10 things real estate appraisers won’t tell you – MarketWatch

Appraisers have a challenging job; their primary responsibility is to determine, the best they can, what an appropriate value for a property is, at a given time, considering all the external circumstances that are, or were in play at that moment in time. In communities like Atascadero, Templeton and Paso Robles that can be a tough order to fill. However, there are standard methods and practices that all professional, licensed appraisers should abide by in order to accomplish the goal. The onslaught of rules, requirements and regulations have made it a tough gig in recent years, and the original scope of work is just as challenging as ever.

I think that the title of this article is a bit misleading as most appraisers are working assignments for banks and that is who they are primarily coordinating specific information for. Rarely do I see consumers deal directly with an appraiser, even though it is considered part of the buyers closing costs expense. It is also usually part of the re-finance process.

I recently posted some information on appraisals and some local providers I work with. Here is another article I found that can help shed some more light on the appraisal process so you know what to look for and what to expect when it comes time for you to require an appraisal.

Remodeling 101: Tankless Water Heaters

It’s my job to look at property. I do it all day, most every day and I see a lot of homes throughout SLO County. One of the first things I look at in a home is the plumbing and hot water heater. Now, as I meet with buyers and sellers throughout SLO County I see more and more Tankless Water Heaters that are not only being installed in many new homes, but they are a popular choice for remodels. If you are near the end of the life of your water heater, you should consider installing a tankless water heater because it can add value to your home when you are ready to sell.

A tankless water heater is just that – it heats water directly without the use of a storage tank. It’s energy efficient because it heats the water only as you need it – it’s not keeping the water hot and stored that way until you need it, like a traditional water heater.

There are several makes and models out there, but since I get asked about tankless water heaters a lot, I thought I would pass this article along. Most everyone I have spoken to enjoys the benefits and energy savings of this type of on-demand water heating system. Here is what you need to know about instantaneous water heaters:

Remodeling 101: Tankless Water Heaters – Yahoo Homes.

How To: Find a Roof Leak

Now that we have officially had our first good rain of the SLO County rainy season, some of you may have discovered a leak in your roof. You know that we are all hoping for lots of rain this season, so if you think you have a leaky roof you may want to check it out now. Having a leaky roof can lead to a whole list of problems and if you can avoid them now they won’t be an issue when you are ready to sell your home and have a home inspection performed. Water can create conditions for mold spores and other wood destroying pests to thrive. Find out where the leak is coming from, fix it and disclose it.

Here’s a piece from Bob Villa and Yahoo Homes on how to find a roof leak:  How To: Find a Roof Leak – Yahoo Homes.

Land Surveys

The old adage in Real Estate has always been to “buy dirt; they’re not making any more of it.” And while for the most part it’s true, the real issue that comes up from time to time is “which piece of dirt is mine?” That’s where they survey comes into play. If during the course of your due diligence and inspection process you find that there are questions about the physical location of the property and who has rights to what, a survey may be your best course of action to sort things out.

A survey is the technique, art and science of accurately determining the terrestrial position of points and the distances of angles between them. They are commonly used for things such as:

• Maps
• Legal Descriptions
• Boundaries of ownership
• Title insurance
• Building setback and height verification certifications
• Easements
• Land Subdivision
• Lot line adjustment
• Parcel and tract maps
• Public lands, ranches and farms

In most cases, a detailed survey must be performed to strict standards set by The American Land Title Association (ALTA), The American Congress on Surveying and Mapping (ASCM) and the National Society of Professional Surveyors (NSPS). This certified survey is presented by the Professional Licensed Land Surveyor to the client for the intended purposes of the survey. The preliminary title report usually contains a legal description of the property which is based on a survey done at some point in time, most likely when the land was last divided.

The cost of a survey can vary greatly depending on the size and scope of the job.  I have seen surveyors spend days hiking in hills to determine property corners and of course, the more complicated the survey job, the more the cost.

Like any other part of the due diligence process, it pays to ask the right questions upfront. If you think a survey is an important part of your due diligence process then your Broker should guide you to the appropriate resources and providers. When it comes to building structures or establishing agricultural concerns, putting it in the wrong place can be a very expensive mistake to correct. Get it right the first time, every time.

