Do We Have To Use An Agent If We Want To Buy A "For Sale By Owner" House?

Dave,

We’ve been on the hunt for a new house! We’ve used an agent to look at four houses so far, but last night we were driving through a neighborhood that we love and saw a great house that is currently for sale by owner. We called the phone number on the sign and they happened to be home. We took a tour of the house and had a great time talking with the owner about all of the house’s character and history. To make a long story short, my husband and I went home and after a lot of discussion we think this house is the one! Do we need to use the agent that showed us houses before to make an offer on the house? We don’t really feel attached to him, he did not find us the house and we think we can navigate the process from here on our own. Any advice?

Thank you!

Becky, Fruita

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Becky,

Ugh…. Why this question?  You are cruel and must love the thought of seeing people squirm!  I can think of few questions I would rather avoid than this one.  The reason I would choose to avoid this question is that the answer may not sit well with my peers, potentially even those on my own team!  First, if you signed an Agency agreement, you are likely bound to this agreement and kicking him to the curb may prove difficult.  However if you did not sign an agreement, then the decision is fully in your court.  This answer boils down to has your agent earned the right to work with you?  Regardless of who found the home or if it is in the MLS or FSBO (For Sale by Owner), has he earned the right to work with you, regardless of who found the property?

By earning the right, I am not just referencing the act of showing you homes.   Showing homes is truly one of the easier and more enjoyable parts of a Realtor’s job.  I will start by pointing out that showing a buyer houses is generally the product of many hours invested in trying to find you the perfect house.  It often means taking calls on the weekends, during family picnics, in the evening or during baseball or soccer practices.  Good Realtors, or even bad ones for that matter, are never truly “off” work and typically behind every showing there are countless unseen and often underappreciated hours of work trying to locate you the perfect property.  I would be willing to bet, if you took a minute of honest reflection, you know if your agent has earned the priviledge to work with you.   If he has, stick with him and have him help you find a solution to your dilemma.  Be honest with him and give him the opportunity to “earn” his keep.  Our agents welcome the chance to earn their commission….. we do not want, or expect, to be paid unless we have earned it and I believe most agents would agree with that position.  

Give him the chance to negotiate a better price, or build his commission into the price of the home to help assist you and the FSBO in making the process go smoothly and avoid some of the legal pitfalls that can be encountered if everyone does not dot their I’s and cross their T’s.  More often than not, we have found that FSBO’s welcome the help and guidance and are willing to work with a real estate agents who can provide value!  Providing value is key in this discussion, because cost is an issue when there is an absence of value.  If he has provided value thus far, give him the opportunity to continue doing so!

Listen, if he really has not “earned” the right, and you are not kicking him to the curb to simply justify or facilitate financial savings, then move on and purchase the home on your own and forego representation. My Grandfather told me long ago, “you will find out all you need to know about a person’s character when you dig into their wallet.”   I am not sure a truer statement has ever been made.   Don’t make the decision based on dollars and cents, make it based on his ability and track record of providing you value and service.  Hope this helps, but I am confident a little soul searching will point you in the right direction.

Dave Kimbrough

The Kimbrough Team

Should You Avoid Purchasing a Home in a Floodplain?

Dear Dave,

I am considering buying a home that is on some property with river access. My concern is flooding. The news has had stories of flooding the past couple of summers and it has us a bit wary of making the purchase.

Can you give me some advice on buying a home that has the potential to flood? What do I need to consider other than flood insurance? I want to enjoy the potential benefits of having a home near the water, but I also want to factor in potential problems that could come up.

I would really appreciate your advice!

Thank you,
Steve and Michelle - Fruita, CO

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Steve and Michelle,

I totally understand your hesitations and purchasing a home that is in the floodplain. If you live in a floodplain then there is always the chance that your home will flood, but remember that is what flood insurance is for! Clearly if you are going to purchase the home and receive a mortgage to purchase then you will be required to obtain flood insurance to get your loan. If you are going to live in a floodplain, then you have to realize that your home may flood and your belongings and home have the potential for extensive damage. Can you live with that? Do you love the house and property enough to live with the threat of flooding? How significant is the threat of flooding? 

