What You Need to Know About Home Insurance...
Homeowners insurance is not required by law. The purpose of insurance is to make you “whole” again should your property experience a loss. Your home is likely to be your most asset, and protecting this asset is essential.
Pete Sabine and Leslie Whitney interview Alie Lopez with Pro Insurance Solutions. You will learn about the right questions to ask and important information to understand about homeowner insurance.
Why is home insurance needed?
The purpose of insurance is to make you “whole” again should your property experience a loss. Your home is likely to be your most valuable asset, and protecting this asset is essential. Also, if there is a lender involved, homeowners’ insurance is a requirement.
How do you decide how much coverage is needed?
Most insurance companies have minimum replacement cost standards, in California we do not recommend insuring for less than $350 per square foot, depending on the property modifications.
Insurance companies have a replacement cost estimator tool on their websites. When a policy binder is issued, the insurance company completes an inspection and confirms the coverage.
If I am buying a home does the amount of the coverage need to cover the amount of the home loan?
One thing to note is that the replacement cost is usually less than the purchase price of the home. The reason is the purchase price includes the value of the land. Replacement cost applies to rebuilding only the structure if there is a total loss. A lender will often ask for a copy of the replacement cost estimator previously mentioned to confirm that the coverage is sufficient for their specific requirements.
If you do not own a home, can you buy renter’s insurance?
Yes. Renters insurance will cover all your personal property, provide liability coverage as well as loss of use if you are under evacuation and need temporary housing until you can move in after damage repairs are completed.
What is the most common standard coverage provided?
A basic Homeowners policy with a standard company in the San Francisco Bay Area is for home with $750,000 in replacement cost and below. Usually, the liability coverage is $500,000 to $1,000,000.
What about basic coverage available for events that cause property damage such as fire, wind, and theft?
These items are covered perils under a Homeowners policy. If any of these events occur and there is significant damage to the structure, the dwelling limit is what pays out for damage repairs, replacement, etc., subject to the deductible amount. For example, wind knocks a tree onto your roof and the roof needs replacement, or fire damage that is now common in California.
Theft loss is covered under personal property.
What are the additional coverage items in a typical policy?
Ancillary structures, such as any structure on the property not directly attached to the home. Personal property, all your belongings. Loss of use provides coverage for renting temporary housing while repairs are completed. Liability coverage from personal injury on your property resulting in litigation if you were found to be negligent.
What are the differences between an actual cash value and replacement cost policy?
Replacement cost is the cost of replacing your personal property. Actual cash value is the current market value less any accrued depreciation.
Is it worth the additional premium cost for a replacement cost policy to ensure your home can be restored to its former glory with only your deductible as your payout?
In California, replacement cost is applied to personal property contents only, but for the dwelling structure, you are provided with extended replacement cost coverage.
This is a percentage and varies from 110%, 125%, 150% & 200% depending on the insurance carrier. If an insurance carrier offers 200% extended replacement cost, it is most definitely worth the extra premium expense.
Are home repairs covered at replacement cost?
Not always, it depends on the dwelling coverage limits.
Is personal property such as your furniture, appliances and clothing replaced at actual cash value?
Basic policies will provide actual cash value for personal property contents.
Can you upgrade your policy to have your personal property insured at replacement value?
Yes, if you have the option to have your contents insured at replacement value, it is recommended that you do so.
Do most policies place a limit on claims for luxury items such as fine art or jewelry?
Yes, most sub-limits for fine art and jewelry are between $1,000 and $10,000. If you have jewelry or art worth more than $10,000, you can purchase a personal articles policy.
Are you covered no matter how your home is damaged?
There is no coverage if you intentionally set your own house on fire and there are specific exclusions depending on the insurance carrier.
Is Flood damage covered in a standard policy?
No, flood damages are specifically excluded. Some companies like AIG will offer coverage as an endorsement.
What about other natural disaster damage coverage from earthquakes?
Earthquake damage is specifically excluded as is damage from landslides. You can sometimes add coverage by endorsement if the carrier offers coverage. You can also purchase separate flood and earthquake insurance policies.
What are endorsements, and how do you know if they are included on a policy?
Endorsements are amendments or changes to the policy. An endorsement can include adding or removing a lender to the policy or adding or removing a coverage line. Policies have a section for endorsements. You can always ask your insurance agent to review each line item.
Can identity theft coverage can be added to your policy with an endorsement?
Yes. Some insurance carriers include coverage at no extra cost.
Am I fully covered if someone is injured in my home?
This is where liability coverage comes in. Injuries vary, so carrying the highest amount of liability coverage is the best way to guarantee you will be fully covered.
Where do you find the maximum amount the insurance company will pay in legal bills and damages if you are sued?
Under Liability Coverage, the limits vary from $100,000 to $1,000,000.
What is an umbrella insurance policy?
An umbrella liability policy covers many different exposures, including your home, rental properties, vacation homes and anyone listed on your auto or boat policies.
For example, if you were involved in a car accident and found to be at fault with multiple vehicles and the underlying liability coverage is insufficient, the umbrella coverage will add more protection for your assets. When someone is injured on your property and suffer damages that cost more than the liability coverage on your Homeowner policy, the umbrella policy provides additional coverage beyond the limits of the Homeowner policy.
What is usually excluded from a home insurance policy?
Damage from earthquakes, floods, and landslides.
What is the easiest way to reduce your monthly premium?
Bundling Homeowner, auto, and umbrella policies will significantly lower your monthly premium cost.
