Home inspection versus home appraisal by Cari Turnbull

Buyers and sellers are often confused about the difference between a home inspection and an appraisal. They are two different functions of a real estate transaction with different goals. 
 

The inspection is an optional part of the transaction. You can choose to have a home inspection and make that part of your offer, or you can forgo that option if you wish. 

The purpose of a home inspection is to find material defects and safety issues in the home. In the state of Maine, there is no licensing for home inspectors; however your Realtor® will likely recommend a nationally certified home inspector. 

It is the buyer’s choice who they use for their home inspection. The cost of an inspection is anywhere from $300-$1200 depending on which inspections you choose to have. You’ll also want to check with your lender to see if they require any testing, like a water test, with your financing program. The inspection is not pass or fail, it is to let the buyer know more about the home they are buying and then go back to the seller to renegotiate, based on the findings if necessary. 

Often people consider skipping the home inspection because it isn’t required and they don’t want to spend the money. It is good to remember that this is likely the largest purchase you’ll ever make in your life and $300 is a drop in the bucket compared to spending your first night in the house and then learn that the furnace isn’t functioning. 

If you are using financing, an appraisal is a requirement to get your mortgage. Appraisers are chosen by a third party and the lender will not know who the appraiser is until the report is completed. 

The job of an appraiser is to confirm that the value of a property is at or above the agreed upon purchase price. How they do this is by looking at comparable sold properties. They will likely be looking at properties that have sold in the same town, or similar towns, in the past six months with as close to the same attributes to the subject property as possible. 

Once the appraiser has completed their report they will submit it to the lender and the underwriter will review it for any errors or items that need to be addressed. Some financing programs have certain criteria that a home must meet. A competent realtor will know the criteria for your loan and will let you know if they foresee any issues with the appraisal prior to going under contract. 

It is important that you are educated on the purpose of each step of the home buying or selling process, and these are two of the most important steps.

Cari Turnbull is a Windham resident. Cari and her team represent buyers and sellers in the Greater Portland Area. For all your real estate needs contact Cari: cturnbull@themainerealestatenetwork.com

Everything you want to know about joint tenancy by Randee McDonald

Cumberland Title loves answering your questions, and there is one that we seem to get quite frequently regarding joint tenancy. Joint tenancy is ownership of a property by two or more people who share it equally. If any one of the joint tenants dies, the remainder of the property is transferred to the survivors. Now, on to the question: 

Does a joint tenant have to give notice to the other joint tenant, if they are selling their half interest? The presumption is that you must give notice to the other joint tenant to transfer your interest. Do you need to give notice to your joint tenant before transferring your interest?

The answer is: No. Now keep in mind, this would be a pretty rare situation. Let’s use my husband, Matthew and I, as examples. We both own property in Windham together as joint tenants. Can Matthew walk into any lawyer’s office and ask that a deed be written from Matthew McDonald to Lady X (his new ‘friend’)? Yup!  Will a lawyer write that deed? Of course - there’s no reason not to. Does Matthew have to tell me that he’s done this? No! Now both Lady X and I will own the property as, tenants in common.

This means, that we own the property together with no rights of survivorship. That is, should Lady X meet a sudden and unexpected (ahem) demise, her share of the property becomes part of her estate and passes on to her heirs. 

Now why would someone do this? This is where it gets interesting! Now let’s just say that Matthew had a child with Lady X (he DOESN’T!)  And let’s just say, he wanted to break the joint tenancy without telling me. That way, when he dies, his half of the property would go (according to his will) to his child with Lady X. So, Matthew does a deed from himself to another person - an unrelated third party - and then they deed the property right back to Matthew. He has thus broken the joint tenancy and now he and I own the property as, tenants in common. Does he have to tell me that he did any of this?  No, but he’ll sure regret it.  Then when he dies (a sudden and unexpected demise), his half of the property does not go directly to me, but rather it will go to the child with Lady X. Wow!

If you find yourself in such a circumstance - or suspect you will, get in touch with us at Cumberland Title.

Randee and Matthew are the happily-married owners of Cumberland Title Services, with offices in Portland, Brunswick, Lincoln and Windham. Cumberland Title is a Maine-based company serving the entire state with smooth closings.

Strike while the market is hot By Amy Krikken

What is a comparative market analysis (CMA) and why should you care about getting one? 

That is a great question and one that I intend to answer.

A CMA is a tool used in the real estate industry to determine the value of your home in today's

market.

How is a CMA calculated? 

First and foremost realize that calculating a CMA is not an exact science, our calculations are tied to appraisal value, but not entirely. There are many determining factors such as: the location of your home, the size and condition, number of bedrooms, acreage, and the overall desirability of the home.
Since each house and piece of land that it sits upon is unique, how do we go about determining value?

