Do I Have to Use the Builder’s Lender and Real Estate Agent?

The real estate industry does a spectacular job educating first-time homebuyers. There’s so much valuable information out there that no buyer should go through the process uninformed.

Buying a home in a new community – a brand-new home that no-one has ever lived in – is not only first-time homebuying on steroids, but the industry has left the homebuyer behind in terms of offering information and sharing knowledge about the process.

From the home loan process to choosing your real estate agent, it doesn’t have to be confusing.

Read on to learn answers to the two most common questions we receive from our clients who are considering buying a newly-constructed home.

The preferred lender

Many potential new homeowners walk away from the model home tour under the assumption that they must use the builder’s preferred lender as a condition of the purchase.

Is it any wonder?

Some builders’ representatives use carefully-chosen words to make buyers believe this

When, in fact, nothing could be further from the truth.

Now, the builder may require you to obtain loan pre-qualification from the preferred lender but, in the end, you can borrow money for the home from whichever lender you chose.

These lenders often offer good deals, though. They may offer to pay your closing costs or entice you with a specific amount, such as $10,000, if you obtain your mortgage from them.

Others will reduce the price of the home or throw in attractive upgrades as an inducement to use the preferred lender.

These are a bit more challenging to put into monetary terms so you may need to do some research. You’ll need a dollar figure to work with when comparing this lender’s offer to others.

Incentives, however, may turn out to mean nothing if not compared against other terms, such as the interest rate and points charged

By the way, go ahead and allow the builder’s preferred lender to pre-qualify you for a mortgage – you are in no way obligated to use their services in exchange for loan pre-approval.

You’ll be given a Loan Estimate that you can use to compare this lender’s offering against others. The Consumer Financial Protection Bureau offers a sample of the form, with explanations, on its website.

My best advice to my clients is to go loan shopping before you step one foot into a new home community’s builder’s office. Have facts and figures in-hand, ready to compare to what the builder’s lender will offer.

If you don’t have this backup,  there’s a good chance you’ll get swept up in the excitement of buying a new home, perhaps falling in love with one of the model homes, and your emotions will take over.

Armed with hard facts (offers from other lenders), on the other hand, you’ll be able to react logically instead of emotionally, and that’s a good thing when making a financial decision.

About the builder’s real estate agent

Just as it’s never a good idea to use the homeowner’s real estate agent when buying an existing home, it’s unwise to use the builder’s agent, and here’s why:

The owner’s agent, whether a homeowner or a builder, has one overriding aim: to get the owner the most amount possible for the home

The buyers’ agent, on the other hand, seeks to help his or her client spend as little as possible for a home.

See how the two duties conflict?

Regardless of how congenial, knowledgeable and eager the builder’s agent is, you need your own representation.

In fact, you’ll be asked on your first visit if you’re working with a real estate agent and your answer should always be “yes”

To be safe, we recommend that you ask your agent to accompany you on the first visit. If that isn’t possible, register your agent when you sign in.

Now, instead of using an agent with divided loyalties, you have your own representative who will go to bat for you in negotiating upgrades and extras, guide you during the inspections and assist you in taking care of all those details during the transaction.

What to ignore during your search for the perfect condo

Condos can be the ideal purchase for homebuyers who are on tight budgets. They’re typically lower priced than single-family homes, insurance is less expensive and ongoing home maintenance costs are kept to a minimum.

There are some aspects of condo-buying that should never be ignored, however. These include:

  • The periodic association fee and how much it will add to your monthly house payment.
  • The homeowner association packet of documents for the homebuyer (it includes vital information).
  • Communities with a large number of homes for sale. Do the research required to find out why so many residents are leaving.

When touring condos for sale, however, some things are better left ignored.

Try to look beyond the cosmetics

Cosmetic issues are easily remedied and typically inexpensive to fix. Ignore the following while looking at condos for sale:

Wall color

Paint colors are personal and what turns on one person may be repulsive to another. Because condos are typically smaller than single-family homes, distasteful wall colors can overtake entire rooms.