Let’s put some perspective behind flooding in Western Colorado. Not intending to minimize the impact or the chances for flooding here, but this is not southern Louisiana where you are at risk of flooding nearly year round. Our main concerns for flooding are heavy rains that cause flash flooding in creeks, washes and ravines or high water in the rivers from spring run off after heavy winter snow in the mountains and a quick thaw. According to FEMA Maps the Colorado River is a high risk flood area in Grand Junction, however this is in areas along the river banks and adjacent areas. If you are considering a purchase that is along the Colorado River, you must accept that the possibilities of a flood are real. My bigger concern would be the potential impact on resale down the road.

“If you are considering a purchase that is along the Colorado River, you must accept that the possibilities of a flood are real. My bigger concern would be the potential impact on resale down the road.”

Rest assured that if you are struggling with the decision, others will follow suit. The threat of flooding will always cause some to back away, however I believe most will understand that the risks are relatively low and not let that impact their willingness to purchase if the property is the right fit. The last issue would be to talk to your insurance professional and make sure that flood insurance costs are not prohibitive. It is my understanding that flood insurance is a fairly low cost insurance policy to have here and not something that will typically break the bank. Checking with your insurance professional should clear up any cost questions as you work through the process.  

I am of the opinion that living near water, whether it is a creek, canal, wash or river is special and likely worth the risks. Remember, just make sure you have flood insurance and make sure to make your payments…just in case! Enjoy!

Dave Kimbrough
The Kimbrough Team

Should we use an agent even if he didn't show us the house we plan to purchase?

Dave,

We’ve been on the hunt for a new house! We’ve used an agent to look at four houses so far, but last night we were driving through a neighborhood that we love and saw a great house that is currently for sale by owner. We called the phone number on the sign and they happened to be home. We took a tour of the house and had a great time talking with the owner about all of the house’s character and history. To make a long story short, my husband and I went home and after a lot of discussion we think this house is the one! Do we need to use the agent that showed us houses before to make an offer on the house? We don’t really feel attached to him, he did not find us the house and we think we can navigate the process from here on our own. Any advice?

Thank you!
Becky, Fruita

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Becky,

Ugh…Why this question? You are cruel and must love the thought of seeing people squirm! I can think of few questions I would rather avoid than this one.  The reason I would choose to avoid this question is that the answer may not sit well with my peers, potentially even those on my own team! First, if you signed an agency agreement, you are likely bound to this agreement and kicking him to the curb may prove difficult. However, if you did not sign an agreement, then the decision is fully in your court. This answer boils down to has your agent earned the right to work with you? Regardless of who found the home or if it is in the MLS or FSBO (For Sale by Owner), has he earned the right to work with you?

By earning the right, I am not just referencing the act of showing you homes.   Showing homes is truly one of the easier and more enjoyable parts of a Realtor’s job. I will start by pointing out that showing a buyer houses is generally the product of many hours invested in trying to find you the perfect house. It often means taking calls on the weekends, during family picnics, in the evening or during baseball or soccer practices. Good Realtors, or even bad ones for that matter, are never truly “off” work and typically behind every showing there are countless unseen and often underappreciated hours of work trying to locate you the perfect property. I would be willing to bet, if you took a minute of honest reflection, you know if your agent has earned the privilege to work with you. If he has, stick with him and have him help you find a solution to your dilemma. Be honest with him and give him the opportunity to “earn” his keep. Our agents welcome the chance to earn their commission…we do not want, or expect, to be paid unless we have earned it and I believe most agents would agree with that position. 

“Give him the chance to negotiate a better price, or build his commission into the price of the home to help assist you and the FSBO in making the process go smoothly and avoid some of the legal pitfalls that can be encountered if everyone does not dot their I’s and cross their T’s.”

Give him the chance to negotiate a better price, or build his commission into the price of the home to help assist you and the FSBO in making the process go smoothly and avoid some of the legal pitfalls that can be encountered if everyone does not dot their I’s and cross their T’s. More often than not, we have found that FSBO’s welcome the help and guidance and are willing to work with a real estate agent who can provide value! Providing value is key in this discussion, because cost is an issue when there is an absence of value. If he has provided value thus far, give him the opportunity to continue doing so!

Listen, if he really has not “earned” the right, and you are not kicking him to the curb to simply justify or facilitate financial savings, then move on and purchase the home on your own and forego representation. My Grandfather told me long ago, “you will find out all you need to know about a person’s character when you dig into their wallet.” I am not sure a truer statement has ever been made. Don’t make the decision based on dollars and cents, make it based on his ability and track record of providing you value and service. Hope this helps, but I am confident a little soul searching will point you in the right direction.