Can you save money for an alarm system, non-smoker credits, and retiree discounts?
Yes. Centrally monitored alarm systems for fire, burglar, or even water flow alarms to prevent water damage claims. Retiree affiliations, such as AARP, or alumni affiliation credits are sometimes applied.
Will it cost less to insure a newer home compared to an older home?
Newly constructed homes will have lower monthly premiums because the systems and components such as the roof, electrical and plumbing meet current building and safety codes.
If you own an older home, will bringing the home up to current building codes or doing renovations can help to lower your premiums?
Remodeling a home to meet current building codes and updating the home will not only help with the premium cost, but it will help with eligibility for coverage. Most insurance carriers do not want to insure older homes built prior to 1945 without any updates to systems and components.
If you make substantial improvements or remodeling to a home, should you modify your insurance coverage?
Yes. Any improvements as well as increasing the square footage, can change the overall dwelling limit coverage for the home.
What can you expect when you make a claim?
If you work with an insurance broker, always check with your account manager for advice on filing a claim. Sometimes it helps to have a designated account manager to assist with a claim does not go smoothly. Otherwise, claims adjusters from the companies ultimately determine the claim pay out amount and eligibility.
What are some of the challenges and costs for homes located in a high fire risk or wildfire hazard zone?
The biggest challenge now is finding insurance carriers to accept a home in a high wildfire hazard area. Carriers are scaling back tremendously on where they are offering new coverage.
This leads into another challenge, non-renewals. Not only are carriers not wanting to take on new coverage, but they are cancelling existing policies due to the specified high-risk locations.
Another challenge is if a carrier will accept your property in a high wildfire area. Do not be surprised if the premium is three times the amount you used to pay. Some of these policies have annual premiums as high as $30,000 to $50,000K because of the dwelling limit and a location within a high-risk wildfire area.
What do you recommend for people who are in the process of buying a home to make sure coverage is available?
Check insurability and related cost BEFORE making an offer on a home or before removing your investigation of property contingency. The cost of insurance can make or break a deal if the insurance is too high.
Should a home buyer have back-up quotes handy in case your current agent or broker is not able to bind a policy to close escrow?
Yes, do not assume that if you have been with a company for many years, they would insure you no matter what. That is not always the reality. Buyers get into panic mode and scramble at the last minute to find a policy so always have a back- up plan with more than one insurance quote and commitment.
How to you check to confirm if a home is in a flood zone during the home buying process?
Ask your insurance agent or broker or your Realtor to check on your behalf.
What can a home seller do to prepare your home before going on the market to help insurability for buyers?
Make any updates you can if you have an older home, have any work orders that show completion of any updates. If you could pick one major update, focus on the roof. Carriers want to see that it has been updated within 20 years. If you have a wood shake roof, replace the roof before offering the home for sale.
Other items include making sure handrails are not wobbly, tree limbs are not touching the structure, remove any firewood from near the house. Create as much defensible space as you can. Lastly, make sure there are no open insurance claims.
Thanks for watching!
Listen to our Real Estate Pro Tips podcasts.
Find our Real Estate Pro Tips podcasts
Find our Real Estate Pro Tips podcasts on Spotify
Find our Real Estate Pro Tips podcasts on iTunes
Find our Real Estate Pro Tips podcasts on Google Play
Pete Sabine & Lesley Whitney
Call or Text 925.297.5335
How to sell your home in a hot sellers’ market.
What are the characteristics of a Sellers’ Market?
A “Sellers’ Market” trend is driven by
* a lack of supply of available homes for sale
* strong buyer demand for homes
* low home loan interest rates
The supply metric is 3 months or less of available homes for sale
based on closed sales activity. As an example, you divide the number of homes for sale by the number of homes sold in one month to determine the number of months of supply.
Another characteristic is the average Days on Market metric. If the average Days on Market is less than 30 days, this is another indicator of a Sellers’ market.
The List Price to Sold Price ratio is another indicator of a Seller’s Market.
Homes consistently sell quickly and above the List Price in a Seller’s Market.
How long will this trend last?
Most likely through the first half of this year
and possibly through the remainder of 2021. Beyond then requires a crystal ball.
What is the formula for selling a home above the list price?
Preparation, Presentation and Pricing.
Obtain property inspection reports. Complete recommended repairs related to systems operation such as appliances, mechanical components, and safety hazards.
All Sellers want an AS-IS sale and most Sellers would love to avoid making repairs or repair concessions.
When you are selling in a Sellers’ Market, provide buyers with a Disclosure Package in advance of accepting an offer.
The Disclosure Package includes property inspection reports and the required property disclosures completed by the Seller. The Disclosure Package creates transparency and provides useful information for a buyer to confirm the existing condition of the property.
In many cases, the Buyer is more willing to accept a home in AS-IS condition
if the Seller has provided accurate and qualified information about the condition of the home.
Include this provision with a purchase agreement:
“Any inspections performed by the Buyer are for information purposes only. There shall be no Seller repair concessions”
This provision emphasizes your intent and confirms the AS-IS nature of the purchase agreement with the buyer.
Obtain a proposal from a professional home staging company.
The proposal should include recommendations for interior and exterior paint colors, landscaping, light fixtures, flooring, plumbing fixtures, and cabinet hardware.
Beware of Realtors who “self-stage” homes. Hire a professional with liability and workman’s comp insurance and controls their own inventory of staging furniture and accessories.
Follow the recommendations of the staging proposal to update your home.
Then have your home professionally cleaned including windows and tune up your landscaping.