Not only that, but the wrong color can make a room appear smaller than it is. Don’t take the paint’s word for it – measure rooms to get the true size.

Then, remember that walls can be transformed relatively inexpensively.

The average square footage of a U.S. condo is 1,482 according to the U.S. Census Bureau. The nationwide average cost to paint a home this size, without hiring a professional, is between $200 and $300 for basic paint and $400 to $600 for high-quality paint.

Hire a pro to do it for you for about $1,100 to $2,000, according to costhelper.com.

Ignore the walls – it’s an easy, inexpensive fix.

Dark and gloomy is also an easy fix

Even with all our years of viewing homes, it remains a mystery to us how some people can live in dark, gloomy homes. Even a lack of natural light shouldn’t prohibit someone from introducing artificial light sources to the home, especially when it’s a fact that light helps lift our moods.

Don’t let the gloom stop you from putting in an offer on a condo that offers most everything else you are seeking in a home. Lighting is inexpensive and, the right fixtures can transform your home.

Check out the room-by-room lighting guide at Huffington Post and ways to enhance your decorating scheme with lighting at bhg.com.

The personal stuff will be gone

We get it. All that dated furniture, the collections of books, knick-knacks or other items, family photos and other personal items and clutter are distracting.

And, although it may be challenging, it’s important to remember that it will all be gone when you move in. Look beyond the clutter to the basic flow of each room — the “bones” of the home.

The flip side is just as dangerous

While ugly interiors can be distracting, so can gorgeous ones. Stagers are skilled at making homes appear move-in ready and at creating interiors that appeal to a broad range of homebuyers.

Don’t buy into the fantasy

Those Imperial silk draperies will most likely go home with the stager when the home is sold. Ditto for all the accessories that go into the psychological appeal of the room, the throw pillows, fresh flowers and plants and mirrors and artwork.

Staged rooms also may not be as large as you think they are. Some stagers use smaller-scale furniture to trick the eye into making a room appear bigger. Paint colors are likewise chosen to make homes seem roomier.

If in doubt as to whether or not your furniture will fit in the home, measure each room.

The National Association of Exclusive Buyer Agents (NAEBA) cautions homebuyers that stagers often use “furniture and wall hangings to cover up or direct a buyer’s attention away from floor damage or wall damage.”

They also remind homebuyers that staged homes are often perceived as being well-maintained homes. Often, this perception is far from reality.

“Many times, staged homes take advantage of the staging to cover up deferred maintenance issues and improper construction and repair issues,” they say in the 2007 report, “How to Not Get Tricked by Staging, and Potentially Save $5,645 when you Buy your Home.

Ignore the home’s staging and perform your due diligence by looking behind wall hangings and under rugs and furniture.

Whether the condos you tour are diamonds in the rough or staged to perfection, it pays to look beyond the cosmetics to whether the space works for your needs and lifestyle.

3 amazing kitchen designs

In 2015, more than 10 million American households spent nearly $50 billion renovating their kitchens, according to the National Kitchen and Bath Organization.

Since the kitchen is the most-used room in the home, and the most popular among homebuyers, it’s money well-invested

If you plan on joining the renovators it’s time to learn about various kitchen design concepts so that you’re better able to choose the one that fits your lifestyle. You can never over-plan your new kitchen, right?

From color schemes to layouts, windows to lighting, here are some brilliant kitchen concepts from top designers.

The contemporary kitchen

If you fancy yourself on the cutting edge of technology and love new gadgets you may just be the type that will enjoy a contemporary kitchen.

Think “sleek” when choosing appliances and anything you can have built-in, by all means do so, even the coffee maker.

Speaking of appliances, a “smart” refrigerator is right up your alley

Forget about granite and even quartz for the countertops and head straight for concrete.

Look for patterned backsplashes (such as glass tile) and don’t forget under — and inside — cabinet lighting.

HGTV suggests the best places to shop for contemporary kitchen items include West Elm, Crate & Barrel and Pottery Barn. They also offer a style guide for contemporary kitchens on their website.

