Tag: house

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Getting You Where You Want To Go

For some reason people love this tag line that I use. I think it’s because we all can relate. You are not selling and/or buying a home on a lark, you have something to accomplish. My approach in all things wherein I am giving professional advice is to discover what it is you want to accomplish (where you want to go), and then to assess the best way to get there given your own particular parameters (the journey).

Today I’m thinking about pricing and all the comparative things taken into consideration when looking at the market and deciding how to proceed.

We Realtors look at many aspects of the most current data available to help you accomplish your goals, and often the type of data or the methods used to assess them have acronyms or nicknames.  Here are a few of those & some things to keep in mind on your journey:

“Comping” – it is said that a Comparative Market Analysis is a product of both art and science. The reason this is said is that, depending on any given property and it’s unique features, there is rarely (except perhaps in a new development) an apples to apples comparison available. Therefore there is a lot of give and take in the assessment of any “comp” when compared to the subject property. Let me give you an example:
~ Let’s say we have a property with great location and large lot size that is also remodeled, but is not on a public sewer line. Let’s also say that no properties right close in to it with similar square footage and bedrooms etc have sold in the last 6 months. What will your agent do to comp it? Well, there are several ways to go:

  • One might go back farther in time to see if there are close-in comps. (This CAN be problematic given the volatile nature of today’s market… but might be necessary if no other options are available.)
  • One might look at other properties with different ranges of square footage. (This CAN skew your comparison of price per SF as a smaller home typically will sell for more per SF than a larger one.)
  • And/or one might go farther out from the subject property’s neighborhood while also looking at smaller lot sizes. (This can work if other neighborhoods with similar aspects are used to produce those farther-out comps. The Realtor really needs to understand the intricacies of the neighborhoods involved, and if moving into other neighborhoods, factors such as the desirability of being on a public sewer line may come into play, and additionally affect the picture.)
  • Another thing that might need to happen is looking at properties built in a different time-range (i.e. if no comps can be found built in 1920, then you might need to use some built in the 50’s or 70’s with hopefully similar updating etc)

None of these is ideal, but depending on what comps are available, you may see your Realtor incorporating some of these techniques.

I bring all this up to point out that, while your Realtor will use the best method available to your particular situation in order to give the most accurate look at what your property will likely sell for on the open market, a lot of judgment is called into play while coming to this assessment.  If a home has a completely remodeled kitchen and a comp does not, but has more bedrooms or a better location, or a much larger lot, then these might still be directly comparable depending on the other particulars involved, and how many of them are good matches to the subject property. Suffice it to say that your Realtor has the experience and discernment needed to weed through these brambles while bringing together the best information possible to help you determine market value, especially if they have expertise in your particular community.  So, trust their advice, and know that it is a lot more complicated in most instances than most believe it to be.

***Another note on “Comping” before I step off my soapbox- ‘Active’ comps (in my opinion) are interesting to note in order to gauge where you will fit in competition. However, the only real ‘Comp’ is one that has Sold. You really only ultimately care what someone actually was Paid for that comparative property.

DOM / “Days on Market” – It is really interesting to note how long a property was on the market before it sold. Many want to know what this means, particularly in the context of a Comparative Market Analysis. Basically speaking, when a house has been on the market for an inordinate length of time, it means one of the following:

  • It may have been priced too high to start. Most of the real excitement happens when a property is fresh on the market.  When it sits for awhile, it usually loses a little luster to those who have already become aware of it and therefore if the price is too high, it often eventually comes down in increments before getting to ‘Sold’. ‘Sold’ is what someone is willing to pay for the property.
  • It may be competing with properties that have more updates or better amenities.  In this market there are so many properties to choose from, that when putting your home on the market, these things really need to be considered when pricing.  This reason for a property sitting on the market still, again, boils down to price.
  • It may have onerous viewing instructions. By this I mean that, while a Seller’s needs and desires absolutely need to be accommodated, a property is most likely to be shown the most often if it is easy to show.  If a home has instructions that read “Call 1st”, then a call is made and an appointment time set fairly easily, and often for that same day while someone is, for instance, at work.  If a property reads “Appointment Only”, then it is possible, and in my experience likely, that it will be shown less often than one that is more accessible, and often stay on the market longer.  That said, when there are pets involved that need to be removed, or day-sleeping Sellers, or children whose nap times need to be taken into consideration, then your Realtor will do their very best to make the showing instructions as friendly as possible and assist in whatever way they can in order to make it as easy as possible for you. Just something to be aware of.
  • It may have mitigating circumstances like location problems, or curb appeal issues, or any number of things,
  • and/but the core reason can almost always be tied to price.

