We have a very old (25 years) furnace.. It is still working well and we don’t have the cash to replace it. We are planning to sell our home next year. What advice do you have?
A 25 year old furnace is a very old furnace, well beyond the useful life expected of such equipment. If a buyer makes an offer on your home and then finds out how old your furnace is, there is a very high likelihood that they will be asking you to buy a new furnace as part of their inspection response. There are a few things you can do to set yourself up for a positive outcome.
First, when you complete your seller disclosure, be sure to write on the document that the furnace is past the end of its useful life and may need to be replaced soon. Price your home accordingly and be sure that your agent highlights to buyers agents that you have priced your home at a lower price point because of its older mechanicals. This will prevent the buyer from expecting you to buy them a new furnace – they should take the age of the furnace into account when making their offer.
Second, put a home warranty on your home when you list it. This will provide coverage to you should the furnace break while you own the home and will give the buyer 12 months of coverage should anything happen in their fist year of ownership (and it is renewable).
Finally, consider buying a new furnace. Many contractors are willing to accept payment at closing if you make arrangements for this upfront. With a new furnace you can ask more for your home and are more likely to draw more enthusiasm form the buyers who do see your home.
Friends of mine just had the sale of their home fall through because of a home inspection. How can that be prevented?
Yes – sellers should have their home pre-inspected before listing to prevent these kinds of issues! Finding a buyer and agreeing on a purchase price is only one small component of a real estate transaction and yet it is often all that sellers focus on. What happens between then and closing, however, is often the more difficult part of the process. Issues with a home uncovered on an inspection often cost a seller thousands in unexpected repairs and when sometimes even result in a terminated transaction. Inspectors are incredibly thorough (sometimes even finding problems that aren’t problems) and so every home seller should anticipate that the home inspector will find deficiencies and that the buyer will expect correction.
All home sellers should seriously consider having their homes pre-inspected. For as little as $250 – $500 for a basic pre-inspection you will quickly have an insiders view of how a buyer’s inspector will assess your home. Use the inspection as a maintenance check list – find a handyman to come in and fix all of the little things so that they don’t come up again on a buyer’s inspection. If there are larger items that you do not have the ability to repair, such as a roof nearing the end of its useful life, get an estimate or two for the repair or replacement. Note the issue on your disclosure and include a copy of the estimate. This should prevent you from having to credit the buyer for the repair later – buyers are supposed to review the disclosure and take any disclosed items into account in making their offer to you.
Of course, if your inspection is good or just has a lot of little items that a handyman can fix, attach the handyman’s receipt showing the repair provide a copy of the inspection in the house for buyers to see with a note indicating that the home has been pre-inspected and repaired and that they buyer can buy with confidence knowing that they are buying a house in great shape! In a town full of older and aging homes, this will really help your marketing!
So before you list your home – consider a pre-inspection. It will give buyers the confidence they need to move ahead with a purchase, may combat concerns that there are likely problems that would lower their initial offer to you, and will hopefully result in a smooth transaction once you do have your home under agreement.
I’ve heard that agreements on many homes have fallen through lately from home inspections – why is that?
Our market has traditionally been one where buyers know they are buying old homes and allow the seller some leeway in not presenting a “perfect” home from an inspection standpoint. However, in many parts of the country, this is not the case. Sellers are expected to remedy all issues noted by home inspectors prior to closing. As more and more people migrate here from other parts of the country, our prices are going up, but so are the buyers’ expectations as to a seller’s responsibility for concerns discovered on a home inspection. At the same time, inspectors are getting significantly more particular. And so yes, it is absolutely possible to have purchased a home only two years ago and have new concerns arise that clearly existed and were overlooked when you bought your home. And yes, it is equally possible that you will be expected to fix them and if you refuse, your sale might fall through.
This can often leave a seller feeling like they are the unlucky one who got stuck holding the “hot potato.” As the years pass, the list of “hot button” issues mounts and if you are the owner when the issue is discovered, you will be the one paying the bill even though the home was bought and sold many times in advance of your ownership. These hot button issues include items such as radon, mold, damp basements, lead water lines, asbestos (fireplace inserts, duct tape, pipe wrap or flooring) knob and tube wiring and pushmatic electric panels. If your home has any of these issues, you should figure you will be the one footing the bill and address them before they become an issue on a home inspection.
