Jennifer LeBow

Buyers and sellers should ask about furnishings

September 29, 2023 by Jennifer LeBow Leave a Comment

Home buyers and sellers can negotiate furniture — Home buyers may want some of the sellers’ furniture and home sellers may have certain things they are not planning to take with them–a conversation about it can create a win-win!

One of the missed opportunities in home sale transactions is related to furnishings. Buyers, especially if it’s their first home or they are moving from somewhere smaller, often need more furniture than they have. Similarly, sellers may be downsizing or moving somewhere where new furniture is planned. They might love the chance to leave behind some larger items instead of paying to get rid of them.

How can buyers find out if sellers might be willing to leave (for free or a “used” price) certain pieces behind? How can sellers discover whether the buyers might be interested in having any of their no-longer-wanted items? ASK!! That’s right. Just request that your agent ask the other agent. My advice is to start out simply: just find out if the other party is interested. Then you can iron out details as far as prices. I recommend that you address this issue after any inspections or appraisal adjustments have been negotiated.

Sellers, please note: you must have the buyers’ permission to leave things. You can’t just decide that the old basement in the sofa or the pool table are too much of a hassle to move and just leave them. Remember, unless otherwise agreed to, anything not attached to the house is considered personal property and you are contractually obligated to remove it.

Buyers, please note: anything that you and seller agree to have stay with the house is going to be in “as-is” condition. So be prepared that there might be some scratches or dents.

So whether you are the seller or the buyer in a home sale transaction, don’t be shy! If there are things you would like to leave behind or things you would love to “inherit”, be sure to ask. What’s the worst that happens? The other party says no. But if they say yes…..it’s a win-win.

Why sellers hate inspection-contingent offers

September 24, 2023 by Jennifer LeBow Leave a Comment

Relocating to Philadelphia's Main Line — To present the most compelling offer to the home seller, while keeping your risk at a level you can tolerate, you need to understand the role of an inspection contingency.

If you are in a competitive bid situation, your agent will probably discuss the option of waiving the home inspection. Most buyers are not comfortable agreeing to purchase a property without one. However, in our current market, if sellers have offers without an inspection contingency, they are much more likely to choose one of them. The the obvious reason is that the buyer could try to negotiate repairs or a credit or reduction in price, leaving the seller with more headache and lower net proceeds than expected based on the original offer. As a way to combat that worry, many buyers are adding language like, “Buyer to absorb up to first $15,000 worth of items discovered through inspections”. While thiat kind of caveat does, indeed, lessen the risk to the seller, it certainly doesn’t eliminate it.

The part of the picture that buyers often don’t focus enough on is the risk the seller faces of the deal falling through (versus just having a reduction in net proceeds in the event of a negotiation resulting from inspection issues). Remember that the home inspection contingency on a PA contract says that, if the buyer is not “satisfied” with the inspection, she can terminate with return of deposit monies. Here’s why, especially in this market with lots of multiple bid situations, this ability for the buyer to get out of the transaction is such a big deal:

Consider a buyer who has been looking for a house for a year, has lost out on five bids and is feeling desperate. She puts a bid on a house that is higher than the others. It has an inspection contingency, but reflects the buyer absorbing the first $20,000 worth of issues. Unless she specifically relinquishes her right to terminate based on the “not satisfied” line in the contract, she could still back out. And here’s the part that most buyers don’t think about–why would that buyer want to back out? Remember how desperate she was because she’d been looking for so long? What if she realizes, after she wins the bid, that the house is ok, but far from perfect. She can still be looking at new properties that come on the market during her inspection periond and if she finds one she likes better, she may choose to terminate based on the inspection contingency language.

That scenario is what many sellers cite as the main reason they don’t want an offer with an inspection contingency–because if the deal falls apart, its is rare that the seller can find someone who will pay what some of the competing bids were when it first went under contract. People attach a stigma to a property that has gone under contract, had inspections and then goes back on the market. All of a sudden, its value is reduced in the opinion of the buying public. Sure, the listing agent would go back to the buyer agents who’d submitted the other offers, but some of those buyers may have since found something else and the ones that haven’t might well not offer as high a price.

So, if you are a buyer writing an offer for a property, carefully consider the risk/reward balance of including an inspection contingency. First, consider how likely the property is to have major issues (is it old? does it seem like it may not have had regular maintenance?). Then consider things from the seller’s perspective. How much risk does the structure of your offer put on the seller? It boils down to how badly you want the property and just how much risk you are willing to take to present an offer the seller will choose.

If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! jen@jenniferlebow.com/610 308-5973

What do (and don’t) home inspectors look for?

September 15, 2023 by Jennifer LeBow Leave a Comment

What does a home inspection cover — What does (and doesn’t) a home inspector examine?

