Straight Talk About Real Estate

It is not uncommon to move out of your house before you sell it. If your situation allows it, you as a seller would most likely prefer not to be living in the house while buyers come through it at all kinds of times day after day.

If you sell a vacant house, keep in mind a few things:

Keep the utilities on. Once you accept an offer, the buyer will need the utilities to do their inspections. They also need the utilities on for the final walk-through to make sure everything is still working.

Make sure there are no running toilets, dripping faucets or broken sprinklers. Your water bill will give you a heart attack if you do.

Ask a neighbor to keep an eye open for any possible unauthorized entry or vandalism.

Keep up the landscaping so weeds and bushes do not overgrow or lawns dry up. It will cost more to repair than it is to keep a gardener.

What does seller-rent-back mean?

It means that after closing escrow, and title has officially changed to the buyer as the new owner, the seller wants to stay in the property. He pays the buyer rent and becomes a renter of the property he just sold.

Why would a seller want to do this?

It is not uncommon for a seller to rent back the property. Usually, it is because their new purchase is not ready for them to move into. Sometimes, the seller sold the house in order to take out the equity, but they wanted to continue living there. The buyer purposely bought the house as a rental property, and is more than happy to have the seller stay on as tenants.

Does the buyer have to rent back to the seller?

If there is no rent back provision in the original purchase agreement, the buyer does not have to agree to rent back to the seller. However, in most of the situations I have seen with a rent-back, the seller only needs to stay a week to a month, and then they will be ready to move. If this is the case, the buyer usually agrees to the rent-back.

How much rent should the seller pay?

This is to be negotiated. Since it is an accommodation to the seller, why should the buyer lose money on it? Therefore, the rent is usually based on the buyer’s costs - his mortgage payment plus prorated taxes, insurance, and any other other assessments and homeowner’s association fees, or the seller pays market rent, whichever is higher.

What are some implications of a rent-back?

The seller becomes a renter in every sense the day escrow closes. The buyer is the landlord. He is responsible for anything that goes wrong with the property. This also means if the seller damages anything, he is responsible.

If the agreement to rent-back is done before escrow closes, the escrow company can be instructed to deduct from the seller’s proceeds and credit the buyer for the full amount of the rent due. The buyer should also collect a security deposit through escrow. This amount is also negotiated. I usually suggest the amount to be 30 days of rent, just like a normal rental situation.

The buyer does a walk-through before escrow closes, the same he would in a normal purchase. After the seller vacates the house at the end of the rental period, the buyer does a walk-through again, this time as a landlord, to assess any damage caused by the tenants. If there is any damage, it should be taken out of the security deposit. The difficulty with this is, it is hard to determine if minor damages are an existing condition normal with any home purchase, or they were caused by the seller during the rental period. For example, if there is a big stain on the carpet, a renter would be charged for carpet cleaning. However, if the stain was there before, the seller is not obligated to have the carpets cleaned for closing escrow. It is not productive to argue over these items, and the buyer usually just takes possession of the house, and clean it up as if they just closed escrow.

However, it would be wise to do walk-throughs very carefully and take plenty of pictures as a protection for both sides.

I usually do not advice a rent-back unless I am very confident of the seller’s integrity, and if their situation is very desperate. I would rather delay escrow closing to allow the seller to work it out wth some other means.

The 30-year conforming fixed rates fell to less than 6% this week. Whether this will continue as a downward trend remains to be seen. The Federal Reserve Board will be meeting on January 31st.

I listed a house at a price that I thought was a little on the high side. With the holidays, slight climb in the interest rate, and a supposed slowing of the market, I thought it might take a few weeks to sell.

I have three offers on the property within 5 days on the market. Two of them were full price offers.

I am not by any means an optimist. I am fully preparing for a downturn in the real estate market. But it just isn’t happening from my experience. There is more demand than supply. No matter what people or media are saying, I am not seeing any drop in prices at all.

Fixtures that are included in the sale of a property mean anything that is permanently attached to the house or landscape. Such items would include ceiling fans, chandliers, built-in appliances, window screens and coverings, in-ground trees and shrubs.

There are some items that are usually included which are not considered fixtures. Examples of these are attached satellite dish, pool/spa equipment, garage door opener remotes, free-standing range, fireplace gas logs and grate.

If the seller intends to take anything that may be considered part of the sale, they need to specify that on the purchase contract during negotiations. They can not decide to take something at the last minute while they are moving out. That would be breaching the contract.

How do I know if my concerns is a case of temporary Buyer’s Remorse or if the concerns are legitimate grounds to cancel the purchase?

If you gain new information that you did not have before, and the information negatively affects your overall reasons for buying the house and cannot be remedied, you should consider cancelling.

Make an informed decision by reviewing the physical inspection report, the seller’s disclosures, appraisal report, etc. for any such problems.

Here are examples of information is does not affect your overall use of the house: the dishwasher does not work; the association does not allow satellite dish; there is termite damage in the house.

Here are examples of information that may be cause to cancel: problems with the foundation or other major damage to the house; neighborhood noise that you were not aware of before; city plans to put in an establishment or road that will negatively affect your house.

If you have legitimate cause to cancel, make sure you do so within your contingency period.

I would venture to say 99.9% of buyers experience this.

Immediately after you buy something, whether it is a car, or an order at MacDonald’s, there comes a sense of “maybe I made the wrong choice” or “I could have gotten something better”.

Buyer’s remorse when purchasing a house is especially pronounced. First, I recognize that it is probably the biggest financial investment you will make and you want it to be a good one. Second, with so many variables in buying a house, it is likely that your chosen house is not perfect, and that makes you feel uneasy. Third, you cannot return a house if you are not satisfied, like you would a pair of shoes.

All these feelings are perfectly normal. Once the seller has accepted your offer, you will undoubtly get some form of buyer’s remorse. All the negatives about the house will come to mind. Friends will advice you to look around some more. You wonder if you can really afford the monthly payment.

Remember that it is human nature to get Buyer’s Remorse. Having these objections do not mean you’ve made a wrong choice about the property. Your mind is merely looking for confirmation that you have indeed made the right choice. I am sure your decision to make the offer was not a rash one, so do not allow a moment of Buyer’s Remorse un-do the process.

List out all the reasons why you made the offer. It is likely that your concerns are the same ones you had before you made the offer, so remind yourself why they did not stop you from making the offer.

Do not second guess yourself. Have confidence that you’ve made the right choice.

With vinyl retrofit windows fairly affordable now, it is a good idea to replace your old ones. In the past, the labor to replace windows were prohibitive. With the vinyl retrofit windows, labor is cheap, or you can even do it yourself. My brother installed the smaller windows himself at his house. The bigger windows required the help of a friend. The first window took him over an hour. Once he got the hang of it, he could do a window in less than an hour.

Make sure you get double-paned windows. We had our windows replaced, and I definitely feel the difference. In the summer, the house is cooler, and in the winter, the heat keeps in well. I don’t feel the draft by the window like I used to with our old single-pane aluminum windows.

I think new double-paned windows are worth the investment.