MOST buildings and property have some issues that you need to be aware of and perhaps have fixed previous to purchase. With the local Building Codes changing continuously, the property will almost always be "behind" the current building codes in some way. Do not let this influence your decision on an EMOTIONAL level "Oh my Gosh.. there are so many 'things' in this report, let's RUN AWAY (screaming...)". These are just issues, they are details to evaluate as a part of the process. I have seen numerous clients "run away" from buying a property that would have been an excellent value with benefits to them far outweighing the items on an Inspection Report.

Remember, MOST buildings or even land will have some kind of issues, it is up to you and your advisers to decide what are important items or not; to determine present or future costs of improvement or upgrade; to evaluate dispassionately and objectively what the REAL value is to your investment portfolio. All of these items: neighborhood, house style, business location, current availability of good contractors, structural or system versus cosmetic... all of these issues need to be part of an EVALUATION process, not an emotional approach.

Seasoned Buyers and Investors have learned how to look through the details and work toward the VALUE they are looking for in a property. Some details need to be negotiated within the purchasing process, some need to be taken into account for action after the property is yours.

Again, I have seen many Buyers hold off from the purchase of an "excellent value deal" because of Condition of Property issues, and the home or commercial property goes to someone else who can work through the details and determine what is truly important.

Remember that any improvements you do to a property can be accounted for and used to reduce your "profit" when you go to sell in the future, money you spend over the first 6 months to a year is money in your pocket (actually throughout your ownership) when you go to sell later. You can make sure that you are establishing a real ESTATE of greater value, pun intended.

Happy purchasing,
Layne ";->

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(continued from previous blog)

The Loan Officer – Consults with the Buyer about their needs and financial situation and suggest what loan amount and loan program is most suited to them. When the Buyer has made an offer, the loan officer then coordinates with the appraiser, the underwriter, the title company, the real estate agents and the escrow officer to get the purchase approved and funded on the closing date. A good loan officer has skills and knowledge about how to best “package” and present the deal to the underwriters to secure approval.

The Appraiser – Is sent out by the lender to look at the house and determine if it is worth the money that is being paid for it. A lender does not want to loan more than the house is worth, since this would put them at high risk to lose money in the even of foreclosure. The appraiser’s analysis is primarily based on recent sales of comparable properties. The appraiser also looks for conditions that would cause the house to lose value, such as a leaking roof or rotting foundation, and they may call for further inspections if these are suspected.

The Underwriter – Looks at both the borrower and the property to be bought and determines whether or not the lending institution will make the loan. They try to make loans that create as little risk as possible for the lending institution. A high loan to value ratio increases risk. They generally have guidelines that they must follow which state what kind of job history, credit history, and financial assets the borrower must have for a certain type of loan and loan amount. The loan will be refused or the interest rate increased if guidelines are not met. They also use the appraiser’s report to help them evaluate the property.

The Home Inspector – Is hired (usually by the Buyer) to do an inspection of the home before the purchase. In Whatcom County, the inspection typically last 3 to 4 hours, cost $250-$450, and generates a lengthy and detailed written report. A so-called pest inspection, which looks at the foundation and checks for wood-destroying organisms, is usually part of this inspection report, and a clear pest inspection is often required by the underwriter.

Your done!
Johnny Howes