Enhance the Presentation of the home for sale.
Hire a professional photographer and videographer to capture the essence of your home. Home buyers scan for homes online and your home must present well
with a high level of emotional appeal or most buyers will not make the effort to visit your home.
No showings equal no sale.
Price your home strategically.
Review recent Sold Properties that are nearby and “like-kind” in size, location, and condition characteristics. This data will set the current “fair market value” of your home.
Review Pending Properties of similar homes that recently went into escrow.
Focus on the List Price of these properties to provide insight of the price point that attracted buyers to make an offer.
Review Active Properties currently for sale in your targeted price range.
Determine how well your home will compete with homes priced 10 percent above and 10 percent below your target List Price.
Buyers base their decision to buy a home driven by its emotional appeal and supported by a perception of fair market value of the List Price when compared to other available homes for sale with similar qualities.
Create a condition for buyer competition to get the highest possible sales price.
Set an Offer Date to review purchase offers 7 to 10 days from your MLS debut date. The offer date strategy ensures that all buyers currently in the market will have a chance to view and bid to purchase your home. It sets the stage for multiple offers with offer prices above your List Price.
One of the best tools to use when you have more than one offer is the Seller Multiple Counter Offer.
If the Seller receives more than one offer, the Seller has the option of responding to more than one offer using a Seller Multiple Counteroffer.
The Multiple Counter Offer has a provision that requires the Seller to sign the Counteroffer one more time after the Seller receives the Counter Offer signed by a Buyer.
This allow a Seller to negotiate with more than one Buyer at the same time without being obligated to sell until one of the multiple counter offers is signed one more time after it is signed and accepted by a Buyer
The most important items to be included from a buyer with an offer:
Some must have items in a loan pre-approval letter:
The most valuable attribute to look for when hiring a Realtor to represent you: Hire a skilled negotiator. Your Realtor should have a proven track record.
We have been selling homes in your area since 1985 with over 1000 successful sales. There is no substitute for contract negotiation experience.
Hire us to win with us!
Leslie Whitney & Pete Sabine.
To find out more about our real estate services and expertise go to
Despite fierce opposition, including over 5,000 constituents personally expressing opposition to the bill, California Governor Newsom signed Assembly Bill 3182 into law on September 29, 2020.
It creates a new Civil Code Section 4741 which voids rental limits below 25% of the members. Per Civil Code 4741, a condominium or stock cooperative association may not unreasonably restrict the rental or leasing of the owner’s unit.
A planned unit development (PUD) association may not unreasonably restrict the rental or leasing of any of the owner’s individual lot, including the residence, Accessory Dwelling Unit (detached ADU), or Junior Accessory Dwelling Unit (attached ADU).
The intent of this bill is help combat the housing and homelessness crises in California, noting that many owners are currently prohibited from renting houses under HOA rules.
Supporters believe that house rentals would help bridge the middle-class housing shortage, freeing up housing for lower-income Californians in need of housing.
There are millions of homes across the state that have the potential to be rented to Californians in need of housing but that are prohibited from being leased under outdated homeowners association rules.
AB 3182 prohibits rental bans in HOAs to allow homeowners who want to rent out their homes.
Under the new law, any provision in a governing document “that prohibits, has the effect of prohibiting, or unreasonably restricts” the rental of any of the separate interests, accessory dwelling units (“ADU”), or junior accessory dwelling units (“JADU”) in a community association is rendered unenforceable.
While there is uncertainty and disagreement over the impact of this language on minimum rental terms, the law specifically allows associations to prohibit short term and transient rentals, defined as rentals of 30 days or less, and also allows associations to place a rental cap of twenty-five percent (25%) of the separate interests (or greater) in the association.
However, AB 3182 also states that if the owner lives in either the main residence or an ADU or JADU on the property, then the property does not count as a rental unit.
As for the required duration of a lease, an association may only limit short-term rentals by imposing a minimum lease term of 30 days or less. This applies to all associations, but does not apply to the rental of ADUs and JADUs.
This means that owner-occupied rental properties are essentially exempt from these rental restrictions under the new law.
There are many different rental requirements HOA memberships often approve by a majority vote.
For example, a one-year minimum lease term, or a waiting period of one year before a new owner can rent a home, or the requirement that the tenant promise to abide by the HOA rules.
Are any of these requirements unreasonable? The issue of unreasonably restricting rentals is a vague standard, which could lead to litigation between homeowners and their HOA, since the definition of “reasonable” in this context is not obvious to all.
AB 3182 also requires any associations with provisions in their governing documents that conflict with the new requirements to amend their governing documents no later than December 31, 2021.
Associations must comply with the prohibition on rental restrictions specified in the new law starting on January 1, 2021, regardless of whether the association has revised their governing documents to comply with the new requirements.
Any association that willfully violates the new law is subject to a civil penalty to the applicant or other party in an amount not to exceed one thousand dollars ($1,000).
AB 3182 also amends the government code to require quick approval of applications to cities and counties for construction of ADUs and JADUs, deeming all such applications approved if not acted upon within 60 days (this applies to governmental agencies, not associations).
The new bill also requires that properties which meet the minimum requirements be allowed to construct one ADU and one JADU on the same property. ADUs and JADUs are not allowed in condominium developments, so this distinction will only apply to planned developments with properties on individual lots.
Some reasons for having HOA rental restrictions include home loan lending requirements that have minimum Owner Occupancy ratios. As an example, many lending institutions will not provide home loan financing if the HOA complex has less than 50 or 60 percent of the total units occupied by the owner.
