Selling & Maximizing Your Investment

1. I want to sell. What should I do?
First thing to do: Create the best curb appeal possible. You want buyers to walk inside your home. A homebuyer's first impression is based upon their view of the house from their car. Take a walk across the street and take a good look at your house. Look at nearby houses, too, and see how yours compares.

The most cost effective methods are to clean up any unnecessary clutter, plant colorful flowers, manicure the lawn and trees. Get a new plush door mat, too. Painting will always bring more buyers inside. Removing and replacing old or unkempt window coverings will help. If you have an area for flowers, buy mature colorful flowers and plant them.

On the inside try to remove clutter and keep pathways clear. When people enter keep windows open to let as much light in as possible. Often people store extra things in the garage to clear their home.

Remember, that many buyers have a difficult time imagining what a house will look like after they've moved in. So the more desirable look you provide, the better the offers. Also, keep your property safe from obstacles and hazards (cords, holes, slippery surfaces, etc.)
Prior to listing your property please gather and provide your agent any and all paperwork pertaining to the home (construction paperwork, permits, inspections, notices, etc.).

2. How much is my property worth?
Your agent will provide you with recent sales and listings in your area and will give you a price range of what your property should sell for. By pricing your home too high you will discourage buyers from even looking, and the property may not even come to their attention. Believe it or not, overpriced properties tend to take an unusually long time to sell, and they usually end up being sold at a lower price. By pricing it too low you will likely get many offers immediately and a few all-cash offers. This can be corrected by waiting a week to counter or accept and offer.

3. What does "AS-IS" mean?
Be careful where you get real estate advice from. Many people are wrong and do not understand what "AS-IS" means. Selling a home "AS-IS" simply means that you will not make any improvements or corrections, however you still MUST disclose everything you know about the property. The buyer normally can still inspect the property, but you are just telling them in advance that the property is being sold just the way it is ("AS-IS") and don't expect any repairs to be done.

4. What kind of repairs are recommended and add value?
Kitchens and bathrooms greatly help to sell a house because they are the most expensive and most important rooms of a home for the typical buyer. Any monies spent on these 2 items almost always yield much more in increased value, more than any other repair. Even minor upgrades will increase the value of your home, as long as they are done professionally and in good taste.

Termite issues. All homes in Los Angeles County have termite issues. The buyer of your home will likely have a lender that requires a termite report and clearance. Termite clearance means the structure is clear of infestations and usually is guaranteed for 1 year. Before listing your home have it inspected and have all repairs done. Having termite clearance will increase value and limit the buyer's negotiating options. If you are in a city that requires a City Inspection (Pasadena, San Marino, etc.) get it done now and correct any violations. Again, if you have clearance you will increase the value and limit the buyer's negotiating options.

5. How does my property get shown?
There are many ways to have buyers view your home. Your agent will coordinate appointments at times that are convenient to you. The easier it is to show your home the greater likelihood that you receive the most and higher offers. Computer coded lock boxes can also be used for access so you don't need to be home. Discuss this with your agent because it is vitally important to have the property available, but at the same time to work with your schedule and privacy.

6. What should I do while someone is viewing my home?
Buyers don't want to feel pressured. Kindly step outside with any pets and turn off all radios and TV's. Keep the sinks clean, the shower clean, and turn on most of the lights so they don't see dark rooms. Take care of all valuables and breakables and insist that the buyer is accompanied by their real estate agent. Make sure you get the real estate agent's business card. Limit talking about your properties shortcomings; you don't want the buyer to think they can negotiate you down on price.

7. Should I answer a buyer's direct questions?
You are paying your real estate agent to negotiate, market and communicate for you. Limit your direct conversations with agents and their buyers and ask them to ask your agent the questions. You are under no obligation to talk to anyone if you choose not to. Most buyers and their agents understand that it is usually inappropriate to talk to the seller directly.

