Dear Michael: I am purchasing a home that has a city violation registered on the title because the garage has been converted into a living quarter without permit. The seller says he will build a carport at the driveway. I am skeptical about depositing my earnest deposit. Is there a risk with moving forward with this purchase?
Answer: In my experience, a converted garage cannot be cured unless the seller re-converts the garage to its original use. If escrow has started, time is of the essence. Go to the building and safety department and find out if a carport will be approved by the city. Carports need approval with a signed petition from surrounding neighbors and even if the neighbors approve the carport, the city can still deny it. The process for approval takes about one year.
I suggest holding off depositing any money to escrow until this is resolved. Tell the seller to put the property on hold in the MLS, have him/her reconvert the garage to its original use and once the lien is lifted by the city, you can deposit your funds to escrow and proceed with the purchase. If the seller does not agree to your request, consider cancelling your purchase on the basis and contingency titled “buyer’s investigation of property condition and reports.” The seller needs to realize that he/she will be stuck with the same problem when next buyer submits an offer. No lender will carry a loan on a property that has a cloud on title.
Dear Michael: Can you borrow the down payment for a new property using cash from a property you currently own?
Answer: When you borrow money and use your property as collateral, it’s called a home equity loan, a home equity line of credit or a cash-out refinance. In any of these cases, the money obtained from an existing property can be used as a down payment on a new property.
The lender of the new property will look at all of debt-to-income ratio to determine whether or not to lend you the money. So, yes, you can borrow to buy a new property if the circumstances are right. If you have multiple rental properties, it may be possible to borrow against all of your properties as one entity. But, you’ll need to find a banker who is willing to look at the properties as a whole and work with you at another level.
Dear Michael: We want to sell our home but it needs updating. What is the best way to make our home ready without having to go through a major remodel?
Answer: I constantly remind my sellers of the importance of having their home look in pristine condition when it is time to put it on the market. I recognize that this is not an easy task and can be a burden for many sellers. The two best ways to make your home ready for showing, while getting the best return, is by having it painted a neutral color and getting the carpets cleaned or replaced. I realize that some buyers may decide to change the color of the walls or tear up the carpet. As a seller, always keep in mind that the first impression from the moment a buyer walks in the front door is by far the most important.
Dear Michael: I am seriously considering selling my home and moving back east. What questions should I ask a prospective real estate agent before hiring one?
Answer: Before hiring a licensed real estate agent, be prepared to ask a series of questions, as in any interview process. How you relate to the agent is sometimes as important as the answers to the questions. If you don’t feel comfortable with the agent, he/she may not be a good fit, despite the person’s qualifications.
Here are a few questions to ask before making a choice:
- Ask how long the agent has been a real estate agent. This is usually a standard icebreaker question. Don’t assume an agent with more years of experience will be best for your situation. A newer agent may be more enthusiastic, tech savvy and attentive to your needs. On the flip side,more complex transactions will definitely require a seasoned agent.
- Find an agentfamiliar with the area. A real estate agent with years of experience but new to the area may not be your best choice.Ask questions about the community and his/her involvement to get a feel of the agent’s local knowledge.
- Find out what services you will receive. Find out what will be done to market your property. Find out how the agent plans to keep you informed. Constant communication is peace of mind for a seller.
- An agent may have been licensed for more than a decade but still may not have sufficient experience to help you. Some people keep their real estate licenses active but rarely practice real estate. Ask if the agent is a full- or part-time agent. Find out how many successful closes the agent has had in the last year, being mindful that during a slow real estate market, even a qualified and seasoned agent may not have impressive statistics.
- Look for an agent with experience dealing with the type of transaction you are considering.