In other words, how do we compare apples to oranges, how can we compare two houses that may do not have much in common?

Understand that when we calculate the value of your home we use houses that have already sold in that same market within the last six months to a year.

We do not use the asking price, or the price that the home was when it went under contract. We use the price that the home sold for. 

A typical CMA uses three comparative properties to compare against your home.

We then make necessary adjustments based on things like number of bedrooms and bathrooms and overall square footage by either adding or subtracting to balance out our comparisons. In other words, this process helps us compare apples to apples, so that we can more readily compare them to one another and assign a suggested asking price to your home. 

On occasion a homeowner may feel that this number is too low, and they wish to put their home on
the market for a higher price. The danger in that strategy is that buyers have access to lots of information these days, and if they have been looking and educating themselves along the way, they know that the home is overpriced. If the house sits on the market without a reduction (an adjustment to the market price - remember it is always in flux because new homes come into the market weekly) the buying public starts to believe that there may be something wrong with your home, or at the very least, they say to themselves, “It can't be that great, or else it would have already sold.” We do not want this scenario for you! 

Real estate agents want your home to sell! They nudge you in the best direction because experience has taught them that pricing your home fairly, will bring more buyers toward your home, and may even result in you actualizing more profit on the sale. Multiple offer situations are happening every day in this market, so price correctly the first time to capitalize on the buying audience within the first two weeks of listing your home. 

Most people reach out to a real estate agent when they are looking for a comparative market analysis, to get an idea of what their house may command in the market, should they decide to sell. However, it’s always a good idea to have a general idea about what your home is worth. Who knows, you might like the number so well that you decide you want to sell. Homes are going under contract in under a week because inventory is so low. 

Knowledge is power, and I am here to help encourage you to know what your home is worth, instead of guesstimating. 

Call a professional. Call The Rock Star Realtor, Amy Krikken of Better Homes and Gardens/Masiello at 207-317-1338. 

Buying or selling? How to choose a Realtor® you can work with by Matt Trudel

Choosing a realtor you can work with can be a daunting task. It seems these days that everyone knows someone who is a real estate agent, or has a friend that is a real estate agent. And with the market picking up in the past two years, more and more people are giving it a try to see if they can make a living selling real estate. Working with a friend who is selling real estate may be fine and work out okay. However, buying or selling a home or investment property is generally one of the largest transactions a person makes. When making such an important transaction, sometimes having a more qualified and experienced realtor might be a better decision for you. Here are a few points to ponder before you make your choice: 

Always interview more than one realtor, preferably three or four. Buyers should ask the agents about the different types of financing programs they have used recently, what programs would they recommend for you, and why.  Some of the common programs are: FHA, VA, RD, MESHA, Conventional Insured, and there are many specialty loans designed for various occupations.  

 Sellers are going to want to know how much their house is worth. Hopefully all the values that come in from the agents are going to be similar in value, but quite often you get one that is considerably higher. The higher number is something to be on the lookout for as it could be that the agent is hoping to lure your business with the greater figure. Understanding how each Realtor came up with their value is important. Take the time to ask questions, because it really is like a job interview, and you are the boss who is doing the hiring.

How long has the agent or agency been in the real estate business? Someone who has been in the business a long time probably has significant experience, has faced various situations or problems that can arise, has many contacts that can assist in the transaction, and has the respect of other agents in the area. Not that you need to have all the experience in the world, but problems do come up in most transactions, and having someone on your side who has faced those issues and has the ability to creatively solve those problems, is surely a plus. However, an agent who is relatively new and might be learning with you is not always such a good thing.

How many clients are they working with right now and how will that effect the time they have to devote to working for you? You don't want an agent that has too many clients and therefore their time would be stretched too thin. This can also be true if the agent is working at a different full time job other than real estate. You want a realtor who is not only capable but available as well. You might want to talk with a few of the realtors’ clients, both current and past clients. As a buyer, you should talk with some of the buyers he or she is working with and/or some of the buyers they helped in the past. Sellers should do the same with some of the realtors’ previous sellers.  Ask about what they enjoyed (and didn't enjoy) about the transaction. Was the overall process smooth, were there any difficulties or problems that arose and how were they handled?  Did they feel comfortable and informed throughout the process?  

As realtors, we are always there to assist other realtors throughout any transaction. Your choice of who you work with should be made with confidence and knowledge that you have the right realtor working for you and with you. Feeling comfortable with them is very important, because you are trusting them with assisting and advising you on a very important transaction.  

This article is by Matthew Trudel, Owner of Five Star Realty, Windham.