A number of years ago I was buying a property for myself. The property had a great view; the owner had spent a fair amount of money improving the property; there was great potential for me to do some things to the property that I wanted to do. I had been looking for just this opportunity for some time – and I was excited, but trying to be remain calm, cool and collected so I would’t tip my hand to the seller how much I wanted to buy. I also wanted to be rational and not lose my perspective.

Guess what I did? Seeing that the property was fairly new and everything looked so clean and “squared away”, I decided to forgo the

Think you are Saving Money? Don't step over dollars to save dimes!

home inspection and save myself $400. I reasoned, I’m sure an inspector will find $300 or $400 in little things to justify the inspection, but I can certainly see everything I need to see and I’m sure it was built fine. I closed the loan and purchased without an inspection, against the advice I give my clients.

The first night I spent in the property, I noticed the wall sconce lights flickered annoyingly, and they were not the bulbs that were supposed to do that. I replaced the bulbs with new bulbs. They still flickered. After much frustration and a couple visits by an electrician, I learned the builder has undersized the electrical panel and novice’s had wired the home without a permit. Light switches ran circuits that weren’t logical, some didn’t work and all and there was a bad electrical short in the wall which affected the flickering lights. This would have been easily discovered had I paid a professional home inspector to objectively evaluate the property.

Moral of the story? Always get a home inspection. Even if you know the sale is “as-is” and the seller isn’t going to make any repairs, at least know what you are buying!

Here are the high points of the “right to inspect” as laid out in Alaska’s commonly used “Purchase and Sales Agreement.”

* Seller agrees to maintain the property in it’s current condition, all the way through to closing. This means if the garage door opener fails once you are in contract and you are the seller, you must repair or replace it.

* Buyer has the right to inspect early, usually within 10 days, of making an offer.  The buyer can choose any qualified professional inspector(s), but must notify the seller who has the right to refuse certain inspectors, but not unreasonably.  Seller agrees to make the property available for the inspection.

The older a home is, the more code changes may affect a sale

* Buyers inspection may include, but is not limited to: square footage, school boundaries, zoning, avalanche, sex offenders, pest inspections, structural, plumbing, sewer and water, heating appliances, insulation, electrical, roofing, soils, drainage, foundation, mechanical systems, code compliances, possible environmental hazards such as asbestos, mold, illegal drug or substance manufacturing, urea-formaldehyde, radon gas, waste disposal sites, and underground tanks. (whew, did we miss anything?) 

* The buyer can inspect anything obviously.  The buyer has 72 hours to either terminate the purchase after his inspection or accept the property or request repairs from the seller. 

* If requesting repairs, buyer shall request in writing and attach a copy of his inspection or findings from his due diligence.  A time frame for sellers response is included in the request, usually under a week. 

* The seller, after being requested to make repairs, can agree to make the repair, negotiate on the repairs such as offer a credit, or simply not agree to make some repairs.

* If buyer and seller are in agreement, the work is done prior to closing and may be subject to a reinspect, at the buyers cost.  If buyer and seller ARE NOT in agreement, the transaction is terminated and both parties go their own ways.

* A repair condition or result of an inspection becomes a material amendment to the “State of Alaska Residential Real Property Transfer Disclosure Statement” and be disclosed to subsequent potential purchasers.

As you can see, the “Right to Inspect” has been well thought out and is meant to keep buyers and sellers on equally fair ground.

This outlet "looks" ok to me! It should work, right?

The buyers wanted to make an offer quickly, but thought maybe the asking price was a little bit high.

An offer was written up and presented to the seller. 

The seller wanted to “sleep on it”, or think a bit.  That made the buyer nervous because he didn’t get a fast response on his offer and was concerned he might lose the house to someone else.

Finally, the seller came back with a counter offer, slightly increasing price but also asking the buyer to close faster.

The buyer was fine with the price.  Agreeing to close fast, they decided waive the home inspection, against my advice.  The buyer reasoned, the house was only a few years old – what could possibly be wrong with it; and it wouldn’t hurt to save the $400 home inspection fee either!  Everything looked to be in order in the house.

A week after closing, I received an email from the buyer saying “the electricity in the house I bought is MESSED UP!”  Several of the GFCI outlets don’t work at all.  At night the lights flicker noticeably and if you stomp on the floor, the lights turn off!”

All these are things a home inspection would have found.  The problems were finally fixed by an licensed electrician, but had we not cut corners, the problem would have been found and solved a lot earlier, saving a lot of anxiety.

The lesson driven home?  Always do a home inspection, even if everything looks good on the surface.

Signing digitally can be very convenent in many situations!

The program turned out to be easy to use and such an obvious advantage that I’m amazed we didn’t have a program like it before now!

