If you’ve ever bought or sold a home in North Carolina and will be doing so again, be prepared to make a radical shift in your thinking about the process. In my opinion, the changes are for the better.

Read below for a very brief and by no means thorough or scholarly history of how things have progressed in real estate practices in these parts:

Dark Ages:

Caveat Emptor was the name of the game. If you wanted to buy, that was fine. If there were problems with the house, oh well.

• Offer to Purchase: one sheet of 8.5 x 11 paper. (This is how it was when I started as an agent in 1987.)
• Technology: Carbonless copies and thermal paper fax machines. We were amazed.

The Middle Ages:

Something called “Buyer Agency” came into being in North Carolina and finally agents who worked with buyers could start pointing out all sorts of issues with houses that they couldn’t previously. [NOTE: I'm not talking about material facts with a house like known structural problems, a fire at the house, zoning matters, etc., These are points that even if sellers didn't want disclosed agents had an obligation to pass along] Home inspections, performed for the buyer’s benefit – and at their expense – became the norm.  This lead to repair negotiations between the parties which can be more contentious than those regarding price. The parties could be weeks and weeks into the process and have things fall apart over whether the non-leaking roof that was 18 years old needed to be replaced or who should fix the linen closet door that won’t stay shut.

• Offer to Purchase: 4 sheets of legal paper.
• Technology: Voice-mail!  No more little pieces of pink paper with messages on who to call back. Cell phones weighed about 100 and pounds and looked like plastic, grey bricks.

Recent Times:

Buyers make offers with several conditions, all attached to dates that might or might not be firm and enforceable. Namely, applying for a loan, getting loan approval, having inspections completed, submitting requests for any repairs and closing. Sellers have dates as well, like how many days they had to respond to the previously mentioned repair request.

There are 2 options regarding property inspection time:

1. Alternative 1 – A prescribed time to make any inspections/inquiries about the property after which time a repair request can be submitted, triggering a time frame for the seller to respond to the request. All of this is solely for inspections. Loan application and approval conditions have their own dates. Lots and lots of dates.
2. Alternative 2 - a drop-dead date to do whatever checking out of things desired at the end of which the buyer decides to buy or not buy. Period. In exchange for which the seller may get a non-refundable fee.

Although it has been the practice to do so in many parts of the country, few buyers have chosen Alternative 2 around here . The inspection period is still a nerve-wracking time for all parties and the process can be gummed up by debate about whether requests being made are reasonable or not. Just you go ahead and try to define what is reasonable when it comes to a used house’s condition.

Go ahead. I’ll wait……

Exactly. Very, very hard to do.

So, again, the parties can be a long time into thinking a sale is moving forward, packing boxes, arranging movers and end up with a fallen through contract.

• Offer to Purchase: 8 – count ‘em – 8 sheets of letter size paper. You’d think all that legalese would make it clear who agrees to what and what are the consequences if things get off track. You’d be wrong.
• Technology: Multiple online outlets for buyers and sellers to post listings, look at houses, research schools, get estimates of value. Cell phones play videos and fax machines and email seem quaint.

Starting January 1, 2011:

There will be no Alternative 1 or 2. There will be what is called a “Due Diligence” period, what is now known as Alternative 2.  Buyers can have all inspections, investigations, pondering and re-thinking of the purchase desired. But at the end of the due diligence period the buyer must agree to move forward or move on. The buyer can decide they want out of the contract for any reason – or no reason. It’s their call. The ‘due diligence’ fee paid to the seller, if any, is non-refundable but credited to the buyer if the property closes. [This 'due diligence' fee is separate from earnest money which serves a somewhat different purpose. See an explanation of earnest money here.]

This is a very big change. It takes the cumbersome list of dates down to three:

• Effective date (date which all parties have signed/initialed all terms)
• Due Diligence date (date by which all conditions are to be met and buyer makes decision)
• Settlement date (generally referred to as ‘closing’)

What this means to buyers is that they need to have all their ducks in a row before making an offer because the due diligence date also includes loan approval date as well as all inspections. And don’t count on sellers giving a pass on that non-refundable fee. Most will want an amount that makes it worth their while to take their property off the market. Buyers will have skin in the game from the beginning.

It also means sellers will need to get their homes as ready to sell as possible since all a buyer needs to rightfully withdraw from the sale is to get a bad vibe about things, no matter how new the roof is or how beautifully the linen closet door closes.

All in all, this will make the process equitable and for only serious parties, on both sides of the transaction.

I just can’t wait to see what the Next Big Thing in technology is. Maybe an app that makes us comfortable with change?

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The thoughts & opinions are mine. The quips that fall flat are someone else’s. Please feel free to shoot me an email with a question or a good joke.

And remember, real estate agents aren’t bad. We’re just drawn that way.

During a recent real estate continuing education class a discussion started about how, in North Carolina, our listing agreement has been changed to include, amongst many other things, the option for the seller to advise intent to have a home inspection performed. This is a fairly new idea and one that is met with resistance by both some sellers and a few agents alike.

On first blush, all parties might agree: Why should the seller pay for something the buyer should do for themselves? It also is true that whatever home inspection a seller gets, no matter how thorough and from how reputable an inspector, the buyer’s equally reputable and thorough inspector may find different issues. But, frankly, there are “issues” and there are ISSUES. A good inspection at the beginning should reveal items that would most likely turn up through the buyer’s inspection and should rightfully be addressed. I’ve written on this before, oh so pithily. Let’s face it, you as a seller may be able to ignore the leak in the upstairs bathroom, but the buyer’s home inspector won’t. And neither will the buyer.