If you are considering buying a home, you’ve definitely heard the term “home inspection”. But do you understand what, exactly, a home inspector does? What is he looking for? What doesn’t “count”?

Inspectors are required to look for safety hazards (like a shaky handrail or an unsturdy deck) and material defects. Material defects are system failures like an air conditioning unit that doesn’t get as cold as it should, a leaking pipe, incorrectly wired electrical, etc.

They look at the exterior of the house to be sure the sheathing (stone, brick, siding, stucco) is in good repair, that the roof is not worn out and that, for example, there are no tree limbs overhanging the roof. They look at basements and attics to determine quality of insulation, air flow and whether there’s any water penetration. These areas also provide information about the structural integrity of the house. They look at the electrical and plumbing systems, check appliances, make sure doors and windows operate and lock as they are meant to, etc.

What does NOT fall under the scope of an inspection is cosmetic items. Stains on rugs, old countertops, dated bathroom fixtures, peeling wallpaper–these issues don’t compromise the safety of the house, nor translate to a system working incorrectly.

It’s easier to be prepared to read a home inspection report if you understand what the inspector is and isn’t examining.

Home inspectors don’t provide cost estimates for everything

September 7, 2023 by Jennifer LeBow Leave a Comment

Home inspectors' cost estimates — What do you do when the inspector doesn’t provide a cost estimate for something?

While fewer home buyers have been making offers contingent on home inspections during the last few years, we are starting to see more contracts accepted that do have those contingencies. Obviously, it is better for the buyer to know what problems there are with the house, in order to decide whether to stay in the transaction (and potentially negotiate a credit or have repairs done) or terminate and have deposit monies returned. Clearly, the purpose of the inspection is to identify safety concerns and material defects, and, specifically, to put a price tag on those repairs. Buyers want that information so they can determine whether it makes sense to walk away or renegotiate a purchase price that reflects the costs involved.

You might expect that the inspector will provide a cost estimate for every defect he finds. While many inspection companies do provide ranges for many repair items (and some don’t provide any estimates at all!), there are almost always a few that say “Contact qualified contractor.” This comment is found when an inspector is unable to determine exactly what the fix should be and/or what it might cost. For example, when there is a lot of wood rot around windows all over the house, the inspector wont’ necessarily know if windows actually need to be replaced or if it’s just some carpentry work, and may not be able to estimate the repair cost. If there’s a pipe that is leaking into the ceiling from an upstairs bathroom, many inspectors aren’t comfortable quoting an amount because they don’t know how much work will need to be made to the bathroom floor once the pipe under it is fixed. Sometimes, a specialist is needed to diagnose the problem and outline a solution and its cost. So, why should you care?

You should care because if you need to estimate how much the repair is going to cost, and if you are going to request a credit for it from the seller, you’ll need to have a number. Theoretically, you can have a contractor (electrician/plumber/roofer, etc.) come in and give you a quote, but time constraints surrounding contracts often make that route impossible. Then you need to ask permission from the seller to extend the inspection period and it’s not a foregone conclusion that a seller will grant it.

(As an aside, there is also the option of asking the seller to repair something. That way, the buyer is less concerned about the actual cost of the work, as she won’t be paying for it. However, in that case, the seller usually won’t agree to fix something until he has gotten an estimate, so that path doesn’t eliminate the problem. For more on whether you should ask for a credit vs. asking the seller to make repairs, click here.)

While I’d like to be able to present a solution to this problem, I can’t. The purpose of this post is simply to alert buyers, so that it doesn’t come as a surprise. Some agents have contractors they work with frequently who are willing to provide estimates based on seeing a copy of the report, which can be a good option. Regardless, you should discuss the strategy for dealing with this issue with your agent if you are planning on having a home inspection.

Fudgy Brownie Recipe

September 6, 2023 by Jennifer LeBow Leave a Comment

Dense, fudgy brownies

Preheat to 350 degrees.

Line a 10 x 15 pan with foil (sprayed with Pam) that hangs over the short edges (so you can lift them out to cut once cool).

If you don’t have a 10 x 15 pan, ¾ the recipe and use a 9 x 13.

I never eat these fresh; once I cut them, I put them in the freezer and like them right out of there. Super dense and fudgy.

Melt over very low flame, stirring continuously til smooth:

2 1/4 sticks unsalted (18T) butter

3 cups semi sweet chocolate chips

1 1/2 cups sugar

3/4 cup brown sugar

Pour into stand mixture and allow to cool a few minutes.

In separate bowl, mix just til combined (if overbeaten, the brownie top will be crispy and separate) 5 eggs and 1 yolk. Add to cooled chocolate mixture and mix only enough to combine.

