Help, A Home We Want To Purchase Smells Awful!

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. Two questions.  First, do you have any experience resolving odor problems and second, how could we include expenses like these in our mortgage that 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 saps 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.

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.  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 but you can also pick one up online for a few hundred dollars.

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

How Do We Create An Outdoor Space With Great Resale Value?

Dear Dave,

My wife and I have been in our new home for about a year now. We are considering putting in a hot tub.

We have a couple of different options to locate the hot tub and wanted your advice. One idea would be to put the hot tub on the small patio that is off our master bedroom. However, that would be the only access and we aren’t sure that is a good idea. The other option is to put it on our patio off the dining room - which would definitely be a more central location, but not as secluded.

Do you think it makes a difference for future resale potential? And if so, what do you think is best? Thanks for your feedback!

Joe and Sydney, Grand Junction

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Joe and Sydney,

Making improvements on your outdoor living space is always a smart move! For resale it is hard to beat the bang for your buck of outdoor home improvements.  Outdoor living spaces are very in vogue and there is little that lights the fire of a home buyer like a really well done outdoor living area. One thing to keep in mind is that hot tubs are a bit like pools, people either really like them or they really don’t and there generally is not much in between. If you simply add a hot tub to an existing deck or patio your financial return will likely be quite underwhelming, however creating a truly amazing outdoor space will add real money and end up being a real selling point when and if you ever decide to sell. All that being said, there are a couple of things you can do to maximize the space and the improvement.

First, concentrate on making the space not just a hot tub space. Make the effort and spend the time to create a space that provides not only a home for your hot tub, but a space that creates an atmosphere and ambiance of a true outdoor living area. Marry your hot tub with a multi-purpose area that serves as an entertaining or sitting area and see the impact soar. I am not sure it matters if you situate the hot tub off the master bedroom or off the dining area if you really create something wonderful. Both locations will have their appeal, if you go off the master you probably want something a bit more intimate and private and if you decide to locate off the dining area you want to shoot for making it conducive to entertaining. 

On another note, make sure to add the extra element of lighting to your area. Lighting is far too often overlooked as a very inexpensive item that provides high impact and is essential when trying to create a mood and ambiance. If you go the extra mile and enhance your landscaping to accentuate the new hot tub/entertaining area you will be well on your way to creating a space that many hot tub lovers and even those who are not will covet!

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc. 

Can You Go To An Open House Without Your Agent?

Hi Dave,

Just curious if this applies to Open Houses: if a couple has chosen a real estate agent, should we not go to open houses on our own? Do we need to announce who we're working with when we walk in? We had seen a particular house with our agent, and the next week it came up as an open house and we wanted to see it a second time, but didn't want to take up the agent’s time again.

Name withheld, Grand Junction

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Name withheld,

This is an easy question to answer…. Finally!  Just kidding, but the answer is easy!  An open house is held “open to the public” for anyone to come look at a home, regardless of their agent representation.  The scenario you described happens all the time and it is always best to just let the agent who is working the open house know that you had seen it with your agent and you are just coming back to take a casual second look.  Let them know who your agent is and leave it at that.  It was kind of you to be respectful of your agent’s time, but I am sure he/she would have been happy to go with you if you desired.

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc. 

Is Xeriscaping A Good Idea For Re-sale?

Dave,

Our landscaping needs a complete overhaul! We were in the middle of drawing up plans to revamp our front and back yard when I ran across some ideas for xeriscaping online. I can’t believe I didn’t think of it in the first place! We would love the low maintenance aspect of it since my wife and I travel a lot. The only thing is we’re thinking of downsizing in a few years. Before we take the leap and jump all in on the idea, what’s your opinion on the style and furthermore if it will turn away buyers once we go to sell.

Love your column!

