Changing Expectations In A Changing Market

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I Did Not Close Due to a Buried Propane Tank. Can I Get My Deposit Back?

BY PAUL ROGERS CTW Features

Q: Just two days prior to closing on the purchase of a residential property, my electrician and I were told by the seller, “Oh, by the way, that’s the cover for the buried propane tank.” The seller went on to tell us that the tank had not been in service since he purchased the home 12 years earlier and was not in use because it had been leaking. I requested that the seller have this tank removed at his expense, He refused and I did not close on the property. The seller is now refusing to sign the deposit release form. He believes that he is entitled to keep my $50,000 deposit. He is claiming that his unintentional failure to disclose this tank does not materially affect the value of the property and I should have closed. What do you think?

A: I think cooler heads should prevail. Unlike a buried oil tank, which may represent environmental worries, a propane tank is non-toxic.As Robert Baylor of the National Propane Tank Association explains, propane gas is “not harmful to soil and water. Because propane does not endanger the environment, the placement of propane tanks either above or below ground is not regulated by the Environmental Protection Agency.” If you want the tank removed, contact a local propane marketer.This is not a do-it-yourself job because the tank is heavy and may be connected to various pipes.When removed, the retailer should assure that all pipes are capped properly.A list of local propane marketers can be found at www.usepropane.com. In addition to dealing with the propane tank, you also need to either close the deal or get your deposit back. See a local attorney for specifics. Q: Imagine that you add a new roof to your home. The roof costs $10,000. Then you sell the home. Are you able to deduct the $10,000 from your taxable profit? A: In general terms, the cost of your new roof would be regarded as a capital improvement, something that extends the useful life of the property and increases its value. Once you sell the house you would add the cost of the new roof See ASK OUR BROKER, Page 2

Curiosity Key to a Thorough Inspection

Buyer’s market: Eager to negotiate and lower the sale price, homebuyers today are carrying more clout. Sellers with toohigh prices and unrealistic expectations are seeing their homes sit on the market for months rather than weeks.

Changing Expectations in a Changing Market BY CHARLES SCUTT CTW Features

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ob Dylan wrote “The Times They Are A-Changin’” in the early ‘60s, but the prophetic folk ditty is as timely now as it was then – especially when it comes to the housing market. Just one year ago, sellers seemed to be holding the cards and earning record profits on home sales. Fast forward to late 2006, however, and the tables have decidedly turned: Buyers apparently have all the leverage.The only problem is that, in many instances, sellers don’t seem to have fully realized this truism, say the experts. “Some sellers have higher

price expectations than are warranted, considering the shift in the market,” says Ron Roth, principal/co-founder of Premier Realty, Pasadena, Calif.“This adds to inventory and results in their homes taking longer to sell. Because of the surplus in inventory, buyers feel they have more time to make a decision and are asking for more concessions.” This time last year,“a seller was able to expect a fairly easy and short time on the market with a price close to their asking price, if not over,” says Elena Thurston, a family real estate specialist with Keller Williams Realty Legacy One, Gilbert,Ariz. “With the current market, sellers

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can now hope for one good offer. In our area, there are at least eight homes on the market for every buyer, which means a seller really has to work to make the sale.They can expect to have their home on the market four to six months, rather than weeks.” Back in 2005, buyers were anticipating paying full price and receiving no assistance with closing costs, says Sally Matthews, regional vice president for Coldwell Banker Residential Brokerage, Columbia, Md. Now, however,“buyers are expecting to negotiate and get the home for less. But some sell-

