rod loose. This is really a challenge. It involved a socket wrench and an extension bar, rust release fluid, and a LOT of elbow grease. After working diligently, it finally loosened and we could unscrew it.
5. I screwed on a hose and opened the drain valve at the bottom of the tank to drain out some water. I drained a lot because our water heater is in the basement and we could let it all flow outside. Then, I closed the valve tightly.
6. I poured 4 quarts of hydrogen peroxide into the tank through the hole where the anode rod was.
7. I applied "pipe dope" or liquid teflon sealant to the threads of the new rod and then inserted the rod back into the water heater and tightened it back down.
8. I opened the water valve just for about 10 seconds to let some water in and stir up the tank. Then turned it right back off.
9. We let the tank "sit" for 4 hours with the peroxide and did not use any hot water at all for 4 hours.
10. I turned the power back on and opened the water valve, and then checked for leaks.
The water heater refilled fully. We opened all of our faucets in the house and turned on "hot"... they vented out gas and we let them run for about 2 minutes then shut all off.
Now, our water is back to normal! We hope this has "saved" our water heater and it will serve us many more years. My research, aka my "google" degree, tells me that replacing your anode road can double the life of your water heater. I hope so!
**Note; I am not a plumber and make no recommendations to others about trying this. I am just sharing my story! (photos below)
removing plastic cover from top of water heater
to expose anode
Removing the old anode... this took some work!
The old beside the new!
The new adode in place
Screwing in the new anodeFriday, April 1, 2016
HOW DO I CHOOSE A FLAT FEE MLS LISTING SERVICE (FSBO)?
You've decided you want to save money by using a flat fee or limited service MLS listing when you sell your home? You know you can handle some of the work of showing your home to private buyers and negotiating your own deal. So how do you decide which company to use? What are the differences? Does it really matter?
First, let's make sure we're clear on what a flat fee listing is. Flat fee MLS, in concept, has been around since at least the early 1990s. Generally, a licensed real estate broker contracts with a seller to provide a package of services or selected "a la carte" services for a flat fee rather than a "commission" or percentage of the sale price. Typically, the flat fee applies only to the listing side of the transaction, and the seller must agree to offer a buyer's broker a percentage commission. The buyer's broker commission is usually advertised to brokers so that they will show and sell the home. In the majority of cases, the house will be sold to a buyer represented by a broker.
A flat fee listing broker unbundles the services that a traditional full service broker would or should provide, and provides a limited number of services. The key service is listing the property on the local or regional multiple listing service (MLS). The MLS is a private database accessible to only member brokers, and is almost the singular source used by buyer agents to locate properties for their buyer clients. Having your home listed on the MLS means fishing in the "big lake" versus the small pond of For Sale By Owner (FSBO) buyers looking on FSBO listing sites, Craigslist, and other public portals. In addition, MLS listing data is automatically syndicated to hundreds of public portals where home buyers shop directly; Zillow, Trulia, REALTOR.com, homefinder.com, homes. com and usually all of the local firm websites.
How to choose? Beyond whether they can simply input listing information on the MLS, there is much more to consider in choosing about a Flat Fee MLS listing service.
1. Is the company local?
2. Is the company a brokerage, or simply an online service that subcontracts with a broker?
3.. Does the broker visit your home and meet with you personally?
4. Is the company respected by other local brokers?
5. What is included in your package? Forms? guidance? lock box? yard sign? showing services?
6. Does the company represent buyers too? Or will they only represent you?
7. Will there be a licensed broker available if you need additional help?
Real estate is LOCAL, and your flat fee broker should be too. There are national websites offering flat fee MLS listings, but the actual MLS systems are local member only sites. National firms have to subcontract with local brokers to input their listings. Because the local broker is only getting a cut of the low fee paid to the national site, they will do the bare minimum necessary to get the listing data into the system. In real estate, the minimum can be dangerous, and potentially expensive in the long run. If the advertised information on the MLS is not correct, both broker and seller are liable for the misrepresentation or omission of facts. And, the lawsuits can be expensive! So, choose local only. Trying to save pennies here can cost tens or hundreds of thousands!
Hire a Broker Directly. Make sure that you are hiring the broker directly, and not a subcontractor.