Cynthia & Bob, Grand Junction

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Cynthia and Bob,

I think it’s a great idea!  Xeriscaping is quite popular and can be very attractive, especially in our “high desert” climate that easily lends itself to that style.  The one hesitation I might have revolves around what type of home you have?  If your home/neighborhood lend itself to families with younger children then I might lean toward xeriscaping in the front yard and having some grass/yard in the back.   I totally get the low/no maintenance attraction, but people with younger kids tend to want a grass back yard for them to have a play area and gravel does not make the most inviting play area for younger kids!  If you take these things into account I do not believe you will have any issues when it comes time to sell, in fact it might be a selling point to many buyers who crave the low/no maintenance yard as peoples time only becomes more valuable as we all get stretched even more thin!   Again, great idea and enjoy your new landscaping! 

Dave Kimbrough

The Kimbrough Team

What Is The Deal With Sellers Paying For The Buyers Closing Costs?

Dave,

We just listed our home for sale and our agent informed us that buyers in our price range are going to ask US to pay THEIR closing costs.... I was floored.  I have never asked anyone to pay my closing costs when I have purchased any of our homes and certainly do not have much interest in paying them on a buyers behalf.  I am going to have my own costs to pay, without paying theirs too.  We do not feel like we should pay someone to purchase our home.  The whole thing just does not make sense to us  and when we asked her why?, she just said, “it is the way it works now days.”  I agreed and just moved on, but it still does not sit well with us.  Could you please give us a better explanation of why we will be required to pay the buyers closing costs? 

Les and Joanna, Grand Junction

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Les and Joanna,

I can assure you, you are not the only sellers I have heard this from, “if they cant afford to pay their own closing costs, they certainly cant afford to buy my home”.  Seller paid closing costs, must be somewhat of a newer trend, as it is my sellers who are generally over the age of 50 that have a real disdain for seller paid closing costs, they are fundamentally opposed to it.  I really believe most of the time it is not the costs involved, it is the lack of understanding and the generational gap of a time when you just did not ask for help. Remember, you are not required to pay the closing costs, but let me see if I can make a case for why you should! 

There are a few reasons why this has become quite the trend in home buying.  First, the lenders will generally allow a seller to pay up to 3.5% of the homes purchase price towards the buyers closing costs.  If the seller agrees to participate by paying the buyers closing costs, this lessens the buyers “cash burden” at close and thus allows them to purchase the property with less money out of their own pocket.  This leads us to our second reason this practice has become so vogue, many buyers in today’s market are “cash poor”. 

Lets face it, as a society we largely live hand to mouth and save very little, although our saving habits have become somewhat better since the fiscal crisis of the past several years.    Statisticbrain.com reports (numbers verified 12-26-2013) the average American family has a savings account balance of $3,800 and 25% of American families have no savings at all and 40% of families have no plan or savings for retirement!  I think it is safe to say that we are a “cash poor” society and the more cash it takes to purchase a home the fewer buyers there will be who will be able to buy.  It really is quite simple, you are paying their closing costs to lessen their cash requirements at close and thus increasing the size of the overall buyer pool.  By saving the up front cash expense of closing costs, the buyer may also be wanting to make some improvements or updates to the home after closing and keeping some cash in reserve will allow them to do just that.   Keep in mind that it is by no means, “every buyer” who “needs” the closing costs paid on their behalf.  Many buyers choose to have their closing costs paid by the seller, as this allows them to “roll” their closing costs into their loan.  By rolling their closing costs into their loan, a loan that they likely have at around 4%, it requires them to take less cash out of other investments that may be performing at a higher rate of return than the 4% they are borrowing at. 

As you can see, there are several reasons “why” buyers will ask you to pay their closing costs and you can be assured that if you refuse, many buyers will move on to another property, especially in the under $300k price range.  I always advise my sellers to pay the closing costs and negotiate from a bottom line sales price (their net), rather than getting caught up in who is paying what closing costs.  Just ask your real estate agent to give you a net sheet so you can see what your walk away number will be and negotiate off your net amount, as this is the only number you should really be concerned about.  I hope this helped. 

Dave Kimbrough

The Kimbrough Team

RE/MAX 4000, Inc.