So, having your home pre-inspected can make very good sense for a seller. I’ve advised clients for years that, as exciting as the home selling/buying process is, what you don’t want it to be is made up of surprises. You want a nice, happy, uneventful transaction. There’s enough inherent adrenaline-producing steps in a smooth sale that no one needs extras. Finding out the crawl space shows a rotten floor joist is something you want to know before a freaked out buyer is demanding it be repaired. Any who wants a rotten floor joist, even if you’re NOT selling, right? This is your house, for crying out loud.

Also, when there are legitimate repair issues, better to address them, and be able to show prospective buyers what a conscientious homeowner you are and avoid the inevitable. Not only that, but it shows you have nothing to hide. Let’s all admit that one of the biggest challenges to the home buying/selling process is everyone’s fear of being taken. Anything a seller can do to show a bright light on things goes towards relieving the buyer’s anxiety.

Granted, there are situations where a seller simply doesn’t have the money to make repairs. But even then, knowing what lies ahead helps you plan accordingly.

Again, avoiding surprises is good.

In the Greensboro area, a home inspection will cost around $350, depending on the age and size of the home. Could be more or less. A good home inspector will provide your report in a very timely manner – within 24 hours – and it will be detailed with copious digital photos of all repair items. There will also be notes about what is not a repair issue but a “keep an eye on” issue.

By the way, above I mentioned that some Realtors don’t agree with the idea of the seller’s getting home inspections in advance. I have to say I feel the reasons some agents object are the types of attitudes that don’t enhance our image. Some think it’s a waste of their client’s money as the buyer will get their own. That seems short sighted to me, for reasons already stated.

But some agents feel (**shiver**) that they don’t want to find out anything that then becomes a material fact about the property which they themselves must then reveal to all parties.

This makes me sad.

The real estate industry has come a very long way from the caveat emptor days when buyers were on their own. Agents should be advising their clients – both buyers and sellers – of the best way to achieve their goals in the smoothest, most sensible and, yes, most ethical, manner possible. The vast majority of agents do. There are a few who need to consider getting into another line of business. Say, selling Ginzu knives door to door.

Back to seller: There’s really no downside to getting your own home inspection when putting our house on the market. A fairly small investment of money gets you a lot of information and can enhance your position in this very competitive market. Show buyers you have nothing to hide. Heck, you’d probably get your car detailed and have a tune-up in order to get the best price when selling.

Tune up your house.

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If you have questions, comments or a good joke to share shoot me an email.  I’m a full time Realtor®, I love what I do and would be thrilled to hear from you.

The opinions I express here are just that – my opinions. The lovely gentlemen who own Yost & Little Realty have nothing to do with what I write. They tolerate me, but they didn’t raise me. So don’t blame them.

There are many misconceptions and myths in life: shaving your eyelashes will make them grow back thicker; cheap vodka tastes just as good as higher shelf brands; dogs don’t judge you and sellers have to make repairs to any issues that come up in a home inspection.

I’ve seen the lie put to all these, but will focus only on the inspection piece for now.

A common belief of home buyers is that a home inspection is a to-do list for sellers. That a seller is required  to correct all items noted.

This is even further from the truth than the one about cheap vodka.

A thorough home inspection will note all manner of things from lots of cracks in the concrete driveway to the fact that the roof is within a few years of needing to be replaced to faulty GFCI outlets in the 2nd bathroom. And many items will be ones that a prudent buyer will want corrected.

Some are things a prudent home buyer needs to realize are what comes with owning your own home.

And of the repairs one should request, their is no rule or law that says a seller must make them. Repair requests are negotiated, just as are the price and other initial terms of the contract. And, as any seasoned Realtor can tell you, deals fall apart over repair negotiations as often as over who will pay the closing costs.

Now, this is not to say buyers shouldn’t expect the house they’re hoping to own be in good repair before they sign closing documents. It’s just that there is no guarantee that sellers will be willing, or able, to make repairs. If a seller has been beaten down on price and other terms, there may simply be no more blood in that turnip.

How to determine which repairs request are reasonable? The guiding question needs to be “is the system or item performing the function for which it is intended”? A roof may be 15 years old and the case could be made that it is approaching the end of its useful life. But a roof has pretty much one job and that is to keep rain out of the house. If the roof isn’t leaking and isn’t a made up of a bunch of cracked shingles, it’s performing the job for which it is intended.

A cracked heat exchanger in a furnace, on the other hand, needs to be corrected. Leaks, wood destroying insects, dry rot, mis-wired electrical outlets. There’s a smorgasbord of issues homes can have. And one would hope and expect that a seller who wants to sell will agree to do the right thing. Most do.

Some don’t. Or won’t. Or simply can’t.

It is at that point a buyer needs to look long and hard a property and ask if they can handle the issues or if they would simply be buying someone else’s problems.

So inspect early. Ask your lender if she or he can hold off ordering the appraisal – for which you have to pay – until after inspections are completed and any repair requests are negotiated. Above all, try to keep your head although it’s hard to do when going through such an emotional experience.

And don’t play air guitar in front of your dog in your bathrobe. You will be judged. I’ll never get over that look on Piper’s face.