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HOME INSPECTORS, it can be assumed, are a naturally curious lot.Their job, after all, is to peek into a structure’s nooks and crannies and ferret out any evidence of flaws.Where did that water stain in the basement come from? How old is that roof and can it last another five years? Curiosity practically is a job requirement – and a trait homebuyers would do well to emulate during the inspection. In fact, the difference between an adequate home inspection and a great one results not simply from an inspector’s curiosity but through the inquisitiveness of the homebuyer, as well.Ask the right questions, and you won’t just help eliminate unwanted post-closing surprises but also learn invaluable information about your home and how to care for it. The questioning should start before you even hire an inspector. Few people realize that home inspecting generally is an unregulated profession. Some states do require a license, but licensing is a minimal qualification. “Licensing, in each state that’s adopted it, sets a bare minimum standard that practically everyone meets,” says Nick Gromicko, founder of the National Association of Certified Home Inspectors. When searching for an inspector, ask to see a license, but also his or her identification card issued by a reputable home inspection organization, such as NACHI or the American Society of Home Inspectors. Both organizations require extensive testing and continuing education to earn and maintain certification. (Web sites for each offer a search function for visitors to find a certified member by city or ZIP code.) In addition, ask about an

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CURIOSITY Make sure the inspector is working for you, not the realtor CONTINUED FROM PAGE 1 inspector’s background, find out how many inspections he or she’s conducted and request a résumé. “Any inspector worth his salt will be more than happy to tell you about his experience,” says Brian Paull, certified home inspector, Premier Inspection & Consulting,Verona, Wis.“I wouldn’t disqualify someone for being relatively new to inspecting, but I would prefer an inspector have some sort of construction background, rather than someone who used to work in office, wanted change of scenery, passed two tests and got a license. Seeing how a house is put together and seeing how the systems are put in behind the walls is more important than being able to answer questions on a test.” The answer to the next question may seem obvious, but ask the inspector for whom they are working.About 70 percent of home inspectors get virtually all their business through real estate agents, says Michael Del Greco, president,Accurate Inspections Inc.,West Paterson, N.J.And that sets up a potential conflict of interests. “If a home inspector tells you there’s a problem and that causes you not to buy a home, the realtor doesn’t get paid. Some

EXPECTATIONS Sellers need to be more selective CONTINUED FROM PAGE 1 ers have not changed their realistic pricing expectations according to the market,” she says. According to Thurston, for every month a seller does not realize his or her home is overpriced, they lose big money. Those who “live in denial that their home is truly worth what they think is might never get the home sold.Those who price it high so they can come down a little in negotiations will probably never get an offer to negotiate.The house that sells in this market is not only priced well but is prepared and marketed well, too,” she says. The shifting in the balance of power in home-sale negotiations from sellers to buyers also should urge sellers to be more selective about the agent they

home inspectors allow a business relationship or future referrals from realtors to influence what they say and how they say it,” Del Greco says.“If the home inspector in any way indicates the realtor is the client, run away.” Most importantly, you should feel a level of comfort talking to a prospective inspector – acknowledge that person is going to take the time to not only go through house and inspect it but also explain things to you. The questions continue during the inspection itself, which means it is imperative that you actually be physically present to get the full benefit. Inspectors say they receive the most questions about water and electricity.Ask if the electrical service is adequate.What makes it adequate? Enough amps to handle your major appliances. If you have two major electrical appliances, you need a minimum of 100 amps, three 125, four 150, says Del Greco. What counts as a major appliance? Almost anything that changes temperatures: a water heater, a clothes dryer, an air conditioner. And, sure, ask if there is any evidence of water in the basement. But a home inspection is more than verifying existing systems are functioning and the walls appear sound. It is your chance to ask an expert how the guts of your home work, where important valves and switches are located and how to make sure everything continues to function at peak levels. “An inspection is partially me evaluating the house and the other part educating the buyer on the building,” Paull says.“It’s impor-

choose to list their homes, says Rich Rector, president of Intero Real Estate Services, Scottsdale, Ariz. “Sellers are beginning to understand that pricing their home correctly is the difference between selling their property and being one of the thousands that will not,” Rector says. Buyers, on the other hand,“need to realize that, sure, prices may come down even more in X amount of time, but I can almost guarantee interest rates will not,”Thurston says.“Therefore, my advice is to get in while you can.The interest rate matters way more than the price of the house does.” In Thurston’s region, at least, prices haven’t dropped significantly, contrary to popular opinion.“But with more homes to choose from, buyers can expect to get more features for their money,” she says.“A buyer also can expect to start negotiations

