Before I get to the answer of does the perfect house exist, I will break down the question into several thoughts of what the perfect house might be using a house purchase example. In some cases, I will refer to the location where I practice real estate which is Berks County, Pennsylvania. It will not have an effect on the answer.
The House Search ~ Locating the Perfect Home
One of the greatest and most surprising statistics in real estate sales is that 92% of all home buyers shop for their next house on the internet. In 2013 people 65 and older went to the computer to find their next residence 62% of the time. Searching the web for properties can no longer be considered a “Young Persons Thing”.
When one seeks the perfect home online they go to their favorite home search website. There they can enter search criteria that will find them the perfect home. This includes things such as number of bedrooms, baths, lot size, garage spaces, location, school district and, of course, price. The computer calculates your choices, also known as taxonomies, and displays houses and properties that best match your search criteria. The search criteria can be saved and you will be updated anytime a new house for sale hits the market.
Now we have a start and possibly part of the answer. Since many house shoppers will have different criteria, the perfect home will not be the same for everyone…Or will it?
House Showings ~ Ready to Visit the Perfect House
The Realtor® schedules showings on several of the houses that made the buyers list. One of the first things you see is that some of the houses look different from their photos that were displayed with the property online. The houses description may have been embellished a bit but all fit the criteria and that is why you are there.
The buyer has previewed 5 houses and one of them stands out and becomes the number one selection. But is it good enough? Is it the perfect house? If you are a first time home buyer you may want to see more houses. You are not quite sure what your perfect house is so you keep it in mind and move on. We will leave this scenario for a future article entitled “First Time House Shopping Tips”.
If you are an experienced home owner and house buyer you may have a better idea of what the perfect house is. It is likely that it will not take you the additional time it does for a first time home shopper to make a house purchase decision. For our example, we will use the experienced house shopper.
Acquiring the Perfect House ~ Making an Offer
That last house was a doozy! The buyer loves the location and it fits all their parameters. The décor was nice but they envision their own colors and accents. Now it gets tricky. What is the perfect house worth? The owners are willing to sell it for $250,000.
The buyers real estate agent gathers all the information they can. The Realtor® asks the listing agent if there are any other offers on the home presently or are any expected. Maybe the Realtor® asks why the home owner is selling. The agent may also do a market analysis to see if the home is priced correctly. There are no other offers and none the listing agent is aware of. The analysis shows the home was priced correctly by the listing agent and seller. Good! You never offer full price, not even for the perfect house and it cannot hurt to present an offer. All the home seller can say is no. This will be a future article for sure called “Know a Good deal when it shows up”.
The house buyer asks their real estate agent to offer $240,000 and the agent asks you a series of questions. The first might be when do you want to settle on the perfect house? Secondly, what kind of escrow deposit would you like to present? Thirdly, will you be financing the purchase, and if so, what terms do you desire? Last but not least, do you desire any inspections such as a full home inspection, value opinion, otherwise known as an appraisal, wood infestation, also known as the termite inspection, radon inspection and, if the home has a water well and septic system it is likely you will be asked if you desire to inspect those items as well. There are many others but these will suit.
Once again, for the sake of our example, the house you chose has municipal water and sewer. This does not mean you cannot or should not still ask for them to be inspected, it is simply rare to do in the reading, PA and Berks County areas.
To the buyers joy, the house seller says “Yes” to the proposal. The buyer has just acquired the perfect house! Well, not really. There is still that mortgage contingency and the house inspections. What most house shoppers do not realize is that they have purchased the right to do further investigations relating to their ability to acquire acceptable financing and house condition. This is known as doing your due-diligence.
Clearing the Agreement of Conditions ~ Financing the Perfect House
The buyer and their buyer agent have found the perfect house and the seller has accepted the proposal. What to do next? There are 15 days allotted to have the inspections completed but just 7
days to apply for a mortgage. Better do the mortgage thing first. The buyer meets with a mortgage lender and they offer an interest rate and lending fees. These are acceptable to the buyer. All is well and the perfect house is still perfect.
But wait…The Home Seller’s Realtor® never removed the house from the market. It was listed as Active-O. Another prospective house buyer has come along and made a better offer and stole the home! How did this happen. It seems that the buyer’s Realtor® did not make the buyer aware that they chose a mortgage lender as part of the Agreement and then decided on a different lender. Therefore the buyer is in violation of Paragraph 8 (B) of the Agreement which gave the Seller the option to terminate the Agreement, in writing, return the deposit and sell the house to the new buyer. WOW! Didn’t see that coming!
Nah…Just kidding. That scenario could happen but that is for another future article. For our example, the house seller is a very nice person and is okay with your change of lender. They have instructed their listing Realtor® to list the house as “Pending Sale”, no more showings to house buyers and their agents.
Clearing the Agreement of Conditions ~ Inspecting the Perfect House
Our pursuit of the perfect house has led us to the property inspections. This is where things get interesting. The buyer’s real estate agent provides literature that displays the different house inspectors that serve the Berks County and Reading, PA areas. They are all priced about the same and the house buyer makes a choice.
It normally costs a home buyer between $300 and $600 to have inspections performed on the property. The Agreement of Sale states that the house buyer may be present for the inspections. Many buyers decide to go along. The inspector is in the house about 2 to 3 hours. They explain many things about the house and send a full report to the buyer and their real estate agent.