The new Civil Code has the maximum of 25% of the total units as tenant occupied and 75% owner occupied.
Other reasons relate to the upkeep and maintenance of each condo or home in the HOA. Many believe that renters do not take care as well as a homeowner. However, maintenance and upkeep standards can be enforced by the HOA rules and regulations with the burden and cost of compliance placed on the owner instead of a tenant.
Associations with rental restrictions or rental caps in their governing documents should discuss the impact of AB 3182 and how to address the new limitations on rental restrictions with legal counsel to avoid compliance issues and any civil penalties.
If you are buying a property within a Homeowners Association, having a contingency in your purchase contract to review and approve of the HOA Rules and Regulations is important because if you plan to rent the property you must understand what is allowed before completing the sale transaction.
Hiring an experienced Realtor to represent you will help you navigate through this complicated area.
Call or text Pete Sabine with your questions. 925.297.5335 or send an email to Pete@PeteSabine.com. Visit our web site OurFiveStarTeam.com
Discover more real estate pro tips.
Find our podcasts at FiveStarRealEstateTeam.podbean.com.
You may have recently entered into an agreement to purchase a residential property or you may have completed a loan application to refinance your home.
Lenders are required to obtain an appraisal, prepared by an impartial and unbiased appraiser, and use it as the primary tool for assessing the sufficiency of your collateral.
You may want to retain an appraiser to provide an appraisal to help you make decisions such as buying, selling or refinancing your home.
The basics of an appraisal
An appraisal is an opinion of value.
For estate planning, financial planning, or sale price decisions, individuals or a trusted advisor usually orders an appraisal.
When an appraisal is used to obtain an opinion of value of a property for loan purposes, federal regulation requires the lender or its agent to place an appraisal order.
The lender contacts a state licensed or certified appraiser and identifies the property to be appraised and the intended use of the appraisal. The appraiser then determines the appropriate scope of work for the assignment.
The appraiser’s scope of work typically includes the type of property inspection (interior, exterior only or none), what approaches to value are required, and any lender-specific requirements.
In some cases, the lender may order the appraisal through an agent, such as an Appraisal Management Company (AMC).
For residential mortgage lending, Fannie Mae (FNMA) and Freddie Mac (FHLMC), which are Government Sponsored Enterprises (GSEs) that purchase mortgages on the secondary market, have developed residential appraisal report forms that are commonly used to communicate the appraisal of properties used as collateral.
Regardless of the type of appraisal report used, all appraisal reports must contain sufficient information to enable the intended users to understand the report properly.
Why is an appraisal necessary?
The lender orders the appraisal to obtain an accurate description of the property and an independent opinion of value. The lender uses the appraisal to document that the real estate is appropriate collateral and determine whether the value of the property is sufficient to support the lending decision.
Why isn’t the consumer considered to be the client when he or she pays the appraisal fee?
Federal banking regulations require the financial institution to be the client, regardless of who pays the fee.
How does the appraiser develop the value opinion?
The appraiser researches market data, public records and talks with buyers, sellers and real estate brokers active in the market area.
Data researched includes sales, leases, and current listings of similar properties. Other data include land sales and residential construction costs.
After all factors affecting the value are considered, the appraiser develops an opinion of value and prepares an appraisal report.
What is the appraisal process?
If an appraisal requires an interior inspection, an appraiser will contact the homeowner (or, in the case of a sale, an agent or the seller) to inspect the interior and exterior of a property.
As previously mentioned, an appraisal may not require an interior inspection.
An appraiser will research county and municipal records, Multiple Listing Service (MLS) records, and other data services for information and documentation concerning the subject property and market area.
An appraiser will review recent sales and listings of comparable properties.
Comparables are recently sold or listed properties that have similar utility, quality, age and amenities as the subject property and are located in the subject property’s market area.
In markets where few sales have recently occurred, comparables may be from similar or competing neighborhoods located some distance from the subject property.
An appraiser may use the sales comparison approach to develop an opinion of value.
What is the Sales Comparison approach?
Often the primary approach to develop an opinion of value for a residential property, the sales comparison approach utilizes recent sales of comparable properties.
An appraiser will analyze and compare characteristics that include the living area of the home, land area, style, age, quality of construction, number of bedrooms and bathrooms, presence or absence of a garage, etc.
What is a comparable sale or comparable listing?
A comparable sale is a recent sale that is similar to the subject property in terms of physical and functional attributes and location.
A comparable listing is a current listing that is similar to the subject property in terms of physical and functional attributes and location.
Comparable sales and listings are used in the sales comparison approach.
In most cases, the sales comparison approach is the most reliable indicator of value for a residential property because it most directly reflects the actions of buyers and sellers in the market.
The cost approach is another method an appraiser may use to develop an opinion of value.
What is the cost approach?
The cost approach is the appraiser’s opinion of the current replacement cost of constructing a reproduction of the existing structure, less any estimated depreciation, plus the value of the land.
The cost approach is a valuable approach to use when appraising newer homes that might have little or no depreciation.
In what circumstance would an appraiser use the cost approach and/or sales comparison approach?
The cost approach is based on the premise that an informed purchaser would pay no more for the subject property than the cost of constructing a substitute property with the same utility.
Differences between the sales comparison approach and the cost approach are particularly evident when the property being appraised involves older improvements where depreciation due to age and functional obsolescence are difficult to estimate, or when the improvements are relatively unique or specialized and there are few comparable properties.