tant to inspect but also to let buyers know things like how the sump pump operates and how to change the furnace filter.” Ask about drainage around the exterior, how to keep the basement dryer, how to prolong the useful life of roofing and siding, how to shut off the water and gas in case of emergency, how to configure high and low air returns to maximize energy use and keep bills low, even how to winterize. Keep in mind that a home inspector can’t see through walls, can’t see mold (barring any obvious signs) and certainly can’t see radon gas.They are likely to miss hidden damage from insects, rot and water, and construction defects unless obvious symptoms show.These are not part of standard home inspection. “The one question that I would ask a home inspector is,‘Do you think I need anything else inspected other than general home inspections?’” says Gromicko. The only questions off limits are those that revolve around personal choice.“Do not bother asking the inspector if you should buy the home, if the home is right for you, if the price is right,” says Del Greco. But almost anything else not only could be voiced, it should. “Even if you feel your question is too silly to ask, you should ask it anyway. Chances are someone before you either asked it already or asked a sillier one.”

$10,000 to $15,000 below asking price and end up around $5,000 less than the asking price, usually with a contribution from the seller.” While the present market may

To get the best deal possible, buyers and sellers need to rethink their strategy look gloomy for sellers, experts recommend that they keep things in proper perspective: Most sellers also are buyers themselves. So while you may have to accept less than your asking price on a listed home for sale, sellers can take advantage of greater bargaining power and a lower price tag on the home they will be relocating to. Additionally, Roth believes that the current housing climate

© CTW Features

can still be kind to sellers, thanks primarily to continued low interest rates,“which will generally attract several offers for a seller. The return to fairly normal inventory levels should not intimidate sellers. Buyers are still buying, but only at the right price. So long as the seller prices their home appropriately by listing at a fair market value, it’s still a great time to sell a home,” he says. Lastly, whether you’re a seller or buyer,“make sure you are working with an experienced, competent realtor who knows the inventory and has strong negotiating skills,” says Rector, who predicts that the country will see slightly decreasing home prices in the months to come. “Prices may continue to decline if we are constantly bombarded with ‘gloom and doom’ housing reports by the media,” Rector says.“However, the market will certainly shift back to a seller’s market eventually.”

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Ask Our Broker CONTINUED FROM PAGE 1

to the “adjusted basis” of the property.A higher adjusted basis will result in a lower profit. For specifics, see IRS Publication 523:“Selling Your Home,” and speak with a tax professional.

Q: We traveled overseas this summer and are now thinking of buying property outside the United States. Is this hard? Is this possible? A: The real issue here concerns the matter of where. Unlike the United States, in many countries foreign nationals (that means you) are not allowed to purchase real estate on the same basis as citizens. In Bermuda, as one example, real estate purchases by foreign nationals are restricted to a total of 2,000 acres.The idea is to assure that property is available for citizens. Local real estate brokers, according to the International Herald Tribune, actually have separate listings for citizens and foreigners, and the least expensive property available to outsiders this summer was priced at $1.4 million. In other parts of the world, you may have to buy through a trust, nominee or corporation, or you may need a land lease that lasts 99 years.Also, the selling, bargaining and financing process may be entirely different than in the U.S. No less important, wherever you look, be aware that in many countries property ownership is a sensitive topic often related to complex national histories.There may be restrictions based on race, nationality and religion. If this seems weird, remember that such restrictions can still be found in older deeds in the U.S. – where, at least, such covenants are no longer enforceable. For specifics, contact the commercial counselor with the appropriate embassy. Get the name of an attorney who can represent your interests overseas – and be sure you have a local (U.S.) attorney. Look for a real estate broker who is qualified as a Certified International Property Specialist.

Q: Who owns a shared driveway? A: A survey will probably show that the property line divides the driveway, perhaps not equally, but at least enough for the driveway to be located on both properties physically. However, owning part of a driveway may be useless and impractical.What both parties likely have is a long-time “easement by prescription” that “runs with the land” and assures access to both owners. Such an easement continues when a home is sold, should be fully disclosed when a home is marketed and cannot be ended by one party or the other. © CTW Features Need real estate advice? Peter G. Miller, author of “The CommonSense Mortgage,” would love to hear from you. Send your questions to [email protected].