Home inspections: tips that buyers NEED to know! (edit/delete)

Home Inspection Tips

Home Inspections can feel very overwhelming for buyers and my job is to help ease the process by providing an explanation of expectations in order to avoid surprises.

First thing’s first: what to expect with your home inspection

What does a home inspection actually entail and/or what does the home inspector do?

- A visual inspection primarily focused on safety and functionality issues
- An inspection of every major system of your home including the following:

• Structure – foundation, water penetration, cracks, basement
• Exterior – facings, trim, windows, gutters, driveways, sidewalks, decks, patios, balconies
• Roof – covering, structure, flashings, vents
• Chimneys – chase, lining, caps
• Electrical – main box, sub-panels, outlets, switches
• HVAC – furnace, A/C
• Water Heater – tank, drafting
• Plumbing – visible piping, leaks
• Attic – rafters, insulation, vents, ventilation
• Interior – walls, ceilings, floors, windows, appliances

What does that mean for the buyer?

Every home inspection will be different but one thing I tell all of my clients is that every home will have minor issues at the very least.  Things you really want to look out for in an inspection report are major safety concerns or major problems that will cost huge amounts of money to repair.  In Chicago, the purchase contract stipulates that anything that would cost $250 or less to repair is the buyer’s resposnisbility.  These things are usually minor and easy fixes that come with normal “wear and tear” and that figure into part of the cost of owning a home!

It’s important to know this information up front because a home inspection report can seem daunting and might be scary at first glance.  It’s important to ask questions during the inspection if anything is unclear.  It’s also important, as a buyer, that you go over the home inspection report with your Realtor and call your inspector if questions come up after the fact so that you can make educated decisions.

A good home inspector will walk you through the home and explain everything he/she will be noting in the report.  Home inspections can also give you valuable information on how your home operates, where things are located, what to look out for in the future, and general home maintenance guidelines.

A home inspection in Chicago will cost anywhere between $250 – $500 depending on the size of the home, as well as what components need to be inspected.  Single family homes, for instance, will cost more to inspect than condos because they are usually larger, they usually include a basement and/or attic to inspect, sometimes there’s a garage to inspect etc.

Please feel free to contact me for free sample reports, free home inspection guides, and free home maintenance tips!

Feeling a little ghoulish after all the rainy weather? Unearth some makeup and raggedy clothing in honor of Chicago’s fourth annual Zombie Pub Crawl

The event will take place on Saturday April 30, 2011 in the Andersonville neighborhood again. The bars are between Foster and Bryn Mawr on Clark Street and include: Simon’s, Hamburger Mary’s Attic and Rec Room, @mosphere, The Call and Farraguts.

2PM: Registration at @mosphere Bar; 5355 N. Clark St. (please bring photo ID and the credit card you registered with) – if you don’t have these two things we can NOT register you for the crawl. Sorry it’s the Zombie Law.

2:30PM-8ish: Zombie Pub Crawl!

If you haven’t seen the Groupon Deal yet, click here to check it out!

This is a no-brainer…. If you’re thinking about buying OR selling and you want $1,000 you literally have nothing to lose! Dream Town gives you ONE YEAR to redeem the Groupon and if you don’t redeem it, you get a refund! Simple!

So…. go get the deal…. and then call me!

Cell: 773-991-9359
Email: ssullivan@dreamtown.com

By EMILY GLAZER

The Federal Housing Administration is raising the annual insurance premium on new loans it insures starting April 18.

Premiums for new 30- and 15-year FHA-backed mortgages will increase by one-quarter of a percentage point. The annual premiums, which are spread over monthly mortgage payments, will range from 0.25% to 1.15% of a loan amount, up from 0% to 0.9%. The rate you get depends on factors such as the loan amount and duration. Existing loans won’t be affected.

If you have a $175,000 loan balance (the average for FHA loans), for example, you’ll pay an extra $23 a month, says Bob Ryan, the FHA’s deputy assistant secretary for risk management. With a $200,000 loan, you’ll likely pay around $30 extra. For a $100,000 loan, it’s about an extra $15. Monthly premium payments will decrease as your loan balance drops.

Borrowers also pay a 1% upfront mortgage-insurance premium that can be rolled into the loan amount when they take out an FHA loan. That premium remains unchanged.