Here is a list of local Land Survey Service Providers that can help.

Title Search and Escrow Services

When you enter into a purchase agreement to buy real property, as part of the buyer’s inspection and due diligence process, you will need a title search and title and escrow services.  A title company checks the history of the property ownership and makes sure that the title is legitimate so that a buyer can be confident that they are dealing with the true owners of the property that they are buying.  The title search also contains a legal description of the property and a chain of title, which is the chain of ownership or claims to any property rights. The title search will also reveal other important aspects of the property such as:

• Taxes owed on the property
• Outstanding mortgages
• Liens on the property
• Judgments against the property
• Easements
• Leases
• Restrictions
• Ownership of mineral rights

Once the title company checks the title and determines that it is legitimate, they can issue title insurance on the property which provides the buyer with assurances against most any claims of ownership or title rights once the property is transferred.  There are two main types of title insurance: owner’s title insurance and lenders title insurance. The buyer is usually responsible for providing lender’s title insurance and the seller the owner’s title insurance.

Many title companies also provide escrow services in addition to the title functions they perform. They collect all the monies from interested parties, follow the escrow instructions according to the buyer and seller contract and handle the payoff of loans, taxes and sales costs at the close of escrow.

The cost of title and escrow services is relative to the sales price and/or loan amount on the property. The fees they charge for their services are part of the buyers and sellers closing costs and can be negotiated in the contract. Your Broker should be able to recommend a title company that they work with on a regular basis who can provide timely and accurate services.

Here is a list of the Title and Escrow Services I work with on The Central Coast.

Real Estate Appraisals

Appraisals are not only an important part of the home buying process, but part of your inspection and due diligence process. Most Residential Purchase Agreements (RPA) contain one contingency clause for inspection and another contingency clause for appraisal and loan. A professional real estate appraiser provides an opinion of value of real property, which can be land, buildings or any combination, at a given point in time.

The appraisal is also an important part of the home buying process because it is used by lenders to determine the amount of money they will eventually loan on the home and any conditions or repairs that need to be made prior to funding the loan. In California, appraisers are licensed by the Bureau of Real Estate Appraisers and every holder of a license must conform to and observe The Uniform Standards of Appraisal Practice (USPAP).  There are three standard approaches that an appraiser uses to determine the value of real property.

• The Cost Approach – what it would cost to replace or reproduce
• The Comparison Approach – what properties of similar size, quality, age, etc. are valued at
• The Income Approach – what amount of income the property produces (generally used for commercial properties)

An appraisal usually costs around $400 and would be considered part of the buyers ‘Non Recurring Closing Costs’.  It is ordered by the lender, usually through an independent third party that specializes in performing appraisals. As a borrower you should receive a copy of the appraisal once it has been completed. If you do not agree with the final appraisal process you can contest it through an appraisal review process if you can present the appropriate documentation to support your values. It may be necessary to renegotiate some of the terms of the agreement based on the appraised value.

Once the appraisal process is completed and agreements are in place the buyer usually removes the ‘Appraisal Contingency’ per the terms of the agreement and moves to requesting the final loan conditions and documents and then arranging the signing with the Escrow Company. This means you are on your way to closing escrow!

As a seller of real property, your Broker can guide you in studying market comparables and setting pricing, but you are certainly entitled to hire your own appraiser to determine the appropriate market value.  In fact, if there is a large enough discrepancy between what your Broker thinks is the appropriate price range and your price range, an appraiser could give a home seller another level of professional, unbiased valuation.

When the deal is done the property will be worth what a buyer is willing to pay and a seller willing to sell for, until then use your smarts and obtain as much professional information as possible to price it right. Here are some of the Central Coast Appraisal Services that I frequently work with in the area.

Mold Test and Mold Remediation

An environmental mold test can be an important part of any home inspection process.  If, during the normal course of the due diligence process – when your wood destroying pest inspection and your home inspection are being performed – it is determined that you have a “mold like growth” happening somewhere, it is advisable for you to investigate the matter further.  Mold like growth on surfaces is often pointed out and can be seen in the form of discoloration, frequently white, gray, brown, or black, but also green and other colors.