Within a couple of days the buyer receives the property inspection report and goodness, it is 50+ pages! As the buyer peruses the report they see a summary page. This is normally at the front of the novel just received. It looks like the perfect house has issues. It is at this time a call is made to the buyer’s Realtor® representative to discuss the inspection report and decide what to do.
The report states that there are 12 items that should be addressed. Some of them are simple and others more complicated. Many of the complicated ones state that the issue or item should be looked at by a certified professional in the particular field encompassing said issue. Does this mean that the house inspector was not able to tell if a real issue exists? Was the inspector not qualified to inspect the item? What was paid for, a home buyers guide? The inspection report is filled with pages about the inspector’s liability or lack of liability. Is the inspector more concerned with their liability or the buyers’ habitability?
Your agent turns and says, let’s ask for these 12 items to be repaired and/or replaced. NOTE: This is a practice I call dump trucking. Let’s dump the issues on the seller and their real estate agent. The buyer’s real estate agent takes all the items in the summary and attaches them to a Reply to Inspection Addendum and off it goes.
But wait….The prospective buyer says, this is the perfect house. The items listed on here are subject to speculation. Even if all the items listed needed attention it is okay. The home seller have been fair and they accepted the offer without a counter of any kind. They could have left the home as active-o but chose to stop the showings. Now I am going to listen to someone I never met, paid $400 to and possibly ruin the deal. It is not worth it. I want the perfect house. Let’s discuss further. I do not want to upset them. Should I get a second opinion or hire specialists in the areas mentioned?
I wish this is what happened in most real estate deals. The more common practice is to dump the truck the inspection summary on the seller and renegotiate the deal. Maybe the buyer asks for a monetary credit for the items or they want them all fixed. Either way, it is part of the due-diligence granted by the real estate contracts. The dealing seems to never end.
For our example, the seller gets an estimate of how much it will be to have the ambiguous issues listed on the report inspected by a licensed professional and repair and/or replace the items listed. The amount comes to $2,000, ¼ of which is for inspections the buyers home inspector was not qualified to complete.
The seller of the house says no to the buyers’ request.
Is the House Still Perfect ~ the Decision?
Ok…What are the buyers’ options here? A. Take the perfect house as is; B. Terminate the Agreement and get the deposit back or; C. Get rid of the dump truck and request items be repaired and/or replaced that may be a safety concern.
It is my humble opinion that house sellers are very accepting to repair or replace items in the house that may be a safety concern to the new owners. Not things like, the inspector could not adequately inspect the air conditioning system because it was 10 degrees out or couldn’t look up the chimney so have a chimney specialist look at it as the sellers cost. Think the Realtor® knew that it would not be 60 degrees out in Berks County in January?
Now is the moment of truth for the house buyer. Do they walk or stay? What seemed to be the perfect house has imperfect issues. The seller is not as nice as perceived and there will be other perfect houses that become available. The buyer walks!
What is not realized is that the buyer walked away from a perfectly good home, one that suited their needs and was the perfect house until the $400 book report showed up. The cost to fix the items amortized over 30 years would have been around $6.00 per month. The perfect house lost to a cup of Starbucks® Latte per month.
So where does this sad story leave us with discovering if the perfect house exists. Here is the answer. There is no such thing as the perfect house. The only thing that is perfect about a house is when it becomes a HOME! Unfortunately to get to that perfect state home buyers, home sellers and Realtors® have to go through a brutal paperwork infested, bureaucratic nightmare filled with, misunderstandings, opposite interpretations and the like.
The real estate industry has not been revamped in many years. New inspections come into vogue, mortgage conditions change, markets change and rules change but our way of doing business does not change to meet the challenges. Therefore we all bear the burden of trying to work with a system that is way out of date and make the best of it.
The perfect house would likely not be perfect because it would be far out of reach of most budgets. Building homes in the Berks County, Pennsylvania is a challenge due to our climate. It is difficult to build a cost effective home in this area of the country that is immune to the climate. The wood used is often a hybrid SPF #2 grade, the windows are vinyl extrusions and the exteriors are veneered with products that, in many cases, entice moisture.
As the consumer expects more and more from a home the home builders have to attempt to deliver. In many cases, this is done by cutting back on the quality of the building material itself. There is a certain level of understanding of these issues that home Buyers, sellers and Realtors® need to become more familiar with. If this does not happen, the economics of a home may more closely follow the trend of the automobile. How much is a new Mercedes Benz worth after you drive it of the lot. Get the picture.
It is not my attempt to parse blame on home inspectors, home buyers, home sellers or Realtors®. It is my hope that these articles help to educate all to make the process of owning a home a more customer centric and enjoyable experience.
There are no perfect houses but there are perfect homes. The road to that perfection is through the perfect Realtor®. While I do not believe there are any of these I do believe that we all practice with the intention of helping those that call on us to traverse the path.
Realtors® should strive for perfection through education. It is a goal that will never be attained but many customers will benefit from the venture.
I have devised a possible solution that may solve some of the issues consumers deal with during a real estate transaction. Stay tuned…
Jeffrey C. Hogue
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