What is a Seller’s Disclosure?

September 28th, 2016

Presenting a Seller’s Disclosure as a legal document

A Seller’s Disclosure is a document outlining the features, known issues or remodeling projects that have occurred in the home during the home owner’s occupancy. This document is then made available to potential buyers interested in the property. By making it available, it gives the Seller’s Disclosure its purpose.  It is a way for any potential buyers to learn about the property in more detail, as well as the seller’s experience within the home.  A Seller’s Disclosure is required by law, and should be completed to the best of one’s ability without guessing.

A seller's disclosure gives the buyer a chance to see what it is like to live within the home.

A Seller’s Disclosure gives the buyer a glimpse of the condition of the home.

Examples of What to Disclose:

⦁ Structural and foundation problem

⦁ Lead paint, asbestos, or toxic mold

⦁ Pests and wood destroying insects (WDI), such as termites

⦁ Fire and safety hazards

⦁ Toxins within the local water supply or soil

⦁ Pending lawsuits that may affect the value of the property

Now, it is understandable that there will be some questions on the disclosure that you do not have the answer to. Not every home owner knows whether or not their home has urea-formaldehyde insulation, or if there are dead trees located somewhere on the property, or if the house has had remediation of environmental hazards in its past.  Some times, it can be shocking what one does not know about the home they live in.  Though, it is important and lawful to disclose everything that you do know, as you can be penalized for non-disclosure.  Penalties for non-disclosure can include major fines and potential lawsuits from the homebuyer.  If you fail to even provide a Seller’s Disclosure, the buyer can terminate the contract at any point, retain their earnest money, and walk away- even out of the option period.  Non-disclosure, and the failure to provide, is a just cause for the buyer to walk away, at any point.  To reiterate this, you can be sitting at closing and the buyer get up and walk out, lawfully.  That is how important this document is.  To protect yourself, and those looking to buy your home, disclose anything and everything that you do know about the home.

There are some myths revolving around disclosures. The most common one:  Is it required for a homebuyer to be made aware of any deaths on the property?  The answer can vary by state: The seller is usually only required to disclose deaths on the property that were not caused by: suicide, natural causes, or accident not related to the condition of the property.  Another would be that a disclosure scares off buyers.  This is a flawed idea.  There is no evidence to substantiate that a disclosure of a death will scare off buyers.  Think of it this way, if there was a problem big enough to scare away a buyer just by reading the disclosure, the problem would be big enough to scare off a buyer without it.  Probably one of the worst myths surrounding a Seller’s Disclosure is that it holds the same weight as an inspection.  A Seller’s Disclosure is not a substitute for an inspection.  It is not, and will not, ever be the same as an inspection. An inspection is a thorough investigation completed by a professional.

In order for sellers to fulfill their legal obligation to any potential buyers, and protect themselves, complete the Seller’s Disclosure as soon as you can and make it available. Curl up on the couch while watching television one night, and just knock it out.  The Seller’s Disclosure is used to give detail about the property and the seller’s experience living there.  There is no reason to not provide it and, ultimately, it will makes the real estate transaction a smoother process.

Election Impacts in Real Estate

August 4th, 2016

How An Election Year Impacts The Housing Market

Every presidential election impacts real estate markets.  There are no if’s, and’s or butt’s about that. The new president’s employment and economic policies will, and do, affect the strength of the housing market, as well as the price of mortgages. From these newly implemented changes, we have seen positive and negative turns from presidents passed. Most often, these changes happen in cycles during the same term. Pairing this with the adjustment period the nation experiences after inauguration, the market can enter a lull until the new commander in chief is normalized to the public. Many changes circumvent a new president, but what happens to the market before the new president is inaugurated? What does an election year mean for the housing market?

The answer is relative. It depends on the type of race the candidates are in: typical or explosive.

Typical Election Year

Little change is seen in a normal campaign season. There is some market anxiety on the behalf of both buyers and sellers, but that comes with the unknown outcome. No one wants to make a large financial move if those finances and rates might not be guaranteed. Eventually, outer lying factors still persuade wary people to list or buy a home. The lull between deciding to buy or sell is relatively small, because overall, the nation’s status quo is unperturbed and the candidates actions are typical. Every one is afraid of the change, to some degree. This fear is easier to push passed in a normal election. When it is explosive, that can be a completely different story.