3rd party/REO’s – When looking at other properties and bemoaning the fact that there are so many that seem to be priced unfairly low (that is if you are a Seller wanting to list your own property), it is tempting to price your property differently than the ones in these categories if yours is not.  What you need to know is that even though your property is not in one of these categories, it is still competing with them, and the comparable data is still valid.  I know this is harsh, but the true value of your home is   determined by the Buyer, so the market is just what it is.   If a Buyer can get a comparable home down the street for a lower price because it is an REO (bank-owned) property or a Short Sale (3rd party), then those are just the facts, and you need to consider pricing accordingly.

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Market Activity Report November 1-7, 2010

Last week Lake Oswego had 14 New listings, 14 Pending sales, and 10 Closed sales, according to RMLS.

See below for further details:

NEWLY LISTED (Nov. 1-7, 2010)

Address Price Sq Feet BR Baths Type
57 Galen St $77,000 689 1 1 Condo
16250 Pacific Hwy #47 $109,900 1305 2 1 Condo
194 Ridgeway Rd 11B $205,000 1659 2 1 Condo
5056 Foothills Dr G $225,000 1252 2 2 Condo
4314 Botticelli St $229,000 2098 2 2.5 Condo
18530 Pilkington Rd $244,900 1925 3 2 Detached
1818 Country Club Rd $269,000 1596 4 2 Detached
18700 Wood Duck Way $429,900 2158 4 2 Detached
4705 Lakeview Blvd $539,990 2700 3 2.5 Detached
5836 Suncreek Dr $599,000 2500 4 2 Detached
17157 Blue Heron Rd $689,000 2749 5 3 Detached
3056 Wembly Park Rd $695,000 2611 4 2.1 Detached
2990 Glen Eagles $795,000 3650 4 2.5 Detached
12512 Shelby Ct $799,999 4975 4 4.5 Detached

PENDING SALES (Nov. 1-7, 2010)

Address Price Type BR Baths Sq Feet
37 Crestfield Ct $69,900 Condo 2 1 923
45 Eagle Crest #320 $109,900 Condo 1 1 768
3433 McNary Pkwy #408 $119,900 Condo 2 2 1008
464 5th St $197,715 Condo 2 2 1092
692 2nd St $259,000 Detached 3 1 1700
2602 Orchard Hill Pl $399,000 Detached 3 3 2568
17187 Carlson Ct $405,000 Detached 4 3 2082
17640 Treetop Way $447,000 Detached 4 3 2718
14370 Pfeiffer Dr $629,000 Detached 4 3 3318
1225 Lake Garden Ct $699,995 Detached 4 3.5+.5 3558
15578 Village Dr $799,000 Detached 3 3 3630
3155 Douglas Circle $925,000 Detached 5 3.5+.5 4517
2111 Hazel Rd $1,089,000 Detached 4 5 4894
670 Iron Mt. Blvd $1,250,000 Detached 4 3.5+.5 5208

SOLD (Nov. 1-7, 2010)

Address Original Price Closed Price Type Sq Feet CDOM
668 McVey #54 $140,000 $140,000 Condo 992 5
3508 Red Cedar Way $249,000 $220,000 Detached 1386 3
1462 Greentree $435,000 $362,500 Detached 2507 123
17670 Marylbrook Dr $499,000 $500,000 Detached 3067 77
550 Middlecrest Rd $624,900 $550,000 Detached 2240 187
571 2nd St #307 $739,500 $559,000 Condo 1561 626
18263 Anduin Terrace $625,000 $565,000 Detached 3100 92
17467 Westview Dr $727,900 $695,000 Detached 3774 4
844 5th St $829,000 $795,000 Detached 2590 32
16772 Alder Circle $1,995,000 $1,799,000 Detached 3151 154