If completed correctly, under ideal circumstances the indicated value by the cost approach should be similar to the estimated value by the sales comparison approach.
Why does an appraiser make “adjustments”?
In developing an opinion of the value of a property, an appraiser considers recent sales of similar properties. The sales that are the most similar to the property being appraised are the best indicators of value.
However, since rarely are two properties exactly the same, the appraiser must account for differences between the property that sold and the property being appraised.
These differences are called “adjustments.”
Adjustments are added or subtracted from the sale prices of the comparables to indicated an adjusted sale price for the property being appraised.
An appraiser may utilize the income approach.
What is the income approach?
The income approach is most often used in appraisals of properties that have two, three or four living units, where income is a factor in the decision-making process of buyers and sellers.
The income approach is based on the relationship of anticipated benefits (dollar income) to value.
The income approach in residential appraising generally consists of little more than a gross rent multiplier analysis (the sale price of a property divided by its income potential).
The gross rent multiplier (GRM) analysis is very reliable in markets where homes are rented and sold frequently.
However, the income approach is not applicable when the property appraised is located in a neighborhood where most homes are owner-occupied.
How does an appraiser develop an opinion of value?
After data collection and analysis, the appraiser will develop an opinion of value by considering the indicated value(s) of the sales comparison approach, as well as the cost approach and/or income approach, if applicable. The values indicated by the approaches utilized will be reconciled to a final opinion of value. The appraiser will present his or her findings and conclusions in a report to the lender.
What are the essential elements of a credible appraisal report?
• A clear, accurate description of the subject property
• Sales that are the most recent and most comparable
• Comments that explain important issues in the appraisal
• An opinion of value supported by the analysis of the comparable sales
Credible appraisals clearly identify the property appraised, the scope of work performed by the appraiser, the client and other intended users, and the intended use of the report.
The appraisal report must include the definition of value (e.g., market value), the effective date of value, the subject property’s relevant characteristics, and any other special instructions from the lender, Fannie Mae, Freddie Mac, VA, FHA, etc.
A credible appraisal must effectively communicate the data and analysis required to support the opinion of value.
A credible appraisal must comply with the Uniform Standards of Professional Appraisal Practice
and all regulatory requirements including the Federal Fair Housing Act, as well as client-specific requirements.
What is the importance of appraiser independence?
Appraisers are trained to deflect any attempt to influence the appraisal or value opinion, remaining independent, impartial and objective. The appraiser has the sole responsibility for the analyses, opinions, and conclusions contained in the appraisal.
Appraiser independence is a critical element to protect the client and intended users and to enhance the public trust that appraisals contain credible opinions of value. Both Federal and State law requires appraiser independence.
Without public trust, mortgage investors could withdraw funds from the secondary market resulting in a shortage of funds for residential lending.
What can be done if it is discovered that a correction is necessary or other relevant data should be considered?
After reviewing your appraisal, if you believe the appraiser did not consider important information about the subject property or available comparables, discuss the matter with your lender.
Submit your concerns in writing to the lender with a request that the appraiser be asked to address them.
For example, if the appraisal has an incorrect living area size for the subject property, provide factual evidence which supports your position.
If you believe the appraiser selected comparables that were not the most comparable, submit a list of the comparables you would like him or her to consider.
The lender will provide this information to the appraiser and request the appraiser to consider what’s been submitted.
The appraiser should review the appraisal and, if additional credible information is pertinent to the appraisal assignment, provide a revised appraisal with commentary addressing your concerns.
After asking for a reconsideration of value, the appraisal remains flawed. What are your options?
You may request the lender order an appraisal review assignment or to order a second appraisal. Keep in mind the lender is not required to do either.
An appraisal review is completed by a different appraiser who will verify the facts and data in the appraisal, search for additional comparables and provide a conclusion as to whether the comparables used in the appraisal are the most comparable.
If the review appraiser does not agree with the opinion of value in the original appraisal, he or she will complete a sales comparison approach and provide his or her own opinion of value.
What can be done If you suspect fraudulent or incompetent appraisal practice?
Submit your concerns in writing to the lender.
Also, you may consider filing a complaint with the state appraiser regulatory agency in the state in which the property is located. The contact information for each state is available at www.asc.gov.
You may also contact the Financial Fraud Enforcement Task Force at www.stopfraud.gov.
Be advised that state appraiser regulatory agencies will generally not act as a resource to you in trying to resolve any issues with the appraisal that may affect your transaction.
Instead, the agency will consider your complaint in light of the appraiser’s responsibilities under the law, and may take disciplinary action against the appraiser, if necessary.
I have heard about problems with appraisers traveling long distances to appraise homes?
How far is too far? The issue isn’t so much “distance” or “how far is too far,” rather the question that should be asked, “Is an appraiser from outside of my area competent to appraise my property?”
Some appraisers work in many geographic areas and are knowledgeable and competent in all of them.
Other appraisers have a limited range in which they normally appraise and they may not have the data or the experience to be competent outside their local market.
What information should you provide to the appraiser?
The more information the appraiser has about your property, the better he or she will be able to develop a credible result.
The appraiser will be interested in knowing if there are any private agreements or restrictions, easements or rights of way, encroachments, “agreed to” arrangements with abutters (e.g., fences, walls) on the property, etc.
The appraiser may ask about the property’s title, sales and rental history, and occupancy.
He or she might ask if the property is under a pending purchase and sales agreement or option and, if so, the details about the agreement or option.
If the property sold in the past three years, the appraiser may ask about the details of the transfers.