The premium increase is part of the FHA’s efforts to bolster its capital reserves. By law, the FHA is required to have a 2% cushion, but it has dropped to 0.5%, Mr. Ryan says.

FHA loans typically attract younger, first-time buyers since they require a down payment as low as 3.5%, offer lower interest rates and are usually easier to qualify for.

First, three basic changes that everyone should know:

You’ll have three extra days to file and pay. The IRS deadline falls on Monday, April 18th this year.  The IRS is no longer automatically mailing tax forms out to every household. To get free forms, you can call IRS Forms and Publications toll-free at 800.829.3676 to request up to 10 forms – or you can pick up the necessary forms at your local library starting in early to mid-February.  Alternatively, you can file electronically for free on the IRS website.

You may be eligible for new tax credits included in the Affordable Care Act passed last March. Small employers – including small non-profit (tax-exempt) organizations and household employers – can get assistance paying for health care coverage for employees through the small business health care tax credit. Read frequently asked questions and find out if you qualify. Visit the IRS website for the full list of Affordable Care Act Tax Provisions.

Other money-saving credits:

Your paycheck may have gone up last year as a result of the Making Work Pay Tax Credit, part of the American Recovery and Reinvestment Act.  If so, or if you were eligible for the tax credit but didn’t receive it, you may need to file a Schedule M form.  Click here for instructions. Many low and middle-income families are eligible for the Earned Income Tax Credit, which rewards working families and can be worth up to $5,666 for those who make $48,362 or less in a year. Changes in 2010 to your financial, marital or parental situation may make you eligible for it even if you didn’t qualify the year before.  The maximum adoption credit goes up to $13,170 per child from $12,150.

You should also be aware of some the common scams that surface around tax filing time:

Watch out for scams that lead unsuspecting individuals to share personal information with a bogus group posing as the IRS. These scams can be perpetrated online, by email, phone, fax, or letter. Please note: The IRS does not initiate taxpayer communications through email. Read the IRS’ tips to protect yourself from tax-related scams.

“Refund anticipation loans” are loans made to individuals who want access to their refunds quickly.  But these loans can be a bad deal when private companies charge consumers very high interest rates.  To protect tax filers, the IRS has stopped providing certain personal financial information to tax preparers that issue such loans.  As an alternative, the IRS offers e-filing of taxes and direct deposit of refunds, enabling a rapid turnaround on refunds without any fees.

The IRS website offers a number of helpful services:

Taxpayers who are 60 or older, or have low to moderate incomes, can get free IRS tax help through its partnerships with nonprofit and community organizations. Some sites require appointments; find where and when you can get assistance. You can check the status of your tax refund online on the IRS website. Visit the IRS Tax tips for 2011 page for additional suggestions this tax season.

“We’re still bouncing along the bumpy bottom to the housing slump, industry experts say, but at least the finish line is coming into sight.  Prices have retreated from their housing-bubble heights of 2006 to the point where they are better aligned with American incomes, setting the stage for more people to become homeowners, said David Stiff, chief economist for Brookfield-based Fiserv Inc, which owns the widely watched Case-Schiller indexes.  But the housing market appears to be approaching equilibrium again after a period of extreme optimism followed by extreme pessimism…So we should start to see demand stabilize, and that should put a floor underneath prices”, says Stiff.

Better than gold. These past few years haven’t been particularly golden ones for housing. But over the long haul—say, three decades—housing has been golden. Actually, even better than gold, reports Ted Jones, chief economist at the Stewart Title Guaranty Co.

Jones suspects that if asked to name the best long-term investment, most people would probably say gold. And if you considered just the past nine years of so, they would be correct. But if you go back to 1980, he said, a house would have been the better place to park your money.

Not counting transaction fees and holding costs, if you bought an ounce of the precious mineral in 1980 and held it until (this past) October, you would be ahead 95.5%, the economist figures. But if you adjust for inflation, you would have lost almost one-third of your investment.

“The value of gold in the last 30 years did not even keep up with inflation,” he said.

But if you had purchased a median-priced existing home in January 1980 and sold it for the median price in October 2010, you would have notched a 252% gain, again assuming no transaction fees or holding costs, he said. This is despite a 23% decline in values since 2006, he pointed out.

