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Waiving inspections

May 18, 2021 by Jennifer LeBow Leave a Comment

Relocation to Philadelphia's Main Line — In a competitive real estate market, should you waive the home inspections to get the house?

In today’s extremely competitive real estate market, many buyers who are successfully winning bidding wars for houses have opted to waive inspections. Should you or shouldn’t you? There is no easy answer. On one hand, remember that you are buying a used house (like a used car) and you shouldn’t expect every hinge to be tightened and perfect baseboards with no signs of wear. What you should be concerned about are safety issues (like unsafe stairs or a heater that is building up carbon monoxide) or material defects (like a roof that leaks, electrical problems or a leaking plumbing waste pipe).

To state the obvious, there is a substantial risk to buying a house and forgoing the professional home inspection. There are, however, some circumstances in which you might consider it.

If you or someone you know (and can bring through the house) is knowledgeable about construction, systems and other things a home inspector would examine
If the home seller has had a pre-listing inspection report done and is willing to share it. Then you can see what the issues are and what the seller will or won’t address.
If you have the time and receive permission to get an inspector to do an inspection PRIOR to submitting an offer. That way, your offer reflects whatever issues are discovered and you can plan accordingly.
If it’s new construction, in which case you almost always have a year to make a punch list of items for the builder to rectify. You might, in that case, choose to have an inspection done once you’ve moved in, in the event there are things you might not notice.
If you plan on doing a major renovation, in which case you’ll be redoing the roof and electrical, plumbing, etc. Since you’ll be replacing a lot of those systems, their current state is relatively unimportant.
If the risk-reward equation justifies waiving them. If your worst-case scenario of what you could discovered balanced against the possibility of losing the house to a better offer is manageable, you might choose to skip inspections.

The discussion above applies to the traditional home inspection. When it comes to termite inspections, septic, well or stucco inspections, those need to be evaluated individually. Significant termite damage can affect the structural integrity of the house, so you might want to consider inspecting for wood-boring insects. Septic systems can be upwards of $30,000 to replace, so that’s another inspection you should think carefully about before waiving it. Stucco, too, can be a tremendously expensive repair, if it has failed. You may have to replace doors and windows in addition to the stucco, so consider the potential cost of remediation compared with how much you want the house if you are opting out of a stucco inspection.

If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag

This market is not a bubble

May 8, 2021 by Jennifer LeBow Leave a Comment

When will this bubble burst?

The most common question buyers ask me about the current real estate market is “When is this bubble going to burst?” They want to know when the intense competition for houses and over-asking, non-contingent offers is going to abate. And even though I’m not trying to buy a house at the moment, I can tell you it’s no fun having to call buyers who have put a seriously competitive offer on a house only to tell them that the seller chose another one. We are all wondering how long this situation will continue. The unwelcome news (unless you’re a seller who doesn’t have to buy another property) is: no time soon.

How is it different than last time?

So how is this market different than the one that preceded the 2008 crash? First of all, the factors driving the increase in prices are markedly different. Then, mortgages were so easy to get, you barely had to have an income to qualify. Now, lenders are much stricter about whom they qualify. Even the type of loans are different. Back then, roughly 35% of mortgages were adjustable rate loans. Often, when those rates adjusted, borrowers were ill-prepared for appreciably higher payments and defaulted. Now, less than 2.5% of new mortgages are adjustable.

Why is there no inventory?

Second, and probably most important, there was more inventory then. In 2007, there were plenty of homes available, which negatively affected value and contributed to tumbling prices. We have been experiencing a housing shortage consistently for the last six years or so. New home construction, which has been lagging behind demand for several years, has been incredibly hard hit by COVID. The delay in supply change and labor shortages due to the virus has made the build time almost double. And unless you’ve been living under a rock, you’ve probably heard how building supply costs have skyrocketed during COVID, further reducing the availability of new homes.

Why is there so much demand?