8. What do I need to disclose?
California Civil Code requires that anything that can materially affect the desirability of a home must be disclosed. Please discuss this at length with your agent. The number one problem in transactions is intentional and unintentional non-disclosure of important items. Think about problems your home has (foundation, electrical, leaks, plumbing, noise, unpermitted work, soil and drainage problems, deed restrictions, etc.).

9. What's a home warranty and should I provide one?
Home warranties are more and more popular, even with homes in excellent condition. The typical warranty is $250 and covers most plumbing, electric, garbage disposal, vent fans, the water heater, etc. The buyer calls the warranty company and they send a licensed contractor to remedy the problem, as long as it is a covered item. It is an excellent selling feature for the seller, it shows good faith, and helps cover the seller from liability.

Buying and Inspections

10. How do I see properties that are For Sale?
Get pre-approved with a reputable lender before searching for property. This will help you understand how much you can afford, and also if you write an offer the seller will probably require that your offer be accompanied by a pre-approval letter. This is a powerful item to use because many buyers only get pre-qualified. There is a big difference between being pre-approved and pre-qualified. You can get pre-qualified over the phone with no verification at all. Being pre-approved requires a completed loan application, credit report, and income verification be analyzed. Most lenders can complete this with you within a week. Next step is to decide what type of property and amenities you need. Your agent will provide you with current listings for you to drive by with or without your agent. New listings can be emailed. When you find an interesting property we can make an appointment to view it. You can also search all of Pasadena, surrounding areas, and Los Angeles County through this website's home page.

11. What are the best and worst ways to find homes?
The best way is to hire a reputable REALTOR® who uses the local Multiple Listing Service. Have your REALTOR® search the "hotsheet" everyday, network with their fellow agents in the area, set you up on instant email listings, scan all listings, and attend all weekly caravan meetings where new listings are showcased. Using services like Realtor.com and other web-based services are good, but their information is not updated daily. Also, some agents are guilty of keeping desirable properties already sold advertised because they want you to call them so they can get more leads. Remember, most ads in the local papers are 5-14 days old, and in this market a properly priced property is usually sold in that time. By going directly to the seller's agent and having them represent both sides is an inherent conflict-of-interest for the agent. Many buyers think they can get a better deal this way, but the agent will make 2 commissions, and it's difficult to determine if they are acting in your best interests.

12. What if they accept my offer but there is something wrong with the property, is my deposit money at risk?
No, but eventually yes. The standard real estate contract is written with basic contingencies for the buyer, with time limits, just in case you need to renegotiate the price or walk away totally from your deal and be able to keep your earnest money deposit. The standard contract requires the seller to leave the property in the same condition as when the buyer initially viewed the property. This means there is not supposed to be any excess trash, the landscaping (if it was manicured) needs to be manicured, and all systems working as they did.

13. Tell me about the inspection.
The contract will almost always allow you to perform inspections of the property (electrical, plumbing, roof, foundation, etc.) as well as all pertaining documents, all within specific time periods. Many people hire a professional inspector or a general contractor. Some just ask a friend in construction or do the inspection themselves. Your agent will not perform the inspection for you. Regardless of what you do, you must understand that it is your choice. Inspections have time limits and specific ways of being handled.

14. What kind of property should I buy?
It depends. If you intend of living in your home for over 10 years, then buy what you want and need because your first concern is your home, but always understand that it's also an investment, much like an annuity. However if you are looking to buy something as a starter, and investment, or a rental, think about what adds to resale value and what detracts, because properties like these need to be looked upon as true investments. A 2 car garage and a 3rd bedroom or den increase resale. Updated electrical and plumbing always helps, as well as most any improvement. Swimming pools can be beneficial and can also detract buyers and limit resale value. And remember the 3 most important aspects of real estate: location, location, location.

Process of Buying or Selling, and what is Escrow?

15. What is the process?
There are 3 parties in a real estate transaction: the buyer, the seller, and the escrow company. When an offer is accepted with a deposit and pre-approval the next step is to give the transaction to an escrow company to complete. Escrow is a neutral group used to ensure that the transaction is completed in a legal and correct fashion. Next step is to complete all inspections. At this time the appraisal should be ordered, have the lender "draw documents", and close with a final walk-through inspection.