Explosive Election Year

The lack of consumer trust during an explosive campaign season is staggering. There is no coincidence that the housing market shows signs of a shift right before a major election, especially when said election completely changes the national social climate. These elections are rife with animosity and up play by the media. It affects the social climate to an extreme. Everyone holds their breath to see who will win these kind of races. For the 2016 election year, it’s been predicted that home sales will decrease dramatically, even up to as much as two tenths to three tenths of a percent. Luxury homes (characterized by a $500k+ price point) can sit up to two years on the market before selling. More towards the middle, we are seeing the inventory sit for months and months before selling. The good news in all this is that the lower price points, $100k-250k, are selling only at a very minutely slower pace. This is in part to the more pronounced lack of first time home buyers, as well as the election. Overall, during a vicious campaigning season, the market anxiety is experienced to a much higher degree.

The election year can make homebuyers, as well as sellers, weary.

The election year can make homebuyers, as well as sellers, weary.

In all, any election will play a part in the housing market. Explosive campaigns cause explosive results, typical campaigns stay pretty mellow, and both will come with a shifting market. Brace yourself for the kind of election year you are facing, and contact me for professional guidance on purchasing or listing a home during an election year.

The Truth About Earnest Money

July 13th, 2016

What is earnest money?

Earnest money is a security deposit meant to show a party’s serious interest in real property. To do so, earnest money adds a relative amount of risk to the buyer, which then shows the seller a willingness to secure and maintain a solid deal. In other words, the deposit helps frivolousness and wasted time from occurring in a real estate transaction. Another use for the earnest money is covering any damages either party may have received if the deal falls through, such as lost time on the market (for the seller) or lost time looking (for the buyer). Earnest money evens out the transaction, making it steady and solid, ensuring both sides have some “skin in the game.”
The amount of an earnest money deposit is relative. Most often, the deposit amount will usually fall between one and two percent of the purchase price. There can be exceptions to this, though. For example, if the house already has multiple offers, it is advisable to make a larger deposit in order to show the seller how “earnest” you are in purchasing the house. Or, if you’re in a booming housing market, it might also strengthen your offer. Though, it is important to put down what you feel comfortable offering; be knowledgable that offering too little can be taken as an insult or a lack of interest, and putting down too much can be detrimental if worse comes to worst later on down the line.

Who gets the earnest money?

Once your offer is accepted, the deposit money is secured by the title company to be placed in escrow. In escrow, the money does not belong to anyone. It is crucial to keep that in mind throughout the transaction process. Once you reach closing, the earnest money is applied to the buyer’s down payment and closing costs. If the transaction does not reach closing, an agreement has to be settled between both parties for the disposition of the money. Remember, the earnest money no longer belongs to anyone at this point.

Between 1-2% of the purchase price is the recommended amount.

Between 1-2% of the purchase price is the recommended amount for deposit.

Contrary to common belief, earnest money is not automatically forfeited by the buyer if the deal falls through, nor is it automatically returned to the buyer. The disposition of the deposit is to be decided between the seller and buyer, using your Realtor to negotiate on your behalf. Oftentimes, the party at fault will forfeit the money to the wronged party. Though, in rarer cases, if a decision is not reached, legal steps can be taken to help arbitrate the situation. This arbitration is a very long and stressful way to go about things, and can cost more for the party at fault.
Ultimately, earnest money is used to show interest. If you are serious about a property, placing earnest money down should not be a big issue. The process it goes through is most often very simple, and the money will be used for the buyer at the closing. The risk is there, but with a knowledgable agent and a real desire for a home, the transaction should be smooth sailing. Just think of the earnest money as a little extra wind to those sails, and you will be on your way in no time.

Title Insurance Policys

June 23rd, 2016
Title Insurance Policy

Title insurance protects the lender and when purchased, the buyer.

Why a Title Insurance Policy?

