Sunday, May 24, 2020

Memorial Day – It's not about the cookouts

This weekend we commemorate Memorial Day. It's usually a time for getting together with family and friends for a cookout or a day at the beach. However the day is much more than that. It began as Decoration Day when communities remembered those who died in the War Between the States, As time went on and our country became involved in more actions against evil leaders wishing to impose their will upon the world, the day became a day of remembrance of all that were lost in keeping us free, and the name was changed to Memorial Day.

This year as many of us have had freedoms limited, may we remember what we had – and pledge to ourselves and our families that they shall be restored, it would be good for us to remember those who lost their lives standing against the enemies of freedom. To this end, I am recognizing the things said by some of the leaders who fought against the greatest evil of their time – and conquered it, but at such a great price. They were the leaders of the greatest generation – my father's generation.



Dwight D. Eisenhower

Dwight D. Eisenhower reminded us that “There is no victory at bargain basement prices”. He was the allied commander that pulled together armies from many nations that stopped and destroyed the Nazi empire, threatening to enslave the world. After that, he led our nation to a time of great peace and prosperity.

However he had several warnings for us. He said, “History does not long entrust the care of freedom to the weak or the timid”. We can not let our enjoyable comfort blind us to the need to be watchful and prepared. In fact he was concerned that our desire for peace and safety take us away from the vibrant nature we achieved under his watch. “We will bankrupt ourselves in the vain search for absolute security”, reminds us that spending money is no substitute for involvement in the world and doing the right thing.

He also had some words that we can apply today: “There is nothing wrong with America that faith, love of freedom, intelligence, and energy of her citizens cannot cure.”

George S. Patton

One of the generals Eisenhower counted on to get the job done was George S. Patton. He had this view of bravery. “If we take the generally accepted definition of bravery as a quality which knows no fear, I have never seen a brave man. All men are frightened. The more intelligent they are, the more they are frightened.” He understood it was normal to be afraid when facing dangers, but said this. “Courage is fear holding on a minute longer.

In words that we can use today: “There is a time to take counsel of your fears, and there is a time to never listen to any fear.”

Winston Churchill

Then there was the man who held the British Empire together during its darkest days, Winston Churchill. He had an appreciation for the sacrifices of those who held off Nazi attacks during the Battle of Britain when he said, “Never in the field of human conflict was so much owed by so many to so few.”

Churchill found that life is not as complicated as some would make it in an effort to back away from realities as he said, “All the great things are simple, and many can be expressed in a single word: freedom, justice, honor, duty, mercy, hope.” Words that have, unfortunately, found little use in everyday conversations lately.

Then his words for today: “Courage is rightly esteemed the first of human qualities... because it is the quality which guarantees all others.” 

Going Forward

The World War II generation was not the last to sacrifice for freedom. There have been many others right down until today who left home and loved ones to stand in the gap for us against those who would do us harm. We need to take some time to remember them as well.

While this day is meant to retain their memory, let's not forget the veterans who came home and are in need of our support.

Sunday, May 17, 2020

What's Your Home Worth?

Things will be opening up soon from the kung flu catastrophe, and you may be thinking about selling your house. The time isn't quite here yet as every week I many houses listed for sale and almost as many price reductions. But with or without the blessing of the powers that be, we will be back doing business again. When that time comes, the market will be interesting and it will be to your benefit to be ready... if you want to sell.

When that time does come, you will have some decisions to make. How much are you going to ask? What will you base this price on? How firm will you be on that number? It's part art and part skill with a little intuitive magic thrown in for good measure. There are a few rules to keep in mind when you start figuring.

Four Rules

Rule one – Zillow's Zestimate is not sufficient research.

Rule two – the assessed value is often a percentage of the market value and, again, is nothing you can hang your hat on.

Rule three – the sentimental value of the memories is of no importance to the buyer, unless they are a family member, and in that case, you should probably want to give them a break anyway.

Rule four – As P.J. O'Roarke tells us, “Something is worth what somebody will pay for it. Nothing else, nothing more, nothing less.”