Dave Kimbrough
The Kimbrough Team

Buying a home with pet & smoke odors? Here's how to get rid of them!

Dear Dave,

After months of house hunting, we have found one that is within our budget and which perfectly suits our needs. The problem is house odors. The sellers are an older couple who both smoke and who have a dog and two cats that stay indoors most of the time. We have mentioned our concern to the sellers, but they don't share our concern. We assume that by replacing all the carpets and completely repainting, we could eliminate the odors. If so, we would make an offer that covered those expenses. Two questions: first, do you have any experience resolving odor problems and second, how could we include these expenses in our mortgage so that the cost will be incurred after the closing?

Julie, Location Withheld

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Julie,

It is exciting that you finally found the perfect house, but with less than perfect odors I am sure you are feeling a bit disappointed!  I will admit that odors, especially smoke and pet, are powerful value killers and there is little that zaps the value right out of a property more than if a cat or dog have been acting as though the carpet was indoor grass or the home smells like an ashtray. The purchase of a new home very much involves the senses and if the odor is offensive, it is an immediate turn off, but often times the people who live there have no idea how bad it really is.

The seller does not share your concern because, one, they are no longer going to live there and it really won’t be their problem once the new buyer moves in. Two, they do not have the funds to correct the problem and thus they deny there is a problem because they financially can’t admit to it or afford to correct it. Three, they really do not care if they sell or not, thus only taking an offer from someone who is willing to either fix the problem on their dime or learn to live with the odor! Most of these are not options that buyers want to hear, but at times they are the reality. Fortunately there are a couple of options.

“If you are dealing with primarily smoke odors (as they do not work well on pet odors), an ozonator air purifier may work.”

First, the option of replacing all the carpet and having the interior completely repainted will typically do the trick, depending on how bad the odors are. You must also consider if the pet odors are significant, you may have to paint the floors with Kilz or some kind of seal coat to cover up or seal any pet stains that have soaked into the sub floor underneath the carpet and pad, yikes!! It sounds worse than it is, but remember this may need to be done. If you are dealing with primarily smoke odors (as they do not work well on pet odors), an ozonator air purifier may work. I have seen it do wonders with odors caused by smoking. Good Shepard Flooring here in Grand Junction have these units available for rent and are very cost effective. Generally speaking, ozone ionizers work at a molecular level and can remove smoke odors from homes, cars, boats etc...I will admit that I am no molecular scientist and thus have no “real” working knowledge of how they work, but I know from experience they can do an amazing job at removing smoke smells from a home or car. You MUST remove all living organisms, i.e. people, cats, dogs, fish, plant etc..(anything you want to remain alive), while the unit is in use and then you can all return home after the treatment and the home has been opened back up. I would highly recommend a professional be hired to help with their use, don’t just get the wise idea to go buy one off the internet.

Lastly you can do what is called a 203K loan which would allow you to escrow the funds for the needed repairs after closing. These loans can be more difficult to manage, so finding a lender who has experience with them will make things run much smoother during the purchase process and after close you will have the funds to make the needed repairs to the property. Keep in mind that the repair costs can’t push the loan value needed over the appraised value. Ask your lending professional if they have experience working with 203k loans and their success rate. This can be a very viable option for repairs needed, even if the repairs or changes are just for taste and by this I mean, the carpet does not have to be stained to qualify for a 203K loan, you may just want a different color.

I hope these suggestions help and I am hopeful that you will find a solution.  

Dave Kimbrough
The Kimbrough Team

Most valuable upgrades in new construction homes?

Dave,

My husband and I are buying a new construction home and are very excited to build a house we love. We’ve decided on our lot and are about to meet with our builder to decide on some major aspects of the home. Our question for you is what upgrades should we go for? What holds the most value?  High end finishes vs larger square footage?  I’m sure our builder will also have an opinion, but we’d love to hear what you think as well!

Thanks,
Becca, Grand Junction

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Becca,

Great question! There are many aspects to look at when deciding what lot to choose and which floor plan will best fit your family. Remember to start with the basics and work from there. By basics I mean start with which floor plan will work best. 

