Don’t skip the Home Inspection


If I were asked, as a Buyers Agent, what is my biggest obstacle? My answer would probably be convincing the buyers that they do need to hire a licensed, professional Home Inspector. I can’t even count how many people have told me they were going to waive the home inspection and do it themselves because they “worked construction in college”. 


There are so many advantages to having a quality, licensed Home Inspector check out the property before you close and very few advantages of inspecting it yourself. Every climate and environment are different and mother nature can cause a lot of damage to a house. A local Home Inspector automatically knows, through experience, what to look for in the particular area. One big example I use is termites. Termites are very common in the Florida Keys. Most homes have them. Just like any other animal, bug, pest, critter or whatever you want to call them, termites will travel. A local home inspector will know if the house next-door recently had termites and that will raise a red flag for him to be extra thorough on your termite inspection. A local Home Inspector can pull permits for jobs that have been done on the house in the past and see if the work was done by a reputable contractor. Local knowledge is a valuable thing.


A home inspection will uncover what may appear to be a very small problem at a quick glance but will become a large and expensive problem if not treated immediately. One example I remember was a house that appeared to be in pristine shape with all of the walls freshly painted the carpet steam cleaned the house was immaculate. The Home Inspector had a tool he ran over the drywall checking for moisture. He determined the reason everything had been freshly painted was one of the pipes behind the drywall had leaked and caused water damage. The drywall was all painted pretty but once it was opened up inside the framing had a lot of water damage. The damage you don’t so you can be more expensive than the damage you do see. Another home inspection I was on the inspector discovered a crack in the pipe that was buried underground going from the house to the septic tank. Raw sewage was leaking into the yard where this families children would have been playing every day. I have also seen a home inspection turn up faulty wiring that was a fire hazard waiting to happen. I could tell 100 more stories similar to those but I’m sure by now you get the point I’m trying to make with the importance of hiring a home inspector.

One of the biggest advantages, locally to the Florida Keys, of hiring a Home Inspector is the windstorm insurance mitigation. Many Home Inspectors are also licensed to write letters of credit for your windstorm insurance which is the most expensive of the insurances in Monroe County. The cost of the average home inspection, including the wind mitigation letter, will be anywhere between $500 and $700. I have seen cases where having this letter has saved over $1000 a year on the insurance policy. Assuming you’re going to own your home 10 or more years that’s a pretty good return on investment. If you’re planning on buying the home to flip it, having this letter in hand is a huge selling feature. Also, if the house does not meet the criteria to get the wind insurance discounts, the Home Inspector can suggest some improvements that will make the house eligible for these credits. Adding $2000 worth of improvements could save you over $1000 a year in insurance.

As a buyers agent, I am so adamant about the home inspection that if a buyer insists on waiving it I will require them to sign a release saying they are waiving their home inspection against my advice as their Realtor. As I mentioned above, the average home inspections will cost between $500 and $700. A lower end house in Key West will start around $500,000 and the high end will be $5M plus. Don’t jeopardize making a poor investment of that amount over the cost of a home inspection. In most cases, the seller will credit the buyer on the purchase price for any defects the inspector has found which usually is more money than the cost of the Home Inspection. 

Gary

Gary McAdams, PA 
Realtor and Notary Public
Barbara Anderson Realty
Key West, Florida 

Does adding a pool help or hurt resale?


One question I get asked a lot by people buying houses to renovate and flip is “Should I put in a pool?“. Anyone who has watched Miami Vice, Bad Boys, HGTV or Burn Notice has a picture in their mind of every Florida house having a pool in the yard. Answering this question is not as simple as it seems. There are a lot of pros and cons to having a pool in your house come resale time.


The biggest positive feature I see it having a pool in the yard is appearance and curb appeal. People have a mental picture in their mind of a luxury Florida home having a vast pool with tropical landscaping. Curb appeal is very important when selling a home. Many buyers will decide if they like or do not like the house before they even get out of their car. The old expression “First impressions are lasting impressions“ holds true here. Another positive reason for having a pool is families with children. Children love a pool. Also, with Florida being a huge retirement state, think of grandchildren. The grandchildren will be very happy to visit grandma and grandpa when they can play in the pool before or after going out on the boat for an afternoon of fun. Children who want to visit their grandparents make for very happy grandparents. Buyers will often see that pool and picture themselves lounging in the water watching sunset with a glass of wine or getting in water exercise and they overlook all the work and maintenance that comes with the pool. 


