Should Sellers Order a Presale Home Inspection?

One of the main reasons home sale transactions fall apart is inspections. This happens when something unanticipated is discovered during the buyers' inspections of the property, and the buyers and sellers can't agree on a remedy.

For example, the sale of a four-year-old, multi-million dollar property in Northern San Diego County recently fell apart because of an inspection. A team of inspectors were brought in by the buyer to report on the property's condition. The roof inspector said that the roof needed $450,000 worth of work. Not surprisingly, the buyer immediately backed out of the deal.

The sellers are suing the roofer who inspected the roof. Other roofing experts agreed that the roof had some problems; it had been improperly installed. However, their repair estimates were all a fraction of the deal-killing bid. The judge might grant the sellers a judgment against the roof inspector. But, this will provide little satisfaction because the sellers are still searching for another buyer.

Would the sellers have been better off ordering a home inspection before they marketed their home for sale? Undoubtedly, they would have. (A home inspection is a comprehensive inspection of the home and all its major systems and components.) The seller's inspector would have called attention to problems with the roof. The sellers could have consulted roofers before marketing their home to get estimates for repairs. Then, they could have marketed the home, disclosing that the roof needed work, along with the repair estimates. Or, they could have had the repair work done before the house was listed for sale.

There's a lot of psychology involved in a home sale. Buyers who are aware of a problem up-front can process this information before making an offer. They can factor the cost into their bid, or ask the sellers to take care of the problem. Buyers often have mixed feelings of excitement and trepidation when they enter into an agreement to buy a home. The impact of an unexpected ad report can destroy their excitement and enhance their fear to the point that they want nothing to do with the property.

First-Time Tip: Sellers who decide that a pre-sale home inspection is the way to go should ask their agent for the names of several home inspectors who are well-known and respected in the local real estate community. Interview these inspectors until you find one who you think will give you a thorough and accurate inspection. For example, if you are selling an older home, use an inspector who has a lot of experience inspecting older homes.

Most states, except Texas, don't license home inspectors. Make sure that the inspector you use is a member of ASHI (American Society of Home Inspectors), or a similar trade organization. ASHI has strict membership criteria, based on experience. Your home inspector should be a licensed contractor, engineer, or architect.

One reason for using an inspector who has a good local reputation, and name recognition, is that you want the buyers, and their agent, to feel comfortable with your inspector. This will add credibility to your report. Your agent should make the report available to buyers to review before they make an offer.

Make sure that your home inspector will agree to return to the property with the buyers to review the inspection report with them. Also, encourage the buyers to have their own inspector look at the property.

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Real Estate V. Stock Market : the Heavyweights Champ !

There are out there essentially three places where you can stack up your hard-earned money: the stock market, real estate and under your mattress. If you decide to put the money under your mattress, beware: it will fruit no interest and, hence, it won\'t grow over time. In fact, it will devaluate.

Competition between Stock Market and Real Estate as the top source of investment returns has been going on since the mid 1960\'s. Typically the Stock Market was seen as the place to invest and Real Estate as the place ... well, to live in. But since the mid 1990\'s the old axiom has changed more and more every year, and today it is entirely revolutionized. The purchase, holding, renting and reselling of real estate assets - especially residential real estate - is now the investment of choice for the majority of investors. Money is pouring in as a direct and proximate consequence of low interest rates, which favor mortgaging over deposits and low-risk asset holdings over high-risk speculative stocks. Demand for residential real estate throughout all urban areas in North America - and to a lesser extent Europe - has gone through the roof. This affects especially condominiums and townhomes located well inside urban cores, but it extends to single-family assets into suburbia just as well. Real estate has become the psychological equivalent of gold, historically considered a tangible, safe store of value.

Tangibility of assets is, in fact, one of the primary psychological reasons of this financial revolution. Given the choice between the purchase of a piece of paper representing the share into a far-away company over which the Investor has no control, and the purchase of four walls and a ceiling that the Buyer can see, touch and paint, the vast majority of consumers today are not going to hesitate for one second : they\'ll take the latter. But there is also a very important practical reason: availability of financing. Scandals have scoured both Stock Market and Real Estate circles, but whereas scandals in Real Estate typically have affected one or a few Sellers and one or a few Buyers, scandals in the Stock Market have affected millions of Investors. Lenders, as a result, have become somewhat leery to lend for the purchase of stocks and bonds and are much more comfortable with real estate market values. Banks lend on appraised values, and it is far more likely for an appraiser of a residential condo to determine its true market value with a high degree of accuracy than it is for a stock analyst to evaluate the books of a corporation with the same degree of accuracy. Afterall, it can be said that House A and House B have sold for a certain price in a certain neighborhood so that it is reasonable to expect that House C will sell for a similar or equivalent price in the same neighborhhod. But it is more complicated to apply the same reasoning to Corporation A, B and C because variables are too great: location, number of employees, performance, market sector, technology, politics, taxes and all the rest. Therefore, a financial institution will lend money to a qualified Real Estate Buyer more readily than to a qualified Stock Market Investor.

The type of Buyer has also changed. With the advent of the internet and all other technological advances, Buyers today are more knowledgeable than ever before. As such, they want to see through things thoroughly and, once again, it is easier and preferable for them to determine by themselves whether they like a piece of real estate than it is to believe to a Stock Broker or analyst. More than ever they want sound advice and hot tips, and there is no question that those they can get from either a good Real Estate Agent or a good Stock Broker. But what the Stock Broker cannot offer is a tour of the company. A Real Estate Agent, on the other hand, will show them the house.