Criteria: Homes in the 97034 and 97035 zip code, listed, pending or sold between the dates listed above as reported by the Regional Multiple Listing Service (RMLS). DETACHD refers to Single Family Detached Residence, MFG refers to manufactured housing, and ATTACHD refers to single-family residences with some portion of the structure attached to another property, but not constituting CONDO ownership. DOM stands for days on market, or the number of days from when the listing became active and when it received an acceptable offer, with CDOM standing for “cumulative days on market” accounting for “refreshed” listings

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Open Houses for November 7, 2010

Before you go to bed tonight, be sure to set your clocks back one hour. Then when you get up tomorrow morning, head on out to check out these 24 open houses in Lake Oswego.

BR BTHS Sq Ft Open
4057 JEFFERSON PKWY $179,900 3 2.1 1460 1 to 3
3854 BOTTICELLI ST $185,000 2 1.1 1132 12 to 2
4473 GOLDEN LN $249,000 2 2.1 1980 1 to 4
12802 BOONES FERRY RD $287,500 3 2.1 1454 1 to 5
53 ORIOLE LN $304,900 3 2.1 2072 12 to 3
14251 CAMDEN LN $385,000 3 2.1 2179 11 to 3
4859 SAGE HEN WAY $415,000 4 3 2417 1 to 3
17802 HILLSIDE WAY $424,900 4 2.1 2965 12 to 2
17791 HILL WAY $459,000 4 2.1 2506 1 to 3
326 LAKE BAY CT $464,900 3 2 1400 1 to 3
725 10TH ST $489,900 4 2 2016 2 to 4
19319 SW DOGWOOD CT $499,900 4 2.1 3105 1 to 4
19443 KOKANEE CT $499,900 4 2.1 2812 1 to 4
19415 SW DOGWOOD CT $519,900 5 3 3517 1 to 4
19263 MEGLY CT $559,900 5 3 3213 1 to 4
1277 HIDE A WAY LN $559,900 5 3 3120 12 to 3
12448 ORCHARD HILL RD $649,000 4 3 3302 11 to 2
5511 FIELDSTONE CT $685,000 4 2.1 3037 12 to 2
5371 LANGFORD LN $694,950 4 2.1 2950 12 to 2
15459 VILLAGE DR $695,000 4 3.1 3059 1 to 3
14480 KRUSE OAKS BLVD $725,000 3 3.1 4661 1 to 3:30
18209 SIENA DR $1,058,000 5 3.1 3839 2:30 to 4:30
1808 RIDGE POINTE DR $1,269,000 5 4.1 4155 2:30 to 4:30
1104 FOREST MEADOWS WAY $1,495,000 4 3.1 5756 2 to 4
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Preparing for Winter Weather

In this month’s Hello LO (the monthly newsletter mailed to the residents of this fine city) there is an excellent Winter Preparedness Guide. In the interest of helping you to protect your real estate investment, I thought I’d share with you some of the important suggestions.

The City is asking you
* To be sure your address is clearly visible and not covered with snow or ice
* To keep a path clear from your street to your front door
* To have an emergency supply kit
* To use flashlights instead of candles to help prevent fires
* To be aware of carbon monoxide hazards from outdoor heating devices used indoors

Make sure your smoke alarm is in good working order
Now is the time of year to check the batteries in your alarm and be certain that they are working. Current Oregon law requires that homes that are bought or sold have smoke alarms with a hush button feature, and either a 10-year lithium battery or be hard-wired with a back-up battery. There should be a working smoke detector on every level of the house with special attention paid to areas with bedrooms.

Food Safety
In a power outage, if your freezer is full, food will stay frozen for about 2 days. If it is less than half full food will stay frozen for about 1 day. Cover the freezer with blankets or sleeping bags to help food stay frozen longer. When the power comes back on, examine all of the food for spoilage and if in doubt, throw it out.

For food in the refrigerator, be especially careful of meat, fish, milk, mayo, and eggs. Again, if in doubt, throw it out.