A title insurance policy is meant to protect a lender’s financial interest against loss caused by title defects, liens and other matters on real property.  Title insurance can also be purchased to protect the real property owner from the same defects, liens or encumbrances. The cost of such policies may vary, but it is a one-time premium to be settled at closing. While the title insurance premium is typically a seller’s cost, it can be negotiated between the buyer and the seller, making it a good leverage tool to seal a deal. Once purchased, the policy protects financial interests from:

  • Documents drawn under false, terminated or expired powers of attorney
  • Utility easements
  • Undisclosed heirs to the property
  • Inadmissibly recorded legal documents
  • Failure to include required parties to certain judicial proceedings
  • Inadmissible acknowledgements caused by improper and/or expired notarization
  • Corporate franchise taxes, such as liens on corporate real estate property
  • Deeds drawn by minors
  • Insufficient legal descriptions
  • Conveyances by undisclosed divorcees
  • Deeds and wills drawn by persons lacking legal capacity
  • Gift tax and state inheritance liens
  • Tax record errors
  • Substandard building and demolition liens
  • Administration of estate and the probate of wills for missing persons presumed to be deceased
  • Matters concerning rightful possession of property
  • Matters concerning rightful conveyances of corporate entities
  • Deeds and/or mortgages by foreigners without legal capacity to hold title
  • Legal capacity of foreign personal trustees
  • Matters involving improper marital status
  • Improper alterations of documents
  • Rights of divorced parties
  • Conveyances in public policy violations
  • Ancillary instruments and will misinterpretation
  • Deeds under persons with false representation of marital status
  • Special tax assessments
  • Real estate homestead exemptions
  • Real property forfeitures due to criminal or illicit acts
  • Matters concerning the adoption of children
  • Conveyances and proceedings concerning the rights of military personnel under the Soldiers’ and Sailors’ Civil Relief Act
  • Matters concerning interests in financial statements recorded under the Uniform Commercial Code
  • Lack of competency or jurisdiction of persons in judicial proceedings
  • Matters concerning community property
  • Forged affidavits of heirship or death
  • Intestate estates
  • Impersonation of the true land owner
  • Prescriptive rights not appearing in record or undisclosed in survey
  • Gaps in the chain of title
  • Mistakes or omissions resulting in inadmissible abstracting
  • Forged legal documents, such as wills, mortgage agreements or deeds
  • Deeds that may appear absolute, but are held to be equitable mortgages
  • Conveyances by an heir, devisee, or survivor of a joint estat attempting to attain title by illicitly
  • Coercion in execution of wills, deeds or documents establishing or transferring title
  • Issues concerning the delivery of conveyancing instruments
  • Creditors of decedent issuing claims against property improperly conveyed by heirs or devisees
  • Arising interests by deeds of fictitious persons
  • Adverse possession
  • Probate matters

The listed factors above are checked in a title search. The search is conducted before the policy is enacted to see if any of the listed factors apply to the real property and can affect the title, including the status of ownership. Once the search is complete, an underwriter will evaluate the risks and set the insurance accordingly, incorporating a list of exceptions in the title commitment under what is known as Schedule C. Once in place, the title policy will last the life of the loan and insure the financial interests based on what was written in the policy when it was issued.

The title insurance policy differs from other policies in that the premium is a one-time cost.  In Texas the costs are regulated by the state.



Home Buying Mistakes

June 22nd, 2016

Home Buying Mistakes to Avoid

The home buying process can be the most exciting, and the most stressful process you go through in your entire life. Knowing this, it is important to prepare yourself for what is to come, and to avoid common mistakes that home buyers make. By remembering these home buying tips you can save money, time, and stress.

Working Without an Agent

Home buying mistakes

Home buying mistakes can be avoided.

Real estate professionals are privy to more information than the average person, such as housing market trends, home inventory and more extensive information pertaining to homes on the market. Realtors are crucial in saving valuable time and ensuring fair representation. Having an agent represent you can help protect your interest and make the home buying process easier.

Not Understanding Housing Market Trends

The housing market has two main trends: a buyer’s market and a seller’s market. A buyer’s market occurs when there is a high inventory of homes and a low number of buyers. This market creates an advantage for home buyers, increasing their ability to negotiate and lowering the prices of homes. When the market is flipped, with a low inventory and a high number of home buyers, the market will favor sellers. A seller’s market puts the cards back in the seller’s hands, raising the prices of homes. These shifts are based off of supply and demand, and understanding them will help you better navigate the home buying process.