Some of the same thoughts that make a pool a positive feature can however also make a pool a negative feature. People with children and grandchildren could look at the pool as being dangerous. Parents and grandparents can picture themselves spending their entire day looking after and worrying about the little ones in the pool. Also, anyone who has or has had a pool in their yard will tell you maintaining it is a lot of work. Another negative aspect of putting a pool in as part of your renovation project is personal taste. Some people want a pool they can lounge in while enjoying cocktails. Some people want a pool with a shallow end in a deep and so their children can play. Some people want to pool for exercise where they can swim laps. A pool that I feel works perfectly may be a pool a buyer feels is useless.

After 21 years of selling real estate in the Florida Keys my opinion on putting in a pool is it something you do for your own enjoyment and use but not for resale. It is very rare you will get back a return on investment where you break even never mind make a profit. Spending $30,000-$50,000 on a designer pool will very rarely increase your sale price by $30,000-$50,000 or more. I have also seen a lot more buyers shy away from my house because it does have a pool then I have buyers who refuse to buy a house because it does not have a pool. My advice to sellers who have enough yard space to add a pool is skip the pool, list it for the value without the pool and put in the listing description “Plenty of yard space to add a pool or make for a great entertaining area“. That will put the pool in the buyers mind, let them know there is enough room to add the pool and they can use the money they saved on the list price to design their pool the way they want it rather than to take the design someone else picked out that may or may not suit their needs.

If you are considering selling your house or just want some ideas on features that will make it more marketable, call me anytime for a free comparative market analysis giving you an estimate of value for your home. There is absolutely no cost or obligation to you for this service. 

Gary 

Gary McAdams, PA
Realtor and Notary Public
Barbara Anderson Realty
Key West, Florida 

Credit "Do's and Don'ts" when preparing to buy a home.


When buying a house your Credit Score will determine how much money you can borrow as well as at what interest rate.  Your Interest Rate will make a huge difference on your monthly payment which is what most buyers are concerned with.  Unless you’re paying Cash, people will usually select their home based on how much money they have to write a check for every month rather than the actual purchase price.  If you have a $500,000 Mortgage, a 1% difference in your interest rate would be $1,048.62 per month you are paying for a total of $103,753.12 on a conventional 30 year loan. 

I won’t go into the obvious things that will have a negative effect on your credit score like Bankruptcy, Foreclosure or just say “Pay all your bills on time”.  Those are obvious.  Here are some unique things that many people don’t realize have a huge effect on their credit score.  What you don’t know CAN hurt you.

  1. Avoiding Credit

We have all herd the expression “Cash is King” but that’s not always the case.  If a consumer has a good job and no debt or credit cards, his/her credit score should be excellent, right? Unfortunately, no. Great credit scores only come from having and using an appropriate mix of credit products. Consumers who avoid credit products, out of prudence or for any other reason, can end up with a low score or a “thin file” (a credit report that does not have enough data to assign a score).  I had one client who considered “Only making $5Million” to be a bad year.  He paid cash for everything and didn’t even have a credit card.  He went to his bank to co-sign for a loan for his Niece to buy a house and his credit score was too low to qualify for a $150,000 loan even though he had over $10Million in the very same bank.  He had to open a separate savings account with $250,000 in it and use that account as collateral for the $150,000 loan.  He then took out a couple secured credit cards where he had to put up $25,000 each to get the credit account.

  1. Closing Unused Credit Card Accounts

A huge part of the consumer credit score — about 30 percent for both the FICO score and the VantageScore — is based on the amount of credit used in relation to the amount of credit available. This is called the debt utilization ratio. People with healthy credit scores keep their utilization under about 30 percent (they don’t charge more than 30 percent of their credit limit) and people with top credit scores keep it under 10 percent. The ratio is calculated for each account and overall. Closing an unused credit card account pushes the utilization up (for consumers who carry a balance).