Make sure the broker will visit on site at your property. A good broker would never list a home "from a distance". License laws in every state require a broker to represent facts about each property they put on the MLS. They must verify the square footage, legal bedrooms, sewage & water systems, HOA information, street maintenance, legal access, liens & ownership, and much more to assure that the advertised information is accurate. Any broker who does not do all of this risks license revocation AND places themselves and you at risk of litigation.
Talk to experienced brokers in your area about the local flat fee MLS providers. While traditional full service brokers may not love flat fee brokers, they must work with them to bring buyers and sellers together. Tell them you are not going to list full service and ARE going to list flat fee. Then ask the experienced full service broker which flat fee firm they would choose if they were in your position. Reputation is everything. If local buyer's agents don't respect your flat fee broker and won't show and sell their listings, you will shoot yourself in the foot by choosing that company.
State "agency" laws vary, but you want an exclusive seller's agent where available. In many states, it is legal and common practice for one firm or even one broker to handle both sides of a transaction. This sounds crazy to most people outside the real estate industry. Some firms also use flat fee listings as "loss leaders" to lure buyers into their firm. Ask your local flat fee MLS provider if their firm also works with buyers... and if they will potentially also work with the buyer of your house. In that scenario, the broker cannot "advise" either of you.
No two flat fee services are alike! It's critical to ask what is included in your package and if additional help is available if you need it. It will be hard to compare services "apples to apples" as every service is different. It's not always about the price, it's about the quality of service. If you are going to pay $200-$400 for someone to throw your listing up on the MLS and then disown it, you are not getting a bargain. You are being left out to dry.
Ask these 10 questions:
1. Will you answer broker's questions about my home?
2. Will you answer questions from buyers?
3. Will you provide current state disclosure and contract forms?
4. Will you provide guidance about preparing my home for sale & staging?
5. Will you provide guidance on pricing our home or property?
6. Will you present and explain any offers to me?
7. Do you provide the same kind of lockbox that full service brokers are used to?
8. Do you provide a sturdy yard sign?
9. How will brokers schedule showings for our home?
10. Are you available if we need more help along the way and want to add on services?
Sometimes you get what you pay for. Flat fee listings are a great way to save thousands of dollars in commissions. But with flat fee MLS providers, you don't want the cheapest, you want your area's best!
First, let's make sure we're clear on what a flat fee listing is. Flat fee MLS, in concept, has been around since at least the early 1990s. Generally, a licensed real estate broker contracts with a seller to provide a package of services or selected "a la carte" services for a flat fee rather than a "commission" or percentage of the sale price. Typically, the flat fee applies only to the listing side of the transaction, and the seller must agree to offer a buyer's broker a percentage commission. The buyer's broker commission is usually advertised to brokers so that they will show and sell the home. In the majority of cases, the house will be sold to a buyer represented by a broker.
A flat fee listing broker unbundles the services that a traditional full service broker would or should provide, and provides a limited number of services. The key service is listing the property on the local or regional multiple listing service (MLS). The MLS is a private database accessible to only member brokers, and is almost the singular source used by buyer agents to locate properties for their buyer clients. Having your home listed on the MLS means fishing in the "big lake" versus the small pond of For Sale By Owner (FSBO) buyers looking on FSBO listing sites, Craigslist, and other public portals. In addition, MLS listing data is automatically syndicated to hundreds of public portals where home buyers shop directly; Zillow, Trulia, REALTOR.com, homefinder.com, homes. com and usually all of the local firm websites.
How to choose? Beyond whether they can simply input listing information on the MLS, there is much more to consider in choosing about a Flat Fee MLS listing service.
1. Is the company local?
2. Is the company a brokerage, or simply an online service that subcontracts with a broker?
3.. Does the broker visit your home and meet with you personally?
4. Is the company respected by other local brokers?
5. What is included in your package? Forms? guidance? lock box? yard sign? showing services?
6. Does the company represent buyers too? Or will they only represent you?
7. Will there be a licensed broker available if you need additional help?
Real estate is LOCAL, and your flat fee broker should be too. There are national websites offering flat fee MLS listings, but the actual MLS systems are local member only sites. National firms have to subcontract with local brokers to input their listings. Because the local broker is only getting a cut of the low fee paid to the national site, they will do the bare minimum necessary to get the listing data into the system. In real estate, the minimum can be dangerous, and potentially expensive in the long run. If the advertised information on the MLS is not correct, both broker and seller are liable for the misrepresentation or omission of facts. And, the lawsuits can be expensive! So, choose local only. Trying to save pennies here can cost tens or hundreds of thousands!
