Real Estate

I don’t want to give my house away.

Sellers seem to always want to list their homes for the most money possible.  They tell me, we can always come down, but you can’t go up.  Let’s start several thousand dollars higher than what the comparable homes are priced at and if we don’t sell it in a few weeks we can come down. Unfortunately, the sellers often don’t want to come down because at that point they have associated this inflated price as the value for their home.  The seller may decide to remain at that higher price for much longer than the realtor would suggest—holding out for the price they want.  Eventually the listing contract may expire and the seller feeling defeated and irritated with their current realtor who couldn’t get them the inflated price may employ another realtor.  Surely the second or third realtor will be able to get more money for them.

I tell sellers two things are true. First, something is only worth what someone else is willing to pay for it. Regardless of what you believe it is worth or what I believe it is worth or what the comparable say, the consumer will eventually decide what the value of a home is worth.  An experienced and educated realtor will be able to advise the seller where to price the home to sell in a reasonable amount of time.  Second, you cannot underprice a property.  If you list a property slightly below market value (I am not talking about listing it at 50 cents on the dollar) and market the home effectively you will have multiple offers on the house.  The consensus will be market value.  There have been times when I have listed a home slightly under list price and then marketed it to the public in a way that causes multiple offers and a majority of the offers are for the exact same price. 

Recently, I had a home that was listed at $130,000. It needed some cosmetic work however the bones of the house were good.  The house would have been worth more money if it was updated.  The seller did not have the money to do the repairs.  I listed the house and held it open that first weekend. The seller instructed me they would look at offers after the open house.  We had 4 offers.  One was a low offer, two were identical and the one we took was slightly higher than the two that were identical.  The seller closed the house at $123,000 with no closing costs or repairs.

Another time, I had a house which we listed for $ 50,000. It also needed work.  We received 17 offers on the house and sold it for $60,000.  We had several offers at or around $60,000. We accepted the one that was willing to take the house without any contingencies.   

The point is you cannot under price a house.  The market will correct for that.  You can overprice a house and the market will respond with it sitting there unsold. Regardless of condition or location, there is a market value for all homes. My job as a licensed realtor is to help you determine accurate value so you can get the house sold for the most money in the quickest amount of time. 

If you are looking for an experienced realtor to guide you through the buying or selling process please contact me at 405-213-2992  or visit my website:  www.equityhomesteam.com

Real Estate

Floor Ducts should not be Rusted

Homes in Oklahoma with central heat and air have either have floor ducts or ducts in the ceiling.  Floor ducts can be made of metal or pvc.  Metal ducts in the floor sometimes erode, rust and deteriorate. They can deteriorate to a condition where there are holes in the ducts and sand in the vents. 

Once this happens, you can do one of two things to correct the problem.  You can fill in the ducts and take them overhead in the attic.  The other option is to have a company come in and line the ducts with a water based latex material to coat the ducts.  This option is usually more economical.

The company that does this will scope the ducts to see what they look like under the slab. This is the only way to truly know what is going on in the ducts.  They will clean the ducts of the sand, debris, and any other substances prior to putting the lining on the ducts. Then they will spray the duct boot and the ducts and perhaps the plenum if necessary.

It is important to make sure the ducts are in good condition to get good air flow through out your house. Also, you want the air to go through the vents and into your home and not be lost. And finally, you want to know you are breathing good clean air and not air which has dirt and sand mixed into it. 

When looking at houses to buy, I think it is a good idea to open the floor registers and look inside.  If you see holes, rust or sand, that is a good indication that their may be more problems.  If you are wanting to purchase the house still, I would suggest you get a camera inspection of the ducts as part of your inspection process.  You may want to negotiate the ducts being repaired upfront provided they appear bad.

I saw these ducts in a house the other day where I had the listing.  There was sand in the duct boots and a hole in the side wall of the duct. The home inspector did point out the damage to buyer and suggested he have them scoped.  The buyer chose to not spend the money to have them scoped so we don’t know what they looked like throughout.  Although my experience tells me they most likely need to be repaired.

As a realtor, I tell my clients we are inspecting the property, so we know what is wrong with it.  Every house has something that needs to be fixed. While we may not care about small things like sink sprayers not properly working or a loose toilet seat.  We do care about large ticket items which need to be repaired.  Rusted floor ducts are an expensive repair.

