Fab Real Estate Blog

New Fairfield, Connecticut, has created the Alert Now Emergency Notification Program, which will notify town residents of any emergency situations in the town.  Notifications will be made for:

• Utility outages
• Town evacuations
• Chemical spills
• Road closures
• Public health emergencies
• Shelter information
• Any other town emergency

This program is similar to the school notification system already in place, which contacts households with schoolchildren of any important school news and information.

Enrollment in this new program is free and voluntary for all town residents, and all enrollment information will be kept confidential.  Notifications will be made via a recorded telephone message and/or an email.

Application forms to enroll for this service may be picked up at the New Fairfield Police Department, 302 Ball Pond Road, New Fairfield.  For additional information, call (203) 312-5719.

New Fairfield, Connecticut School District administrators are entering the computer age.  Beginning on or about January 24, 2007, all school policies will be available online at the district's website.

Utilizing a service of the Connecticut Association of Boards of Education (CABE), all district policies will be available for the public to view at their leisure. Currently, school policies are only available through the Superintendent's office under the Freedom of Information Act; those wishing to receive copies of the policy may be charged at the cost of $0.25 per page.

This new online availability of district policies will ensure that current policies are available for all to view, free of charge.  It will also eliminate the need to maintain a binder of copies of every policy in each administrator's office, which currently need to be revised each time there is a policy change.

Also, by using CABE, the district will be kept informed of Connecticut General Statute changes that can affect individual school policies, informing them of any potential changes that may need to be made.

The New Fairfield Public School District is applauded for creating a transparent system where the general public will now have the ability to freely review school policies.

The state of Connecticut's Real Estate Licensing Regulations require real estate licensees to enter into a written agreement with a buyer prior to negotiating on behalf of that buyer.

In Connecticut, without a written buyer representation agreement:

• A buyer agent cannot request confidential information for the buyer
• A buyer agent cannot express opinions or provide advice about any particular real estate
• A buyer agent cannot show you homes listed by other brokerage firms
• A buyer agent cannot discuss an offer with you, the buyer
• A buyer agent cannot negotiate for you, the buyer, on any terms of a purchase

It is a violation of Connecticut's Real Estate Licensing Regulations for a real estate agent to provide any of the above services without a written representation agreement.

When buying a home in Connecticut, it is imperative to sign a buyer representation agreement with the real estate agent you wish to represent you in the transaction.  Only with such a written agreement can that agent then provide you the full level of services you deserve and need.  Once the written representation agreement is signed:

• Your buyer agent will be able to discuss your confidential information with you
• Your buyer agent will be able to express opinions and provide advice to you on particular real estate
• Your buyer agent will be able to show you all available homes, regardless of who is the listing brokerage
• Your buyer agent will be able to discuss an offer with you
• Your buyer agent will be able to negotiate for you on all terms of the purchase of your new home.

As per Connecticut law, landlords must pay interest on the security deposits they receive from their residential tenants.

For the 2007 calendar year, this interest rate has been set at 1.5%, which is unchanged from 2006..

Landlords in Connecticut are allowed to require up to the equivalent of two months' rent as a security deposit, including any "pet deposits" or "last month's rent."  For tenants aged 62 or over, landlords may only require the equivalent of one month's rent as a security deposit.  Landlords may not commingle security deposit funds with their personal funds.

Upon the tenant vacating the property, the landlord has up to 30 days (or 30 days from the date the tenant provides a forwarding address, whichever is longer) to provide the former tenant with the security deposit refund, plus interest, or a statement detailing funds retained along with a check for the balance of the deposit.

When marketing your home for sale, among all the preparation that must be done to make your home stand out amongst the competition, you also need to consider your home's appeal.  The appeal of your home may not result in a direct increase of the market value of your home.  However, it can certainly help.

Items that add value to your home include the home's square footage, the granite kitchen and the covered porch.  They may not add as much value as their original cost, but they certainly do add some value.

Items that add to the appeal of your home include the freshly-painted front door, the neatly trimmed plants and hedges along the front walkway, the sparkling-shiny kitchen sink and counters, the welcoming floral arrangement in your entry foyer.  You get the idea.

