FSBO Selling in Annapolis: Is it for You & Who Should Be on Your Team?

Realtors are an extremely useful professional to have available, when you need them.  The fact is that with the Internet, their utility in some markets--particularly this one--is indeed questionable in many but the most atypical cases.  A couple of caveats/disclaimers before we begin.  1. For Sale By Owner (FSBO) isn't for everyone.  If you're a nervous Nellie, suffer from one or more anti-social personality disorders, or you are just too busy and need to have someone else handling potentially problematic minutae, then it isn't for you.  2. Only a professional who doesn't rely on Realtor referrals will ever tell you this, of which I am one.  3. There will be those who will throw out all types of excuses and accusations regarding this article (particularly folks who need the gullible to continue to pay exorbitant amounts of their hard earned equity for their "services").  I'm sure that the afflicted and impuned can attest that they earn every single penny of their sales commission ad nauseum.  To them, as well as the rest of the offended in the studio audience, I say do what I do and prove it.   Just because something has always been done (like lemmings jumping over the cliff to their collective doom), or it's repeated or chanted over and over again does not make it an advisable course of action, much less make it a fact or true... Finally, this article assumes that the seller is not in an upside down, pre-foreclosure, or other unique/atypical situation.  The majority of FSBO sellers have been in their home for some time and have built up some equity (their house is worth more than they owe on it), know their house has a few, potentially significant maintenance or repair issues (they are non-delusional), and understand that their preferences and tastes are not necessarily shared by others (they are reasonable).  If this doesn't describe you or your situation, then you should seek the services of a professional Realtor. 

Mindset is the first order of business.  The five-Ps--Proper Planning Prevents Poor Performance--is particularly useful in getting from the decision to finally sell your "asset," to the closing and eventual property transfer.  In other words, it takes a lot of work to get to market both efficiently and effectively.  To begin with, this is no longer your home, it's an asset (if it's a real liability, then go back to the first paragraph and reread for advice).  The second order of business is to realize that you need a "team" to perform several of these functions.  Note that FSBO has more letters in it than DIY.  I like to think that's because it takes the efforts of a few more people than yourself to make the sale happen.  So, who should be on your dream team?

In order to compete effectively in the market, you must hire an appraiser to find out the asset's current value prior to listing.  Realtors claim to be able to do this as part of their service, and most have a general idea of what a particular home may go for (and how long it will take), but they ARE NOT TRAINED NOR LICENSED TO PERFORM THIS FUNCTION.  Don't want to see your house languish on the market for months on end? Hire someone who has no ulterior motive than to properly valuate your property...  1st TEAM MEMBER-APPRAISER: Getting an accurate, timely appraisal is the most critical step to accomplish prior to listing.  Having this report helps you figure out what to price the house for and this information will also assist greatly in determining cost-benefit of potential repairs/renovations/upgrades and future negotiations with potential buyers. Note that an appraisal is an evaluation of an asset's value vis-a-vis other, similar assets nearby.  It doesn't magically negate years of wear and tear, dated appliances, or neglected maintenance or repairs.  Also note that an appraisal is a snapshot in time.  Getting one too early might negate its utility.  Finally, note that your buyer will probably have to have another appraisal done if they're getting financing.  They will rarely have a say in which appraiser the bank will use, and it's highly unlikely that your appraisal will do for this purpose.  There's nothing wrong with giving your buyer this information for their own use--including their forwarding it onward to the next appraiser.  The next appraiser can choose to review or discard it entirely, but at least they know it's been done recently before they begin their own evaluation.

2nd TEAM MEMBER-INSPECTOR: Getting an honest evaluation of the asset's material condition is the best way to identify the "delta" between the market value of the home and the inevitable devaluation offset caused by required repairs and replacements.  The best way to get this is to find a licensed, reputable home inspector that can find the defects prior to listing in order to get them corrected.  The inspection report then becomes the "to do list" that can then be shopped around to licensed contractors to get their repair proposals in order to make the selection.  A little Internet research is key to selecting the right professionals for your "team."  Don't have a clue as to who might be available in your area?  Click here to go to MD DLLR's REAL and MHIL lookup page.  Oh, by the way, make sure the home inspector releases the report for your unrestricted use.  Some agreements restrict distribution to the primary client, which could get problematic if you want to use it in your marketing efforts later on (i.e. if you wanted it available for review by potential buyers).  A final word: don't hide knowledge of material defects hoping nobody will notice.  Even if everyone else, including your infallible inspector, misses something significant (like your hidden, abandoned underground storage tank) you could be held liable for failure to properly disclose this information to the buyer.  Blaming the inspector isn't going to magically transfer the liability for lies of omission (feigning lack of knowledge) any more than it will for lies of commission (overt attempts to hide or deceive).  You don't want to be on the receiving end of this type of litigation, so bring up these issues to the inspector -preferably in writing via e-mail, etc.-before the inspection and make sure to transfer this info to the required real estate disclosure forms and your attorney/title company.