Gas Shutoff
If you need to have your gas shut off, contact NW Natural at 503-226-4211 and they will send a technician to assist you. If, however, an emergency arises where you need to shut the gas off immediately, follow this simple procedure:
1) Locate the shutoff valve on the riser pipe (the pipe running from the ground or through the foundation wall to your meter). To turn the valve you will need a crescent or pipe wrench. A wonderful home inspector I use suggests every home owner buy a simple wrench that fits this valve and hang it on a nail behind the riser pipe. This way in a true emergency you aren’t fumbling around in the garage looking for the right tool. When the valve head is parallel to the riser pipe, it is in the OPEN position.
2) Turn the valve head crosswise (perpendicular) to the pipe and it will be in the CLOSED position. There are also natural gas shutoff valves on the lines fueling individual gas fireplaces. Once the gas is off, LEAVE IT OFF.
3) Call NW Natural, 503-226-4211, when you are ready to have the gas restarted.

Storm Clean Up and the Tree Code
A permit is not required to remove downed trees. However, pictures are encouraged for documentation.

An Emergency Tree Permit or a Hazard Tree Permit needs to be issued for trees that present an immediate danger of collapse or present a danger to either people or property. Again, be sure to take pictures. Both permits are obtained thru the City and may require a Hazard Evaluation Form completed by a Certified Arborist, along with photos. For more information, call the Community Development Department at 503-635-0290 or click here.

Photo courtesy of Cornell University
Don’t Forget Your Pet
OK, I know this isn’t about your real estate investment, but it is about an entirely important emotional investment.
* Consider inviting your outdoor dog or cat inside when the temperatures dip to freezing.
* More dogs are lost in the winter than any other time of year. In snow or ice dogs loose their scent and more easily become lost. Keep them on a leash or in their fenced yard, and be sure that they are wearing an ID tag and/or an ID chip.
* Cats will seek warmth and have been known to crawl under the hoods of cars. Get in the habit of banging on your car hood before starting your engine to give a cat the chance to escape.
* Thoroughly wipe your pet’s legs and stomach when you bring them inside out of the snow. They can ingest anti-freeze and other chemicals when licking their paws and grooming after they come indoors.
* Don’t leave your cat or dog alone in a car. They can freeze to death in January just as easily as they can die of heat exposure in July.
* Don’t let your dog run loose on a pond or lake where ice could break and they could drown. And this year, with the lake drawn down, keep them out of the murky mud in which they could become stuck.

It is really hard to know what to expect from Old Man Winter. Some years we get next to no snow or ice. Other years we get hammered. But in any case, we need to be prepared. I hope you have found this guide useful.

Dianne

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Open Houses for 10/24/10

The first storm of the season is supposed to blow through Portland this evening. You may need galoshes, but these 22 houses are worth seeing:

Address List Price Bedrooms Baths Prop Type Open
221 CERVANTES $144,000 2 1.5 CONDO 2:30 to 4:30
16250 PACIFIC HWY $209,000 2 2 CONDO 2 to 4
29 GREENRIDGE CT $239,000 3 2 ATTACHD 1 to4
6062 BURMA RD $269,987 4 2 DETACHD 12 to 3
3684 RED CEDAR WAY $289,900 3 2.5 DETACHD 1 to 4
1851 KILKENNY DR $384,900 4 3 DETACHD 12 to 4
14 MONTICELLO DR $399,950 3 2 DETACHD 1 to 3
151 DEL PRADO ST $419,000 4 2.5 DETACHD 1 to3
12 SCARBOROUGH DR 479900 4 2.5 DETACHD 1 to 4
19319 SW DOGWOOD CT 499900 4 2.5 DETACHD 1 to 5
19415 SW DOGWOOD CT 514900 5 3 DETACHD 1 to 5
19263 MEGLY CT 559900 5 3 DETACHD 1 to 5
19245 SW MEGLY CT 569900 5 3 DETACHD 1 to 5
17981 MEADOWLARK LN 584900 3 3 DETACHD 10 to 4
9 ABELARD ST 599000 5 2.5 DETACHD 2 to 4
3943 TEMPEST DR 599000 4 3.5 DETACHD 12 to 2
17682 MARYLBROOK DR 599900 4 2.5 DETACHD 1 to 4
5321 AMBERWOOD CT 709000 4 3 DETACHD 2 to 4
19019 BRYANT RD 739900 4 3.5 DETACHD 1 to 3
18209 SIENA DR 1097000 5 3.5 DETACHD 2:30 to 4:30
1808 RIDGE POINTE DR 1269000 5 4.5 DETACHD 2:30 to 4:30
1968 CHERYL CT 1595000 4 4.5+.5+.5 DETACHD 1 to 4
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Foreclosure Freeze/Shortsales/Market Conditions

The news has been full of headlines about the new crisis in the mortgage industry, this time affecting foreclosures. So it seems like an opportune time to look at not only foreclosures, but also shortsales and the latest market update from RMLS.

