Tuesday, January 17, 2012

What Stays with the Property When I Buy a House?

Q:  I just sold my house and we've moved out.  After we got settled into our new place, my son reminded me that we forgot a subwoofer that we accidentally left in the lower left cabinet of the movie room in the basement.  Can we go back and get it?

A:  Maybe.  It depends on a few things.  Is the subwoofer attached?  In Georgia, fixtures stay with the property.  A fixture is anything that is part of the property which is determined by the method of attachment.  If it is screwed, glued or nailed, then it is usually considered real property and would automatically convey with the property upon a sale.

In Georgia, we generally have a Seller fill out a Seller's Property Disclosure Statement which is a questionairre that the Seller fills out prior to selling in order to prompt the Seller to disclose any known defects of the property.  It also has a place that the seller checks off items that stay with the propety and a place to disclose what, if any, fixtures do not remain with the property.  If an item on the checklist is not listed and the Seller forgets to disclose if  said item (like a subwoofer) remains or doesn't, the method of attachment would determine if it's real property (stays) or personal property (goes with the Seller).

One item that frequently trips buyers up is the refrigerator.  The fridge doesn't usually convey.  After all, it's just plugged in like the TV or the alarm clock.  You wouldn't expect an alarm clock to stay with the house, would you?  But maybe the refrigerator is a fancy SubZero built-in refrigerator with custom cabinetry panels on the front.  It stays.  You don't even have to write it in the contract.  But if you want a regular plugged-in refrigerator, or washer and dryer, you would need to write it into the offer that those appliances convey with the property (unless the Seller's disclosure provided states that they remain with the property).

What about bathroom mirrors?  If they are hanging on the wall like a picture, they do not stay.  If they are screwed, glued or nailed in place, you got it.. they stay. 

So what about that subwoofer?  You left it behind by accident.  If it's screwed, so are you.

Wednesday, January 11, 2012

If Your Basement Doesn't Leak Now, It will Eventually

It is said "there are two types of basements.. those that leak and those that are gonna leak".

Homes with water problems sell for up to 30% less than other homes (if they sell at all).

Water enters into a homes basement three ways...
  1. Over the foundation wall
  2. Through the foundation wall
  3. Under the foundation wall
In a poured basement (which is most of newer construction), the floor is not structural.  The concrete foundation wall, footer and slab are all poured separately which means that there must be a moisture barrier applied to seal the foundation.   Sometimes a builder will skimp on this as it will not be seen by a buyer.  A footer drain exit (corrugated pipe) should be visible on the daylight side at the exterior of the home.  In lieu of this necessary drain, a "strip drain" (a flexible drain system that wraps the foundation) can be used.  These drainage systems can be easily damaged when the soil is back-filled at construction.

When the foundation hole of a home under construction is back-filled, the dirt around the foundation is not compacted as much as the surrounding soil, so rainwater flows easily through the soil near the foundation.  After a period of time, the footer drain (which sometimes isn't even present) can become clogged with silt.  For this reason, footer drains always fail- sooner or later.

Another way water finds its way into a basement is if the landscaped area at the edge of the house has dirt that comes above the poured foundation wall, the water can enter over the top of the wall. 

Many times, moisture intrudes through the corner of the basement due to the downspouts which are located at the home's corners.  Improperly channelled roof water is the number one cause of basement and crawlspace leakage.  All downspouts should be piped off 8-10 feet away from the house.

Some common yet ineffective water intrusion repair methods are
  1. Negative Waterproofing (sealing water out).  This is achieved by applying a topical product on the foundation basement walls from the inside.  This is a bandaid fix at best and does not usually provide a permanent solution.
  2. Exterior Excavation.  This method removes the existing landscape, patio or decking around the perimeter of the house to install/repair appropriate drainage.  This method is very expensive and is no longer being done by reputable waterproofing companies.
  3. Interior Footing Drains-  a pipe and gravel drain system in stalled inside the basement which sometimes will feature a metal flange.  These systems will usually fail as the metal can corrode and fail.
  4. Waterguard- from Basement Systems International is a system engineered for permanent basement waterproofing installed around interior perimeter of basement.  This innovative system features a drain that is rust proof and won't break down or decay and won't clog-ever.  This type of system offers a lifetime warranty (life of the structure) which is transferrable to buyers.  This system averages about $6000.00 and requires 3-4 days to install.
In any case, if you're a homeowner and have a leaky basement, you really need to get it fixed.. the sooner the better.  It is pretty much a must if you're planning to sell.  If your buying a home with a basement (or crawl space), it's very important to be informed. 