The program is incorporated into our FlexMLS document program.  When we type up a real estate document, such as a Listing Agreement or an Agreement to Purchase, we can click on the DocuSign tab and by following a series of screens, and email the form to one or more parties. 

When the customer gets the form via email, they can open the form and again by following easy screens, they can sign the form digitally on the screen and simply email the form back. The customer can create their own digital signature online without needing a scanner or any unusual equipment.

In the “old days“, we would fax the forms to be signed if the buyers couldn’t drive to our office.  One problem was by the time the form was signed and faxed around a couple times, the print would distort and become very difficult-or impossible- to read. 

In some transactions, contracts are negotiated at length, so buyers and sellers would have to run back and forth between their homes and the real estate office again and again; Sometimes there was the problem of  locating a fax machine….

Another nice thing about DocuSign is if their are more than one signer on the documents, they don’t have to be at the same location to sign digitally.  In other words, one party can sign online on one side of town, and the other party might be on a business trip or working on the North Slope, yet they can sign the same exact form – No more signing duplicate documents in counter-part!

After a month of using DocuSign, I’m amazed at how few problems my customers and I have had using this very convenient program!  Real estate buyers and sellers love the convenience, not to mention it’s green (your not killing trees) and maybe the best things is the program is just plan tech-y and cool!

In real estate sales, most sales have a property inspection. Many times inspections reveal aspects of the property that the owners have lived with, and may have not known about or didn’t consider them to be a problem. 

Can zoning or code issues be grandfathered in?

Sometimes it is a survey ordered as part of the purchase agreement that discovers a problem.

When the buyers inspector comes around citing a code issue and calling for the repair, sellers often cry foul and the question of grandfather rights can come up.

First, what are “grandfather rights?”   The common interpretation of the terms means that “something that was once permitted in the law can continue to be, although the law or rule has changed.“  Generally, new construction must be built with the new code.  Depending on the situation, a grandfather right mean the condition can remain unless the property is sold or over 50% damaged, in which case it would have to be repaired to the new code.

In the case of a property, or property addition,  built without a building permit, our municipal authorities will handle it on a case by case basis.  If the addition or structure was built after zoning was in place, but a permit was not issued, they can require the structure to comply with the code, even if it means removing part of the structure to return to code compliance.  The cost of code compliance is rarely a consideration to the Zoning Enforcement officials. 

If the building or addition was built before zoning was in place, it may fall under grandfather rights since the built before there was a code in place.  However, if the property suffered a fire or other disaster, it would have to be re-built in accordance with the current code.  The Municipality of Anchorage has an interesting web page that speaks to the issue of “non-conforming” or grandfather rights.

There are many cases of code changes inside the home.  If the code is considered “health or safety”there are no “grandfather clauses” I am aware of.  Occasionally the code itself will call for properties after a certain date meet a particular requirement.  Most code infractions are found at the time of sale during the inspection process. 

Many sellers desire to sell “as-is” and not have to make code changes to their property.  One of the difficult aspects to this situation is that most lenders won’t allow a loan to close with life and safely violations.  This means the buyers loan can’t close without the repair being done.  If the seller insists they won’t make the code change, they may lose the buyer.  On later sales they now would have to disclose the code condition to new buyers, possibly deferring the same negotiation to the next transaction.

Examples of code changes that aren’t grandfathered and may be required to meet code for life and safety can include instillation of smoke detectors, carbon monoxide detectors, bedroom egress window size and height and sometimes even the lack of sheet rock behind old paneling or under the stairs in the case of older split level stairs. Another common example might be GFCI breakers in the kitchen, bathrooms, garage and exterior electrical outlets. 

Codes are often developed as the result of fires, earthquakes and other disasters.  In the case of window heights and the size of the window opening, the code changed several times in the last decade.  It took a fire a the death of it’s occupants before local zoning determined that the code must be adhered to.  There would be no “grandfather clause” for the owners of the property.

Here are 10 ideas to help you sell.

1. Work on curb appeal.  If the yard is a mess, people are going to be less likely to buy the house, let alone look at the interior.  Some simple things that can be done are keeping the lawn mowed and edged and your house exterior painted and “squared away”.  Sealing an asphalt driveway with the “Black Jack” tar can improve your curb appeal. 

2. Remove all clutter.  Clutter makes the house seem smaller and less inviting to prospective buyers.  Discard or donate items to charities that you have out grown or no longer need, but are still usable.

3. Neutralize any smells.  Sorry to say, but a home with cigarette smoke can be a huge turn-off to people who don’t smoke.  If you have pets, the smell of pets will turn off a buyer.  Cat boxes, dog mess in the back yard, stale fish tanks and ferret cages are good examples of smells that will get a buyer out of your home quickly. 

