With Terry Story, 26-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
No matter how well-built and substantial your home may be, if it lacks curb appeal, that is, a visually pleasing appearance, it’s not going to sell quickly nor at the desired price. So Terry advises first taking care of the obvious before putting your house for sale, such as pressure cleaning driveways, sprucing up the landscaping, or checking for wood rot.
In order to get the best price possible and to avoid problems after receiving an offer, make sure that that all major appliances, air conditioning, electrical system, roofing, and plumbing are in top condition prior to letting that first prospective buyer through your front door. Most insurance companies require a 4-point inspection (electrical, air conditioning, roof, and plumbing) that will affect your qualifying for a mortgage, so doing your own preliminary check-up can save time and money down the road.
Terry and Steve discuss the value of investing big money for, say, a new roof (that will indeed please the insurance company) as opposed to discounting the price to the buyer. One way or another, the bottom-line will be affected. And it’s the seller’s decision to make.
For the buyer, especially the first-time buyer, Terry suggests getting a pre-approval letter before starting the home search, as well as being mindful of your debt to credit ratio during this process.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent Terry Story. Terry is a 26-year veteran with Coldwell Banker located in sunny Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: When does the season for selling actually, or the buying season, actually start across the country?
Terry Story: You know, the biggest selling season is spring, which starts April first for the selling market, and, if you’re a seller thinking of putting your home on the market, there are certain things that you should start doing, like sprucing up your house, making those repairs, especially the most obvious things. If you’ve got some wood rot, take care of that, sprucing up the front door, put some fresh flowers out, lay some mulch, pressure clean the driveway. First impression curb appeal, Steve, is always number one. People see the home on Zillow and all these different websites. They’re going to want to drive down the home, and if it doesn’t look nice, they’re judging the book by its cover.
Steve Pomeranz: Sure.
Terry Story: Make it look nice and take care of those items, especially major systems like electrical, plumbing, air conditioning because you’re going to hear about these when you go through an inspection. Sometimes, Steve, a small item like an air conditioner, the freon might be off. The inspector may say, “Oh, you need to get an AC contractor out there”, where it just needed a little freon just to charge it back up, and the inspector may make it sound like it needs a whole new air conditioning system. Try to avoid …
Steve Pomeranz: Yeah. You’re talking about sellers now, and a seller is going to have …
Terry Story: These are sellers. It’s the seller’s season and it’s still a seller’s market, and they want to get the highest and best price possible for their home, so they need to start doing these things before they put their home on the market.
Steve Pomeranz: Well, I’ve heard of a 4-point inspection. What exactly is that and what problems do you run into as a broker trying to advise people on the best ways for them to sell their homes? What is a 4-point inspection?
Terry Story: Sure. Many insurance companies will require, depending on the age and style of home, a 4-point inspection. It’s made up of 4 points: the points being electrical, air conditioning, roof, and plumbing. Basically, what it means is, for example, if you don’t have 3 or 5 years of remaining life on a roof, you won’t get a clear 4 point, and what that means is, ultimately, that you can’t get insurance. If you’re getting a mortgage, you need to get insurance. If you can’t get a mortgage because you can’t get insurance, then you’re not going to be able to buy that house.
Steve Pomeranz: Yeah.
Terry Story: A 4-point inspection comes into play often. You can’t have leaky faucets. That needs to be taken care of. Electrical problems, depending on the severity of the electrical problem, we have issues with electrical panels, specific panels that are not accepted by insurance companies.
Steve Pomeranz: Not up to code.
Terry Story: A lot of times sellers find out that they have to change out their panel prior to selling their home because the buyer can’t get insurance.
Steve Pomeranz: You know, Terry, this is kind of a bummer. It reminds me that when you lease a car and you know the lease is coming up within a year and your tires are going bald, you wait and you wait and you wait, and then 3 months before the lease is up, you get brand new tires, so actually the new buyer is getting to use all those tires. The same thing for the roof. If it’s only got 3 years to go …
Terry Story: I know.
Steve Pomeranz: … and you’re getting ready to sell, you’re going to spend $30,000 to put on a roof for somebody else?
Terry Story: Well, you know, every situation is unique and different, so you have to really look at it. It can’t have any leaks.
Steve Pomeranz: Well, I mean, you can get it repaired.
Terry Story: An inspector might extend the life of the roof if it’s in good condition, so there are factors and variables within that, but, yes, very much so. If the inspector writes it up as the end of its useful life, you’re not able to get insurance. Now there might be, I don’t want to say 100% absolute you can’t get insurance, there might be an insurance company out there that would charge an exorbitant amount of money for you to carry insurance, or they might put a restriction that you have to have it changed out within the next 60 days, so premiums are significantly higher with these defects in place.
Steve Pomeranz: Well, the point is in order for, if you’re going to take a mortgage, the house has got to be insurable, so the seller’s got to understand that the buyer is going to have to get insurance, and if it doesn’t qualify against these 4 points, then the buyer may not be able to get insurance, which means they can’t get a mortgage, and that’s going to be a detriment to selling your house.
Terry Story: Yeah. I just had it happen on a house. I just had it happen on a house that failed on 3 points, and the only one we could sell it to was a cash buyer. Of course, the cash buyer then wanted a greater discount for the home because of the condition. They use that as leverage, like, “Well Mr. Seller, I can’t get insurance.” Somebody paying cash doesn’t necessarily need to get insurance because it’s something that they want. It’s not a requirement as you find with a lender if you’re getting a mortgage.
Steve Pomeranz: Yeah. Look, it’s got to come out in the price somewhere.
Terry Story: Ultimately the seller pays for it.
Steve Pomeranz: Yeah, that’s right.
Terry Story: It’s either having to discount the price to a cash buyer or taking care of some of these items. These are things as a seller right now you should be looking at if you’re putting your home on the market, and as a buyer, especially first-time home buyers. Make sure you go in and have your preapproved letter before you start your home search, and whatever you do, don’t go out and buy a new car or new furniture because that’s going to affect your debt to income ratio. You may have been told you qualify for a loan, and then the next thing you know, you’re out shopping for furniture and now you no longer qualify to purchase that home. That’s a big no-no, and I’ve seen that happen.
Steve Pomeranz: Yeah. You start to take out some more credit cards to make a big purchase like that, that’s a red flag to the credit agencies, and you’re going to run into all kinds of problems that way, so cool it if you’re going to buy a house and need a mortgage. Stop everything. Don’t take on any more big purchases. Wait until the house closes, and then you’ll be fine, right?
Terry Story: That’s right.
Steve Pomeranz: That’s Real Estate Roundup for this week. As always, my guest is Terry Story. Terry is a 26-year veteran with Coldwell Banker located in Boca Raton, and can be found at Terrystory.com. Thanks, Story
Terry Story: Thanks for having me, Steve.