Hire a Broker Directly. Make sure that you are hiring the broker directly, and not a subcontractor.
Make sure the broker will visit on site at your property. A good broker would never list a home "from a distance". License laws in every state require a broker to represent facts about each property they put on the MLS. They must verify the square footage, legal bedrooms, sewage & water systems, HOA information, street maintenance, legal access, liens & ownership, and much more to assure that the advertised information is accurate. Any broker who does not do all of this risks license revocation AND places themselves and you at risk of litigation.
Talk to experienced brokers in your area about the local flat fee MLS providers. While traditional full service brokers may not love flat fee brokers, they must work with them to bring buyers and sellers together. Tell them you are not going to list full service and ARE going to list flat fee. Then ask the experienced full service broker which flat fee firm they would choose if they were in your position. Reputation is everything. If local buyer's agents don't respect your flat fee broker and won't show and sell their listings, you will shoot yourself in the foot by choosing that company.
State "agency" laws vary, but you want an exclusive seller's agent where available. In many states, it is legal and common practice for one firm or even one broker to handle both sides of a transaction. This sounds crazy to most people outside the real estate industry. Some firms also use flat fee listings as "loss leaders" to lure buyers into their firm. Ask your local flat fee MLS provider if their firm also works with buyers... and if they will potentially also work with the buyer of your house. In that scenario, the broker cannot "advise" either of you.
No two flat fee services are alike! It's critical to ask what is included in your package and if additional help is available if you need it. It will be hard to compare services "apples to apples" as every service is different. It's not always about the price, it's about the quality of service. If you are going to pay $200-$400 for someone to throw your listing up on the MLS and then disown it, you are not getting a bargain. You are being left out to dry.
Ask these 10 questions:
1. Will you answer broker's questions about my home?
2. Will you answer questions from buyers?
3. Will you provide current state disclosure and contract forms?
4. Will you provide guidance about preparing my home for sale & staging?
5. Will you provide guidance on pricing our home or property?
6. Will you present and explain any offers to me?
7. Do you provide the same kind of lockbox that full service brokers are used to?
8. Do you provide a sturdy yard sign?
9. How will brokers schedule showings for our home?
10. Are you available if we need more help along the way and want to add on services?
Sometimes you get what you pay for. Flat fee listings are a great way to save thousands of dollars in commissions. But with flat fee MLS providers, you don't want the cheapest, you want your area's best!
Saturday, October 31, 2015
Double Double OIL and Trouble!
Underground storage tanks... The mere mention makes my stomach jump!
Like many brokers working in areas with lots of old housing stock, I've seen some crazy situations with residential underground oil fuel tanks. This year has been no exception!
Scenario 1; Nice 70 year old lady inherits a rental house in an old established City neighborhood after the death of her husband. It's a brick rancher from the 1950s and has been heated with fuel oil since built. She's planning to sell and thinks this old oil furnace and oil heat could be a deterrent. So, she calls an HVAC contractor and buys a new natural gas system. They come and install the new furnace and tell her they are also going to "abandon" the old oil tank. Seems all is well, right? I list the house and I'm happy to tell potential buyers that this is taken care of. One rainy fall night I get THE frantic phone call. My seller is standing outside of said house in the rain with the fire department and the emergency response team. The story? The aforementioned contractor apparently hired Abbott & Costello to abandon the old oil tank. While they were supposed to remove all of the oil from the tank before "closing" it, they apparently "thought" they could do that from the oil fill line inside the house which is 4-6 inches above the actual floor of the tank so that heat systems are protected from the "sludge" that forms at the bottom of the tank. Draining from the fill line empties the tank down to just that level...leaving 4-6" of oil sludge at the bottom. Abbott, or maybe Costello, then dug down to the tank and cut open a hole in the top to fill with sand. After filling, they weren't really prepared to properly seal the hole, so they just set the cut piece on top of the sand filled tank and covered it with soil and grass seed. All done! And then the rains came... The old tank sat just below the drip line of the house and the gutters were clogged with leaves and overflowing... onto the old tank location. The ground saturated... the tank flooded... the oil sludge floated right up through the sand to the top of the tank... and right on out to grass and then right on down the hill in front of the house. Neighbors were frantic when they called 911 about the big oil slick running down the yard toward the street from the house on the hill. Fast forward 2 months. My seller has been forced to hire a clean up team to remove all contaminated soil at the cost of $12,000. The tank also had to be removed and the soil tested below. It was positive, so they have to remove more soil and test again. Tests are still positive, but the equipment on site can't go deeper than 12 feet. My seller and her environmental mitigation contractor are authorized NCDENR to stop digging, put in clean soil and begin the process of recording a Notice of Residual Petroleum (NRP) on the deed for her home and notifying all of the neighboring properties of same. In the end, my seller has fronted close to $20,000 for this whole process. She goes after the HVAC contractor, and he ponies up just $4000. She files for reimbursement by the state's underground storage tank fund (and 18 months later receives close to $12,000 back from the fund). She is out $4000. She finally sold the house in deep winter for considerably less than originally hoped. But, the selling season was over... and there was a NRP notice on the deed... and she was worn out!
