Govt. Shutdown affects real estate market

Oct. 2013 the government shuts down. No big deal right? The Post office is open, airplanes are still flying and most of us here in Northern Indiana aren't bothered at all. Sure I guess unless you're trying to buy or sell a house or get a mortgage. As of 10/1/13 when the govt. shut down all FHA and USDA employees are on furlough. That means if you've been waiting for your USDA loan to close since August just keep waiting. Your loan is now on hold indefinitely. "That's okay we're going to do a conventional loan" You say? Oh wait, one of the governments new regulations for getting a loan is to verify your tax returns with the IRS and that division of the IRS is shut down! So basically this chest thumping match between the D's & the R's has the potential to derail 11 real estate deals in my office and two different parties run the risk of being homeless because they gave notice to their landlord and have to be out at the end of the month.

I'm buying a home. Should I get inspections?

The short answer is, "Yes probably." There are many different unique circumstances, like the age and condition of the home, is it owner occupied, how much cash you have for inspections, down payment, closing costs, insurance, etc. that determine if you decide to have inspections and how thorough you want to get.

So now what inspections should I get?

I will recommend all of them all the time, but here are the most common.

1. Whole house: In Indiana this is done by a licensed professional whole house inspector. He/she will look at all the major components of the home. Electrical, interior plumbing, heating & air, windows, doors, roof, water heater and more. He/She will check all the outlets, open the windows, turn on all the water and flush the toilets, and are very knowledgeable and thorough. Good inspectors have a working knowledge in all of these components, but aren't experts in any. If they find something they believe to be wrong, they will recommend that a licensed professional come look and make a recommendation to repair. This inspection generally costs $250.00 - $450.00 depending on the company you hire, the size of the house, and if there are any other buildings or structures to inspect. Whole house inspectors often get paid upfront and I highly recommend that you attend the inspection with them. It generally takes 2.5 - 4 hours and you will receive a 50 - 100 page report about the property within a day or two.

2. Wood destroying insect: The cost of this in our area is $45.00 - $65.00 and the repair costs if bugs are found can reach into the thousands. This inspection is relatively quick (less than an hour) and you generally have the report the same day that will say either it has bugs, it doesn't have bugs, or it has had bugs before but it's been treated.

3. Radon: Check out http://www.epa.gov/radon/pubs/citguide.html for more info about radon. This inspection is a kit that is placed in the lowest level of the home, takes 48 - 72 hours, and gives a rating on how much radon is in a home. If the levels are above the established healthy level, it can be mitigated by sealing any foundation cracks and creating a sealed pit with a pvc pipe that runs out of the home with a little fan inside the pipe that runs all the time. Then the home is retested to make sure the level is safe. Most radon mitigation companies offer some sort of guarantee. This inspection generally costs $125.00 - $175.00 and mitigation costs between $750.00 - $1,250.00.

4. Private well water quality: If you're buying a home on public utilities this inspection probably doesn't apply. Most city water comes from wells also, but the municipality will check the quality on a regular basis. If you buy a house on a private well, the whole house inspector should get a general knowledge of the well function when they test the plumbing in the home. For information about your well, go look at it. Most well drilling companies put a cap on top with their name and phone number and can tell you how deep it is, how deep the pump is, etc. As far as the water coming out of the well, the whole house inspector or a private lab will take a water sample and perform an analysis. They generally test for Nitrates, Nitrites, and Bacteria. Then for an additional cost you should have the water tested for lead, arsenic and a hand full of other metals. In our area, if there is a problem, it's generally one of the above. Check with a professional in your area for any other tests that should be done. If the Nitrates, Nitrites or Bacteria are above the maximum safe level, the fix is relatively easy. Have the well chlorinated and retested, and problem should be solved. If the lead, arsenic or another metal is too high, the fix is more costly and involves filtering the water similar to a reverse osmosis system. The water quality test generally costs $125.00 - $175.00 depending on the scope of the test. Well chlorination costs less that $50.00 and the other systems can run into the hundreds and even thousands of dollars.