Along with the reduction in supply, we are now seeing increased demand. Now, with incredibly low mortgage rates, people who might not have otherwise been in the market are actively looking for houses. Additionally, the (substantially large) millennial cohort is buying at an earlier age and with more cash in savings. The impact of such a large group entering the market sooner and with more money is significant. Of course, we can’t forget how COVID has spurred an exodus from expensive cities as people no longer have to live where they work. Wanting a lower cost of living, more interior and exterior space, many people are making lifestyle changes beginning with a move. The demand for suburban homes has increased sharply.

Don’t expect a crash

No one can predict with certainty when the market will come back into balance. However, the most basic principles of supply and demand indicate that it won’t be in the immediate future. An analysis of situation and the contributing factors illustrates how different our current market is than just before the crash in 2008. That artificially high market was a bubble and it did, indeed, burst. What we are seeing now, though, is no bubble. In the next couple of years, as supply and demand realign, we should start to see a reduction in the intense level of competition, but it is unlikely prices will fall drastically. For a recap/summary, click here.

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

Understanding listing prices in this real estate market

March 26, 2021 by Jennifer LeBow Leave a Comment

Main Line relocation home prices — Making sense of today’s list prices isn’t easy. Learn why they are so high and how it affects buying strategy.

High listing prices

If you are shopping for a home today, you’ll notice that the listing prices seem high–that’s because they are. Understand why. It’s the simplest reason: supply and demand. Why the supply is so limited and the demand is so high is beyond the scope of this post but to read more on that, click here as well as here. For statistics on this market, click here.

Should I expect to pay list price?

In most markets, most of the time, sellers list their homes and expect to receive offers slightly below their asking price. Today, unless a property is not attractive to buyers (regardless of the price), that scenario is exceptionally rare. Now, almost every desirable property is purchased at a much higher price. One article suggested that you look at the list price like an auction reserve price: the lowest the seller will go, but not what he expects to get. How high should you go? Click here.

What else besides offer price matters?

In low supply markets today (which is most of the country), the offers sellers are choosing are not only often the highest purchase price, but the ones with the fewest contingencies. People are waiving inspection contingencies. Be aware that choosing to waive inspections may mean that you discover problems once you own the house that require expensive repairs. Many winning offers are also waiving appraisal contingencies.

Why the appraisal is so important

Remember that your lender will only lend a percentage of appraised value. When a property appraises for less than the purchase price, the loan amount decreases. That situation leaves a gap between the amount you were planning to spend as a down payment (for example, 20% of purchase price) and the amount you’ll have to add in to make up for the reduced amount of mortgage money.

While the agreement of sale provides the right for buyers to terminate in the event of a low appraisal (to avoid this potential unpredictable out-of-pocket expense), sellers these days are looking for, and getting, offers that waive this appraisal contingency.

The non-obvious negative of a high offer

Obviously, if you agree to pay above the asking price, you are spending more on your down payment and more on your mortgage than you would have at list price. However, there are significant financial implications beyond that one. Beware the appraisal trap.

Recognize that the appraisal trap issue should be resolved in another few months once properties that are selling now at inflated numbers settle and are recorded. Then those properties will raise the bar as far as appraisal values on new properties. Once the appraisals catch up, there shouldn’t be such a gap between purchase prices and appraised values which means the additional out of pocket cash expense will decrease.

Structure your offer carefully

List prices in many markets are up to 10% higher than they were a year ago, and are selling for higher than list in many cases. If you are considering making an offer on a property at this volatile time, do so from an educated position. If you understand why the prices have increased so steeply (reduced supply and increased demand), you can better predict what kind of offers are winning these properties and use that information to decide upon your own offer strategy.

Jen LeBow’s Candied Nut Recipe

March 8, 2021 by Jennifer LeBow Leave a Comment

Jen LeBow’s Candied Nuts

In a large frying pan, bring to a boil over medium high heat:

½ cup water (or just a tad less)

3/8 cup sugar

Add and stir constantly until water is almost entirely gone (5 minutes):

4 cups pecans/almonds/walnuts

Add and stir about 2 minutes:

1 T cinnamon

½ t salt

Pour out onto large cookie sheet and cool entirely before storing in air-tight container.