We cannot always put a dollar amount on these appeal items.  But they help create the desired ambiance of your home to entice buyers to say, "Hey, I can see myself living here!"  And, that is the goal of marketing your home for sale.

Why worry about your home's appeal?  Because buyers' emotions play a large part in deciding which home to buy.  They want to fall in love with the "feel" of the home, in addition to its location, floor plan and price.  They want to feel comfortable in the house.  They want to see that the home has been well cared-for and loved.  They do not want to worry about how long it will take them to clean that grime off of the shower stall, or the effort and money needed to re-landscape the entire grounds.

Can your home's appeal add to its value.  Certainly.  The more appeal your home possesses, the faster it will attract a buyer and the more buyers it may attract.  More buyers can equal multiple offers and a higher final sales price.  Finding the right buyer faster means closing on the sale of your home sooner; this results in lower holding costs to you, as you discontinue paying off that mortgage, those taxes, the insurance and other costs much sooner.  And the ability to move on and have your home sell quickly without months and months of showings?  Priceless.

Don't forget to take a look around your home to determine ways you can add to its appeal.  Ask your friends and family to take a discriminating look, too.  And, of course, make sure your REALTOR does the same and provides you with a check-list of things to do. 

I've written about some key mistakes sellers can make when listing their home for sale, including overpricing your home, failing to keep the house clean and in top showing condition, failing to make necessary repairs, and having exclusions to the sale.

What sellers also need to remember when selling their home is that communication with your listing agent is essential!  Have a question?  Ask it.  Have a concern?  Address it.  Worried about something?  Discuss it.

Here is where asking questions is key:  when you are signing a contract - either the listing contract or a buyer's purchase offer for your home.  Don't sign that contract until you, as the seller, completely understand and are comfortable with the process, the terms, and the conditions of the contract.  Ask questions so that everything is clear.  You hired a real estate agent to represent your best interests, to market your home and to negotiate on your behalf.  But you are also hired that agent to answer all of your questions and to walk you through the home selling process step-by-step.

I always tell my clients, both buyers and sellers, not to worry about things - that's my job.  But, I try to reinforce that if they are worried, or confused, or stressed about an issue, to call me.  We'll talk it out.  I'll explain anything that is unclear, even if we've already discussed it before.  And, if it's midnight, and you can't sleep because of some nagging question - then power up your computer and send me an email.  You'll have a response first thing in the morning.  Or sooner if I still happen to be awake and working.

Remember, you as the seller have the right to ask questions.  As REALTORs, we sell real estate every day.  You most likely do not.  We're here to educate you while we market and sell your home. Use your agent as your resource to learn about the process.  It will lead to a much more enjoyable transaction for all involved.

When it's time to sell your home, among the myriad of things to do to get your house ready for sale, you must determine the best price at which to list and market your home.  Price too high, and buyers and their agents may not even come to see your home.  Price too low, you may enjoy a quick sale, but you could leave money on the table.  Pricing competitively - based on recent similar sold homes while considering the current active competition for your home - will result in more showings, more interest and the achievement of your goal:  the sale of your home.

Many factors must be considered when pricing your home.  The total square footage of the home is one major consideration.  Another major consideration is your home's location.

You've heard the saying:  The three most important factors in real estate are location, location...  (I won't repeat it the third time.  It's annoying.)

How can location affect the value of a home within your town?  Very easily.

• Homes on a main road will have a lower value than homes on quiet roads
• Homes on a cul-de-sac will have a higher value than homes on through-roads
• Homes that back-up to retail or commercial space will have a lower value than those in strictly residential areas
• Homes with steep driveways will have lower values than those with level driveways
• Homes with water frontage will have higher values than those without such frontage

These and more factors must be considered when pricing your home.  Your agent should prepare a complete market analysis for you that takes all pertinent issues into account, thus determining the appropriate list price for your home.