Here’s an example: Joe has three credit cards. Card A has a $2,000 limit and a $1,000 balance (50 percent utilization). Card B has a $1,000 limit and a $300 balance (30 percent utilization). Card C has a $1,000 limit and isn’t carrying a balance (0 percent utilization). His overall utilization is 32.5 percent ($1,300 used, $4,000 available). If he shuts down Card C because he never uses it, his overall utilization jumps to 43.3 percent ($1,300 used, $3,000 available), likely resulting in a ding to his credit score.

Also closing out unused accounts will lessen your length of credit history.  How long you have had your credit affects your score.  Creditors know anyone planning on buying a house can be good for a year or two but they like to see longevity with good payment history.  I still have a Sunoco Gas Card I got when I was 18 years old.  The only time I ever see a Sunoco Station is when I travel but I make sure I charge something on it every time I see one and pay it off immediately.  I have an Equifax Credit Monitoring Account which tells positive and negative factors in my credit and that Sunoco Card always comes up as a positive factor.

  1. Taking Advantage of Credit Offers

Solicitations, ads and point-of-purchase credit offers pop up every day. But taking advantage of such offers causes a hit to the credit score each time. Ultimately, the cumulative reduction will be significant enough to result in denial of subsequent applications. That’s because for every application, the creditor initiates a hard inquiry into the consumer’s credit history. Every hard inquiry affects the score in two ways. One, it causes a minor dip to the score, and two, it’s a point against the maximum number of inquiries that a creditor allows in order to approve an application.  Also having too many credit cards (Lines of credit) will have a negative impact on your credit score.



  1. Consolidating Debt to a Low-Interest Card

This “gotcha” goes back to the utilization ratio, which has a big impact on your score. Even when a consumer’s other cards have zero balances, if any one credit card is maxed out, the score suffers. A debtor who is tempted to transfer several small, high-interest balances to a single card with more advantageous terms should know that doing so will cause the score to fall until the balance is brought down, even if the high balance is the only revolving debt.  Those “0% Interest for 18 Months” can greatly reduce your balance but only do that if you know you have the ability to pay the debt down in 6 to 8 months.  Also, only consolidate to one of those cards if you know you are not going to apply for a major credit line like a Mortgage or Car in the next 12 months.

  1. Someone Else’s Mistakes

One-fifth of Americans have errors on their credit reports, and 5 percent of consumers have errors that are significant enough to bring down the score. People with common names are particularly at risk of having items on their credit report that belong to someone else. Obtain your free credit report every four months from one of the three major credit reporting agencies (do so by visiting AnnualCreditReport.com) and follow the agency’s instructions to request correction of all errors, large and small. Success can be difficult to achieve but is worthwhile to pursue. Some persistent consumers have won judgments in court against credit reporting agencies that fail to correct errors in the manner prescribed by federal law.  If you dispute anything on your Credit Report the Credit Reporting Agency (Equifax, Experian, Trans Union) has 30 days from notice of your dispute to verify it is true and correct or remove it from your Credit Report.  The best way to dispute it is by certified return receipt mail.  That way you have proof of delivery.  The 30 days starts the day the letter is signed for even if it sits in their mailroom for a week.  You may have to send a separate letter to all three Credit Reporting Agencies but it is well worth the time.

  1. Starting Up a New Utility

Many cable TV, cell phone, landline, gas and electric providers run a credit check prior to starting a new service. Similar to a credit card application, this is a hard inquiry that lowers the credit score.  If you move residences and the same Utility Company services your new area be sure to tell them you want to transfer your current account to your new address not start a new account.  This will avoid a new inquiry on your credit as well as keep your longevity of the account as mentioned in Item number 2 above.

  1. Not having a mixture of credit sources

The types of credit you have accounts for the remaining 10% of your credit score. This includes credit cards, auto loans, mortgage loans — and having a healthy mix will insure you score well in this category. Having too many, or only one type of account can actually hurt you in this category. When it comes to credit scores, diversity is key and credit scoring models like to see that you can maintain and manage a number of different types of credit accounts.

Many people will think they don’t need a gasoline card or a department store card because Visa/Master Card/AMEX/Discover is accepted everywhere.  I keep that Sunoco Card mentioned in number 2 because it is also a different source of Credit.  Sears has been after me for years to transfer my Sears card into a Sears Master Card for “My Convenience”.  I insist on keeping it a Department Store Card only for the mixture on my Credit Report.