Real-Life Example

This last rule is especially applicable to the, sometimes illogical, world of real estate. I had a small rehabbed house listed for $165,000. I was hoping that it would appraise for something near that amount so my buyer could get financing. I had four buyers at that price. Unfortunately they all had personal issues that made the deal fall through. The guy that actually bought it asked for some closing costs to be rolled into the price. That bumped it up to $179,000 – and that appraised without a problem – at well over $200 a square foot.

Apparently ads on some of the For Sale By Owner sites stay there almost forever. I recently got a response from some fellow who was interested in the property but felt that $195 per square foot was way overpriced for that area and he wanted to talk about it. I wish I could have seen his face when he got my emailed response telling him what the house actually sold for.

I learned a couple of things from this. 1. Among them is that if you make it nice, people will want it. 2. Perhaps I should have asked for more, but my “realistic” side told me not to. 3. The buyer and lender combination will be the final determinant of what they can pay.

Place to Start

Before getting too deep into the pricing of your property, it would be good to contact your mortgage company to get the payoff on your loan. It is not the amount showing as the balance on your monthly statement. The banksters have other fees they tack on if you pay the loan off early so it will probably be a thousand or two more. Just don't cut the numbers too close.

If you have access to county real estate sales records, this would be helpful. Look at what similar houses are selling for in your area, but don't go beyond any major highways or geographic boundaries. They may look the same over there, but there are often factors that impact the price that are not immediately obvious.

How Does Your Property Measure Up?

Look at the condition and features of the property. You may have to account for some problems or imperfections. Several hundred dollars for a property inspection may be a good investment to see how solid your property actually is. If your house is in good shape the report may help you sell it. If it isn't, you need to know what the buyer will see that will impact his buying and pricing thinking. You may even want to take care of some of the problems to make the house more saleable.

If you know what the guy across the street or down the block sold his place for recently it could be a good place to start. But that doesn't mean you should be asking the same for yours. If you had the chance to look at the house when it was for sale think about how similar it is to your place. The same applies to any house in the neighborhood.

Look at pictures of the properties on the market and compare them to yours. Does the other house have a new kitchen and bath, does yours? How about the floors? Check the public records and compare the number of bedrooms and bathrooms as well as the square footage. While most houses on the market have been priced by experienced realtors, they are just as fallible as you or I. The prices are not set in stone. Don't take asking prices too seriously. It is the actual sales price that matters. Remember rule four. Sometimes the asking price is a product of wishful thinking and sometimes the realtor had a bad day or didn't do their homework properly.

Rrice per square foot is another major factor to consider. This is an essential number as two houses may look a lot alike but are priced thousands apart. You may find the one has 300 fewer square feet. Look at the pictures (this is where Zillow and Trulia are helpful). All these factors contribute to the value of a property. Find at least three, preferably four or five comparable properties to arrive a what seems to be a reasonable price for yours. If you are uncomfortable with this or nothing seems to make sense, for several hundred dollars you can get a professional appraisal.

Set Your Price

This is the acid test of your calculation, and here is where Mr. O'Roarke's rule comes into play. If the price is right you should not have a difficult time making the sale. If you are fortunate, you may get several parties interested in it and sell for an even higher price.

If the property does not sell in several weeks while others are selling, be prepared, both mentally and emotionally to lower the price. When other similar houses are selling, but yours is not, it is either something with the property or location, like sitting next to a crematorium or a politician's office or the price is too high. Some people will offer you a low ball price and hope you take it. It's called a low anchor and even if you don't take the original offer, they hope it will set your thinking downward. Unless the place has been on the market for a considerable amount of time, don't fall for their tactic. There is part art, part science, part magic and sometimes just plain luck in pricing a house for best results.

A Word of Caution

These are interesting times and it will take some people a while longer to come out of their stay-at-home shell. Some have been beaten up financially by being locked out of their business or job. Many will come back but don't expect them to rush out the first week to buy your house

Give it a little more time than you would normally expect before you start dropping the price. The confidence of the buying public will determine when they are ready to move. They have been bombarded daily with tales of death and destruction. This has emotionally damaged some people more than others. Be patient, if you can. If there is interest but the buyer hesitates over price, before dropping it too much, offer to throw in something additonal, like a home warranty, or some piece of furniture or an outdoor grill that they admired. It's not always about the numbers.