Go Mediterranean

The Mediterranean kitchen can be summed up in two words: Warm and cozy. Oh, go ahead and throw in “romantic” as well because the iconic rich colors of this style positively drip with amour.

Houzz’s Lisa Frederick suggests using “a blend of spicy red, bright yellow, terra cotta and ocean blue” as your color scheme. Then, add dark cabinets and upholstery fabrics that connotes the sun and sea.

Top it all off with ceramics anywhere you can put them, from accessories to backsplashes.

For ideas on how to create a Mediterranean kitchen in your home, visit Decoist and Houzz. The latter also offers an accessory buying guide for your Med kitchen.

The cottage kitchen

Although cottage-style design may seem more suited to a vintage home, such as a bungalow, if done right it can be quite attractive even in a newly constructed home.

As you approach the design, think homey, cozy, utilitarian and down-to-earth.

Color schemes are typically heavy on the white, but “pretty painted base cabinets in pastel blue make a room shine bright,” according to Kathy Barnes at Better Homes & Gardens.

Speaking of cabinets, you can also forget the traditional and opt for attractive, vintage-looking shelves instead. Then, throw in a farmhouse sink, hardwood floors and pendant lights.

See examples of cottage kitchens at Southern Living, This Old House and Better Homes and Gardens.

Get Help With Your Down Payment

It’s frustrating to have a decent-paying job, a bright earnings future and acceptable credit and still not be able to buy a home because you lack the thousands of dollars in cash needed for a down payment and closing costs.

The dreaded down payment stops more potential homeowners cold than any other aspect of the loan process.

To read articles about down payment headaches one would think it’s only millennials who have trouble coming up with the funds.

In reality, most would-be first-time homebuyers, regardless of age, find saving up 20 percent of hundreds of thousands of dollars challenging.

Sure, you may qualify for a loan with a lower down payment, but do you really want to add to your monthly house payment by purchasing the mandated private mortgage insurance policy? That’s what’s required if you don’t have 20 percent equity in a home you purchase.

Today, we’ll explore ways you can get help with the down payment on your new home.

Crowdfund your down payment

Enter, HomeFundMe CMG Financial, which offers a brilliant way for you to come up with that down payment: Crowdfunding – with the approval of Fannie Mae and Freddie Mac.

Before the crowdfunding concept came into being, lenders stipulated that your down payment and closing cost funds must come from your savings (mutual funds, stocks, IRA and 401(K) included), proceeds from the sale of another property, assistance from government programs or non-profits, union, employers or gift money from an immediate relative.

HomeFundMe allows anyone to donate funds to help you buy a home and CMG Financial provides the online platform.

While many crowdfunding endeavors offer a return on investment, the HomeFundMe program returns nothing to those who give. Money given is considered a gift, although they can make the gift conditional on the money eventually going to fund a home purchase.

The program offers incentives to savers, however. Attend credit counselling and education classes and you may receive a grant of up to $2,500. Then, the crowdfunding platform will match donations “$2 for every $1 raised, up to $2,500,” according to CNBC’s Diana Olick.

Get help from the government

The government, from local to county, state and federal, offers programs to help Americans get into home ownership. Some of these programs are geared toward the low-income applicant while others are open to all.

Federal Home Loan Bank

The Federal Home Loan Bank offers three programs to help homebuyers with their down payments and closing costs:

  • Home$tart® — Assistance up to $7,500 for borrowers who take the homebuyer education program and earn up to 80 percent of their area’s median income (find yours on HUD’s website). Unlike the aforementioned programs, these funds come in the form of a grant.
  • Home$tart Plus — $15,000 to borrowers who are currently receiving public housing assistance. Borrowers must complete a financial literacy program and be income qualified.
  • Native American Homeownership Initiative (NAHI) — $15,000 to eligible Native American households to help with a down payment and closing costs.

Good Neighbor Next Door

This program falls under the auspices of the United States Department of Housing and Urban Development (HUD) and offers a discount (typically 50 percent) off the asking price of a home. The program is open to applicants in the following professions:

  • Pre-Kindergarten through 12th grade teachers
  • Law enforcement officers
  • Emergency medical technicians
  • Firefighters

Be aware that this program only covers homes in HUD’s revitalization areas that are listed for sale through this program.