If you need a list of reliable contractors (for any type of work associated with your home) please check my website.

Thursday, January 5, 2012

What is the Difference between a Condo and a Co-op??

This is a question I've been bombarded with ever since I listed a fantastic property in a co-op recently.  Atlanta doesn't have many co-ops (cooperatives), so most folks around here do not know what a co-op is. 

Unlike a condo, in a co-op, you don't really own property.  You own a share value in a corporation and the corporation owns the property.  You still have exclusive right to use the individual unit that you are purchasing in much the same way you would have the right to use/own the individual unit you would purchase in a condo, but the ownership is different.  In a condo, you along with all other owners, own all the buildings, grounds and improvements together.  Your individual ownership is the paint on the walls and the interior space of your unit (unless the by-laws of the condominium state differently).  In a co-op, you have the exclusive right to live in and improve/renovate, etc.  a unit, but your ownership is in a stock share and a corporation owns the real estate.  You and the other share owners own the corporation.

Here are 5 ways a Co-op purchase is different from a Condo purchase.

1.  You do not use a GAR (Georgia Association of Realtors) Purchase and Sale Agreement.  Instead, the cooperative will usually provide a Purchase Agreement form.  This is because you are buying a share (like a share of stock) instead of actual real estate.
2.   A buyer would usually go before the co-op board to be approved to live in the co-op.  Different co-ops can have different guidelines for the approval process.  We've all seen movies where the buyer of a co-op has to be approved by a bunch of snippy old bitties and the buyer is trying to make a good impression because they can get such a great deal in Manhattan, but they have some big dirty secret to hide....So it is a bit like that with out all the Hollywood dramatization. The upside of this is that you could potentially have a say as an owner of who gets to be a neighbor.
3.  A co-op price is usually way less than a comparable unit that is a condo, but the co-op fees are usually much higher than condo fees.  The reason the monthly fees are higher for  a co-op is that the corporation which owns the co-op may have a blanket mortgage on the co-op.  The mortgage has to be paid back by the share-owners.  Part of the monthly fee is the individual share-owner's portion of the mortgage that is amortized and divided among the share-owners.  Also, the entire co-op community is taxed as one parcel.  The entire property tax amount is divided among the share-owners and is charged out to each individual share-owner which is included in the monthly HOA fee.  Additionally, many times some of the utilities, insurance, HVAC maintenance and repair, etc. may be included in the monthly HOA fee.
4.  It is somewhat difficult to get a mortgage to buy a co-op.  The reason is that the corporation which owns the co-op may already have a mortgage on the entire complex.  Since a buyer is purchasing stock and not actual real estate, they may not be able to get a "second mortgage".  Usually, the cooperative will provide some financing to assist buyers.  One of the advantages of this is that a buyer would not be subjected to strict underwriting guidelines as they would for applying for a traditional mortgage.  This is especially helpful to self-employed people, buyers with credit issues such as a foreclosure or short sale in their history, buyers without a lot of established credit, etc..  The downside is that many times the financing provided by the cooperative may not be competitive with regular mortgage rates and loan terms.
5.  The value of a co-op is not as subject to swings in the real estate market as a condo.   The reason for this is that typically the purchase price of a co-op unit is considerably less than a condo as mentioned previously.  Since you are buying a share value in a corporation, valuations are not as closely tied to what's happening in the real estate market.  When purchasing a co-op, you are purchasing the share value plus whatever the market will bear for the improvment or condition of the unit that the owner is asking for.   Also, unlike a condo, sales are not dependent on an appraisal based upon most recent sales (since these appraisals for condos are used to obtain a mortgage, and a mortgage is not used to purchase a co-op unit).

It's imporant to note that a co-op owner may be able to deduct mortgage interest paid from their taxes as you would in deducting mortgage interest on your primary home of a condo or single family house.  If the corporation has a mortgage on the property, they will send out statements to each share-owner at the end of the year stating what portion of interest that share-owner has paid.

While buying a co-op is not for everyone, there are several distinct advantages for buyers.  For more information about some of the co-ops right here in Atlanta visit atlanta cooperatives.  To see the co-op I have listed (it's really quite fablous and only $100,000 in the Buckhead/Midtown area) click here.