  1. Not Paying a Bill

Unpaid bills are not “unique” when it comes to what affects your credit score. But an amazing number of people treat certain bills differently without any basis for doing so. An unpaid bill is an unpaid bill, and if the biller can identify the legally responsible party, there’s an excellent chance the delinquency will end up in collections and on that person’s credit report. Here are a few examples of bills people ignore (but shouldn’t):

Any disputed bill after a decision has been made in the biller’s favor: A moral opposition to paying the bill does not relieve the consumer of responsibility to pay. Don’t skip payments unless the biller states that doing so during the dispute process won’t harm your position or your credit.

Parking tickets, unpaid toll charges: In most states, these are the responsibility of the vehicle owner unless he can prove someone else was driving.

Library fines, unpaid equipment rental charges, unpaid storage fees, lapsed gym membership: Any time you are under contract to pay, the unpaid bill could show up on your credit report and hurt your score.

Rent: Some landlords, particularly those of the corporate variety, report to the credit bureaus.

What may seem like unimportant bills are still bills and can affect your credit score.  A $20 parking ticket can cost you literally over $100,000 in added interest on a $500,000 mortgage.

Gary

Gary McAdams, PA
Realtor and Notary Public
Barbara Anderson Realty
Key West, Florida 

Merry Christmas from Key West and the Florida Keys


Key West may be a 4 mile by 2 mile tropical island with average year-round temperatures above 80 degrees and has never had snow but we still go all out for Christmas. The businesses have a Christmas Lights contest. The residents have such big competitions over who has the best Christmas lights that the local "Conch Train" has a tour where they drive the island looking at the houses and the passengers vote on the best decorated house. The house with the most votes by Christmas Day wins a $10,000 cash prize.


We have more versions of Santa Claus than I've seen anywhere.  I will admit my first Christmas down here felt weird going jet-skiing in the morning then having Christmas dinner outside but I got used to it real fast. Bing Crosby can keep his "White Christmas and I'll keep the beach.

Merry Christmas Everyone!!!!!


Gary

Gary McAdams, PA
Realtor and Notary Public
Barbara Anderson Realty
Key West, Florida 

Renovations and upgrades to increase your homes value


Homeowners are always looking for projects to beautify their home and increase the value. The “do it yourself” projects have really increased now that so many people are home with the Covid pandemic. Some renovations are done simply because the homeowner wants to do them. Other side done to increase the property’s resale value.


One of the biggest home improvements that will increase the value of the house as well as making it more desirable to a potential buyer is an upgraded high-end kitchen. The kitchen seems to be the first room buyers will inspect when I’m showing houses. You want the first room the buyer says to “Wow” them. If a buyer starts off the showing with positive thoughts, positive thoughts will continue as they view the rest of the house.


The next feature a buyer really looks for is a large and fancy bathroom. This is particularly so in the master bedroom. Roomy walk in showers with multiple showerheads almost always impresses a buyer. Large counterspace with his and hers vanities are another big focal point. Shelving for extra towels or plants just look good too. I have heard a lot of buyers commenting on how nice a plant would look on a particular shelf in the bathroom yet I don’t think I’ve ever been in a bathroom that actually did have plants in it.


Staying in the master bedroom, a large walk-in closet is another feature buyers really desire. If the bedroom offers enough room to have a dressing area inside the closet that will impress the buyer almost as much as the fancy kitchen. People see closets with dressing rooms and it just gives off that feeling of wealth. Add in a couple of large full length mirrors if you have the wall space. Years ago the whirlpool bathtubs were the thing to have but they seem to have lost popularity.

If you’re doing home improvements or renovations and your main purpose is to increase the value for resale, you should really consider these three items being on the top of your list. With resale, curb appeal is also very important. A lot of buyers decide whether they like the house or not before they even get out of the car. Adding $200 of flowering plants and shrubs can add thousands of dollars on to the final sale price.

 Gary McAdams, PA

Realtor and Notary Public
Barbara Anderson Realty
Key West, Florida 

Key West and Lower Florida Keys Real Estate Market Activity, 12/01/2021

December is here. That means cold weather is here too. Though, when you live in the Florida Keys, 70 degrees is "Cold Weather". Ho...