If you are looking to buy, sell or invest in real estate, I would love to help you. Please call me Sandi Walker at 405-213-2992 or visit my website www.equityhomesteam.com

Real Estate

Monitor your foundation

The foundation of your house is extremely important.  It is what is supporting your house.  In Oklahoma our newer homes tend to be built on slabs. These foundations are built with a sand or gravel base which is used for drainage and then a cement slab is poured over that based. Dirt or sometimes a concrete walk way is placed around the house. 

People in Oklahoma have become very conscience about cracks in walls or the brick veneer as a sign that the house has structural issues. However, you also need to be aware of erosion around the house which can cause water to get under the cement slab and wash out the sand base underneath.

I took a picture of the house with this foundation. 

 The elevation of the house is higher than the neighbors house.  This house doesn’t have gutters and the grass is thin on this side of the house.  Over time it appears that water has eroded the dirt from the side of the house so much so that now water can enter in under the cement slab. 

I spoke to the homeowner after I saw this.  I explained to her that she needed to get some dirt around the house.  She proceeded to tell me that she lived on a limited budget and couldn’t afford to buy dirt or to fix the problem.  I explained to her that dirt was cheap compared to the structural problems she would have if the problem was not corrected.  Once the slab slips then she will need to have a pier company come raise the foundation back up and she will still need to add dirt around the house. 

Maintenance on a house is important.  It is the number one con to home ownership because you have to maintain the home if you own it rather than someone else maintaining it if you are renting and it costs money.  Taking the time to notice repairs and fixing them prior to them becoming large issues will help you save money.  This issue here could have been avoided with proper guttering and making sure grass was maintained in this area from the beginning. 

If you have real estate questions or are looking to buy or sell or invest in real estate, call me Sandi Walker 405-213-2992 or visit my website, www.equityhomesteam.com.

Real Estate

What is a Mortgage Inspection Cert (MIC) and why does the seller pay for it?

A mortgage inspection cert is a drawing of the property that is being conveyed between two parties. It is often called a survey. It is not a pin survey and should not be used when determining actual lines to say install a fence. It is a useful to know easements and encroachments. It will also show whether a building is actually on the property it is supposed to be as per the legal description.
The seller pays for the MIC to prove that they have a marketable title. Sometimes I get sellers who rebuke the idea of needing a survey. Yet it is important. They are disclosing to the buyer that the title of the property through the survey is clear of encumberment and encroachments.
I have seen gas line easements which have run down the middle of a property, pools in easements, driveways that are over property lines and other easement issues. The most common easement violation are sheds in the utility easement. Just because there is an easement violation doesn’t mean you should stop the sale. You should investigate more to know what you are purchasing and to understand how it will affect the usefulness of your property.
The worst MIC I saw was one where the house didn’t actually sit on the property being sold. The seller and the previous seller had done a quick claim deed about 20 years ago and then did a corrected deed and then another corrected deed all to get the property correct. Unfortunately, they still did not convey title correctly. When the seller refinanced the property 12 years ago, the lender didn’t do a survey since the borrower owned the property. Had the borrower ever defaulted on the loan, the lender would have had a driveway as collateral. We had to go back and correct the deed in order to sell the property. It took about 5 weeks to accomplish, but my team did it. The other option would have been to quiet title the issue. The seller had been living in the house for 20 years paying taxes and would have won the quiet tile suit; it just would have cost attorney fees.
If you are purchasing property, always get a survey so you know what you are buying. You will want to know exactly what you are purchasing.
If you have real estate questions or are looking to buy, sell or invest in real estate please feel free to contact me at 405-213-2992. Feel free to visit my website