Molds are micro-organisms, or fungi, that help to decompose dead organic material, such as leaves, wood, plants and proteins. Molds grow best in warm, damp, humid conditions and they spread and reproduce by making and then releasing more mold spores into the air. When these microscopic spores, which can survive conditions too hot or sunny for mold to grow, land on a surface that has food and oxygen available, like wood or drywall, they can remain dormant until some sort of water damage occurs, which then allows them to grow and reproduce, releasing thousands or more spores into the air and repeating the cycle all over again.

The biggest causes of mold in most properties are:

• Flooding and water damage
• Wet clothes, fabrics and insulation
• Poor ventilation in crawl spaces, subfloors, basements and attics
• Condensation from pipes, HVAC systems and concrete floors
• Leaky pipes and faulty plumbing fixtures under the sink
• Leaky roofs, eaves, gutters and flashings
• Humidity and warm, moist conditions

If you do suspect that you have a mold problem remember this: in California there are no licensing requirements for people who remove mold, so you need to be informed on how to approach the issue. First, not all mold remediators are licensed contractors and not all licensed contractors are mold remediators. My best advice is to check with service provider that they are a licensed and certified by either the American Council for Accredited Certification (ACAC) or Institute of Inspection, Cleaning and Restoration Certification (IICRC).  The California Department of Health Services and the California Department of Public Health are also good resource for more information on mold like growths and how to deal with them.

The cost of a mold test can vary greatly depending upon the size of the area being tested and the thoroughness of testing.  Sometimes cabinets need to be pulled out and walls need to be opened and exposed to determine the true extent of damage. The cost of mold remediation can also vary greatly depending upon the scope of the work that needs to be done and certifications required to meet lender or homeowner requirements.

The bottom line is this: you need to do what is right for you and your family. The home inspection process is an important time to be focused and informed to make the best decisions for your family’s future.  If you suspect mold or mold problems then have it checked. It’s best to find out early if there are any problems and what it cost to fix the problem and make it right.

As a home seller, if you are aware of any issues from the past that may have resulted in the formation of mold like growth, it is best to disclose it from the outset.  When it comes to disclosure issues, especially health and safety, full disclosure is a must and always the best way to keep a buyer from claiming future damages.

Here is a list of some of the Central Coast Mold Remediation Services that I call on.

Well Tests in SLO County

Well tests are in high demand on the Central Coast right now and it’s a critical part of the due diligence and buyer inspection process when buying a rural property that is served by a well. A well test is conducted to evaluate the volume of water that can be pumped from a particular well for a particular amount of time. It is usually expressed in GPM, or Gallons Per Minute. The test is used to predict a maximum rate at which water can be extracted from the well and the distance the water level in a well will fall for a given rate and duration of pumping time. Therefore, it’s important to specify how long you want the well test to be conducted for; the customary minimum standard in our area of the Central Coast is a 4 hour test.

Keep in mind that the volume of water that can be pumped is relative to the size of the pump motor, so while the GPM is important, the length of the test and the amount that the water level will fall, or what’s called drawdown, is equally as important to consider.

A good well test should also include an inspection of the pump, equipment and any storage tanks or other well related infrastructure. If there are protection or insulation requirements for the equipment your service professional should point those things out. The final step is to collect and bring a sample of the well water to the county for water quality testing. The county runs a series of tests that check for Total Coliforms and E. coli and have a turnaround time of one day on the testing.

You can learn more about SLO County water testing services by clicking here. A 4 hour well test with water testing costs around $700, but could be more for rural or hard to get to properties. In our area it is customary for the seller to provide for the costs of a well test and a homeowner can also request a well completion report that is on file with the state.

Water well drillers in SLO County and throughout California are required to be licensed as well as drilling contractors in order to install and/or repair water wells and pumps by boring, drilling, casing, cementing and cleaning. Because our water situation is constantly changing on the Central Coast it would be wise to check for any ordinances or moratoriums that could affect use and development of any new or existing wells. For information on obtaining a permit to drill a water well in SLO County, click here.

Here is more information on SLO County Well Drilling and Testing Service Providers as well as state and county information links.

Septic Systems

In order to be King of the Castle, the King needs a throne – and having your throne in working order is really important to the King, for obvious reasons. As you begin your home search, you may really want to consider this question beforehand: do you want to live with and deal with a septic system or do you want to be connected to public sewer services?