Not selling your home? Be prepared, just in case…..

February 15, 2021 by Jennifer LeBow Leave a Comment

selling a house Main Line — Even if you have no intention of selling your house, it’s good to be prepared for the unexpected.

You’re not selling your home

Congratulations! You are happy in your home and not planning on making a move. I don’t blame you; moving can be a hassle. That said, we all know (hello COVID?) that we can’t predict the future and, sometimes, the best laid plans change. As the Boy Scouts say: Be Prepared.

Preparing to sell when you aren’t selling

Obviously, my advice in this circumstance will stick to no-cost or very, very low-cost activities. Outside of the normal maintenance or remodeling you would do for your own benefit, under the assumption of remaining in your home, you don’t want to spend money on an unlikely eventuality of selling. I get it. So what can/should you do?

Take pictures of your yard at its best.

Got a pool? Take pictures of it when it’s open (and clean!) during the warmer months.
If you have any flowering trees, shrubs or perennials, photograph your property when they are in bloom. Be sure to take some shots of what the home looks like from the curb, too. Landscaping can make all the difference in a buyer’s first impression, so, even if it won’t look like that if you end up listing in January, at least a buyer can see the potential.
Patio? Deck? Porch? You won’t see them under a blanket of snow, so take some shots when those outdoor entertaining spaces are looking good.
Outdoor kitchens are very popular–if you have one, make sure you have the pictures to prove it!
Gazebos or any other outdoor structures can elevate the backyard into an oasis and differentiate it from other properties. Snap some pictures when the weather allows you to show them off to their best advantage.

Keep track of repairs

Buyers are interested in knowing how systems (like heaters and air conditioning ) have been maintained and when they were installed. They feel more confident that the home has been well-cared for when the seller can provide documentation. So if you replace your roof, keep the receipts. If you upgrade the electric service, don’t lose the paperwork. If you do ever list your house, I recommend you prepare a sheet listing the improvements/repairs along with the dates and the cost. (When you can demonstrate how much you’ve spent, it can help justify your list price.)

Clean out your closets

Whether you’re selling or not, it’s wise to clean out your closets every so often. First of all, you discover things you might want to wear or use that you’d forgotten about. Second, by giving things away, you clear out space which makes it easier to find things, opens up additional storage and (in the event you do decide to sell) makes the closets neater. Finally, giving things away that you no longer use is always a good thing to do. Someone else will be very glad to have those items.

Keep a home repair list

Disclaimer: I’m not saying you have to address any of the things on the list. However, it’s not a bad plan to have a running list of repairs or “areas of concern” in your house and on your property. Your home is an asset, but will lose value if not maintained. So this list is not just for the eventuality of a move. Once you identify the potential projects, you can determine where (if anywhere) you want to put your money and effort. Making a list of them may also help you budget for repairs so you aren’t blindsided with lots of things that break at the same time. Noting when systems (roof, windows, appliances, heat, a/c, etc.) are nearing the end of their useful life spans can reduce unpleasant surprises.

So plan to stay put!

As I said at the beginning of this post, planning to remain in your home is a wonderful thing. Being prepared for unexpected (and often uncontrollable) changes in the plan is also smart. The good news is that you can do both at the same time. So, plan to stay; prepare to sell.

Expiration date on an offer to buy a house

February 4, 2021 by Jennifer LeBow Leave a Comment

relocation home purchase in philadelphia main line — What does the expiration date mean on an offer to buy a house?

What is the expiration date?

When I write an offer for a home purchase, one of the required fields is the expiration of that offer. While I am all for buyers who trust their agents and defer to their expertise, I also believe that agents need to be sure their buyers understand what they are signing. As with many details of the offer, some agents don’t bother to discuss the expiration date with their buyers. Therefore, they don’t know what it means, nor how it can be used strategically. I want to change all that!

What does it mean?

The expiration date determines the time/date at which the offer, if signed exactly “as-is” by the seller, no longer binds the buyer. When a buyer submits an offer, he signs it. If the seller accepts it with no changes and signs it before it has expired, the contract is executed and is binding. If the seller signs it after it has expired, while the buyer can choose to honor it, he is not required to.