The best way to prevent an inspection fall through or an unexpected bill for defects is to have your home inspected before you put it on the market. A pre-inspection will allow you the opportunity to fix those items that can be fixed and disclose the rest to save yourself from a laundry list of requests. Be sure not to ignore the small stuff that comes up or that you know is wrong. For example, when I list a home, I specifically ask sellers if all of their windows open, stay open, shut and lock, and if any are cracked or have broken seals. Sellers more often than not disclose no issues with their windows and yet it is one of the most frequent inspection deficiencies. Take the time to do your homework – get your home inspected – repair or disclose any possible concerns – and save yourself from a long last-minute repair list and potentially even from losing your sale.
We live in an old town, with homes dating back to the early 1800s. With old homes comes a lot of history, and sometimes a ghost story or two. If your home has a history of paranormal activity (real or imagined), or someone has died in the home, do you have a duty to disclose that to potential buyers? While approximately half of our states do require disclosure of paranormal activity, as of yet, Pennsylvania is not one of those states. However, a case in Delaware County where the seller failed to disclose a murder/suicide that happened in the home may change that in PA.
Many other states have adopted far more comprehensive disclosure laws. In our neighboring New York, paranormal activity must be disclosed. In California, any death in a home in the preceding three years must be disclosed. And in Massachusetts, the law is even more comprehensive, requiring disclosure of paranormal activity, as well as whether the home was ever the site of a felony, suicide or homicide or whether someone with HIV ever lived in the home.
Our disclosure simply asks whether there are any material defects, which is defined as anything that could significantly impact value. Material defects would clearly include any major problems with the physical structure, as well as pending tax assessments and disputes over property boundaries with adjoining landowners. But what about those ghostly apparitions or eerie cries in the night? According to a well-known California appraiser who specializes in diminution of value, a well-publicized murder can reduce value by 15% – 35%. Does a ghost reduce a home’s value and need to be disclosed? Right now, the answer in no in Pennsylvania, although sellers wishing to avoid lawsuits would be well advised to disclose anything that could be seen as stigmatizing a property, including paranormal activity and deaths in the home. For some buyers, value actually increases with the prospect of living among ghosts. But before disclosing the ghost in your attic, be sure there isn’t a rational explanation for what you are experiencing.
Buyers, if you don’t want to move into a haunted home, what can you do to protect yourself in the absence of required disclosure? You can start with the internet – do a thorough search of the property address and sellers’ names. That will likely turn up information on any more recent concerns with the property. Some recommend burning sage to rid the home of spirits, and if all else fails, you can always call Ghostbusters!
If you have bought or sold a home in the past 15 years then you have come across our (now very lengthy 6 page) Seller Disclosure. The Disclosure is the document where, as required by law, the seller discloses what they know about the property that they are selling. Sellers – the Disclosure is your friend – it is your best insurance policy against future problems in the deal or lawsuits after the fact – take the time to fill it out completely.
Right now, if you are like most home owners, you are probably thinking “I maintain my home – its in great shape.” Or maybe “its an old home – old homes have problems – that’s what you get when you own an old home.” You might be surprised to learn that what you know and fail to disclose could present future liability to you.
What might you not be thinking of? The list is endless – some quick examples follow. Ever have water leak into the basement that you thought you fixed? The disclosure asks if you have ever had water enter the basement. Even if it seems fixed, you must still disclose that it happened – failure to do so could result in a lawsuit if the problem recurs when the buyer moves in. How about windows that are painted shut, don’t stay open or have broken seals? Failure to disclose these sorts of issues can cost you thousands when the home inspector inevitably finds them – if you disclose them upfront, the buyer cannot object to their presence later. How about bathrooms that do not have exhaust fans to the exterior? Bathrooms, kitchens or garages without GFCI plugs? Staircases without handrails? Cracked pavement in sidewalks or driveways? Non-fire rated doors leading into attached garages? All of these things seem like non-issues when you live in a home but if not disclosed, can cost you thousands in inspection repairs.
And don’t forget disputes (or what could become a dispute). Is your fence just a little bit over the property line? Disclose, or you could find yourself having to pay to move the fence prior to closing. Do you have liens against your home, such as tax or contractor liens? Failure to disclose could cost you thousands in compensatory damages to your buyer if the closing is held up as the closing company tries to address the liens and your buyers find themselves having to store their belongings and live in a hotel.
If you are selling your home, it’s a good idea to sit down with your experienced real estate agent and make sure you have thought through all of the possible items that need to be disclosed. If you take the time to be thorough, it is your best insurance policy against future problems.