Not Being Prepared

Get prequalified. Finding out what price range you can afford can save you valuable time, help you better address your options and then negotiate more readily. Plus, sellers are more likely to negotiate with someone who already has financial backing. Getting prequalified should mark the beginning of the home buying process. Do not delay in acquiring a prequalification letter.

Not Shopping Multiple Lenders

When you go to get prequalified, make sure to research multiple lenders, such as local banks, national banks and mortgage lenders. Each has their own set of advantages and disadvantages. It is important for you to find one that is reliable, affordable and customer service oriented.

Draining Your Reserve Funds

One of the most common mistakes is using the entirety of a savings account, borrowing the difference and then being left with no reserve funds for emergencies. Take into consideration that there still may be unexpected costs after closing. If you drain your accounts, there is no cushion for you to fall back on and this can hurt you financially in the future.

Setting an Unrealistic Timeline

Being a smart home buyer is key, but being too cautious can lose you great opportunities. Keep an open mind, assess each opportunity carefully, but take action as soon as possible. An offer being submitted quickly helps ensure that you do not lose your chance to buy. Act fast and wisely. You do not have as much time as you think, especially in this shifting market, to submit an offer. Getting one to the seller as soon as possible will help the prospect of securing a contract.

Overlooking New Construction

There are diamonds in the rough when it comes to newly constructed homes. Builders will offer incentives to help entice home buyers, as well as energy-saving technology, safety features, wired networks and a home warranty. Don’t assume new construction is not an option for you. It might just surprise you, and get you that much closer to the home of your dreams.

Focusing on the Small Things

Aesthetics are important, but walking away from a deal over easily changeable things is unnecessary. Not compromising on smaller issues (like paint color, cracked plug-in plates or ugly door knobs) can cause you to bust out of your deal. Ultimately, it is worth more to accept the easily fixable things as your own responsibility. If a repair is necessary, ask for the funds upfront. Asking for the money to have the repairs done yourself gives the assurance that it will be up to your standard, and customizable. This will help keep the transaction running smoothly. Know what to compromise on; doorknobs are easy to change after the fact, load bearing walls and safety hazards are not.

Neglecting to Inspect

Get the home inspected. An certified inspector will see the problems within the house that you cannot, and making the purchase of the home contingent on a passed home inspection will add incentive for the seller to make repairs. It is important to have a guideline for the inspector on what to check for; this list should include overall foundation and plumbing, mold or pest infestations, heating and air conditioning, as well as the electrical systems. Having the inspection will reassure you that the home you are buying is comfortably habitable and that any repairs will be made with the least liability placed on you.

Rushing the Process

Keep in mind that the normal span of time to close is right around six months. Though, in the right conditions, it can take as little as thirty days. Many factors can change that amount of time it takes to close. For example, the type of market you are buying in, or what time of year the transaction takes place, can affect how long it takes to close. A shifting market can cause a longer time span, and a busier time of year (the summer months) can cause mortgage and title companies to be backed up. Prepare for the waiting period, and try to remain patient throughout the home buying process.

Not Considering Home Resale Value

When you are looking at houses, take into consideration what their resale value could be in the future, even if you do not plan to resell any time soon. It would be wise to consider the location, school district, and features of the home from a resale point of view. Purchasing a house that cannot be resold can hurt you financially. Shop houses responsibly, consider all factors (past, present, and future) and think of home buying as an investment.

Home buying process

Sellers should know the home buying process too!

Getting Too Attached

Buying your first home is exciting, and will come with a lot of high emotions. These emotions can make it hard for you to think objectively, and in turn, can cause you to lose negotiating power or recognize a bad deal. It is crucial to remain as impartial as you can, do not think of one house as the “be all, end all.” Making sure you are protected and clear-headed is just as important as purchasing a house you can see yourself living in for years.

This Month in Real Estate

May 10th, 2016

May 2016 Real Estate Market Update

Welcome to This Month in Real Estate for May 2016. Here are just a few of the national real estate numbers I’m tracking for you. According to the National Association of Realtors, the number of projected home sales rose to 5.3 million. And the national median home price for existing homes increased to $222,700. That’s up 5% from last month and up 5.7% from this same time last year. If you’re looking to sell, now might be a good time to enter the market. Finally, according to Freddie Mac, the national average for a 30 year fixed-rate mortgage is down from last month to 3.59%.