Finally, the appraiser may inquire about physical characteristics of the property, including any additions, permits, etc.
If you are hiring the appraiser directly, the appraiser will want to know what the intended use of the appraisal will be.
If you are engaging the appraiser to prepare an appraisal for a federally-related transaction, you should know that the lender or the lender’s agent is required to engage the appraiser
What should the appraiser do when he or she inspects my home?
Based on the client’s intended use of the appraisal, the appraiser determines whether an interior and/or exterior inspection or no inspection is required.
Under many circumstances, the lender will require a full viewing of the property including an exterior and interior inspection.
Assuming that a complete inspection is required, the appraiser inspects the site, site improvements, and building improvements.
The appraiser considers the site’s size, shape, topography, drainage, and any other attributes that may affect value.
He or she views the site improvements (e.g., paving, fences and walls, landscaping) to determine their contribution of value to the property.
Finally, the appraiser inspects any structures. Some of the items considered are building style, number of stories, size, number of rooms (including bedrooms and baths, etc).
He or she observes the structure’s condition as an aid to estimating depreciation.
In addition, the appraiser considers the property as a whole, including the dwelling and any other improvements as well as any visible encumbrances (e.g. power lines, encroachments).
Finally, the appraiser considers the property in relation to the neighborhood.
An appraiser’s inspection and a home inspection are different.
An appraiser gathers information to develop a value opinion and a home inspector gathers information to identify construction features, structural integrity and any needed repairs.
The appraisal report has codes describing elements such as condition, construction quality and location. How do I find out what they mean?
At the request of the lender/client, the appraisal report may be prepared in compliance with the Uniform Appraisal Dataset (UAD) developed by Fannie Mae and Freddie Mac.
The UAD requires the appraiser to use standardized responses that include specific formats, definitions, abbreviations, and acronyms. Look through the appraisal for the UAD Definitions Addendum.
In most cases, the addendum will be in the appraisal. If not, either request it from the lender or access it online
Having an appraisal contingency in your purchase contract is important because if the appraised value is less than the agreed upon purchase price or repairs are required, you can renegotiate the sales price, require the seller to make the repairs, or back out of the offer altogether with the return of your deposit money.
Hiring an experienced Realtor to represent you will help you navigate through this complicated area.
Call or text Pete Sabine with your questions. 925.297.5335 or send an email to Pete@PeteSabine.com.
Discover more real estate pro tips. Find our podcasts at FiveStarRealEstateTeam.podbean.com.
Compass. License #00880760
The Advantages of Professional Property Management
Being a landlord requires effort and dedication. If you live far away from your rental property or have other personal commitments, hiring a property management company is a good option. Some of the benefits of hiring professional property management services include:
Finding High Quality Tenants
The biggest challenge for most landlords is to find responsible tenants for their rental homes. This ensures timely payment of rent, proper maintenance of the home and fewer problems during the tenancy period. Professional property managers have defined criteria for screening applicants and selecting the most suitable occupant for your property. Experience in scrutinizing thousands of rental applications will extract the facts and identify warning signs. In-depth research about the tenant’s background, employment, rental records, income, criminal history, previous rental experiences ensures that you are renting your property to the best qualified tenant.
Effective Property Advertising
A property manager uses the most effective resources to market your property to a large pool of prospective tenants. Posting high quality photos and virtual tours of the home will help to set your property apart from the competition. Property managers will offer effective staging tips and evaluate the condition of your home to recommend improvements that will increase its appeal and rental value.
Strict Rent Collection Process
Collecting timely rent every month is important to ensure a consistent cash flow. When you work with a property management company, you can be assured they will collect the rent on time and deposit it into your bank account. They demand that tenants follow the lease terms and pay the rent by the due date. In case of delays, they know the proper and legal ways to deal with the situation.
Property Maintenance and Repairs
Performing maintenance and repair tasks on time not only ensures a comfortable stay for the tenants, but also retains the value of your investment property. By hiring professional property management services, they will outsource the task to licensed and qualified contractors. The property manager will conduct regular inspections of the rental home to identify and repair any potential issues before they pose larger and more costly problems.
Better Tenant Retention
Property managers act as a point of contact between the landlord and tenants. When all the maintenance issues are addressed timely, tenants are less likely to look for another place to live in.
This, in turn, will lead to shorter vacancy cycles for your rental home. You will also be saved from all the efforts of finding and screening new tenants, marketing, arranging visits, re-painting the home etc.
A property manager has in-depth knowledge of the tenant-landlord laws and the property manager will ensure that the process is carried out in a legal manner, saving you from exposure to costly litigation.
Contact us to discuss your options for property management of your rental property. We are affiliated with a local professional property management company and we can relieve you of the burden and hassle of managing your income investment properties.
Listen to our podcast with a professional property manager.
Find our podcasts at FiveStarRealEstateTeam.podbean.com
We are the Five Star Real Estate Team, and we know how to set the stage for your success.
Pete Sabine & Leslie Whitney
Call or Text 925.297.5335
By Pete Sabine
There are so many choices for a real estate professional, does it really matter who you choose to represent you when you buy or sell a home?
If all real estate companies are the same, why are the results so different for each company?
Even more true when focused on the personal performance of a Realtor.
Why are two Realtor’s results so different in the same profession and local market?
Athletics can be a measure of comparison. For one reason, athletics are designed to be clean and pure in results. The scoreboard generally defines the finest of top performers. Each performer knows the start, the finish and event rules.