Learn more about the program and how to apply on HUD’s website.

State and local programs

FHA offers state-wide down payment grants through a variety of programs. Search for them here.

Search for local programs at Freddie Mac’s website.

The National Association of Local Housing Finance Agencies (NALHFA) suggests using downpaymentresource.com to find information on local assistance programs.

provides local-level program information.

Finally, several labor unions, such as the Culinary Union, offer homebuying assistance programs for members.

“Real Heroes Don’t Wear Capes. They Wear Dog Tags”

Sure, it’s a slogan on a t-shirt, and nobody has yet to take credit for it, but it sums up how we feel.

And, since Veteran’s Day – the day we celebrate our heroes in dog tags — is November 11, we’d like to take this opportunity to remind our current and former service members about the amazing VA home loan that is part of their benefits.

It’s curious that of 21.8 million veterans in the U.S., only 6 percent use their VA benefits to purchase a home.

So, we thought we’d take this time to remind active service members, veterans and qualified widows and widowers about this money-saving, homebuying program.

In fact, we feel that the VA loan might just be the best mortgage today.

Not only will you not be required to make a down payment, there’s also no mortgage insurance requirement, making the loan even less expensive. Then, there is the fact that veterans using this loan guarantee often get lower interest rates than they would with a conventional loan.

It does this not by directly lending money but by guaranteeing conventional lenders that a portion of the loan will be repaid should the buyer default. Since lenders are thus assured, they are able to offer our veterans more attractive rates and terms.

The Many Uses Of The VA Home Loan

Although purchasing a home is the most common use of a VA loan, the administration also offers programs for veterans to build homes, to simultaneously purchase and improve a home and to improve a home’s energy efficiency.

To be eligible for a VA-backed loan:

While many of the eligibility requirements for the VA loan are similar to conventional loans, others are less stringent.

  • The VA wants you to have “suitable credit.”
  • Your income must be enough to cover both your mortgage payment and your monthly bills.
  • The VA loan is only for borrowers who intend on occupying the home as their primary residence.
  • The borrower must obtain a valid Certificate of Eligibility, or COE for short. Many lenders can use the online ACE system and can provide the certificate almost instantly.

The borrower must also have a certain amount of residual income left after paying monthly credit debt. The amount is determined by region and family size.

For instance, in Minnesota, a family of five must have $1,039 left every month after paying their debt payments. If this family’s debt-to-income ratio (DTI), however, is higher than the maximum allowed, they will need more residual income to qualify.

Now, these are the VA’s eligibility requirements. Since the loan will be granted by a lender, you may face other requirements.

Here’s How Much You Can Borrow

The VA doesn’t set a maximum on the amount of money an eligible veteran can borrow but it does limit how much of the borrowed amount it will guarantee.

“In 2017, a qualified borrower generally can buy a home with a value of up to $424,100 with no down payment, though the actual amount varies by county,” according to Hal M. Bundrick, CFP at nerdwallet.com.

Now, this doesn’t mean you’ll automatically qualify for the maximum. The amount you’ll qualify for depends on a number of factors, including your debt ratio.

Determine your ratio by adding up your monthly debt payments (exclude items such as phone bills, utility bills and groceries) including your mortgage or rent, and dividing the sum by your gross monthly income. The maximum acceptable debt ratio is 41.

There’s a lot more to know and love about the VA-backed loan, so feel free to contact us. We’re happy to point you to a VA loan specialist who will walk you through the process.

How To Hire A House Cleaner

Outsourcing. Big corporations do it, so why not households? Delegating the mundane, routine household chores to an outside source may just be the key to a happy household.

Whether you’re looking for some temporary help around the holidays or part-time or full-time household help, hiring a house cleaner requires a bit of preparation and a whole bunch of interviewing.

Finding A House Cleaner

“House cleaner and housekeeper — they sound the same, but they actually involve two very different jobs and duties,” Jennifer Troyer, founder of Seattle Green Cleaner, LLC writes at Angie’s List.

