home-buying

Do you know where your property lines are?

by John Rice

Based on nearly 20 years of experience, I am going to guess you will say you do.

There are two questions on the Seller’s Disclosure about property lines that make me think this.

One questions asks if you know the property lines. I do not think I have ever had a seller answer no to that quesiton.

The next question asks if they are marked in any way. Many sellers answer no to that question.

I have always wondered how they know where the property lines are if the boundaries are not marked in any way?

The truth of real estate is that most of the time, we do not know where the property lines really are. The only way to be sure is to have a pin and stake survey done. Many people assume that was done when a fence was installed but that is not always the case.

When buying a house, few buyers purchasing a home in a neighborhood care to find out exactly where the boundaries are. Most assume it is the fence or if no fence exists, it is the mutually agreed upon line where the neighbors stop mowing their grass.

And for all intents and purposes , if everybody is happy, then that pretend line is just fine.

Buy if you are going to add a fence or some structure that may encroach on the set back lines of your property, the best thing you can do is get a survey done. Nobody likes to spend a few hundred bucks on something they think they don’t need, but if a neighbor doesn’t like where you put your fence, you better hope your fencing company guessed correctly where the property line actually is. It can get even more expensive if you do something like build a deck within the set back line, which is the minimum space required along the perimeter of your property. If the building inspector finds out, you will either need to remove it or apply for a variance. Neither are fun and will cost more than a survey.

Plus, getting a survey done allows you to answer affirmatively that you actually DO know where the boundaries are because they ARE actually marked.

Best question to ask your Realtor

by John Rice

Where is the best place to spend (insert your budget here)?

That is the single best question to ask your real estate agent if you are buying in an area you know nothing about.

I recently worked with an out of town buyer who found a for sale by owner home in a town not too far outside of Lexington. It was a very nice home. Seemed to offer a lot for the money. Large lot. Great view. Nicely updated.

I could not recommend this house though.

My buyer asked me a few questions about this home. I told them that while it is a very nice house, it is NOT in a neighborhood most people in this small town pick at this higher price point. I then mentioned a very popular neighborhood in this town, saying that is the one most local people find the most desirable. I then said that to local people, that super desirable neighborhood is the one they grew up with as the pinnacle place to live. If they reach the point of being able to afford that neighborhood, they move there. I also told them the house they were interested in will likely sell to an out of town buyer who doesn’t know anything about the local real estate market.

Well, when I went to check on the comparable recent sales in this price range, guess what? Almost ALL of the recent sales were in that exact neighborhood I mentioned. Know what else? My buyer told me that the seller had told them that almost everybody who has seen the house was from out of town.

And all this is why you should ask your real estate agent where is the best place to buy within your budget. You do not want to get stuck with a house that will later be hard to sell because you knew nothing about the local market.

What are escrows & WHY did my mortgage go up?

by John Rice

Welcome to homeownership.

If you are new to this, there is a day coming in your future that happens to everybody who owns their home.

You will be having a perfectly ordinary day. Your life will be going swell. You’ve been excited because the value of your home is going up according to the zestimate, which you frequently check.

Then you go to the mailbox or check your email. You’ve got something from your lender. It’s called an escrow analysis and has a bunch of numbers all over the place. It is almost as confusing as your cell phone bill and all those stupid docs you signed when you bought your house. You have no idea what it all means. All you know is that it says your mortgage payment is going up starting in a couple of months.

There goes that perfectly ordinary day you were having.

Can they do this to you? Yes they can. Here is why and how it all works:

In case you didn’t know, the escrow account is for money you give the mortgage company within your monthly payment to budget for the property taxes and homeowner’s insurance. When those annual bills come due, the mortgage company pays them on your behalf.

Here are the reasons why your mortgage payment may increase due to escrow accounts:

1. The assessed value of the house increased. This is when the PVA looks at houses that have sold around your house and thinks the value of your house has gone up. It’s a good news/bad news thing when this happens. It means your net-worth just went up but also means you’ve gotta pay more in taxes when they increase the assessed value. You will get a letter from the PVA when/if this happens. They have the right to do so annually and there is an appeal process.

2. The tax rate increased. The amount of taxes you pay is a simple math problem. It is your assessed value multiplied by the tax rate. If your assessed value did not change but the tax rate went up…..well, you’re paying more in taxes.

3. Your homeowners insurance went up. (This is happening all over due to the crazy storms we have had.)

4. There was a shortage of funds in the escrow accounts to pay the taxes and homeowner’s insurance. 

The mortgage company collects this money over the course of the year so they have enough in the escrow accounts to pay the property taxes and homeowners insurance on your behalf. If the projected expenses for next year exceed what you are currently paying into those accounts, they can raise the amount you pay into escrow every month to make sure they have enough to pay those bills when they come due. Should you have one year when there is an excess amount left over, the amount you pay for escrow accounts could go down, making your mortgage payment less.

5. And the last reason is sometimes it can be a combination of any of the above reasons.

I sure hope this helps make sense of something that is not at all fun to deal with!

Reading the tea leaves when your house isn’t selling

by John Rice

House not selling? Wondering how to interpret what is going on? Here are a few of my thoughts on some common situations. The following assumes your house is being presented well online with plenty of good pictures and marketing remarks that describe it with more than trendy generic AI generated verbiage.

The house that gets lots of showings but no offers

Assuming that you don’t have some negative that wasn’t obvious like backing to a highway, apartments, or having an Eiffel Tower looking electrical thing in your yard, this situation simply means that the house doesn’t live up to what buyers expected. The good news with this one is that buyers think the price for what they thought the house would be is okay or else they wouldn’t come at all. The solution here is to either lower the price or improve the house so that it meets the expectations buyers have. Whichever is easiest.

I once had a condo that got tons of showings. I kept encouraging the seller to paint. Once we did, it sold. I recently had another listing that was getting tons of showings. It was a nice place, but just felt like a 15 year old house that needed a fresh vibe. The seller did some painting and replaced the flooring in all the bathrooms. As soon as it was done, it sold. Both of these places looked great online, and just needed to match what buyers thought they were getting. Both were improved for far less than the price reduction we would have needed, so both sellers actually came out better by going that route.

The house that gets no showings

This one is easy, but hard for sellers to accept. The price is too high. If a house is presented well on the MLS, and still nobody comes to see it, all you can do is lower the price. Real estate is all about price, location, and condition. You can’t change the location, but the other two you have some control over.

Also something to think about is this: If you have a $400k house and you’re asking $475k for it, buyers are comparing it to other houses that are really worth the asking price. The buyers who are going to spend what your house is really worth aren’t even going to see it since the list price is over their budget.

The house that gets the same bad feedback over and over

This is the least fun thing that can happen to a seller. I mean, they get kicked out of their house for showing after showing with no offers AND get to hear what people hate about their house.

Several years ago I had this really cool older house that had been mostly remodeled. It had the smallest living room I have ever seen……must have been the smallest anybody had ever seen since that is all I kept hearing after the showings. I’d ask for feedback and the buyer’s realtor would go on and on about how beautiful the place was, how unexpected it was to have walk-in closets in such an old house….then they would say their client wasn’t going to buy it since the living room was so small.

We tried putting in smaller scale furniture, but that didn’t help. After that, all we could do was drop the price. A price reduction opens the house up to a larger pool of buyers as well as enticing them to overlook a shortcoming if they are getting a better deal. We got that one sold too.

If you have a situation that doesn’t fit into these scenarios, give me a shout and I’ll let you know what to do.