Scenario 2: Another elderly couple owns a home on city water and sewer. Back in the day (+/- 20 years ago), they had oil heat replaced by a gas furnace. The oil tank was close the house and inside of a concrete slab, so they just sort of "left it" after the oil ran out. Then, they build a sunroom addition... on top of that old slab. Fast forward 20 years and I list their house. I warn them about that oil tank and tell them they need to disclose it. A potential buyer requires that it be properly abandoned. They have to cut out the floor of their addition, drain the tank through the sunroom, fill it with concrete and then repair the floor. The only other option is to tear down the addition and remove the tank with heavy equipment.
Scenario 3: Nice couple heating with oil and the tank is close to their house (trend here!). One day they smell oil. After extensive visits, digging, etc, it is learned that their oil tank has sprung a leak. It has saturated the ground, and then kept going to saturate the block of the foundation and then right into the basement slab. Ultimately, they have to cut out a large section of basement slab and replace it, along with a large section of foundation wall. Of course, they have to haul away all of that contaminated concrete and many loads of dirt and then bring in new dirt. Final cost? $60,000. Surely they would be covered by homeowner's insurance? NO - there's an exemption in most policies. They are able to file for partial reimbursement with the State's underground storage tank fund, but it covers only 1/5th of their expense.
Where else have we seen these tanks? I've had one in a huge set of concrete steps leading to stone house's front door. I've seen one in a concrete slab front porch.
Moral of the story? If you have an underground storage tank, deal with it now regardless of the hassle!
Like many brokers working in areas with lots of old housing stock, I've seen some crazy situations with residential underground oil fuel tanks. This year has been no exception!
Scenario 1; Nice 70 year old lady inherits a rental house in an old established City neighborhood after the death of her husband. It's a brick rancher from the 1950s and has been heated with fuel oil since built. She's planning to sell and thinks this old oil furnace and oil heat could be a deterrent. So, she calls an HVAC contractor and buys a new natural gas system. They come and install the new furnace and tell her they are also going to "abandon" the old oil tank. Seems all is well, right? I list the house and I'm happy to tell potential buyers that this is taken care of. One rainy fall night I get THE frantic phone call. My seller is standing outside of said house in the rain with the fire department and the emergency response team. The story? The aforementioned contractor apparently hired Abbott & Costello to abandon the old oil tank. While they were supposed to remove all of the oil from the tank before "closing" it, they apparently "thought" they could do that from the oil fill line inside the house which is 4-6 inches above the actual floor of the tank so that heat systems are protected from the "sludge" that forms at the bottom of the tank. Draining from the fill line empties the tank down to just that level...leaving 4-6" of oil sludge at the bottom. Abbott, or maybe Costello, then dug down to the tank and cut open a hole in the top to fill with sand. After filling, they weren't really prepared to properly seal the hole, so they just set the cut piece on top of the sand filled tank and covered it with soil and grass seed. All done! And then the rains came... The old tank sat just below the drip line of the house and the gutters were clogged with leaves and overflowing... onto the old tank location. The ground saturated... the tank flooded... the oil sludge floated right up through the sand to the top of the tank... and right on out to grass and then right on down the hill in front of the house. Neighbors were frantic when they called 911 about the big oil slick running down the yard toward the street from the house on the hill. Fast forward 2 months. My seller has been forced to hire a clean up team to remove all contaminated soil at the cost of $12,000. The tank also had to be removed and the soil tested below. It was positive, so they have to remove more soil and test again. Tests are still positive, but the equipment on site can't go deeper than 12 feet. My seller and her environmental mitigation contractor are authorized NCDENR to stop digging, put in clean soil and begin the process of recording a Notice of Residual Petroleum (NRP) on the deed for her home and notifying all of the neighboring properties of same. In the end, my seller has fronted close to $20,000 for this whole process. She goes after the HVAC contractor, and he ponies up just $4000. She files for reimbursement by the state's underground storage tank fund (and 18 months later receives close to $12,000 back from the fund). She is out $4000. She finally sold the house in deep winter for considerably less than originally hoped. But, the selling season was over... and there was a NRP notice on the deed... and she was worn out!