“If you think in terms of light-duty work with some organizing thrown in, that’s for a housekeeper,” she explains. Think Alice, on TV’s “The Brady Bunch,” for example.

“If you’re looking for a top-to-bottom cleaning of your home, that’s for a house cleaner,” Troyer concludes.

Aside from asking friends, family and co-workers for a referral to a house cleaner, check online at sites such as Craigslist, Angie’s List, Yelp and Groupon. If all else fails, use Google to find “house cleaners in [the name of your city].” 

Prepare For The Interviews

Naturally, before interviewing anyone you’ll want to check for online reviews. Do this at Yelp.com, AngiesList.com or, again, Google the company or person’s name with the word “reviews.”

Then, make a list of questions to ask those you will interview. Following are a few suggestions:

  • If you’re hiring a company, ask if they perform background checks on their employees.
  • Is the cleaner or company licensed and bonded?
  • Is there room in his or her schedule to accommodate you?
  • Ask for references from current and former clients
  • What is the longest period of time the cleaner has held a client?
  • The money stuff – how much will each service cost, when and how will you be expected to pay? Will they bill you monthly? Are there extra fees required for certain tasks?
  • If it’s important to you to have the same cleaner every time, ask the representative if that is a possibility if you hire them.
  • Will the cleaner bring his or her own supplies or are you expected to supply them? Is there an extra charge if they bring their supplies? If the cleaner will use yours, ask for a list of what is commonly used so that you can shop for these items.

Next, make a detailed list of what you expect every time the cleaner visits and another for occasional tasks. For instance, “dust the furniture” is a task most homeowners want performed on every visit. But, “wipe down the top of the refrigerator” may be one that can be done once a month or so.

Finally, make a list of any special considerations, such as what to do about pets, surfaces that require special care or areas that are off limits.

The Interviews

Always request an in-home interview. This way, you can conduct a thorough walk-through of your home, pointing out exactly what you want done. Not only will the price quote be more accurate than if it were given over the phone, but you’ll have a chance to judge the company’s or individual professionalism better as well.

When you’ve narrowed it down to one or two cleaners, and if they don’t work for a company that conducts criminal and background checks, you’ll need to do some research. Check out ConsumerAffairs.com’s list of online background check companies with reviews from users.

Do let the candidate know that you will be running a background check on him or her.

Red Flags

All of us get gut feelings about someone when we first meet them and many of us end up chiding ourselves for not paying attention to those feelings. Pay attention to what you’re feeling about the potential hire during the interview.

Then, reconsider hiring any house cleaner who:

  • Can’t or won’t supply you with at least three references from current or past clients.
  • Refuses a background check
  • Has no long-term (more than at least 6 months) clients

Finding the right employee for any job is challenging but when that job is going to be performed in your home – while you may be away – it’s even more important to be extra cautious.

Selling Your Home? Make Sure It Appraises For Maximum Value

There are two phases of the home selling process that throw most homeowners for a loop: The home inspection and the appraisal. Both can have a major impact on the home’s market value and, thus, how much money can be realized from the sale.

Repairs suggested on the home inspection report can be negotiated between the buyer and seller.

While both can break the sale, the appraised value isn’t something you can negotiate. This is why it’s so important to work with a real estate agent to determine the current market value of your home. Then, do everything you can to ensure that the appraiser agrees with that value.

What Influences Value To An Appraiser?

Real estate consumers, for the most part, don’t really understand the appraiser’s role in the home sale process. For instance, although the buyer pays for the appraisal, it belongs to the lender, not the buyer.

By law, however, a copy of the appraisal must be given to you if you request it in writing, according to the Federal Bureau of Consumer Financial Protection.

Residential appraisal professionals take a multi-pronged approach to determining a home’s value. Items considered, over which a homeowner has no control, include local housing market trends, which are impacted by economic, social and other forces. Supply and demand is an example of this.

In other words, the current real estate market.

The appraiser will use all of these factors as a backdrop when he or she studies the neighborhood, your home’s characteristics and competitive properties to arrive at the home’s appraised value.