And unlike gold, you would have been able to live in the property, reap the tax deductions for mortgage interest and property taxes, and a nontaxable gain (no capital gains tax) of up to $500,000 when the house was sold”.

Gold is high now…Great time to sell high and reinvest low in the super real estate deals currently available.

The New Year provides an opportunity for Americans to start fresh and develop goals which have come to be known as New Year’s resolutions. Some people strive toward financial aspirations or a professional achievement, while others might choose to pursue a lifelong goal, such as owning a home. If 2011 is the year to achieve your dream of homeownership, the following tips may be helpful.

Talk to the experts. Work with a real estate professional, lender and attorney who are familiar with the area in which you would like to buy a home. A real estate agent can provide you with expert knowledge about the local market including information about community life and specific neighborhoods. Make sure you are confident in the abilities of the people you choose for your team and that you are comfortable asking questions and sharing information with them. Once you start looking at homes, the process can move rather quickly and you may have to make critical decisions on a moment’s notice. Your agent will be a useful resource throughout the entire process as he or she guides you from the initial search through closing on the purchase of your new home. Your agent will also be instrumental in assembling a list of homes that fit your preferences as well as your budget.

Financing. You may have savings allotted to cover your down payment but don’t forget about other upfront expenses like closing and inspection costs. Look into the many programs available to help you reduce upfront costs. Also, it’s never too early in the process to become pre-approved. Doing so will help you develop a budget, understand what price range you can afford and set realistic expectations. Separately, don’t underestimate the importance of a great credit score. If your score is not where you’d like it to be or if there are any inaccuracies, many lenders will recommend steps to improve it, saving you thousands over the life of a loan.

What are your preferences? Make a list of the features you want in a home. For example, figuring out the preferred style, size, location and number of bedrooms and bathrooms will help narrow down the possibilities. Is a short commute to work more important than a larger living space? Take time and think about what you want out of your home. Speak to your real estate agent and browse online for homes that meet your criteria. Many sites, including http://www.dreamtown.com/, allow you to see multiple photos, view school and neighborhood information and set up e-mail alerts to notify you of new listings. Before you begin looking at homes, be sure you have a clear idea of what your wants and needs are, as well as the price you are willing and able to pay.

Interest rates have been on the rise for six straight weeks in a row but they are still GREAT compared to what they were even a year ago so you can still get in at very profitable time.  If you (or someone you know) have considered a home purchase but are unsure of your qualifications, a simple phone call to a lender to discuss things might lead to a big surprise!

Happy New Year!

Stephanie

Everyone seems to fear the home inspection because you just never know what will come up and what could potentially kill the deal.  As with everything in this business, there are certain steps one can take to minimize the chance for surprise and disaster.

I recently had the chance to speak with Michelle Teague of All About Homes and she provided some very helpful tips that I will share below:

Prior to a home inspection it is helpful to review what a home inspector does and does not cover during the inspection with your client.  This will set realistic expectations.  A home inspector will visually inspect all safety and functionality issues that deal with structure, the exterior, the roof, chimneys, electrical, HVAC, water heater, plumbing, attic and the interior (i.e. walls, ceilings, floors, windows, appliances etc)

A home inspector will NOT do code inspections, they are not contractors, they cannot do repairs themselves, they do not inspect systems owned by utilities or municipalities and they will not do specialty inspections such as mold, termite, or structural.  They will recommend that a special inspection be done and can usually point out problems like mold, but they cannot test the mold for instance.

One thing a buyer should know beforehand is that home inspection reports are not as scary as they might appear to be.  A good home inspector will provide a very thorough report and it helps to let buyers know that every home inspection will reveal “problems.”  The key is to distinguish between the major problems and the minor ones.  I always tell my clients that the issues to pay attention to are the ones that are classified as “Safety Concerns,”  or anything else that may be a major expense in the near future.

Major expenses include masonry work (look for heavy cracking, leaning walls, cracking and sagging around windows, or crumbling parapets), plumbing (check for low pressure), electrical (look for old fuses and panels that might indicate things aren’t up to code), heating and cooling systems, structural issues, and water damage.

Everything else can usually be categorized as minor and not worth losing a deal over.  If you set expectations up front, your home inspection will go more smoothly and buyers will be less stressed out about this potentially difficult step in the process!