The Foreclosure Freeze
There is now discussion that the foreclosure process, which has pretty much swamped the big lenders like Bank of America and Wells Fargo, has been mishandled. The accusation is that the paperwork involved in the foreclosures was often reviewed and processed by unqualified people and by people who did not read what they were signing. I do not know if this is true or not, but I do know that I have counseled people who are in foreclosure who have not only felt powerless, but have felt that the bank was not answering their letters, returning their phone calls, or being responsive. Obviously there is going to be anger for a person in this position. That combined with the current media coverage does make me feel that we will see litigation.

Gregor Watson, a principal with McKinley Partners, recently gave a best to worst case assessment of what this means:
Best case: this is only a technical glitch. It will require some re-tooling of the process, but the process will get back on track and foreclosures will resume. This is needed to allow the glut of foreclosures to work their way through the market and then be out of the inventory.
Medium case: people will enter into significant litigation that could take years to sort out. This could slow and extend the downturn of the housing market.
Worst case: the housing market is brought to a halt because Title Companies refuse to insure mortgages involving foreclosed homes. (This would not bring the entire market to a halt: simply the foreclosures. Still, a big problem)

On the positive side the Philidelphia Inquirer reported yesterday that Bank of America intends to begin resuming foreclosure proceedings stating that they have a legal right to do so despite accusations that documents used in the process are flawed. This bodes well for the possibility that the better scenario may result. We shall see….

Shortsales
When the whole shortsale phenomenon began a few years ago I will admit that I was a skeptic. It reminded me of the buy-a-house-with-credit-cards schemes. Just too simple to be true. Really? You could just ask your bank to forgive part of your mortgage so that you could sell it for less? Really? As time has gone by I have come to see that not only are shortsales here to stay, they are a significant part of the market.

I think shortsales do present remarkable opportunity, as do foreclosures. It allows a house to be sold for market value and not have an asking price that is based upon a value/debt that is several years old. But shortsales are not for everyone. I want to make if very clear that if you are a homeowner considering a shortsale, you need professional and legal advice far beyond the scope of what I am discussing here. So I want to directly address buyers.

The buyer best suited to benefit from a shortsale is the investor. This is because the shortsale is so uncertain and the process takes months. A buyer who is shopping for a home may have the patience for this, but is usually not in a position to wait 3-5 months and then learn that they lost the house to another bid or that the shortsale was not approved. Whereas an investor is not waiting with a moving truck full of furniture. If it works, it works. If not, that’s OK too. For the investor able to be patient, it can present real opportunity. I have personally seen several homes here in Lake Oswego that sold for values that made my jaw drop in the shortsale scenario. Just know what you are getting into.

Keeping it Local
Here in Lake Oswego we currently have an active listing inventory of 626 listings (condos and houses). Of those 37 are Bank-owned Foreclosures and 70 are shortsales. And this means that about 82% of the market is neither a foreclosure nor a shortsale. It’s a home owned by someone who is not in it upside down and who has perhaps even taken loving care of it. So there is a house out there for you whether you are an investor, a home buyer looking for a personal residence, or even a home buyer looking for a personal residence with the patience of an investor.

Also keeping it local, the latest RMLS Market Action Report offers the following information about area 147, which is Lake Oswego and West Linn Combined
Total active listings = 1025
Total pending sales = 84, a decrease of 24.3% over the same time one year ago
Average sales price = $432,200
Average days on the market = 186
Change in values over the same time last year = -9.3%
Change is closed sales, year to date = -22.3%

I consider myself to be a very positive person. The thing to do in this economy is look for how it can work in your favor. That may mean waiting, but that may also mean pouncing on opportunity. The subject today is pretty complex. Please contact Linda or myself for more information, to ask questions, or to get property information. We are here to be of help.
Dianne

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Open Houses 10/10/10

There certainly is a feeling of devine moment when the date is 10/10/10. Not sure exactly how or in what way, but it has a nice ring to it. Perhaps it’s the day that you are meant to find a house?