When choosing a floor plan remember to stick with a few common features that will help retain and increase future value. Some simple things that I believe are here to stay are floor plans with a great room concept design and feature raised or vaulted ceilings, split bedroom concept (master bedroom on one side and secondary bedrooms on the other side of the house), large kitchens, luxury master baths and a 3 car garage. If you are lucky enough to incorporate all these into your floor plan, consider yourself blessed! If you can’t get them all, you will need to prioritize which of these features are most important for your family. Also remember that today’s open concept floor plans live larger than their square foot size so don’t be surprised if a smaller plan lives larger than its actual size. If you are able to find a smaller plan that lives large you can use some of the savings and splurge a little on your finishes. After you have chosen your floor plan, stick with more basics by focusing on how to best position your home on the lot.

“Keep in mind that you will boost your long term value if you position your home on the lot leaving maximum space along the garage side to be used for RV parking. ”

If you have options of how to best position your home on the lot you will want to focus on how to maximize back yard, privacy and RV parking. Keep in mind that you will boost your long term value if you position your home on the lot leaving maximum space along the garage side to be used for RV parking. This is an easy one to miss, but if the lot allows enough room to make RV parking make sure you take advantage of it, as it can be a make or break feature for some buyers. Lots are getting smaller and pushing your home forward on the lot can help create a few more feet in the back yard and even a few feet can make a big difference.  After you have conquered the basics of the lot and floor plan, focus on the finishes!

Picking the finishes for your home is the fun part and this is where you will give your home some personality. When you start picking finishes ask yourself how long you are planning on living there? If you plan on this being your long-term home then you might pick finishes that focus more on what you want and less on what will prove easier to sell when the time comes. If you are planning on being there a few years and then moving up or potentially moving out then you might stick closer to a conservative middle ground than on the edge of new trends! Timeless finishes are wood and tile floors, granite counter tops, neutral carpet and wall colors (maybe with a splash of color on an accent wall). Hard to go wrong with any of these and they are all for maintaining and enhancing future home value. Most importantly have fun with the process and choose things that you love!

Lastly, for all the Mom’s out there enjoy your day! For every person reading this column, take time to thank your mom for all she has done. Remember, without her you would not be here! Happy Mothers Day!!

Dave Kimbrough
The Kimbrough Team

Do we need an inspection on a new construction home?

Dave,

My wife and I are currently building a house and wonder if we need to get a home inspection even though the home will be new? We don’t want to spend money if it isn’t necessary, but also want to make sure we go through every process correctly. If we do need an inspection, at what point in the building process should we have it done?

Thanks, Josh—Grand Junction

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Josh,

Yes. It is my recommendation that you always get an inspection (especially if the home you are purchasing is NOT new), but I will say that if there is one scenario where it might be o.k. to skip the home inspection it would be in the case of new construction. You have to remember that any new home has been inspected over and over and those inspections have also been inspected. To put it mildly any new construction project has been meticulously inspected from the foundation up and this ensures that each new building has been built to local building codes and is structurally sound and mechanically safe. These inspections catch most mistakes along the way and thus limit the real effectiveness of a new home inspection for anything but minor/cosmetic items. 

A home inspection will cost somewhere between $300 - $450 and my experience is that very few substantive items are discovered on new construction home inspections. Generally items that are discovered are VERY minor, but there have been times where something more significant was found and needed to be corrected. I will also point out that virtually every one of those more significant items would have presented themselves in short order without the home inspection.  From a timing perspective, you should consider the home inspection sometime around the CO, Certificate of Occupancy. If you use this time frame, you can be confident that the home will be mostly complete and all that is left will be mostly cosmetic issues. This is also a good time to do the inspection as any items identified can just be added to the builders punch list to complete prior to close. Although there are no guarantees with getting any home inspection, they do provide some surface level peace of mind. Also remember that every builder will provide at least a 1 year home warranty for your entire home and most of them are willing to help even after that one year if the problem proves to be a material or workmanship issue. 

Ultimately what an inspection on a new home provides is some insurance that there are no major problems with the quality of construction, workmanship or mechanical systems. You have to ask yourself if the peace of mind is worth the cost? I can say that I have not seen a home inspector yet that is as qualified as the general contractor you hired to build your home and the inspections your home goes through prior to getting its certificate of occupancy have been extensive and complete. It is a call you must make, but it is completely understandable if you skip the home inspector on a brand new home!  Hope this helps and hope you had a wonderful Thanksgiving!

Dave Kimbrough
The Kimbrough Team