Why is the expiration date important?

Consider this scenario: you put on offer in on a house and the seller doesn’t respond immediately (maybe he is waiting for a better offer). Meanwhile, you tour another property and decide you like that one better. If you write and offer and it is accepted, what happens to that original offer? If it has expired, you have nothing to worry about. If, though, it has not expired and the seller has signed it, you are contractually obligated to follow through on that purchase. If both sellers sign offers before they expire, you’ve gotten yourself into quite a pickle. (Yes, there are ways to “get out of the deal”, but that’s a separate topic).

Aside from the legality issue, most buyers are not emotionally prepared to pursue a second property until they know whether the first one might work out. So having no expiration date leaves the possibility of a deal hanging in the air with no specified time frame. While a buyer and seller can negotiate a contract after the expiration date, defining that date allows a buyer to know when he can refocus on another property without still being entwined with the first one.

How can the expiration date be used strategically?

Does the expression “A bird in the hand is worth two in the bush” sound familiar? It can be applicable to a home purchase. This concept only applies if you submit a strong offer. The idea is to pressure the seller to accept it before it expires. If it’s a good offer, if he waits until after it’s expired to accept it (because he’s hoping to get better offers), you might not honor it. Sometimes, sellers are confident they will receive similar offers from other buyers or that you will honor your offer, even if it is not accepted before it technically expires. Others subscribe to the school of “bird in the hand”.

Choose an expiration date consciously

Any offer for a home is a long document with lots of blanks to fill in–the price, settlement date, amount of deposits, inspections contingencies–and they all have at least some effect on how attractive the offer is to the seller. The expiration date is no different. An offer that allows him a week to respond is very appealing! He can wait to get other offer and if nothing better comes along, he signs your offer without worrying you’ll have moved on or will no longer offer as much. However, if your expiration date requires a response in 24 hours, he now has to decide if he wants to risk losing you as a buyer by not replying within that time frame. You can only use the expiration date strategically if you understand what it means to both buyer and seller.

Home Search Criteria for Main Line Philadelphia

December 22, 2020 by Jennifer LeBow Leave a Comment

Choosing search criteria for a suburban Philadelphia homes has some unique challenges. Learn what they are and how to design a search that will yield the best results.

Looking for a home on Philadelphia’s Main Line?

So you’re moving to the Philadelphia suburbs and are ready to start an online home search. Sounds pretty straightforward, right? Wrong. Most people would identify towns of interest based on location, type and cost of housing, lifestyle and school district. Then, they would enter other criteria (budget, number of bedrooms and bathrooms and maybe lot size, etc.) along with the town names and, voila! A useful search is born! Or so you’d think…

Why a Main Line home search can be challenging

The reason that this approach doesn’t always yield the desired results is mostly due to the fact that Main Line towns don’t play by normal rules. Here’s what I mean: in most cases, if you live in a certain town, you know which school district your kids will attend. You have a pretty good idea of what the taxes on a property of a certain price will be.

However, many of our towns cross county lines and school district boundaries. For example, you could live in Wayne, PA and reside in Montgomery County. Or Delaware County. Or Chester County. And your school district could be Upper Merion, Radnor or Tredyffrin-Easttown. Your taxes could vary wildly, depending on exactly which township your house were located in. Finally, we have inconsistencies in our tax records that assign town names to properties that are not actual town names. Therefore. when you try to search for those towns (like Radnor or St. Davids), you get no results.

How can you focus your home search?

Confusing? Yup. So how can you be sure you’re using the wisest search parameters? Well, the easiest answer is: find a great real estate agent who will design a search for you that will limit the number of “no way” options while not filtering out all reasonable possibilities. If you are not ready to do that yet, I’d advise you to use zip codes instead of town names and, if school district matter to you, be sure to include that as a criteria. Most search engines don’t allow for that from a public-facing site, though Compass’s does.