3rd TEAM MEMBER-HOME IMPROVEMENT CONTRACTOR: Finding a licensed, reputable, RELIABLE, and reasonably priced contractor is key to "getting r dun"...  This project needs to be focused and time-bound.  Insist on a no-kidding MHIC compliant contract with a firm fixed price for the work.  Ask for references, and above all, make sure that you have a good contractor point of contact to reach out to in the event problems/issues arise.  THIS IS NOT THE TIME TO GO TO THUMBTACK OR TO CRUISE THE HOME DEPOT PARKING LOT FOR HELP.  A prospective buyer is going to want to see evidence of proper permitting and required licensure on any significant work performed.  This also moves the liability for potential future problems with the work to the tradesman--where it belongs!  Don't risk a DIY nightmare or lawsuit.  Just do your due diligence and find the right guys for the job.  Click here to inquire about MHIC license holders in your area.  It goes almost without saying that you want to keep complete, legible receipts of all paid invoices (along with their appropriate license number); copies of cleared permit paperwork; and, if applicable, any contractor/subcontractor lien releases to provide future buyers.  You really don't want this to become an issue later (before or after closing), and if the contractor you're considering isn't willing to provide or doesn't know what a lien release is, find someone else... 

4th TEAM MEMBER-HOME STAGER AND/OR PHOTOGRAPHER: This profession has limited regulation, so you're going to have to do some research to find someone who really knows what works, and most importantly, what doesn't work to effectively prepare and present the asset for the Internet market.  Oh sure, there's other ways to advertise--in lah-lah land--but, unless you're ready to hit the Multiple Listing Service (MLS) with everything you've got from day one, you're adding needless frustration and delay to an already stressful process.  Even if you're pretty good with a camera and think you're all that and a bag of chips with interior decorating, I don't recommend that you DIY.  Remember, this should be a dispassionate, professional protrayal of your asset with the sole goal of getting it sold for the highest dollar--it's not the time to show the world your creativity...  Be sure to ask for references and to request a viewing of their portfolio.  Two reminders.  1. You get what you pay for; and, 2. Watch out for their follow-on referrals to other real estate consultants (you can figure out why on your own). 

5th TEAM MEMBER-REAL ESTATE ATTORNEY:  There are several good ways to find a competent real estate attorney and title company to handle the inevitable contracts and documentation required to complete the closing and property transfer to the new owners.  There are lawyer referral Web sites and the Better Business Bureau can recommend local title companies, but there are other resources out there as well.  Make sure you inform the folks you're considering that this will be a FSBO sale.  This helps them with figuring out the overall costs of doing business with you, and they're going to be much more helpful in most cases knowing that you don't do this every day.  A word of advice.  These folks live in the billable hour world.  If you call them with every single question or concern (most of which you can find out on your own), expect to pay their rates for this service ($150-$450 an hour in the DC area).  Maybe your time and money could be better used doing your own homework for the more germane information gaps.  Of course, if it's a matter of contract law or state/local required documentation, it's best to leave this type of thing for your attorney.  Please note that it's a matter of law that the seller can ask to switch or independently hire their own team members too, but being diplomatic, flexible, and reasonable during the purchase agreement negotiations (in the beginning) will help negate most conflicts.

6th TEAM MEMBER-ONLINE ADVERTISING & THE MULTIPLE LISTING SERVICE PROVIDER:  You MUST BE ON THE INTERNET TO EFFECTIVELY MARKET YOUR HOME.  FSBO services are available locally and on the Internet, and you should exercise due diligence in making a selection.  We have sold several properties without using a Realtor in four different states over the past few years, and we have had good luck with this provider For Sale By Owner.com Web Site, but there are other providers too.  The important thing is to make sure that you're going to be comfortable with the services being provided and their support throughout the process.  Some advice: 1. If it won't post your listing to the MLS, walk away.  2. Make certain that all contract documents and disclosures are reviewed by your attorney/title company BEFORE you attempt to use them.  Buyers are a skittish lot and trying to get them to redo paperwork, no matter how seemingly trivial, is anything but.  Try your dead level best to get this right the first time by reviewing these requirements with the folks you'll be closing with beforehand. 