And, finally, population growth, density and age are other important factors in today\'s prevalence of Real Estate over the Stock Market. For instance, here in the Greater Vancouver region population is expected to grow 58 percent to 3.3 million people in the next 25 years according to the Urban Futures Institute. That\'s 1.2 million more people than are here now. The Institute reports that the Baby Boom generation now makes up about one-third of the population. Their aging will result in a surge in the over-55 population of 146 percent by 2030, and that many baby-boomers today are beginning to look towards their retirement years and golden age as a period of calm, enjoyment and relaxion - free of the continuous buy-and-sell hustle typical of stock exchanges everywhere. They are more and more beginning to question Donald Trump\'s make-it-or-break-it philosophy for a more solid and long-lasting approach to the management of their own personal wealth and finances.

Luigi Frascati luigi@dccnet.com www.luigifrascati.com

Real Estate Chronicle

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He is the author of the Real Estate Chronicle, his weblog published online. Luigi holds a Bachelor Degree in Economics and has been practising real estate for the past eighteen years.

The Leverage of the Lease

In today's rapidly changing business environment it makes sense to consider all the options before paying for your business equipment - whether it's a photocopier, computer system, computer hardware or software, telephone system, security equipment, office furniture or anything else. Many business people will give great consideration to the actual purchase, getting quotes from different suppliers and considering different choices. When it comes to paying, however, they simply pay cash or use bank finance without fully exploring the available options.

Most businesses will think of leasing for cars, yet don't consider this option for equipment. Either managements don't realise that leasing companies will lease items with little or no second-hand value; or they don't know which way to turn to get expert help or advice. Again they don't realise that the leasing broker - a concept pioneered by Technology Leasing - came into being precisely to meet that need.

The leasing broker gives customers a single point of contact, providing access to many leasing companies (all with different lending criteria) and picking the lender best suited to the client's individual needs. For example, some leasing companies dislike computer equipment. Others will not lease to businesses with less that five year's trading to show. Some will lease on software on its own, though, while others will lease to brand-new start-ups. The broker must match the client to the leasing company, which means not only the one with the best rate, but also one which will finance the type of equipment and consider the client's credit rating on the merits of the case.

Using leasing allows a business valuable leverage. You pay for the equipment as you use and profit from it. There's and analogy with paying your staff; you wouldn't hand over three or five years' salary in one lump sum , so why pay for your equipment that way? Leasing enables businesses to get the equipment they need now. Those on limited budgets can acquire what they really want, rather than what the budget dictates. In the case of one firm of consulting engineers in Glasgow, leasing the equipment enabled them to upgrade their computer software and put them in a position to handle larger jobs at lower cost.

Leasing is also 100% tax-allowable. As the user you don't own the equipment - the finance company does. This arrangement allows the lease payments to be written off the profit and loss account rather than the balance sheet (where a depreciating item is a liability). The tax saving of up to 40% of the cost of the lease payments goes to the lessor. A large firm of solicitors in London was able with our assistance to lease 40,000 of furniture, renovating the office and improving its professional image, while making the above 40% tax saving.

Another benefit is that you don't need to contact your bank when leasing, so there is no need to impress or persuade the bank manager. You need not meet the broker, either. We arrange leases all over the UK for all kinds of different businesses and organisations, with equipment values from 1000 to 500,000 - in most cases without ever meeting anyone from the client. Everything can be done by e-mail, telephone and post, with the cheque going direct to the suppliers of the equipment.

Why increase your exposure to the bank when there is an alternative? The image of the friendly bank manager belongs to the past. Today the old gibe applies too often - that banks are happy to lend you the umbrella when the sun is shining, only to snatch it back at the first sign of rain. They will quote variable rates at so much over base (all the leasing we arrange is at fixed rates) and hide their profit by charging large 'arrangement fees'. Most bank overdrafts are repayable on demand at a time to suit the bank - hence cases of loans being called in, without the borrower's prior knowledge, after a large cheque has been paid in.

If you have a cash pile and want to pay for your equipment from that hoard, always consider one thing before parting with the money. Is there a better use for the cash than being tied up in rapidly depreciating equipment? Remember that, if you do use cash to pay for such equipment, you can't later, in case of cash need, refinance and get the money back. It may well make more sense to invest the cash in marketing or staff training - or purchasing inventory at discounted rates. Simply holding the cash in case of unforeseen circumstances may also be a wise financial strategy.

When you lease equipment for up to five years, bear in mind that you are not tied to that equipment for the whole term. Clients have the option to upgrade and change some or all of the equipment at any time during the term - although this is more cost-effective if done half-way or later in that term. You simply select the new equipment. A new agreement will then replace the existing one, including cost of the equipment and the outstanding payments on the old contract, which will be discounted. This option allows many companies to keep up with new technology by replacing their equipment every two or three years, often with little or no increase in their monthly payments.

In all, leasing via a broker gives the client more choice. It saves the time and money that would otherwise be spent on shopping around to get the best or right deal. And it provides the best independent advice to suit individual circumstances.

Brian Burns - Technology Leasing Ltd - http://www.technologyleasing.co.uk

Computer Hardware and Equipment UK Leasing Experts