Not Just Another Real Estate Agent

April 22nd, 2016

I’m a Different Kind of Real Estate Agent!

I’m not Just Another Real Estate Agent

It’s NOT just a kitchen. It’s where friends and family gather. It’s NOT just a bathroom. It’s where worries come to vanish. It’s NOT just a bedroom. It’s a sanctuary from the outside world. And this is NOT just a house. It’s a testament to all your hard work. Understanding that real estate is more than four walls, that’s what makes me NOT just another real estate agent.

One-story lake front home for sale Richmond TX

April 11th, 2016

7803 Dunlap Field Ln Richmond TX – Lakemont

Home for sale Richmond TX on lake front lot with green space too!  GORGEOUS elevation, 3,525 SQ FT 4 BR 3 bath 1-story on very premium corner lot. Open split plan has over-sized study, big media or gameroom, very lg formal dining, neutral paint, architectural details, island kitchen, granite counters, snack bar w/spacious casual family dining. Big family room has stunning limestone gas fireplace. Attractive master w/separate shower, garden tub, split vanities & walk in closet. Generous room sizes & move-in ready. Enjoy the views now!  For more information click here.

4 Bedroom 2.5 bath home for sale Richmond TX

April 11th, 2016

7427 Bannon Field Ln Richmond TX – Lakemont

Home for sale Richmond TX.  Spacious 2,381 Sq Ft 2-story home has 4 BR 2.5 bath. Shows pride of ownership in Lakemont! Ideal home for singles or wanting a comfortable lifestyle. Beautiful laminate wood floors & gas fireplace. Large kitchen has big snack counter & convenient service to casual & large formal dining rooms. INCLUDES ALL appliances and home warranty! Large lot has room for a pool with room to spare. Location! Walking trails, lakes, pools, kids parks & easy access to Grand Pkwy & Westpark Toll.  For more information please click here.

Resale Certificates and Property Owners Associations

February 3rd, 2016

Resale certificates and why they are important

Resale certificates  are issued by property owner’s associations or home owner’s associations.  They can be a confusing topic for home buyers because the documents and their importance are not often discussed in real estate transactions.

Homeowner's Association Resale Certificates

Property Owner’s Association Resale Certificates

When a property is subject to mandatory membership in a property owner’s association, the resale certificate is a packet full of valuable information that can be provided to the buyer.  The resale certificate documents give the current status of the home’s property as it relates to the property owner’s association.  It can include but is not limited to the following:

  1. Covenants, Conditions & Restrictions (Rules and Bylaws).
  2. Violations of the restrictions identified in the bylaws or rules.
  3. A summary of health or housing code violations as of the date the resale certificate is prepared.
  4. The amount of the regular assessments and when those dues are to be paid.
  5. Special assessments that have been approved and are to be paid  after the resale certificate was prepared.
  6. The delinquent dues or special assessments not paid by the current owner.
  7. The property owner’s association approved operating budget and balance sheet.
  8. The property owner’s association’s approved capital expenditures for the current fiscal year and their capital expenditure reserves.
  9. All unsatisfied judgments against the property owner’s association.
  10. Disclosure of pending lawsuits and causes, including unpaid ad valor-em taxes of an individual member of the property owner’s association.
  11. Administrative transfer fees charged by the property owner’s association.
  12. The full contact information of the property owner’s property management company or agent.
  13. A statement as to whether the restrictions allow for foreclosure or a property owner’s association lien to be placed against the property for failure to pay assessments or dues.
  14. A statement, amount, and description of each transfer of ownership fee and to whom it is paid.

There is a lot of information contained in the Resale Certificate.  Buyers can request it through their real estate professional when an offer to purchase a property is submitted.  What party pays for it is negotiated between the buyer and seller before the contract is executed.

If the subdivision information becomes part of the purchase contract, the title company requires payment up front and they will request the resale certificate from the management company or agent of the property owner’s association.  There are some associations that require that a resale certificate  be provided to a new home owner whenever a property is transferred.