OTHER TEAM MEMBERS-YOUR SOCIAL NETWORK: The fact that your former home is for sale should be spread like a middle school rumor.  We've seen several instances where Realtors were paid thousands of dollars in commission for almost effortless, quick sales made to the seller's own friends, family, and associates.  Easy money for them, lost equity and profit for the seller.  You just never know who you know that might know someone, anyone, in the market for a house like yours.  In short, let everyone know and be as candid as possible without shooting yourself in the foot.  For example, stating that the unfinished basement has always reminded you of a Mediveal torture chamber (dark, foreboding, etc.), is probably going to be rebroadcast or taken out of context in any number of really creative ways that could be prejudicial to your efforts to sell the property.  Maybe a few comments about how much your kids really enjoyed the school, how your neighbors are saints, etc. might be apropos.  Of course, watch out with the puffery.  The charming pit bull chained to rusty bumper of your neighbor's derilict 1967 Impala isn't really going to get any better no matter how you try to sugar coat it...

Maryland Reduction of Lead Risk in Rental Housing Overview

epa lead infographicThe MD Reduction of Lead Risk in Housing Law went into effect on February 24, 1996.  The law's intent is to reduce the incidence of childhood lead poisoning while maintaining a stock of affordable rental housing.  The implementation of the law was phased in over time, and now all rental houses built in 1978 or earlier must comply unless they are certified lead free.

 

The requirements for landlords of affected properties include the following:

  1. Register the property each year with the MD Department of the Environment (MDE) and pay a $30 fee.  This is done at the MDE office in Baltimore, by calling 410.537.4199 or visiting their Web site at www.mde.state.md.us
  2. Deliver to tenants copies of the MDE's Notice of Tenant's Rights Pamphlet AND the EPA's Protect Your Family from Lead in Your Home pamphlet at the start of tenancy and every two years thereafter.  Both of these are also available at the Baltimore Green & Healthy Homes Initiative Web site Link
  3. Deliver to the tenants a copy of the current inspection certificate for the home upon execution/signing of the lease.
  4. Complete risk reduction treatments in the property prior to occupancy change and have the property inspected by a MD licensed inspector.  You can get the currently licensed inspector contact information from the MDE's Lead Paint Inspection and Abatement Providers Web Link

Full risk reduction treatments are codified in MD Annotated Code, Environment §6-815 (hyperlink to applicable annotated code)  Generally, these measures include repairs required to eliminate hazards caused by chipping, peeling, or flaking lead-based paint on the interior or exterior surfaces of the affected home.  This is verified through the passing of a lead dust test and receiving an inspection certificate from an MDE licensed inspector.  Note that many jurisdictions also require this certificate prior to issuing the required rental license to the landlord.

Not just any contractor can do the repairs required to comply with full risk reduction.  The qualifications and authority to do this type of work is regulated by both the EPA and the MDE.  Moreover, both agencies must certify the contractor or company in order for the work to meet the state's minimum requirements.  Failure to abide by these regulations can result in expensive fines and possible criminal charges in many jurisdictions.  In other words, this is not a DIY project.  All work must be supervised and completed by EPA/MDE certified individuals.  Moreover, there are different classifications that apply to specific types of risk reduction work.  For example, there are two types of supervisory MDE classifications (S2 and S4) and using/hiring the wrong one could invalidate the work and possibly subject the parties involved to fines and litigation.  This is especially important if a landlord receives a notice of defect or a notice of elevated blood level.  If either of these notices is received, the landlord must complete required risk reduction measures within 30 days or risk revocation of rental license, fines, and/or other civil/criminal penalties.  In other words, this is not a situation where finding the lowest bidder is prudent.

We suggest hiring a competent, licensed, and experienced contractor that understands the unique challenges posed to landlords of affected properties.  Many contractors know the short deadline and high stakes involved in these types of situations and will leverage this in their pricing/contracts.  It's best to do your research up front, before the problem is identified by the local jurisdiction or the tenant's medical provider.  The GHHI can provide free, non-adversarial compliance assistance to rental property owners (410.534.6447 or www.ghhi.org).

 

Tokori is an approved GHHI contractor who relied heavily upon their informational materials in drafting much of this article.  The GHHI is a national non-profit organization dedicated to breaking the link between unhealthy housing and residents.  The Baltimore GHHI office is located at 2714 Hudson ST in Baltimore, MD.