How each athlete prepares for the event physically and mentally makes a world of difference. The tenacity of training, the focus of mind and nutrition of the body are all contributors of success.
The same is true in the real estate profession.
Athletes generally get to train and prepare for several days or weeks to compete at an event. Realtors train, compete and recover daily.
Success in the real estate profession can be measured in different ways. One measure is the sales volume recorded in the MLS. A more meaningful and relevant measure of success is defined by the tears of happiness in a client’s eyes and referrals to their friends, family, and co-workers.
As the legendary NBA coach Phil Jackson said, “You're only a success the moment you do a successful act, so these acts have to be repeated all the time." So true and drives the good to become the great.
It is the work ethic, the focus, and the competitive drive! The perseverance, the training, the mental toughness, and it is the way you show up every day…without a ranking, without results to rest on, and power through your day to get results. It is your internal drive to make a difference in someone’s life.
You do so as a role model, a parent, a significant other, a sibling or a friend. You do what you do every day to make a difference on your own scoreboard in life, not anyone else’s scoreboard.
Now, more than ever, experience and knowledge matters in real estate. In challenging times, you are best served by a seasoned real estate professional who can help you navigate through a transaction that can often be complex and with frequent changes in the market that can affect the outcome.
What is your scoreboard to measure a Realtor? Discover how we can help you reach your goals.
Pete Sabine & Leslie Whitney. Call 925.297.5335. Experience. Innovation. Results. Compass. License #00889760.
#successfulrealtor #hiretherightrealtor #experiencecounts
BY PETE SABINE
A bridge loan is a short-term loan that uses the equity from your current home to help you make an offer on a new one, without rushing to sell. A bridge loan is a simple solution to bridge the gap between the home you have and the home you want to buy.
A bridge loan can be a viable option if you can cover the cost of the loan along with the additional monthly payments due until your current home sells to pay off the short-term bridge loan.
Here are the key benefits of a bridge loan to buy your next home:
• Avoid weakening your negotiation position with an offer contingent on the sale of your home.
• Take the anxiety of selling your home first without having another home to buy in a competitive real estate market with limited inventory.
• Avoid the hassle and expense of a double move.
The Bridge Loan Advance Solution
The Compass Bridge Loan Advance is available exclusively for our qualified clients with a traditional bridge loan who are working with us to sell their existing primary residence. If you are approved for the Bridge Loan Advance, it has a 0% APR for the life of the loan and has no additional application or loan fees.
What rates and fees accompany a bridge loan?
The rates and fees for each bridge loan are determined by the lender. We recommend reaching out to a bridge loan lender directly to learn more. The bridge loan can be from any lender of your choice.
What is covered by the Bridge Loan Advance?
The Compass Bridge Loan Advance can equal up to 6 months of monthly bridge loan payments and eligible closing costs incurred from the bridge loan. Eligible closing costs include the dollar value of any loan fees paid upfront, origination or application fees, if applicable, and appraisal fees.
How it works
Step #1 - Inquire directly with a bridge loan lender, such as Better.com or Freedom Mortgage, to see financing options and conditions for your loan qualification.
Step #2 - Apply to get pre-approved for a bridge loan with the lender of your choice.
Step #3 - If approved for a bridge loan, apply with Notable, an independent lender, for the Bridge Loan Advance to cover the first six months of your bridge loan payments.
Step #4 - Then use your approved bridge loan to strengthen your offer for your next home.
Step #5 - Move into your new home while we market to sell your current home.
Pro Tip: Use Compass Concierge home improvement services to sell your home faster and for more money.
Step #6 - Use the proceeds from the sale of your former home to pay back the bridge loan and Bridge Loan Advance.
Contact us to find out the current value of your home to determine if you have enough equity for a bridge loan.
Call or text 925.297.5335. Pete Sabine & Leslie Whitney. Compass #00889760
By Pete Sabine
In a seller’s market, you may have to compete against other buyers, which raises the stakes and makes it especially important that you move through these steps quickly. When you have found a home you love, here is what you need to do to craft an offer that appeals to sellers.
Use an escalation clause
In a multiple-offer scenario, the last thing you want to do is assume another buyer is paying far above the asking price and submit a higher offer based on this assumption — you might get the property but end up realizing you could have gotten it for less. Consider including an “escalation clause” which states that you are willing to pay a specific dollar amount over the highest competing offer.
Here is an example:
A home is listed for $850,000 and it has three other offers. You submit an offer of $850,000 with an escalation clause that says you will pay $5,000 more than the highest offer, up to a maximum offer price of $860,000. Then, if another buyer comes in at $855,000, you will automatically offer $860,000 to secure the deal, without going over the maximum amount you are comfortable spending.
Accommodate the seller’s timeline
Ask if the seller needs a quick close or an option to rent the home after closing to allow enough time to pack and move. For some sellers (like those buying another home or relocating for work), timeline can be as important as the sales price.
Most buyers include contingencies in their offer. In a competitive market, waiving contingencies can make your offer stand out. You can remove the appraisal contingency that is usually included for buyers financing a home purchase as well as the loan contingency only if you are fully pre-approved by your lender. Inspection contingencies are common — and some buyers waive their inspection contingency in hot markets, but this can be risky.
The home sale contingency, where your offer is contingent on selling the home you currently own, is included when you need the equity from a home you are selling to purchase your next home. This can make your offer less appealing to a seller, who wants certainty in their plan to fit their own timeline priorities. It is best to complete the sale of your existing home before making offers for your next home.