Here in the Candlewood Lake area of Connecticut, typical adjustments I use based on location look like this:

• Home is located on a main road:  Deduct 5-10%
• Home is situated on a cul-de-sac:  Add 10% versus a home on a main road, or add 5% versus a home on a regular through-road
• Home backs up to retail or commercial space:  Deduct 10%
• Home has a steep driveway:  Deduct 2-3%
• Property has water frontage on a pond or small lake:  Add 5%
• Property has water frontage on a large boating lake):  Use comparable sales that also border the same or similar lake.  If not possible, then you may need to get creative, and consider an adjustment of adding 10% or so.

These adjustments may be altered depending on specific circumstances, as each situation is different, but they are a good guideline.

Of course, the ultimate market value of your home is what a ready, willing and able buyer pays for your home.  As real estate agents and appraisers, we don't control prices, but we can look at the market, it's history and the trends we see to determine the best price for your house.

Correct and competitive pricing will draw the buyers and their agents to your home.  We want to attract them in droves to sell your house!

When determining the value of a home, your agent will first take into consideration the home's Gross Living Area, otherwise known as square footage.

The Gross Living Area of your home includes the fully-finished, above-grade areas of your home.  Typically not included are basements, attics, garages and enclosed or covered porches.

One of the most common discrepancies I see with homes listed for sale here in the Danbury, Connecticut area is that sellers and their agents sometimes include a finished basement in the total square footage of the home.  Below-grade areas, whether finished or not, are not calculated into the total square footage of a house.

An unfinished basement will add a some value to your home versus a home that is built on a slab, without a basement.  And, of course, a finished basement will certainly add value to your home versus a home with an unfinished basement.  However, basement spaces do not add to the Gross Living Area total for the home, and whether finished or not, basement areas are not valued by appraisers the same as above-grade living areas.

Adding a finished basement's square footage into the total square footage of the home is misleading and deceptive.  Pricing your home based on this misleading figure will result in a price that cannot be substantiated via an appraisal, which is a contingency in most transactions requiring mortgage financing.  Should the buyers and their agent not realize the square footage error and write an offer based on what turns out to be an exaggerated square footage total, your sale will most certainly hit gridlock when the appraisal value comes in lower than the contracted purchase price.

Appraisers and their appraisals protect both the lender and the homebuyer from overpaying for a house.  Appraisers do not attempt to justify contract prices.  Rather, they review the subject home, comparable sales and market conditions to determine an unbiased value of your home.  Again, it should be repeated that whether finished or not, basement areas are not valued by appraisers the same as above-grade living areas.

Some exceptions may apply, such as the lower level of a Raised Ranch-style home being included in the total square footage, if that is customary in your area.  Other local customs may take precedence in other areas, and they will traditionally be applied across-the-board.

Be sure to advertise your home with the correct square footage.  Real estate marketing should be honest and will thus generate the best results.

When listing your home for sale, you will be instructed by your agent to clean-up and fix-up your home before the first buyer takes a look.

A previous post discussed removing anything from the home that you wish to exclude from the sale.  Further discussion of that post revealed that sellers should also consider what personal property in the home is valuable to them - monetarily or sentimentally - and remove them.

Remove all valuables from your home during the marketing period.  It doesn't matter if these items are expensive or just irreplaceable in your heart.  There's no need to let the buyers think that maybe, just maybe, you'll be willing to part with these items as part of the home sale transaction.

If something in your home "fits" that home well, such as a favorite bench that sits in the nook on the front porch so perfectly, and you absolutely must take that bench with you to your new home, then store that bench away during your home's marketing period.  Otherwise, the buyers may ask you to include that item in the sale.  True, you can say "No" and move on, but why run the risk of upsetting the buyers?

Take an inventory of the personal belongings in your home.  What is so important to you that you couldn't possibly leave it behind for the new owners?  Gather up these items and store them away.  It will give you a head start on your packing!  And, it will also help you as you begin the process of decluttering and depersonalizing your home.

As an added bonus, by removing these items that are important to you, you eliminate the chance of these items becoming accidentally damaged, say, by a buyer knocking into them and breaking them.

Remember:  If that bench is the perfect thing for your front porch, you can always buy an inexpensive one at the department store to replace it!

Special thanks to Michael Roberts for his anecdote about the bench.

When sellers and their agent are determining at what price to list their home for sale, it is important to remain realistic about the market and the home's current market value.

