Patty Manzi’s Tri-Valley Real Estate Blog

I was watching a TV show this evening, you know those shows where the TV real estate agent helps someone sell their home.  This young couple inherited a small home and subsequently took out an equity loan to remodel the whole house.  After a few years and children on the way they purchase a newer bigger home to accommodate their growing family.  They now had two mortgages and were faced with a major decision; rent out the house for more money than their mortgage payment, or sell the home for the same amount of money they owe on the mortgage. 

Seems like a no brainer to me, rent the house out and make a few bucks.  I was very surprised when they chose to sell the house, and I was even more surprised when the real estate agent agreed with them (well, not really that surprised at the latter, afterall it is a TV show about selling homes!).  Their major reason for not renting out the house was their perception that it was a “hassle to be a landlord”. 

The home was listed just above what they owed on their mortgage and after several weeks on the market the home wasn’t getting many showings.  In comes the TV Agent suggesting the reason the home isn’t selling is the decor so he brings in someone to stage the home – which the buyer pays for.  A few weeks later with still no offers the agent suggest a price reduction.   They get an offer but its a low offer and after a few counters back and forth, the buyer walks away over $5,000.  So the house sits a few more weeks, another price reduction….you get the idea.  After 3 months they’ve paid for a stager, reduced the price to below their mortgage balance, made 3 mortgage payments, paid for utilities and yard maintenance and are very, very. frustrated.  The next offer that comes in they accept immediately just to dump the home and move on with their life.  They end up  $35,000 out of pocket to walk away from this whole mess!

Their initial reason for not renting the home was they perceived it to be a ‘hassle’.  I’m not sure what they really meant by that.  Did they mean its a hassle finding a tenant, keeping a tenant, keeping it rented, collecting rent, performing maintenance and repairs, or what?  If they had had a ‘real’ agent maybe they would have been advised that they can advertise for free on many websites to find tenants, they can pre-screen their tenants by doing credit, criminal and eviction history checks, get employment verifications and proof of income, call previous landlords, and have their tenants sign a written, legally binding lease agreement.  By doing this a landlord can ensure they are protecting themselves and helping to ensure they are getting a good tenant who will pay their rent on time and follow through with their lease agreement.   Another option is to enlist the services of a property management company.  They typically charge a percentage of the monthly rent, or a flat fee to conduct all the services necessary to manage the property leaving the owner free from the day to day responsibilities.

The really sad thing is that it will take this poor couple years to make up that $35,000 deficit from the sale.  If they had rented out the home from the beginning, they would have had a positive cash flow instead of a negative and over time would be building equity.  Equity they could use in the future to send their kids to college, or use for their retirement, or both! 

If you are facing the same situation or thinking of purchasing rental properties, make sure you are being advised properly by an experienced real estate professional who has your best interests in mind.

People often focus on how to decorate and improve the inside of their homes, but they overlook the improvements to the outside of the home! 

By making simple changes to the overall visual appearance of your home’s exterior and landscaping, you can not only increase your enjoyment and satisfaction while living there, you will also increase your ‘curb appeal’ when you are selling your home.

Too often people put off these simple, relatively inexpensive improvements until they are ready to sell and by doing this they miss out on the opportunity to fully experience living in a home that is an expression of themselves (not the previous owner).  They only see the house at its best when they are ready to pass it on to the buyer.

For those of you who are planning on selling your home soon, making these changes will create a ‘come on in’ look for any prospective buyers. 

Here are some tips for increasing your home’s curb appeal:

• Patch cracks on the driveway.  This can be done professionally, or with a do-it-yourself kit from your local hardware store.
• Power-wash your cement driveway and walkways.  This will remove oil, rust, dirt, and other stains that may be present, and give it that fresh clean look.
• Consider adding inexpensive vinyl shutters on the exterior next to windows.  This give more dimension to the home.
• Add window boxes with seasonal flowers, or add planters with flowers on a porch or wide entry to add beauty and richness.
• Prune & trim your plants and shrubs for a well cared for look.  Well-manicured, clutter-free yards are always appealing.
• Plant an assortment of flowers around the base of a tree in the front lawn.  Consider using mature plants rather than seedlings or young plants.
• Take a realistic look at your house and compare it to other homes in the neighborhood.  It it appears faded, consider a fresh coat of paint.
• Last, but not least, CLEAN YOUR WINDOWS~!  This is a very strong indicator that the house is well cared for.

Remember, you only get one chance to make a first impression!

Here is a brief explanation of the responsibilities of the Buyer’s Agent and Seller’s Agent in a transaction.

In California,Real Estate brokers and their sales persons are required to disclose the type of working relationship they have with the buyers and sellers in a real estate transaction.  There are several types of relationships that are available to you.  You should understand these at the time a broker provides specific assistance to you in buying or selling real estate.  Buyer’s Agent and Seller’s Agent relationships are commonly referred to as ‘agency’ relationships and carry with them legal duties and responsibilities for the broker as well as for the buyer and seller.

Buyers Agent.  A Buyer’s Agent acts solely on behalf of the buyer and owes a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer.  The agent will negotiate on behalf of, and act as an advocate for the buyer.  The buyer is legally responsible for the actions of the agent when that agent is acting within the scope of the agency.  The agent must disclose to sellers all material facts concerning the buyer’s financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property, but cannot disclose to another party that the Buyer will pay a price greater than the price offered.  A separate written buyer’s agreement is available which sets forth the duties and obligations of the parties.

Sellers Agent.  A Seller’s Agent acts solely on behalf of the Seller and owes a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.  The agent will negotiate on behalf of, and act as an advocate for the Seller.  The Seller is legally responsible for the actions of the Agent when that Agent is acting within the scope of the agency.  The Agent must disclose to Buyers or Tenants all adverse material facts about the property known by the Broker.  A separate written listing agreement is required which sets forth the duties and obligations of the parties.