 

 

 

Got Mold in Your Maryland Home? Essential Info You Need to Know

 

Rotten sill plate

Fungus converts cellulose and other organic materials into food to support further spore growth--spreading the damage far beyond the initial point of water intrusion.  In this case, significant structural damage occurred due to past water leaks.  The former owner concealed this damage beneath siding without disclosing it.  This home was inspected by a "referred" inspector prior to closing, but the new homeowner was the one who discovered it months later.  Hiring an independent, licensed inspector with building trades experience is critical to discovering deliberately hidden defects that make houses "sick."

Sources of mold in the home

Mold grows wherever high humidity or excessive moisture is found within the home. This can be caused by any number of defects, some seemingly minor at the time, but all of which can significantly detract from indoor air quality.

Chronic exposure to mold is known to cause a host of symptoms including but not limited to:

  1. Itching or irritation of the eyes, nose, or throat.
  2. Skin rashes.
  3. Runny nose and sinus congestion.Allergy Gal
  4. Frequent sneezing or coughing.
  5. Difficulty breathing.
  6. Headaches and fatigue.

CDC's Mold and Health Affects Resources Web site

What can be done if you suspect you're living in a "sick" house?

Consult an IAC2 certified mold remediation specialist who has the building science knowledge and trades experience to properly identify and correct material defects contributing to poor indoor air quality.  Remember, any licensed MHIC "Chuck in a truck" can perform "remediation" services in Maryland, so be sure to ask questions and do your research.          A great place to begin research is EPA's Mold and Your Home Resources Web site

iac2 allPro Labs Logo                          z 5                                        

 

Don't trust your home investment or your family's health to a "handyman..."  Insist on hiring a Pro-Labs® supported IAC2 certified remediation contractor that has bonafide experience!   Click here to find an IAC2 certified individual in your area 

 

 

Landlord Alert! 2015 IECC Removes Historic Building Blanket Exemptions

Thought that hard-wired smoke detector installations and other costly code-compliance renovations were expensive, the new energy efficiency standards will soon be implemented.  How soon?  Anne Arundel County is holding a hearing this February to adopt new changes to the existing building codes, which will include adoption of the most recent version of the International Energy Conservation Code (IECC 2015).  This is a significant change for the county's owners of historic buildings.  Not on the historical register, not to worry, for the the definition of "historical" now covers virtually any residential structure under three stories tall (commerical standards apply to those).  Also, just as any change in ownership, configuration, or occupancy evokes the county requirements to upgrade smoke detectors, etc., just about any permitting "trigger" event could potentially bring with it the entire set of IECC requirements.  Of course, there is a way to defer or exempt a historic property from one or more of these new energy efficiency requirements.  Here's the gist of the new rules/process:

With the new 2015 IECC, historic buildings are no longer exempt. Instead alterations and repairs to historic buildings must comply with the IECC to the extent that such compliance does not compromise the historic nature and function of the building. Where compliance would compromise the historic nature or function of the building a report must be submitted to the code official from the owner, a registered design professional or representative of the historic preservation authority having jurisdiction.  IMT Energy Code Compliance Fact Sheet Link

In other words, a historic property owner must now seek a written exemption, which may or may not be granted, or comply with the new energy conservation code requirements.  Upgrading a property's insulation, fenestration (windows), etc. can result in a significant operating cost increase for a landlord--particularly if it is a typical "short-notice" triggering event, such as an unforeseen change in tenancy.  The potential upside is that a more energy efficient residence should be a more valuable rental asset in the long run and could be a significant marketing plus following completion.

 

We recommend hiring state certified/trained weatherization professionals if you're a rental property owner facing county mandated IECC upgrades.  This will ensure that you're getting the best value for your investment and it will also make the mandatory compliance inspections go a whole lot smoother.  A final word of advice, don't even think about doing these upgrades yourself or without pulling a permit.  We promise that you'll spend a whole lot more in time, aggrivation, and money than you could have possibly thought you were saving!