The RMLS has 15 homes promoted as open houses tomorrow. Enjoy the day!

Address Open Price Bedrooms Baths
1400 Bonniebrae Dr 1 to 3 $169,500 2 1
5713 SW Kenny St 10 to 1 $279,900 3 2
1899 Woodland Terrace 1 to 3 $369,000 3 3.5
252 N. Shore 1 to 3 $369,000 3 1
2697 Lookout Ct 2 to 4 $429,000 3 2
14466 Holly Springs Rd 2 to 4 $449,900 5 3
12 Scarborough Dr 1 to 4 $499,900 4 2.5
17930 Meadowlark Ln 1 to 3 $539,900 4 4
4120 Southshore Blvd 1 to 3 596,500 3 2
15915 Waluga Dr 1:30 to 3:30 598,950 3 2.5
1785 Palisades Terrace Dr 1 to 3 749,900 5 4.5
17884 Kelok Rd 1:30 to 4 774,000 5 3.5
17896 Kelok Rd 1:30 to 4 774,000 5 5
18209 Siena Dr 2:30 to 5 1,097,000 5 3.5
1808 Ridge Pointe Dr 2:30 to 5 1,269,000 5 4.5
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A Sight Rarely Seen

The water level draw down of the lake is nearly complete and the sight is really something interesting.  This draw down has happened to allow access to the bottom of the lake for installing the new city sewer line.  The lake should be refilled by the time school lets out next June:  in plenty of time for summer fun.  In the mean time, it is just really something to see.

View of the main lake from the Forrest Hills Easement

Lakewood Bay on the East end of the lake

The Cabanas

Looking West from the Northshore Bridge at Lakewood Bay

The Villas

Equipment staging area by the water overflow/main dam

Water is still being pumped out of the lake

Canoes and floating docks sitting on the bottom

Blue Heron Canal

Check out the boat, suspended in its slip

Kelok Bay

The West end of the main lake

West Bay

The main lake at Springbrook Creek

A word of caution:  don’t be tempted to go out and walk on the lake.  The soil is pretty much loose silt.  One person has already had to be rescued:  a construction worker who sank up to his arms.  Take care also with your pets.

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Open Houses for 9/26/2010

This first weekend of fall is supposed to be beautiful. A perfect time to go and explore these 27 open houses.

Time L/Price Address Bdrms Total Bath Total SF
01:00pm – 03:00pm $169,500 1400 BONNIEBRAE DR 2 1 864
01:00pm – 03:00pm $329,000 16090 SW KIMBALL AVE 4 1.1 2276
02:30pm – 04:30pm $389,000 1899 WOODLAND TER 3 3.1 3031
01:00pm – 03:00pm $389,900 1462 GREENTREE CIR 4 2.1 2507
02:00pm – 04:00pm $399,900 6666 CHILDS RD 3 1 2073
01:00pm – 03:00pm $409,900 2602 ORCHARD HILL PL 3 2.1 2568
12:00pm – 02:00pm $429,000 2697 LOOKOUT CT 3 2 2219
01:00pm – 03:00pm $469,900 17055 CRESTVIEW DR 5 3 2575
11:30am – 01:30pm $474,900 326 LAKE BAY CT 3 2 1400
12:00pm – 02:00pm $475,000 17944 TUALATA AVE 5 3 2325
01:00pm – 03:00pm $475,000 273 EVERGREEN RD 3 3.1 1789
01:00pm – 05:00pm $499,900 19319 SW DOGWOOD CT 4 2.1 3105
01:00pm – 03:00pm $499,900 10 HILLSHIRE DR 4 3 3152
01:00pm – 03:00pm $519,000 2 MORNINGVIEW CIR 3 2.1 2954
01:00pm – 05:00pm $519,900 19415 SW DOGWOOD CT 5 3 3517
01:00pm – 05:00pm $569,900 19245 SW MEGLY CT 5 3 3490
01:30pm – 03:30pm $598,950 15915 WALUGA DR 3 2.1 2939
01:00pm – 03:00pm $619,500 3943 TEMPEST DR 4 2.1 3714
02:00pm – 04:00pm $629,000 133 FURNACE ST 2 2.1 1927
01:00pm – 03:00pm $649,000 14370 PFEIFER DR 4 2.1 3318
12:00pm – 03:00pm $749,900 2469 MARYLHAVEN PL 4 3.2 5582
02:30pm – 04:30pm $799,000 4158 CASEY CT 4 2.1 3385
01:00pm – 03:00pm $1,097,000 18209 SIENA DR 5 3.1 3839
01:00pm – 03:00pm $1,194,000 18246 BELLA TERRA DR 4 3.1 4196
01:00pm – 03:00pm $1,269,000 1808 RIDGE POINTE DR 5 4.1 4155
12:00pm – 03:00pm $1,665,000 18024 SKYLAND CIR 4 3.2 4131
01:00pm – 03:00pm $2,050,000 2572 GLEN EAGLES PL 5 4.2 6490
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Home Warranties