There’s Value In A Well-Maintained, Clean Home

If you’ve maintained your home over the years, it may sail through the home inspection. And, a well-maintained home will also impress the appraiser. Making small repairs, revving up the home’s curb appeal and meticulously cleaning the home will help you in both instances.

While some appraisers say that clean properties don’t result in higher values, others, along with many real estate industry insiders, beg to differ.

The home’s condition, however, will have a direct bearing on its appraised value – known as the Condition and Quality rating in the appraisal industry. The condition rating can range from C1 (for new homes) to C6 – for homes with severe deferred maintenance issues and defects that may impact the home’s habitability.

During this phase of the evaluation, the appraiser will consider all the improvements you’ve made to the property.

Supply The Appraiser With Accurate Data

Don’t assume that the appraiser will notice the upgrades you’ve made to the home. Make a list of them, the dates they were performed and by whom.

Get specific in your explanations. Rather than “Bathroom remodel,” be more specific. “Bathroom remodel: new tub; travertine tile work; cherrywood cabinetry; Kohler sink, faucet, etc. …/Installed 2009/$15,000 cost,” says Ryan Lundquist, certified residential appraiser in Sacramento, California.

In fact, Lundquist offers a handy information sheet you can download, fill out and offer up to the appraiser when he or she visits the home.

Don’t assume the appraiser is familiar with your neighborhood

As a result of the Dodd-Frank reforms, appraisers are typically assigned jobs by an Appraisal Management Company, or AMC for short. And, these jobs are assigned “essentially at random,” Phil Huff, CEO of a real estate appraisal data company in California tells Market Watch’s Daniel Goldstein.

Which means, the appraiser may have little to no knowledge of your neighborhood.

Make a neighborhood description (quick and to the point) part of the data you supply to the appraiser. Lundquist suggests a bulleted list to make it easier for the appraiser to read quickly.

Tell the appraiser what you appreciate about the neighborhood, about your HOA (and fees you pay), anything important about its location within the town or city, anything in particular that makes your neighborhood among the “in-demand” areas of town and any information you have on pending projects that will have a positive impact on your area’s home values.

Do mention the school district if it is of high enough quality to positively impact home values in the neighborhood.

Other items to point out to the appraiser include:

  • If your lot is more desirable than others nearby, include a copy of the property survey.
  • Home features that the appraiser may not notice, such as energy efficiency.
  • Any information you may have on why a nearby home sold for less than it should have, such as a divorce or a sale to a member of the homeowner’s family.

Sure, there may not be anything you can do to change the economic forces that influence your home’s value in the eye of the appraiser, but taking care of the items that are within your control will help a great deal.

2 Important Forms You’ll Need To Sign When You Sell Your Home

 

 

Like practitioners in any profession, real estate agents and brokers have a unique vocabulary, they usher their clients through a distinct process and provide industry-exclusive legal paperwork.

Because agents and brokers use the latter, daily, they are so familiar with it that many tend to forget that their clients are not. None of us want to appear clueless, so many real estate consumers keep quiet and don’t ask questions about things they don’t understand.

Today we’ve decided to fix that by introducing you to two of the most important forms that your listing agent will ask you to sign.

Agency Disclosure

The first thing to understand about “agency” is that it is a legal term that applies to a relationship in which one party is representing another in dealings with a third party.

When selling your home, your real estate agent is his or her broker’s agent – representing the broker in her dealings with you.

Your real estate agent will then represent you in your dealings with buyers. Confusing? Yes, a bit.

Think of the real estate agent as the middle-man or woman, standing in for the person who holds the broker’s license when dealing with you and representing you when dealing with the buyer.

One of the first forms you’ll be asked to sign (if not the first) is an agency disclosure.

It is “a written explanation, to be signed by a prospective buyer or seller, explaining to the client the role that the broker plays in the transaction,” according to “Barron’s Dictionary of Real Estate Terms.”

The disclosure form explains the various types of agency relationships in effect in your state.