4. Clean your interior!  Hire a cleaning service if you hate this sort of work, but

Make your home "stand out" by making it clean & stage it like a model home!

 nothing if more important.  Shampoo carpets, vacuum floors, wash any dirty walls from pets, kids and wash windows inside and out.  Also consider removing some of your personal things, such as photo’s of your kids in every grade as they matured.  It makes it easier for prospective buyers to see themselves living in your home.

5. Inspect the house.  Sometimes something as minor as a creaky floorboard, a broken light switch or a toilet that runs can cast an impression to the buyer you don’t want.  Get someone not emotionally involved with your house to walk through and help you evaluate your home with another set of eyes.

6. Fix any neglected things.  If something obviously needs fixing, especially if it is something anybody can do, it sends a conflicting message to the prospective buyer.  Subconsciously, they will start to wonder what the next surprise will be.  A lot of first time home-buyers barely have enough money to buy the house and are not ready to have to begin repairs right away.

New paint can be one of your best improvements

7. Invest in renovations, if necessary.  Is the carpet worn?  Are there wear paths down the hall or stairs in the carpeting?  Are there marks on your walls from a child’s marker pen?  Do you have loud primary paint colors on your walls?  Was your kitchen in-vogue in 1975 and pretty much looks the same?  Don’t count on finding a buyer who wants to find a home they can work on.  Far more buyers are looking for a home they DON’T have to work on.

8. Get the opinions of others.  Sometimes a different perspective can go a long way to broadening your houses’s appeal.  Others see and notice things you tend to ignore.  Sometimes you’ve lived with something in your own home so long you don’t even see it anymore.  A good realtor can be invaluable here, as they may be able to see home weaknesses that you are unaware of.

9. Consider getting a home inspection.  Sure, it’s normal for a buyer to get an inspection when they buy, but what if you could get a jump on the process and show a recent inspection report and show you’ve already made the recommended repairs or have them underway? 

Icicles Hang From a Roof

If you have been thinking about getting a energy audit done at your house, you should get after it! The program has been in effect for quite a while and you never know when it might run out of funds to contine or possibly restrict the program to a smaller group.

 The Alaska Housing Financing and the State of Alaska will reimburse you the major part of the report.  Click here to check out details on the energy rebate program and to sign up to get one done. 

I signed up for an energy audit back in October.  It took about two months until my turn for an audit came around.  Alaska Housing assigns the energy auditor.  I didn’t know who the auditor was going to be until I received a call to schedule it.  The inspector was very professional and thorough.  From start to finish, my inspection took about two hours. 

Two inspectors came out.  One person explained what was going to happen and asked to review my utility bills for the past year.  The other inspector opened my window blinds and measured each window for size.  They measured the outside walls, all the while entering data into their computer.  They accessed the attic and crawlspace areas to check for insulation and venting.  Then they shut off the furnace and turned down the hot water heater and installed a “blower door” on the exterior door. 

The blower down is an air-tight gasket with a large fan in the middle.  The fan gets turned on and decompresses the house by blowing inside air outside. The blower door is hooked up to an array of gauges and dials.  The inspector takes careful readings at intervals while the blower is running.  Because the home turns into a vacuum, every air leak your house has becomes very evident at this time.  In my case, cold air was rushing into the home through exterior wall outlets and even under the base plate of the wall (where the wall and the floor connect). 

I have to tell you, it was a sobering experience because I thought my house was pretty well insulated.  My house was built in 1999 and I figured built pretty well. The energy inspection cost $500 dollars.  You have to pay the inspectors bill, and then you submit to Alaska Housing for a rebate of up to $325.

When you receive your report (mine came via email a week after the inspection), you will get your actual rating and then many things you can do to improve your homes efficiency.  You can choose which things you want to do (or not).  Save your receipts for things you purchase!  You have up to 18 months from your initial energy inspection to choose and make energy improvements.  When you are done, you have another energy inspection done, called a post inspection.

If you move your home up a “star grade”, say from a 3 star to a 4 stars you can submit for reimbursement of up to $10,000 dollars!  Talk about a gift that keeps giving!  You will have lower monthly utilities bills and a more comfortable home, and the cost of the upgrades will be reimbursed from Alaska Housing!  How could it get any better?

Step 1:  Decide to Buy!   Above all else, when done right, home ownership can help lay the foundation for a life of financial security. If you are renting and have a stable job with some savings, and a credit score in the upper 600 range, you can likely qualify for a FHA or conventional financing. 

An interesting tree root washed up in Cook Inlet

Very few people can afford to buy their dream home when they buy their first home.  In fact, according to the National Association of Realtors, 69 percent of first-time home buyers compromised on some features of their first home.  So you make some compromises, buy your first home, and start building equity.  This approach takes you further and faster down the road to bring able to own your dream home than if you hadn’t purchased a home at all.