If you don’t want to designate specific zip codes, you can also use the map drawing option to create a customized geographical boundary. Some people like to choose a location (like a work address) and click the button showing properties located within a specific distance radius of that point. Consider total square footage and lot size if those are important. You can also select whether there are attached garages or central air. You can even select home styles (or types to avoid, like split levels or ranches). My recommendation is to not be overly-restrictive when you begin; you can always tighten or tweak criteria, but you want to avoid filtering out properties that could actually work, even if they’d need some creative thinking.

Ask an expert for help

Remember that buying a house is a huge financial investment. It is also important to recognize that making a mistake as far as location, neighborhood or the house and property itself can have far-reaching negative consequences. I mentioned earlier that you would be wise to engage an agent as early as possible in the process. Going it alone would be like writing a will without consulting a lawyer. And while lawyers charge a fee, buyer agents (at least in Pennsylvania) do not, so you have nothing to lose. Please talk to a seasoned professional!

Sometimes, you have a set of parameters in your head based on the knowledge you have–but that knowledge may be incomplete. As a result, you may discover that the criteria you’re using is not likely to generate search results that show you your best options. Talk to an agent about your priorities and what is important to you. Then allow that person to ask you some questions which often leads to a revising of your original set of requirements. Happy house hunting!

Home Buyers: Focus on Practical not Perfect

December 13, 2020 by Jennifer LeBow Leave a Comment

Philadelphia Main Line relocation home buying — Thinking about buying a home? Here’s what you should consider.

Pondering a Purchase? Be Properly Prepared:

Look for a Property that is Practical, not Perfect

While there is absolutely nothing wrong with making a list of all the features your dream home would have, it’s important to keep in mind that finding a property that checks every box on that list is extremely unlikely. My advice is to approach house hunting from a practical perspective and look for something that meets your needs as opposed to waiting to find a perfect property (which probably doesn’t exist). PLEASE NOTE: I am not proposing that you use only tangible criteria to make a home buying decision. I’m a firm believer in balancing quanitifiables (layout, number of bedrooms, yard size, location) with the visceral “Yeah, I think this could definitely feel like home to me” response. You need to be able to envision a potential purchase as a place you could genuinely feel comfortable and “see” yourself in. Just try not to look for perfection.

There is no perfect house

Even when people build their own houses, they usually make some compromises. Maybe the lot isn’t exactly what they would have chosen, the location is not in their favorite neighborhood or the lovely porch they wanted cuts down the amount of natural light in the living room. I always tell my clients: there is no house/property that has everything you want and nothing you don’t. Figure out what you non-negotiables are (number of bedrooms, first floor home office, air-conditioning) but consider whether any of them might have work-arounds. For example, you don’t want a pool? You could fill one in. Have to have a garage? Maybe you can build one. Something like school district or not being on a busy road are more cut and dried requirements.

Are you being unrealistic?

While some people buy the first house they see and some people look for the perfect home for 10 years or more, the majority of people search for around 30-90 days. I you’ve been looking for a year and feel that nothing you’ve seen could be a good fit, you may be being too picky. If you are willing to be patient and wait until something “just right” comes along, there is no rule that says you can’t. Just understand that while you might find a needle in a haystack, it’s more likely you will not.

There is no “right house”

Buyers often refer to the (fictional) “right” house. They declare lots of properties “not the right one”. While, certainly, many may not be good matches, I caution you against believing there is a single perfect “right” house. Why? Because it implies all the other options are “wrong”. In theory, there should be a number of available properties which could suit you. You might need to change some paint, refinish the floors and eventually update the kitchen. However, if you could see yourself living there and the house meets the criteria you’ve defined as “must haves”, don’t be too quick to put it in the discard pile, especially if you’ve been looking for a while.

House vs. home

As hokey as it may sound, don’t lose sight of the difference between a house and a home. Again, of course, the house and property must meet your needs and be a place your family can live comfortably. It needs to have the characteristics you’ve determined are important to you. Remember, though, what makes a house a home is your own personal stamp. Home is much more than the physical structure of any house. So if it has a few quirks here and there, decide how much they really matter, if everything else seems to fit the bill.