Write a personal letter to the seller
Some sellers are sentimental about selling their home and may focus on their desired buyer profile over the highest sales price. When dealing with a seller who has lived in their home for many years with pride of ownership, they might be focused on selling their home to someone who will take good care of it. Write an insightful and sincere letter about why the home is a perfect match and what you love about the house and the community. Let the seller know you are a serious buyer.
Over the past 35 years, we have successfully negotiated over 1000 real estate purchase agreements. Call or text 925.297.5335 to benefit from our real estate expertise for your next home purchase.
Pete Sabine & Leslie Whitney. Compass. License #01866771
By Pete Sabine
After you put your house on the market, you might be hopeful for a quick sale—especially if you've invested a lot of money improving the house and if your neighborhood is in high demand. While you should not panic if the house does not sell right away, you should be concerned after 6 weeks without receiving an offer. Here are some reasons why your house may not be selling.
The asking price is too high. If your house is overpriced, it is not going to sell. The longer your property stays on the market, the less likely it will sell at the asking price. Compare your property to similar properties that recently sold within your area to get an accurate idea of its true value. Do not make the mistake of adding 100% of the cost of any renovations you made. The cost of all renovations does not always translate to equivalent added value.
Poor presentation. If the listing of your home has a poor description and/or amateur photos, most buyers will not want to visit. Make sure your Realtor creates a listing that attracts the attention of buyers with professional photos and video of the interior and exterior of your home.
Houses that smell do not sell. A dirty house leaves a bad impression on buyers. Hire a professional to clean thoroughly the interior including appliances, carpet and windows before showing your house.
Lack of emotional appeal. If your home is vacant, do not show an empty house. This makes it difficult for buyers to imagine living in it. Stage your house with furniture and decor to give buyers a sense of space and how it can be used. You want the buyer to feel at home when they tour your home.
The décor or remodeling is too personalized. Take down your personal décor so that buyers can have an easier time imagining themselves living there. You might think that dark paint and fixtures in the master bathroom is incredible, but that does not mean potential buyers will agree. If your home improvements or decor are too personalized, most buyers will not get past your unique style and choices for fixtures and finishes.
Less is more. If you have too much furniture, it will make the house feel smaller than it is.
Too many repairs needed. The more repairs needed, the less likely a buyer will want your house. Many buyers do not want to deal with the cost or effort of doing repair work, even if it is just small repairs, such as tightening a handrail or replacing a broken tile.
The market trend changed. Sometimes a hot market can temper by the time your home is offered for sale. Your Realtor should be monitoring the competing home for sale and the supply/demand ratio and communicate with you to make any adjustments in your marketing strategy.
You hired a novice Realtor. A seasoned professional Realtor makes all the difference in selling your home at the highest possible price within a reasonable time. All these things can be remedied, however, one of the best ways to avoid making these common mistakes is by hiring an experienced Realtor.
We know how to set the stage for your success.
Call us to win with us! Pete Sabine & Leslie Whitney. 925.297.5335.
Discover more real estate pro tips. Find our podcasts at FiveStarRealEstateTeam.podbean.com. Compass #01866771
By Pete Sabine
Our local real estate market is one of the hottest I have experienced in my 35 years of selling real estate. The current real estate “Seller’s Market” trend is driven by a lack of supply of available homes for sale, low home loan interest rates and strong buyer demand for homes in our area.
How long will this trend last? Most likely through the remainder of 2020 and into the first quarter of 2021. Beyond then requires a crystal ball.
Here is the formula for selling your home at 10 to over 20 percent above the fair market value list price…Preparation. Presentation. Pricing. Read More: http://petesabineteam.com/sell-home-record-high-sold-price.
Preparation prior to offering for sale. Obtain property inspection reports. Complete recommended repairs related to systems operation (appliances, mechanical, etc.) and safety hazards.
Obtain a proposal from a professional home staging company. The proposal should include recommendations for interior and exterior paint colors, landscaping, light fixtures, flooring, plumbing fixtures, and cabinet hardware. Beware of Realtors who “self-stage” homes. Hire a professional with liability and workman’s comp insurance and controls their own inventory of staging furniture and accessories.
Follow the recommendations of the staging proposal to update your home. Have your home professionally cleaned including windows and tune up your landscaping.
Presentation preparation. Have your Realtor hire a professional photographer and videographer to capture the essence of your home. Home buyers scan for homes online and your home must present well with a high level of emotional appeal or most buyers will not make the effort to visit your home.
No showings equal no sale.
Price your home strategically. Review recent Sold Properties that are nearby and “like-kind” in size, location, and condition characteristics. This data will set the current “fair market value” of your home.
Review Pending Properties of similar homes that recently went into escrow. Focus on the List Price of these properties to provide insight of the price point that attracted buyers to make an offer.
Review Active Properties currently for sale in your targeted price range. Determine how well your home will compete with homes priced 10 percent above and below your target List Price.
Buyers base their decision to buy a home driven by its emotional appeal and supported by a perception of fair market value of the List Price when compared to other available homes for sale with similar intrinsic qualities.
Set an Offer Date to review purchase offers 7 to 10 days from your MLS debut date. The offer date strategy ensures that all buyers currently in the market will have a chance to view and bid to purchase your home. It sets the stage for multiple offers with offer prices above your List Price.
Hire a skilled negotiator. Your Realtor should have a proven track record.
We have been selling homes in your area since 1985 with over 1000 successful sales.
Call us to win with us! Pete Sabine & Leslie Whitney. 925.297.5335. Compass. #01866771