Good luck! Happy selling!



Sunday, May 10, 2020

What Does A Home Inspector Do For You?

Editors Note: We looked at home inspectors a couple of months ago primarily from an investors perspective.  Since then we have had questions about their value for the average homeowner.  So we are revisiting the subject with them in mind.

If you are buying and/or selling real estate you will come in contact with building inspectors. I'm not talking about the ones from the local government that tell you what you can and cannot do with your own property along who can do it. That is a rant for another day. We are looking at the inspectors buyers hire to check out a piece of real estate before they commit to closing.

They can be somewhat annoying even when checking out a property you wish to buy, but they can also be extremely helpful. They are the ones who squeeze into crawl spaces under the house and skulk about in attics so I don't have to. In fact, you will not find me creeping around two foot high caverns dodging sewer pipes, air ducts, and the usual assortment of critters that populate the crawl spaces under many homes.

I say they can be annoying because most have a fetish about finding every real and imagined flaw in the property down to cracked switch plates and missing screws that are scheduled to be replaced anyway. However, that IS what they are paid to do. I must say that I somewhat solved this problem with an arrangement with an inspector friend of mine when I was working in the formerly free state of Virginia. We agreed that he would not give me the notebook, but would just hit the things I really had to fix. It worked out quite well. I saved a bit of money and he did not have to document every unimportant detail many of his colleagues thrive on, and he had the promise of a flow of repeat business.

You may wonder why I deal with inspectors when I buy since I seem to have an aversion to their work. The fact is, if I plan to sell the property after fixing it, I want to know what the next guy's inspector is going to ding me for when he crawls over the property. Which brings us to the question of them being a necessary evil. Here we get a little more philosophical. Nothing that is necessary is evil and nothing evil is necessary... ever!

These guys have saved me a bunch of money and they have kept me from buying a money pit at times. This is why I like to be present when the inspectors are going through a house I am looking to buy. A couple hundred dollars is not a bad price for this and I want to get my money's worth.
It is just understood, that if you are not an investor, but are looking for a home to live in, especially if you have never owned a house before, a good inspector can be your best friend. If at all possible, being there during the process and following him or her around will be an education. They will point out things many homeowners never even think of. There are things they will show you that are not bad or in need of repair but just items that you should be aware of and will make your time in the home less expensive and more enjoyable.

That is why I like a disinterested third party, like the inspector, digging around to pick up on things the seller was hoping I wouldn't see. If they find something you were not aware of, at that point, you, as the buyer, have a decision to make. You can look for an adjustment in the price or you can walk away from the deal IF you have an inspection contingency in your agreement. Any reputable real estate agent will include that in your contract. You usually have somewhere around ten days to check things out. If he tells you it isn't necessary, it is time to look for another agent, run, don't walk away. The only time an agreement with no inspection contingency is acceptable is when one investor is wholesaling a property to another professional who should be able to do his own evaluation.

If you are a homeowner selling a home you've lived in for many years, there may be things you never really noticed or have just decided to live with that may not set well with a new owner. It could well be to your benefit to have an inspector come around before you put the place on the market. If you get a good report, your agent can use it as a marketing tool to show the prospective buyers that the house is solid. If you do not get a good report, it is usually better for you to know about it than to have your buyers inspector present the problem in the worst possible light. You then have the choice of fixing the problem or telling potential buyers about it and factoring it into the price before they come back asking for an even larger discount.

When I am a seller, I don't want to be around when my buyer's inspector comes around. I don't want to give the impression that I am colluding with him or intimidating him. ( I wouldn't want Adam Schiff or Robert Mueller wasting my time coming after me.) I also don't want to be around to answer any impertinent questions that may arise. Beyond that, the practice of being absent may well keep me out of trouble and preserve the physical well being of the guy picking apart my completed work... even though, knowing they will be around helps us do a better and more complete job.

So, like them or not, inspectors are part of the real estate business and since we must deal with them, we may as well understand how the game is played and use them to our best advantage.

Saturday, May 2, 2020

Offer, Counter Offer


If you have a kitchen, you have counter tops. If you are starting from scratch, you have a wide variety of choices, and if you are remodeling you have a couple more choices based on the size of your bank account or limit on your credit card. You see the remodeling shows on TV creating really nice kitchens with high end appliances and super counters. Is that your dream?