5: Private septic: Again if you're buying a home with municipal sewer service this won't apply. Septic systems are customized to each home based on soil types, number of bedrooms (in our area) and other factors. In Indiana the septic system is approved and code is enforced by the county health department. The requirements may vary from county to county.  Each septic system is different and just because "It's always worked..." for the current occupants doesn't mean it will pass inspection, and they can be really expensive. The last one I had to have replaced cost over $13,000.00. I asked the owner of a local septic company what was the most expensive one they've ever done for residential and he said $27,000! An average cost, however, would be $5000.00 - $7000.00. The cost of this inspection is +/-$350.00. They pump and inspect the tank, check baffles, locate the field system, etc. Also most county health departments keep a drawing of the systems for each property.

6. Furnace / AC service: Beyond the whole house inspection, it's often a good idea to have the furnace and air conditioner serviced by a professional heating and air company. They will not just operate the system, they will also take the system apart, clean the components and will have greater access than the whole house inspector to identify any problems, and it will make the system work better and last longer. It costs approximately $125 - $150 each and some companies offer an annual service contract and offer a discount and other benefits if you sign a contract.

7. Structural / Foundation: These are actually two different inspections that are often used interchangeably. Foundation is just that, the foundation of the home. If you feel like there is a problem with the foundation, a reputable general contractor can assess the situation and make recommendations for repair. Any discovered structural issues can also usually be addressed by a general contractor. Most engineers won't do residential. Cost will vary by scope of work.

8. Specialty inspections: Pools, hot tubs, irrigation systems, piers, pond aeration systems, chimneys, fireplaces, interior or exterior wood, pellet or corn burning stoves, mold and other biological contaminants, shops and barns, etc. are other components that won't be covered in any of the above inspections. Qualified professionals should be used to inspect anything you're unsure of.

Please contact me if you have other questions about anything real estate.

@Buffini vs. @Vaynerchuk

I recently attended the RE/MAX R4 international convention in Las Vegas.  As always @RE/MAX LLC. puts on a great convention with top notch speakers and education.

My favorite was the opening session where they lined up @Brian Buffini, www.buffiniandcompany.com, who is probably the most premier real estate coach in the country followed by +Gary Vaynerchuk, garyvaynerchuk.com who among other things is a social media guru.

Both of these guys are hugely successful in there industries and are amazingly similar in their differences. Buffini came to America a broke Irish immigrant and became a hugely successful Realtor, invested well and now teaches other Realtors and Mortgage Bankers how to do what he did.  He preaches that the old way of doing things i.e. cold calling, door knocking, mass mailing both email and snail mail don't work any more and that most people do business with someone they know and trust or get a referral from someone they know and trust. His philosophy is to be the hub of your database so that whenever people have a need they think of you and you provide great service to generate referrals thus growing your database and generating more referrals.

Gary V's philosophy is that we are moving into a major shift on how we get data and information from a push marketing society to a pull marketing society.  That instead of people being marketed to they go and find the data for themselves and the only thing anyone in the sales or marketing business will have is expertise and great customer service and that we need to provide content that is valuable, useful and readily available for our consumers.

It's really cool to read between the lines to see two super successful people say the same thing is such a different way.  Both built their business by giving consumers what they want and how they want it.  I know that my school teachers from the 80's and 90's won't be big into social networking but will move 3 or 4 more times in their lives and I know that my 20 something buddies and clients won't open a newspaper or a mailed marketing piece and will move many times also.  I want to thank both Buffini and Vaynerchuk for the idea of customizing my marketing plan to how my consumers wants to receive it.  You guys are awesome!

Any body in sales or marketing should read everything they have written.

Welcome everyone to my blog.  I am looking forward to making posts about both our Real Estate and Auction business.

Stay tuned for more posts and photos of our current events.