Image result for public domain images of weatherization

 

 

Without Fools, There Would be no Wisdom...

a.k.a. "Why skimping on or foregoing a home inspection is rarely a bargain"

It pains us to have to be the bearer of bad news, yet we seem to be doing a lot more of it lately.  With YouTube and the plethora of "DIY" reality shows available, it would seem that the sky is the limit when it comes to doing things that a "professional" normally does--saving the cost of hiring them in the process.  At a minimum, the Internet can provide enough information to enable hiring a service provider or tradesman totally based upon the cost/price for their services.  Well, why that may be true to a degree, what is often overlooked are the more nuanced or non-routine conditions that may be encountered by the newly endowed DIYer or inexperienced  inspector sent out by the Realtor's referred franchise (many of whom are unlicensed and relatively untrained).  Unfortunately, it is in situations like these where the extra money paid for a professional inspection is more than worth it--especially if it prevents the purchase of a money pit or identifies a significant, extremely expensive defect.  Here are some examples from projects we've worked in the last year...

 

Don't worry, some bleach will fix it...

The new tenants noticed musty odors in the upstairs master bedroom and reported it to the property manager. Upon investigation, we discovered significant accumulations of mold in the attic--ultimately resulting in an extensive remediation project and insulation replacement.  The cause?  The landlord had hired "some guys standing in front of Home Depot" to put on a new asphalt shingle roof after noticing water staining upstairs.  They did it all right.  We counted three layers of shingles on the roof.  Coupled with the lack of ventilation and the exhausting of both the bathroom vent fans and the clothes dryer into the attic, the extra "blanket" of shingles made the attic a virtual petri dish.  I noted that the inspector the landlord used prior to the purchase of this property should be reported to the state, but, alas, there was no inspection done prior to settlement.  Put it this way, just the cost of putting his tenants up in the hotel exceeded the price of even the most expensive home inspector.  $400ish or $15,000+???  Seems abundantly clear in hindsight, doesn't it?

IMG 0376

Screw those guys! I found someone much cheaper on Craigslist...

We were called in to evaluate and remediate a moldy basement by a REO asset manager.  Upon inspection and sampling, we found several varieties of mold--a virtual cornucopia of fungus--growing wild and freely within.  The manager was furious!  Turns out he had hired another "mold inspector and remediation contractor" to do the same thing at that address and the problem apparently returned within 90 days.  He called us because (you guessed it) the previous guys were not to be found.  I asked him about the initial treatment mold test results from the previous job.  He stated that the "contractor" performed the testing and assured him that a proper remediation was completed.  He added that the photos supplied with the invoicing seemed convincing.  However, when I asked him if he verified the license and IAC2 certification or other credentials of his previous hire, he reluctantly admitted that he found the guy on Craigslist and went with him because there wasn't much time and this guy was way more cheaper than others he contacted at the time.  Our remediation status for that project is a year and counting w/o a reoccurrence.  However, you might say that our $10,000 invoice, coupled with the cost of the former "mystery contractor," certainly bears out the old adage of throwing good money after bad...

 

Does it seem cold in here to you?

Following the death of the homeowner, the executor asked us to "spruce up the place and prepare it for sale." Our standard practice is to perform a home inspection to inform and to properly scope the work in cases like this.   The executor informed us that she would not pay for an inspection as the deceased always kept the place up and, although it might be a bit dated, it was well maintained.  We told her the inspection was inclusive as part of our service agreement and she agreed.  It seemed initially that she might have been right until we went into the attic.  Turns out that the elderly, wheelchair bound homeowner had hired a "weatherization contractor" to insulate and seal the air gaps in his attic a few years ago.  We found the fiberglass batt insulation still neatly bundled and stacked in the attic--dusty and undisturbed.  The executor showed us the virtually illegible handwritten receipt, but the total dollar figure was plainly visible--$3,800...

 

What do you mean the deal is off?!?

A frustrated seller called us out to evaluate a derogatory home inspection report from the buyer's home inspector.  The buyers were threatening to cancel the purchase agreement if all identified defects were not corrected prior to closing, and the report listed over 20 items...  The seller had purchased the newly constructed house just three years previously and was understandably upset.  We found that all but two minor defects (hard to operate windows and a racked interior door frame) were bogus--including an "inoperable" garage door opener.  We produced and delivered the report to our client, who then refused to correct the imaginary defects. The buyers played hardball and demanded their earnest money back, and the house was sold to the contingency buyer.  The initial buyers were angry that they missed out, so they threatened to sue us.  What they should have done is sue their Realtor.  Under Maryland law, ANY referrals made by a Realtor to any party in the transaction MUST include the VERIFICATION of the referral's CURRENT license.  What an unfortunate waste of time and emotional energy: they would have been much better off if only they had hired an experienced, DLLR licensed inspector instead of their Realtor's bargain priced friend... 

 

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