Some people see this and believe that such things are beyond their reach. Sometimes they are right, but often this is just an assumption and not based on research. We aren't going to look at the six burner commercial gas ranges they put in some of the kitchens but we will look at the counter tops. The range of prices and materials range from squeaking by on a low end rental to really nice dream kitchens. But keep in mind that except for the very low end and rich folks mansion high end, many of the choices are grouped in the middle. The point of this is consider the wide range rather than settle for something because you don't think you can afford what you really want.

If your kitchen has been around a while, most likely it has laminate (or Formica) counter tops. They by be stained or show marks where a hot pan was improperly placed. If they are solid and in otherwise good shape, you have several options if you have neither the budget nor inclination to pull them up and replace them.

The least expensive approach is to clean them up really well and use either counter top paint or self sticking laminate to cover them. If you have a drop in sink you will have to take it up to install the laminate properly. With the paint you can get a variety of colors to match pretty much any taste. The laminate can have a marble or granite pattern and can look quite nice. If you don't feel comfortable, or you just can't get the front edge done to your satisfaction a piece of wood trim can be used along the visible edge. This trim can be painted or stained to match or contrast with the cabinets.

If you are replacing counter tops, unless you have a woodworking shop to make them from scratch, the next step up is the preformed laminate tops available in various sizes and configurations at the blue store and the orange store... and other home improvement stores around the country. They can be used in most applications and give a professional, finished look. They come in a limited range of colors, but are great for the do-it-yourselfer or budget remodeler.

If these don't meet your needs, the same stores and remodeling contractors can get you laminate counters in a mind boggling array of colors and styles custom made for your particular needs. There is very little you cannot get in the custom laminate tops, and they have improved over the years, but still are subject to hot pans and sharp blades. If you are settling for this choice because you because you think one piece tops are beyond your budget, these are getting mighty close to the low end of granite.


You can also look at butcher block materials for all or a portion of your kitchen. They are attractive and sturdy, but subject wear and scratches. Especially if used as a cutting board and food preparation surface.

When you get into one piece tops there are several choices and granite is usually the first one that comes to mind. It is about as durable as you can get. As the installer told my wife when they were putting it in my kitchen, the house could burn down and they could just clean up the tops and use them again. They are almost indestructible.

Corian is a similar looking material and makes very nice tops. However, it has issues with scratching and staining as well as cracking when exposed to excessive heat.. I once bought a new range for a very good price at the blue store that had been returned because it had a rear vent and the Corian installer said that was a no-no... that it would damage the counter top.

Engineered quartz makes very nice counter tops as well, and while it and Corian are priced close to granite, they do not go into the stratospheric prices of granite at the upper end. The quartz is usually a thinner material and is slightly more destructible than granite. When you rehab houses, it is amazing what you find sometimes. I bought a fixer house with quartz tops where the seam at the kitchen sink had come apart and behind the sink it was broken out where the faucet came through. I have no idea what the tenant had done to the thing, but I learned that tops like this could be broken. Fortunately my granite supplier could send a repairman over and got everything looking like new. So for about the price of preformed laminate counters I was able to keep my quartz tops. What a bargain!

If you want the granite look without the granite expense, it is possible to build a solid counter top of at least ¾ inch plywood and cover it with granite tiles. This has a good part of the durability of the one piece with a much smaller price tag. Just make sure the joints are really tight. This is not a tutorial on how to do this, but between YouTube and various DIY sites, the information is available.

For the high end, industrial look, concrete is a good choice that can be formed into pretty much anything you want. Since it is a porous material it needs to be sealed to prevent it from absorbing water and materials that will stain. It can be chipped and make sure your cabinets can handle the weight.

You can also get stainless steel tops if you are a serious gourmet type cook or if you just like the clean, sleek look of the material. Some use ceramic tile rather than granite tile – it can look nice but it can chip and you have to use a good sealer on the grout lines.

As you can see there are choices for most any budget and taste so you don't have to settle for plain old Formica – even though it is used in some pretty nice kitchens.