Price your home too high and buyers and their agents will probably ignore your home, or use it to sell other, better-priced homes.  If the home does sell at too high of a price, then it may not make it through the appraisal phase of the contract.  If the home cannot appraise at the purchase price, then the buyers may not be able to obtain financing.  Assuming there is an appraisal contingency in the purchase contract, this leaves the buyers three options: 

1. Negotiate with the seller down to the appraised value
2. Pay the difference in cash at closing between the appraised value and the purchase price, creating immediate negative equity in their home
3. Cancel the contract.

Most buyers, except in an extremely tight and competitive market, will opt for options 1 or 3 above.  Thus, a too-high price does nothing for the sellers.

Price your home too low and you risk leaving money on the table.  No one wants to lose any money!

Work with your REALTOR to determine the correct list price for your home in your current market.  Price your home for that current market - not yesterday's or last month's market, and not what you believe tomorrow's market may be like.  Review comparable sales with your REALTOR - ideally, these will be home sales that have closed in the previous 3 months, within a 1/2 to 1-mile radius of your home.  (Some exceptions may be made for this, but generally speaking, appraisers want to use comparable sales in your town, within a 1 mile radius of the home, sale closed within 6-12 months at most, and within a 20% differential for gross living area or square footage)

In general, the following applies when determining which comparable sales you, your listing agent and any appraiser will utilize:

• Homes should be of similar age.  If your home is 40 years old, you cannot use the new construction homes just completed up the street as comparable sales.
• Homes should have square footage within 20% of your home.  If your home has 2,000 square feet of gross living area, you cannot use your neighbor's 3,000 square foot home that just sold as a comparable sale.
• Homes must have sold.  You cannot use your neighbor's recent appraisal for a mortgage refinance as a comparable sale, even though their home may be the same model as yours.
• In most cases, your basement is not included in the square footage of the home, even if it is fully finished.  (this may differ in some localities and for some home styles)

Keep these issues in mind and work with your REALTOR to determine the best list price that will result in the best sale price and terms for you.

I've discussed various mistakes sellers can make when selling their home.  This is a favorite topic of mine, because I've found that when sellers and their REALTOR are willing to work together as a team, these issues can all be avoided.  All issues should be discussed up front and put to rest early, so we can move on the the final goal:  Selling your home.

Previous seller mistakes I've written about include overpricing, negligent housekeeping and failing to make repairs.

The next item of Top Seller Mistakes is making Exclusions to the sale of your home.

Exclusions could be something like:

• Dining room chandelier not included
• All window coverings to remain with seller
• Built-in desks and cabinetry in office do not transfer

But, here's the problem:  Potential buyers are looking at your house.  They notice the beautiful antique chandelier hanging in the entry foyer.  They love your house, and that chandelier is an added bonus, as it fits so well.  These buyers write an offer, which you counter.  You accept all their terms and their price, but you state "Entry chandelier not included in the sale."

With that one statement, you have potentially disappointed these buyers, who love the house and can't wait to call it their own.  But, now they're disappointed.  They can get upset.  Since buying a home is truly an emotional experience, this simple issue can sour them on the home altogether. Causing you to lose the sale.

Sound extreme?  It is.  But it happens.  And sometimes it happens over the silliest of items.

As a home seller, your REALTOR should prepare you to prevent issues such as this.

Want to keep that chandelier your grandmother gave to you many years ago?  Fine.  Take it down now, put it into storage and replace it with a new light fixture.  Do you love your draperies so much that you must absolutely take them to your next home?  Even if they may or may not fit your new windows?  No problem.  Replace them all before you home goes on the market.

As far as wanting to remove the built-in desks and cabinetry example listed above?  Well, the buyers and their REALTOR will have to wonder what condition that room will be in once you remove those items. Will there be holes in the walls?  Will they repaint?  Will the floors get damaged?  Take care of this before buyers start viewing your home!

It can be said over and over again:  Buying and selling a home is an emotional process for all parties involved.  Take away any potential items of conflict so you can focus on the transaction with less heartache and stress.