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Home Warranties have become increasingly popular in real estate transactions. This is for several reasons. First, it gives home buyers some assurance that during the first year of ownership, after they have already financially spent so much money buying the house, they are not going to be caught by surprise with unexpected repair expenses. Second, for sellers it gives them some assurance that their buyer will be happy in the first year of ownership. Statistically homes sold with warranties have a much lower rate of post-sale litigation. And, third, Realtors like warranties pretty much for the same reason that sellers do. Happy buyers are the goal and home warranties help that to happen.

The Basics
The way a warranty works is that it is purchased at closing for between $250 and $400, depending on the plan. It can be paid for by any party to the transaction: buyer of seller. Once the warranty is in place it will be in effect for a full year. During that year if any mechanics in the house break down, the new owner calls an 800 number to order repair service. The warranty company contracts locally with approved workers who then come to the house and perform the needed repair. The buyer then pays the service charge (typically about $50-$80) for the visit and all other costs are covered by the warranty. It really is a great program. On average these policies are used at least twice in the year that they are in place.

Please notice that I am describing the policy as covering the mechanics in the house: the furnace, water heater, dishwasher, garbage disposal, electricals, etc. It does not cover the structure itself: the roof, walls, foundation, etc. Most basic policies do not cover refrigerators, washers and dryers, or air conditioning, but these can be added to the policy for additional costs. Be sure to read your policy. Some also have limitations. For instance, it may cover up to $1500 for a furnace, but not cover costs over that amount. So know the limitations and compare policies before you buy one.

There are quite a few companies that offer these policies. American Home Shield is probably the most widely known. There is also the First American Home Buyers Protection Plan, Choice Home Warranty, and Fidelity National Home Warranty. I’m sure there are others as well.

My Word of Advice
I do think a home warranty is money well spent. However, I also caution that these policies put a lot of emphasis on repair, and, in my opinion, are not quick to replace truly warn out items. Here is what happened to me:

When I bought my current home I opted for a home warranty because the dishwasher was obviously in really bad shape. The seals around the door were shot and the machine leaked when it was used. The technician who serviced it estimated that it could be repaired for $300. Why would I want to put $300 into a dishwasher that would then still be old? They offered me a credit in the same amount to apply to a new dishwasher, which I took advantage of and was happy to receive. Then I had trouble with my furnace that winter. Again, I called the warranty company and my furnace was repaired. The furnace went out a second time, again it was repaired under the benefits of my warranty. A year went by and my policy expired. The following winter, again my furnace went out. This time, with no warranty to use, I called a company of my choice. This time the technician said my furnace was so bad it was unsafe to use and he red tagged it. I then replaced my furnace. In hindsight I wish that when my furnace had gone out the second time, while it was under warranty, that I would have gotten another opinion. I think the warranty company did full fill the obligation of the policy because they were able to get the furnace to work, but I also think that I could have had the policy assist with the furnace replacement if I had taken the time to do my own inquiry.

I do think that if you are a buyer or a seller you should consider a home warranty when you are involved in your next real estate transaction. At least ask the question as to whether it would benefit you or not. And, as always, listen to the advice of your Realtor.