Scenario 2: Another elderly couple owns a home on city water and sewer. Back in the day (+/- 20 years ago), they had oil heat replaced by a gas furnace. The oil tank was close the house and inside of a concrete slab, so they just sort of "left it" after the oil ran out. Then, they build a sunroom addition... on top of that old slab. Fast forward 20 years and I list their house. I warn them about that oil tank and tell them they need to disclose it. A potential buyer requires that it be properly abandoned. They have to cut out the floor of their addition, drain the tank through the sunroom, fill it with concrete and then repair the floor. The only other option is to tear down the addition and remove the tank with heavy equipment.
Scenario 3: Nice couple heating with oil and the tank is close to their house (trend here!). One day they smell oil. After extensive visits, digging, etc, it is learned that their oil tank has sprung a leak. It has saturated the ground, and then kept going to saturate the block of the foundation and then right into the basement slab. Ultimately, they have to cut out a large section of basement slab and replace it, along with a large section of foundation wall. Of course, they have to haul away all of that contaminated concrete and many loads of dirt and then bring in new dirt. Final cost? $60,000. Surely they would be covered by homeowner's insurance? NO - there's an exemption in most policies. They are able to file for partial reimbursement with the State's underground storage tank fund, but it covers only 1/5th of their expense.
Where else have we seen these tanks? I've had one in a huge set of concrete steps leading to stone house's front door. I've seen one in a concrete slab front porch.
Moral of the story? If you have an underground storage tank, deal with it now regardless of the hassle!
Wednesday, July 8, 2015
The Shiny Penny Replaces the "Fixer Upper" For Millenial Buyers
The Shiny Penny replaces the Fixer Upper
In today's real estate market, buyer tastes and priorities are different than those of past buyer generations. The old mantra has always been, "location, location, location". While location reigns as King in real estate, it has a new queen. Most current buyers second priority after location, or perhaps tied as a top priority, is condition. "The shiny penny" has become an expectation of today's homebuyer. What's this? It's the house with everything in tip top condition and with a shine!
Back in the "old days", many buyers looked for "fixer uppers" to invest their sweat equity and build real equity. Now, while a few handy folks remain, the vast majority of buyers are looking for "move in ready" homes. They want to buy the house, unload the moving truck, and start living. They don't want to buy the house, tear out the kitchen, remodel the bath, or spend every night at Lowes or Home Depot. Priorities change with each generation. Generation "Y"and Millenials are more interested in current quality of life, dining, and living life to the fullest today. They are, as generations, less interested in building wealth via drawn out "do it yourself" projects. While they are willing to hire people to do work for them, this takes time, focus and additional money. The easiest answer is to buy new construction or to search for the "shiny penny" where someone else has done all the work and invested their time. Sellers of older generations MUST accept this and adapt.
At least once a week, I hear one of the following;
"We will give them an allowance to replace..."(the worn carpet, the dated appliances, old hvac, etc)
"We will let them pick out their own paint and replace our special colors...."(purple passion, pumpkin orange, radical red, etc)
"We don't mind buying a house that needs work, so we're sure we can find someone who is willing to do a little work".
All I can say is this, "Wake up"! Today's buyers are different. Forgive my sweeping stereotype, but younger generations are not so handy overall. They have been raised in an era of technology where their fingers are used for typing, not for prying wallpaper off unprimed sheetrock. In many cases, hanging their photos will be a challenge, much less attempt replacing a faucet or painting. And, because they would prefer to explore the latest brewpub or performance art, they don't want the hassle of trying to find a good contractor and overseeing a remodel. It's not their "thing", and older generation sellers who recognize this have a huge advantage over those who stick their heads in the proverbial sand!
So, how do you make your house a "shiny penny"? We'll explore that in our next post.
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