There are costs and maintenance issues that come with a septic system and it’s important to pay close attention to this matter as it can greatly affect the value of your home. Buying or selling a property with a septic system problem can be an expensive mistake to correct, but here’s what you need to know.

A septic system is a sewerage treatment system and it has 3 parts:

• a tank
• distribution pipes
• a drain field or leach field

When human waste enters the tank it is broken down into liquids and solids. The liquid moves through the distribution pipes and is released into the drain field. In order to properly maintain the system, the solids from the tank need to be pumped out from time to time by a septic service professional. There are a hosts of issues that can occur with septic systems just as you could have problems with city sewer services or problems with the line that runs from the street to your home.  The main thing that you want spelled out when you make an offer on the home and want to see happen is a septic “CERTIFICATION”.

A septic system certification is a written document that states that an onsite sewerage disposal system has been inspected and found to be in satisfactory condition according to established industry standards. It identifies the location, size and configuration of the septic system and its components and provides documentation that a proper inspection was conducted.

It is absolutely critical that there be a thorough inspection of the entire septic system during your due diligence and inspection process.The costs of a septic pump and certification can vary, but in most cases the cost is around $700. What can add to the costs is if the service company has to spend time to locate the tank or has to spend an inordinate amount of time digging up the tank to access it. In SLO County it is customary for the seller to provide a clear septic certification in the course of a normal property sale.

There are a number of reputable companies in the local area that we work with and it usually takes about a week to get on the books and get the pump, inspection and certification completed.

It’s important that you clarify and check that the drainage field has been tested and I would also inquire as to how it was tested and for how long. There is a great deal of focus paid to the condition of the tank and the pumping of the solids but what is equally important is that the water is properly draining through the drainage field if the system is being taxed with an inordinate amount of liquids. Think about a normal evening with the clothes washer going, the dishwasher going, a tub or shower draining, kids brushing their teeth, and a couple of toilet flushes and that’s a lot of water flowing through your system.

Remember, inspect what you expect. Here is a list of some of the Central Coast Septic System Service Providers that we work with.

Location. Location. Location.

There’s more to buying a house than falling in love with a house. When you’re looking for the perfect place to call home, you should be thinking about more than granite counter tops, walk-in closets, and panoramic views. Choosing the right home should mean finding one that fits your lifestyle.

It’s so important for a buyer to think about how a particular neighborhood or area can impact their lifestyle in terms of family activities and commute. While it’s important to buy what you love and what you can afford, choosing the wrong neighborhood could leave you unhappy and dissatisfied in the long run. It’s important that you take full advantage of and be engaged in the due diligence and buyer inspection period. Here are some important considerations to think about before making an offer:

Location! Location! Location!: If your greatest enjoyment comes from living in a neighborhood where you can walk to local coffee shops, restaurants, and shops, most likely you’re not going to be happy living in the country. Likewise, if you enjoy the peace and quite of country life, the sounds of the city could leave your nerves frazzled and your dream home looking less dreamy.

Don’t Assume: You may think a longer commute is a fair trade off for a house that lives up to your dreams, but don’t underestimate the length of your commute. Many people don’t accurately factor in the extra time that rush hour traffic, road work, or weather can add to a commute. Before signing on the dotted line, get into your car and make the drive back and forth a few times. In the end, you may decide that spending less time on the road is worth more than a few extra square feet.

Temper the Romance: No one is immune to falling head over heels for the home of their dreams, but don’t let the romantic notion of what life will be like interfere with the reality. Sure, a hillside view home might fill your head with fabulous images, but after repeatedly lugging bags of groceries up a steep driveway, you might find yourself feeling a lot less love for your new home.

How can you find both the perfect home and the perfect neighborhood? It helps to ask questions–a great Real Estate Broker can help you find out about schools, taxes and possible new construction projects, as well as provide you with detailed demographics and census information that can help you make a good decision. But, at the end of the day, there’s nothing like finding out for yourself. Explore the areas that you’re thinking about moving to–go to the coffee shops, the parks, walk on the trails–and make sure to visit at different times of the day so you can get a better feel for how the area will fit your lifestyle.