One of the often most overlooked items when it comes to the sale of property are clearly repairs. Listing agents don’t do a great job creating a detailed list of items needing attention for the home seller to correct before listing the property or they just allow obvious issues to go unattended in hopes that nobody will notice. It is sad to think that the day of a professional process by which listing agents take the time to look at the property and really learn about it are sliding away from us all.
In my opinion, one of the most valuable things a listing agent can do before taking on the marketing of a property is to share with the seller what things can be repaired or replaced before entering into a sales agreement so that the property can bring the highest offer. Sometimes just a little cleaning and painting is all that would be needed, but issues like a rusty or leaking water heater can turn a potential buyer away. In many cases, the lack of simple maintenance items being addressed can cause thousands of dollars to disappear from offers. Let’s be honest, I am not talking about a complete renovation here; I am looking at cleaning, painting, and a few simple repairs. However, if you have a house that has ageing or out of date appliances or mechanicals, it might just be a great investment to replace them before putting the house on the market.
Now I know that there are going to be times when making repairs before hitting the market may not be possible. I also understand that some items may not be obvious at first look and may only turn up during the inspection process. This is where we need to work quickly to determine what or if any repairs are going to be made by the seller, or if a price reduction to offset these items will be agreed to. Please note, that some types of loans do not allow certain items to go unrepaired prior to closing, or may require an escrow to be held until such repairs are completed. Please be sure that everyone is clear about what may or may not be allowed.
In the case where repairs are going to be made, it is very important that everyone agreed as to what the specific remedy is and when it will be addressed. Again, certain times the lender may have to re-inspect the property to be sure all repairs were made correctly. In a case where the appraiser does not call for these repairs, but the home inspector named them and the seller agreed to make corrections; it is important that all of those details are worked out prior to closing and with full knowledge and approval of the lender! You just can’t wait to the last minute to decide these things, or just ignore them and hope to work out a solution at the closing table. What may seem like a small issue could create a huge problem if left to the last minute. In some cases, trying to offer a credit at closing may not be allowed or could cause the loan to been re-disclosed and trigger a three business day delay in closing! Again, not all situations are likely to cause a delay, but in some cases it could cause a delay or maybe even worse!
So let’s try to avoid issues if we can. Listing agents, please take the time to look for potential issues. If you find them, talk to your client and share with them the value in making repairs or even replacement before the property has its first showing. If repairs are required by the inspection or the appraiser, please be sure everyone is on the same page as to what has to be done, who is going to do it, and when it will be done by!
Taking care of repairs early saves time and money. Why risk the transaction for an item or two that you will have to correct anyway? If the issues are larger, you will need to consult with your lender to be sure that the solution to the challenge is acceptable and within loan product guidelines for this specific transaction!
With TRID just a few weeks away, we all want to do a better job up front on our transactions to save time and avoid closing delays!
Questions or comments: Mike@IMTcoaching.com