16. What is Equity? How does a refinance work?
Equity is what we call the value of an asset above any loans (encumbrances. For example, if you have a home worth $400,000 with a loan of $300,000, your equity is $100,000. Sometimes you can have negative equity where there is no equity and you owe more than the asset is worth. Some call this "being upside-down". An example of this is if you have a home worth $400,000 with a loan of $450,000. Even in good real estate markets this can happen to people. An example of this is if zoning gets changed, newer environmental problems, even faulty appraisals. In today's market negative equity is rare and uncommon; however it was extremely common in the mid 1990's.

A refinance works by having a lender pay off existing loans and then getting a new loan with new terms. There are many types of refinances. Popular today are "cash-out" refinances. Here's an example of how this works: Perhaps 5 years ago you bought a home for $300,000 with 10% down payment. So your loan is $270,000 and your 30 year fixed mortgage is at 8%. Your payments would be $1981/mo. Today the home is now worth $400,000 and your balance on the loan is now $254,000. If you wanted to take advantage of the low interest rates and get some money to pay off student loans or remodel the home, so you get a new loan, a "cash out" refinance. You could get a new loan, say at 6.75% and loan on 80% of the value of the home. 80% of $400,000 is $320,000. The lender would give you a new loan of $320,000, pay off the $254,000 original loan, and you could pocket the $66,000. Your new payment would be $2075/mo. There are minor fees, tax implications, and other risks.

17. What is PMI (Private Mortgage Insurance)?
Private mortgage insurance is insurance that the lender usually requires when a loan balance exceeds 80% of the value of a property. The insurance premium is paid by the property owner monthly and is typically not tax deductible. The insurance typically covers about 17% loan losses for the lender with the understanding that in a worst-case- scenario (they need to foreclose because of non-payment) that the property would be sold and losses probably wouldn't exceed 17%. If you are paying PMI then the easiest way to take it off is to refinance (hoping that the value of the property has increased). Attempts to ask the lender to drop PMI are difficult and typically require very good credit, a re-appraisal, and application.

Maximizing Your Home Investment

18. I'm thinking about selling, but definitely will in the next few years. What should I do to prepare?
A common blunder many people make is they fix up their home for the new owner. Why not fix it for yourself and enjoy it? Take good care of the improvements and benefit from the increased value you'll likely get. Who knows what the future will bring, so enjoy your home as much as you can.

19. How can I improve my neighborhood?
There are direct and indirect approaches. The direct approaches, other than fixing your own home, is to help other neighbors clean their properties, form neighborhood watch groups, have quarterly homeowner meetings, and just getting to know your neighbors. Often times when a neighbor starts improving their property it motivates those around them. Most cities have programs for the elderly, handicapped, or unemployed, which provide free property remodeling and maintenance.

Indirect approaches are numerous and include free services in almost all cities that will provide quick graffiti removal and shopping cart removal. Some people will call their city or county's code compliance department and report zoning, code or health violations. You can call anonymously. In a worst-case-scenario, you can call your local police station, ask for dispatch, and anonymously report something.

20. What should I look for in a REALTOR®?
Buying or selling a property is your single largest financial decision. Who do you want to advise and assist you in this? A successful and good REALTOR® will come referred, have extensive experience in the market, have sharp negotiating skills, a proven track record, and understand the contract. Do not be afraid to ask for references. A good REALTOR® is busy and has lots of business. You aren't their only transaction; therefore they aren't pressured to make all their money from you (get it?). The REALTOR® business is a relationship business. It's important to have a good relationship, even a friendship, with your REALTOR®. Your REALTOR® should never push you to buy or sell. A REALTOR® has a fiduciary duty of utmost care and trust, which is the same duty doctors and attorneys are also required to give their clients. The process of buying and selling can be difficult, confusing, and stressful. A great REALTOR® will minimize this and constantly steer you towards your eventual goal of a sound investment, homeownership, and no headaches.