And if the buyer really absolutely must have that spare, dented refrigerator you keep in the garage?  Consider giving it to them.  It's a great gesture of good will, and it's cheaper than losing the sale and having to continue with the hassles and expense of marketing your home for sale.

Yesterday, my local paper printed a Wall Street Journal article titled, "Living Trusts: Sometimes Needed, Often Not."  Here is a portion of the article.

The gist of the article explains that most people do not need a living trust.  Hogwash.

One can create a living trust, place their valuable assets (investments, automobiles and homes) into the trust, and thus provide for how such assets are to be utilized and distributed should you become incapacitated or die.  There are, of course, some caveats to living trusts:

• You should consider a revocable living trust rather than an irrevocable living trust.  A revocable living trust allows you to make changes later.
• You must fund the living trust, by placing the titles to your assets into the trust.
• Creation of a revocable living trust requires the use of, and cost associated with, an attorney.

What are the benefits of a living trust?

• Upon your death, your heirs do not have to go through probate court
• Should you become incapacitated, the successor trustee can control your assets per your previously detailed instructions
• Upon your death, your heirs do not have to go through probate court

Did I mention that your heirs will not have to go through probate court upon your death?  That can save your heirs an extraordinary amount of time and money, especially if you own real estate in more than one state.  Without a living trust, your heirs would be required to go through probate court in each state in which you owned property.

In addition to a revocable living trust, you should also consider having a "pour over" will to cover any assets that were not funded into the living trust.

In his quest to discredit living trusts, the writer of the article states that one way to avoid probate court on your real estate is to hold "property in joint ownership with the person you want to inherit it."  This is a huge, huge mistake.  Let's take a look at an example of this:

Mrs. Jones is elderly, and wants her surviving children to avoid probate court after her death.  So, she deeds 1/2 of her home to Jane, her adult, married daughter as a joint tenant.  By doing this, upon her death, Mrs. Jones' ownership of her home is transferred to her joint tenant (her daughter, Jane), who will then own 100% of the home.  While most parents assume their children and families will always do the right thing, this scenario is fraught with perils, such as:

• If Jane later goes through a nasty divorce and her assets get divided between her and her husband, Jane's portion of her mother's house can now be awarded to her ex-husband, who could then become a third co-owner of the property.  As a co-owner, Jane's ex-husband could then petition the court to force the sale of the home so he can obtain his financial stake in the house.  If the court forces a partition sale, Mrs. Jones could end up without a house.
• When property is inherited, the heir or heirs receive the property at its current market value as of the date of death.  Thus, if sold at the same market value, the heirs may not owe taxes on the profit.  But, when Mrs. Jones deeds 1/2 of the home to her daughter, Jane now takes over her mother's possibly very, very low cost basis.  When selling that home after her mother's death, Jane may now be taxed on the difference between the sales price and her mother's original purchase price (less any improvements made).
• Upon the mother's death, her daughter, Jane, now owns 100% of the home.  Will Jane now distribute the value of the home to her siblings, if that was her mother's wishes?
• Suppose the tragic:  What if Jane causes a major traffic accident and seriously injures or kills another person?  If Jane is sued and loses the lawsuit, one of her assets that can be attached is the home she co-owns with her mother. 
• Suppose relations between Mrs. Jones and her daughter, Jane, should sour over time.  Or if Jane should encounter serious financial issues.  Jane will have the legal right to petition the court to force the sale of the house so that she can obtain her proceeds from the sale.  Once again, Mrs. Jones could end up without a home.
• In all of the above examples, Mrs. Jones has given up her right as a sole homeowner.  Her future, and the future of her home, suddenly come under the control of others.

Estate planning takes careful thought and planning.  It should be left to your chosen professionals, in consultation with you.  Do not allow a newspaper writer to blur your decisions when the alternative possibilities, such as those listed above, are not even included in the article.  Consult your estate planner, your tax professional and your attorney and together, determine what is the best plan of action for you.  Still unsure?  Then get second opinions from other qualified professionals.

Please note:  I am not a tax professional nor am I an attorney.  I am not an estate planner. Please do seek the advice of these professionals to discuss your specific needs and wants and determine your best course of action. State laws may vary and should be taken into consideration.