The most common relationships are single agency (the broker represents only one party in the transaction), designated agency (when the buyer and seller are represented by two agents from the same brokerage) and dual agency (when one agent represents both the seller and the buyer, illegal in eight states).

The agency disclosure form is not a contract. When you sign it, you are merely acknowledging that the broker has disclosed the agency relationship.

Listing Agreement or Contract

This is typically the second form you’ll sign and it gives the broker and her agents the right to offer the home for sale. The listing agreement must contain the following if the broker is a member of the National Association of Realtors:

  • The price at which the home will be offered for sale.
  • A beginning and ending date.
  • The amount of broker compensation and the terms and conditions under which it will be paid.
  • Authorization for the broker to cooperate with other brokers and how the broker that brings in the buyer will be compensated.
  • Authorization for your broker to either reveal or not reveal the existence of previous offers.

Other items you may find in the purchase agreement include:

  • Authorization for the broker to install a sign and lockbox.
  • Items the seller wants excluded from and included in the sale.
  • Seller’s warranty that he or she owns the home and that there is no pending notice of default.
  • Authorization for the broker to advertise the home in the Multiple Listing Service database and/or online.

The listing agreement is a contract, so read and understand everything in it before signing.

 Another important piece of paperwork you’ll be asked to sign is the homeowner’s disclosure, which we’re happy to explain to you.

Selling your home is a paperwork-intensive undertaking, but nothing compares to the stack of papers you’ll be required to sign at closing. But, that’s a subject for another post.

3 Words You Must Learn And Understand Before You Buy A Home

When you’re shopping for homes you’ll be introduced to an entirely new vocabulary and I’ll be the first to agree with you that some of it seems downright boring. Take encroachments and easements, for instance.

Though they sound ho-hum, they are both important concepts so today I thought I’d try to put them in plain English for you.

What’s an encroachment?

Encroachment describes the violation of a homeowner’s property rights. Imagine your next-door neighbor, Frank, decides he is tired of having only a carport and builds a garage. When complete, the structure extends onto your property. This is encroachment.

Encroachment can be intentional or unintentional

And, typically, it’s the latter. Unless you are absolutely sure where your property lines are — down to the inch — you’ll have no way of knowing if you’re encroaching on your neighbor’s property when you decide to plant that gorgeous oleander hedge between the two homes.

And, an easement?

In Hawaii, all beaches are publicly-owned and the public is ensured access to all “land below the high-water mark on any coastal shoreline.”

In other words, should you purchase a home on a beach in our 50th state, you cannot block the public from using that beach. In Kahala (on Oahu) for instance, you’ll find pathways that cut between multi-million- dollar homes, from Kahala Avenue to the water.

These paths are public rights-of-ways, or easements — allowing others to travel or pass through their land. And the homeowners on either side have no say in the matter.

The primary distinction, then, between encroachments and easements, is one of permission.

How to deal with encroachment — and why you must

When an encroachment comes to light, both parties have options. Remember Frank – the neighbor who built his garage partially on your property? Suppose this happened decades before you figured out that he had encroached on your property.

You approach Frank, voicing your displeasure. Your most common options include ignoring the trespass, forcing the removal of the garage, offer Frank an easement or have him sign an encroachment agreement.

All of these remedies require the advice and assistance of an attorney

What if Frank doesn’t like any of these options? He may have one of his own (and you won’t like it): adverse possession.

Yes, another ho-hum real estate/legal term, but one that has a huge impact, if invoked. Through the adverse possession process, Frank may be able to gain ownership your portion of the land on which the garage sits.

In fact, adverse possession can be used to gain ownership of “just a few feet of property or hundreds of acres,” according to Emily Doskow, attorney and author of “Neighbor Law: Fences, Trees Boundaries & Noise.”

Although state laws vary, Doskow says that courts generally apply a “four-factor test” when looking at adverse possession claims. The occupation of the land must be:

  • hostile
  • actual
  • open and notorious
  • exclusive and continuous for a certain period of time

Courts don’t define “hostile” the way we do. In an adverse possession case, it describes that Frank’s possession of your land is hostile to your interests.