Add and mix only til combined:

1 cup flour, sifted

5 T unsweetened cocoa, sifted

1/4 t salt

Add and mix only til combined:

2 T vanilla

1 t coffee extract (optional)

Pour batter into prepared pan and let rest on counter 30 minutes.

Bake on 350 around 30 minutes.

Cool at room temperature for 30 minutes, then put the pan into the fridge. After about 4 hours, they should be cool enough to cut. I put them directly in the freezer.

What must sellers disclose?

August 23, 2023 by Jennifer LeBow Leave a Comment

What does a home seller have to disclose to a buyer? — Both buyers and sellers often need clarification on exactly what is and isn’t required to be disclosed.

Whether you are selling a home or buying one, there are often questions about what the seller is required to disclose. In Pennsylvania, we have an 11 page form that asks about the roof, plumbing, HVAC, whether there’s been water in the basement, shifting in the foundation, and lots of other specifics. The overriding theme is that the seller must disclose material defects. Those are defined as issues with the property that significantly affect its value or pose a safety risk to someone living there.

Many times, when I provide this explanation, I am asked questions like, “Do I have to disclose if someone died here?” The answer is no, not in PA. Our rules for what needs to be disclosed are based on problems that could potentially be assigned a dollar value to rectify. So things like a leaking roof, unsafe wiring or rotted window frame fall into that category. A neighbor with a dog that bark a lot or being in the path of the news traffic helicopters don’t.

Here is a scenario that comes up fairly often and also tends to cause confusion: Let’s say your property goes under contract and the buyers have an inspection done and then terminate. If you receive a copy of that inspeciton, you are required to update the disclosure to reflect any problems discovered by the inspector. Alternatively, you can provide a copy of the report to all interested buyers. (As a side note, sellers often fix some of the problems and then provide a copy of the report with notations on repairs that have been made,)

While it’s understandable that some sellers are reluctant to disclose defects (even though they are required by law to do so), keep in mind that disclosure has a benefit to the seller. Remember that a buyer’s offer includes a signed copy of the disclosure. Any problems that are disclosed are, in theory “off the table” as far as a buyer asking for a credit for them after they are noted by an inspector. The seller has a strong argument by saying, “But you knew about that when you made your offer since it was disclosed; the understanding is that your offer reflected your awareness of that problem.”

A final point about disclosure: as much as it might make a seller squirm to list a bunch of “problems” with a house he’s trying to make appealing to buyers, it can protect him in the long run. Consider that the more a seller discloses, the less the likelihood that a buyer will come back after the sale and accuse the seller of knowingly hiding something. These situations can quickly turn into lawsuits which are not only costly, but extremely stressful. So, as we say in the industry, disclose, disclose, disclose.

Getting rid of mortgage insurance sooner rather than later

August 2, 2023 by Jennifer LeBow Leave a Comment

How to eliminate your PMI — If you have mortgage insurance (PMI or MIP), you may be able to stop paying it sooner than you think. Here’s how.

If you put less than 20% down when you purchased your home, you most likely had to pay (and may still be paying) mortgage insurance. Traditionally known as PMI (private mortgage insurance), it is often now called MIP (mortgage insurance premium). Either way, it’s an extra fee that provides the lender with some insurance against what is seen as a more risky investment–they are on the hook for a larger percentage of the home’s value than if you’d put down 20% or more. If you default on the loan, they run a higher risk of not covering their investment with a sale (particularly if the market declines).

So that’s what mortgage insurance is and why lenders use it. With conventional loans, the insurance disappears once you’ve paid off enough of the loan to leave the bank owning just under 80% of the initial purchase price (usually it’s about 78%, just so they have a cushion). In most cases, this “roll off” of insurance happens automatically once your equity reaches around 22%.

HOWEVER, if the value of your home has significantly increased since you bought it, it’s quite likely that its current value is appreciably more than you paid for it. In that scenario, the bank’s investment would be more than covered, even if you defaulted tomorrow, which is the entire premise of why the insurance is charged in the first place. Most lenders will agree to remove the PMI/MIP if you can demonstrate, through an appraisal, that the value of your house more than covers the bank’s exposure. The appraisal will cost about $500. If you suspect your home value would mean the bank’s existing investment is now less than 78% of the home’s current market value, that insurance could disappear.

To determine whether it makes sense to have an appraisal, first check with your lender what their requirements are to have the insurance removed. Second, ask when, according to the bank’s existing schedule, they expect your insurance to go away. If it’s a only a few more payments, it might make sense not to bother with an appraisal. It could, though, save you a lot of money, depending on the amount of the insurance and for how many more payments it’s expected to be attached to your monthly bill.