Step 2:  Hire Your Agent.  Your agent will educate you about the market, analyze your wants and needs, guide you to homes that fit your criteria, coordinate any needed professionals, negotiate in your behalf, and all the while check and double-check your paperwork and solve any problems that may arise.

Step 3:  Secure Financing.  Your lender will approve you for a loan amount, but ultimately, YOU will decide what you are comfortable paying every month.  In other words, you don’t have to get a loan as high as you qualify for…you are the boss.  When you pre-qualify for a loan, both you and your agent know you aren’t just wasting time; if you find the right property, you can move forward on it.

Step 4: Find Your Home!  Your real estate agent will help you sort this out.  Which is more critical, size or location?  Are you interested in a condo?  A duplex?  Do you need a yard?  You’d like a 3 bedroom, but will two bedrooms work if everything else is good?

Step 5:  Make an Offer.  This is done in writing on a proper “purchase money agreement”.  Your agent will help you decide what a fair offer is.  An offer includes several important things such as the price you are offering, when you want to close, a home inspection, who pays what closing costs as well as what things go with the sale like refrigerator or window blinds.

Step 6: Due Diligence. Very few homes are absolutely perfect.  This is where you hire a professional to inspect your home, hopefully with you in attendance.  The inspectors job is to check for code compliance and for construction problems – large and small. 

Step 7:  Closing on your home.  You’ll need to get home owners insurance and put utilities in your name.  Your real estate agent will check your work schedule and look for available appointments with the loan closer.  In our market, you sign one day and “record’ the transaction the next day which is the official day you own.

Step 8:  Protect Your Investment  Learn to give your new home the love and care it needs.  you will need to learn to perform routine maintenance on your home’s system, depending on it’s age and condition.  A good rule of thumb is to watch for signs of leaks, damage and wear.

My son and friend enjoying new snow

If passed, Washington will be able dictate building codes on your home that will supercede current local building codes.  This new building code allegedly applies the same conditions to a home in Honolulu, Hawaii as  a home in Anchorage, Alaska and Portland, Maine.

The bill  requires that by 2012 codes must require that new buildings be 30 percent more efficient than they would have been under current regulations. By 2016, that figure rises to 50 percent, with increases scheduled for years after that. With those targets in mind, the bill expects organizations that develop model codes for states and localities to fill in the details, creating a new “national code.” 

From what I understand, the new codes target new construction first and then will begin to affect existing construction.  It’s hard to know what changes to anticipate, but for sure the cost of new construction will increase.  The enforcement of the code will have to mean another inspection and someone to interpret the federal guidelines, then the repairs will have to be made and, of course, another post-repair inspection.  As if it’s not complicated already.  Home inspections today can be difficult for some to comply with, as well as expensive and time consuming.

Read this article explaining the bill “http://www.govtrack.us/congress/bill.xpd?bill=h111-2454“;  For some interesting reading, go to your Internet browser and”Google” search “Waxman-Markley Cap and Trade” and see what your impressions are. 

I can say that on the surface it may seem desirable to uniformly mandate higher home energy efficiency standards. I don’t think the industry will be enthusiastic about Washington D.C dictating the changes.  Enforcing these changes at the sale of a home will greatly increase the costs to sellers as well as the time it takes to complete a transaction because of the extra inspections, construction and underwriting compliance time.

At this point in the purchase real estate agents recommend buyers do a walk-through one more time just prior to closing.  This is commonly called the “final walk-through.”  This is the last opportunity to ensure that everything in the home is in working condition and the home was left in clean.  If the seller was making any repairs from your home inspection or at the request of the lender or appraiser, this is a good time to see that repair, if you haven’t seen it already.

I’ve heard stories of last day accidents that caused damage to the walls or floors when the seller was moving out, and I heard the occasional (rare) story about appliances being swapped out, such as, the original oven for an inferior oven.  This last walk-through would catch those things if the seller hadn’t informed you yet.

Winter Sunset on Turnagain Arm

At this walk-through each room should be examined from ceiling to floor for any new problems since you first inspected the property.  This is not your home inspection.  A formal inspection should have occurred in the first 10 days after your offer to purchase was agreed upon.  This is just a last look for a new problem or a move-out related problem.

Once you have closed and the seller has received his money, it can be difficult to go back to the seller to make any requests.  Outgoing sellers tend to lose motivation once the sale is concluded and money has changed hands.

Real Estate agents are valuable in cases where a problem is located in the final days of a transaction.  In most cases, everyone is still eager for the sale to proceed.  A problem at the end is generally an annoyance for the seller, but this is the perfect time to have the problem dealt with.