Then, the courts will want to see that Frank actually used your land as if he were the owner.

He can prove this, according to Doskow, if he can produce records showing he maintained or improved the property or paid taxes on it.

The third factor of the test is that Frank’s use of your property must be obvious “to anyone – including a property owner.”

Finally, Frank must prove that he controlled the land exclusively (meaning he didn’t share it with you) and that he did so for certain amount of time (which varies by state).

How to avoid adverse possession

When determining how to deal with encroachment, it’s important to keep Frank’s option in mind.

Your best option, in any type of encroachment, may be to either offer to rent the offender that piece of your property or grant him an easement.

But, it’s critical that you contact a real estate attorney who will help you consider all possible options. And do it quickly because there is a statute of limitations.

Scary Home Inspection Report? It Doesn’t Have To Be A Deal Breaker

It’s a toss-up whether the home inspection or the appraisal induces more nail-biting. Homebuyers, sellers and the agents involved await the results of both with a mixture of anticipation and fear. The latter, at least statistically, is unfounded.

“Nationally, [only] 3.9 percent of sales failed in 2016,” according to Forbes staff writer Samantha Sharf.

She doesn’t mention the reason for the failures, although it’s a safe bet that not all of them were due to a nasty home inspection report. So, the chances are in your favor that your deal, regardless of the findings of the inspector, will sail through to closing.

But, it may need your help.

When faced with problems that the home inspector turns up, you, as the buyer, have several options.

First, Choose Your Battles

Understand that there are some repairs, such as electrical, roof, the HVAC system and plumbing, that you can reasonably expect the seller to make.

In fact, anything that presents a health and safety concern or that negatively impacts your use of the home is not only something that the lender may require, but that, should you walk away from the purchase, the next buyer will expect as well.

It’s the little things, though, that bog down transactions, sometimes bringing them to a halt. If you really want the home, ignore the small stuff and fight for what actually matters.

Items to ignore include anything of a cosmetic nature and problems that are inexpensive to remedy. Save your big guns for the major repairs.

For instance,

Demand repairs to anything that presents a danger to health and safety, such as faulty wiring or mold.

You Have Options When Faced With An Ugly Home Inspection Report

Ask the seller to make the repairs

When faced with major repair or replacement costs, many homebuyers ask the seller to make the repairs before the close of escrow. Often, sellers balk at the request, but once they’re reminded that the next potential buyer will most likely make the same request, they relent.

Ask the seller for a credit

Rather than ask the seller to make the repairs, ask that he or she credit you with the cost of the repairs at the close of escrow. This way, the seller avoids the hassle of having to hire a contractor and the inconvenience of home repair work happening while he’s trying to pack up for the move.

Note that FHA will only allow the seller to credit the buyer 6 percent of the sales price.

But, if the problem has to do with the roof and the required repairs are extensive, FHA may require that the work be done before the close of escrow.

Renegotiate the price

A third option is to ask your agent to amend the purchase agreement with a reduced price, reflecting the deduction for the cost of the repairs. You’ll need to get bids from contractors to determine the cost of fixing or replacing whatever is at issue.

This option depends on your current cash flow. While it lowers the cost of the home, it does nothing to put money in your pocket. So, before exercising this option, determine if you have the funds to do the work.

Switch your financing

If you’re using a FHA-backed loan, contact your lender to find out if you can switch to their 203k program. Because this loan rolls the cost of the repairs into the mortgage, you’ll, in essence, be financing the repairs but only make one payment every month.

The 203k program is a bit complicated and the loan takes time. It will significantly slow down the purchase process so you’ll also need to ask the seller for a later closing date.

One problem you may run up against with this option is that the seller is under no obligation to cooperate with your efforts to obtain financing that differs from that stated in the purchase agreement. There is a risk that the seller may cancel the sale.

But, since whatever problems the inspection turned up are now disclosure items (the seller will have to inform any subsequent buyer about them), many sellers will be amenable to the change.

It’s important to work closely with your real estate agent on inspection problems, requests and remedies.