Real Estate

Maybe I should just rent it

In my last post I talked about pricing a home right to sell even if it means bringing money to the table. While there is nothing illegal or immoral about a seller bringing money to the table to clear the note and sell a property, it just seems wrong to many people. This is an investment and as an investment, it ought to make you money or at least cause you to break even.
So sometimes people think that the alternative is to rent the property. The renter can pay down the mortgage and then they can sell the property without bringing money to the table. That is understandable. However there are some things you will need to consider if you chose this path.
1. Either study the landlord tenant act and know it or hire a property manager. You need to know the law and follow it.
2. Make sure you have a separate bank account for the rental property and the escrow.
3. Have some savings for repairs. While you may be ok living with a broken a/c or garage door opener until you have the funds to fix it, your tenants will not.
4. Have some savings for times of vacancies or when your tenant is late paying or doesn’t pay at all. You still need to make the mortgage payment.
5. If you are going to manage your property yourself make sure you know how to properly screen a tenant. Just because they have the deposit and first month’s rent doesn’t mean they will have the next month’s rent.
6. Drive by your property and check on the inside occasionally. Your lease should give you authority to inspect with notice.
7. If you are moving out of town or state, hire a property manager. It will cost but it will be worth it.
8. Plan on painting and making some repairs when the tenant moves out. The security deposit may not cover all of it.
These are the basics considerations when considering whether you should rent out your property rather than selling it. There is also emotions that will come into play. This may have been your first home or one your fixed up. It is heartbreaking to see others not taking care of your house the same way you might. So decide if you are willing to do all these things or if it might be better to just sell it and move on. I personally have rental property. My very first rental property was one that my husband and I bought in Omaha, NE and then learned a year later we were getting transferred to Oklahoma City. We didn’t have the money to sell the house and decided to rent it. And of course we did it ourselves out of state. So I have been there. It was a learning experience. The education cost me some money. I will never personally have a rental that is not within a 20 mile radius of me. But that is me.
If you are thinking of selling and would like an experienced Realtor to help you with the transaction, please contact me at 405-213-2992 or visit my website at http://www.sandiwalker.com

Real Estate

Let’s price it right to begin with

Sometimes people buy a home with the intention of living there for a long time and then life changes and they need to move. Depending upon when they purchased the house and the market, there may or may not be enough equity to sell the house without bringing money to the table. If they put money down when they purchased the property there is no guarantee that they will get all that money back when they sell. It is a hard conversation to have with a seller, but an important one. A house is simply not worth what the seller needs, rather what the market dictates.
So the question is always what should we do in that case. I have had several sellers want to list the price above market value in order to cover costs. Sometimes these sellers have transfer orders or need to move now so the house is left vacant. In this case I simply ask the seller if they want me to give them an accurate value and list it to sell quickly or would they like me to lie to them about the value, put it on the market at a price I know will not sell, and then reduce it every couple weeks until it gets to the actual market price. Of course, Mr. Seller, by that time you realize that the days on market is going to be long and then buyers are going to think they can negotiate for a price below market.
In addition to not selling quickly, there are holding costs associated with a house that is not selling. The seller still has to pay the mortgage, utilities, maintenance and upkeep. Even if the house is paid for there will be taxes and insurance accruing on the property. Therefore I will usually ask a seller who is in this situation, “Do you want to bring the money one month at a time or all at once?” The seller who is going to pay the holding costs waiting for a buyer is bringing money to the table so to speak–one month at a time. So why not simply price the house correctly at first. The market will always determine if the house is priced correctly by either supplying a buyer or not.
If you are looking for an experienced realtor to give you an honest assessment of your property, please contact me 405-213-2992 or visit my website.

Real Estate

Don’t lose all your investment profits to taxes

Investment property is a great way to build wealth. The investor can write of off many expenses and depreciate the value of the property on their taxes over the years. While making a profit from the rental income, they also are able to obtain a tax benefit from the investment. Over time an investor may decide to exchange a property with a high equity position perhaps a free and clear property to a larger property or to multiple properties that provide additional cash flow. The investor may want to diversify into other geographical areas of the country.
When an investor sells their property they are liable to pay several taxes. These include capital gain taxes to both federal and state, recapture tax on the depreciation, as well as the ACA tax of 3.8% if the investors taxable income in over the designated amount. ($200,000 for a single person and $250,000 for a married person at the time of this writing). This can add up fast and take up to approximately 50% of the profit to pay these taxes. For this reason, people sometimes think twice about trading properties. But there is a way to trade properties without paying the taxes.
Since 1921, savvy investors and real estate professionals have been taking advantage of a powerful tax strategy created by IRC section 1031-the deferred exchange. IRC Section 1031 (a)(1) states:
“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-king which is to be held for productive use in a trade or business or for investment.”
By using a 1031 exchange an investor can defer the tax burden. This allows them to keep more money to invest in other like-kind exchanges. While this does not eliminate the tax burden, it does defer it. And it can be deferred into a passive trust or a vacation rental when the investor decides not to be as involved in managing investment properties.
The investor will need to work with a “Qualified Intermediary” to facilitate the transaction. And it will need to be stated in the contract that the sale is subject to a 1031 exchange. This is just a simple introduction to 1031 exchanges. If you have additional questions, regarding time lines and other benefits please ask. As always it is recommended that the investor discuss a 1031 tax deferred exchange with tax and legal advisors.
If you or someone you know is looking to buy, sell, or invest in real estate please have them call me at 405-213-2992 or visit my website at http://www.sandiwalker.com