From: manes@magpie.nycenet.edu (Steve Manes)
Subject: Re: Getting Ready to Sell House
Organization: Manes and Associates, NYC
Date: Sun, 22 Nov 1992 23:13:54 GMT
X-Newsreader: TIN [version 1.1 PL7]

Ed Green - Pixel Cruncher (egreen@east.sun.com) wrote:
: In article D4v@magpie.nycenet.edu, manes@magpie.nycenet.edu (Steve Manes) writes:
: >Ed Green - Pixel Cruncher (egreen@east.sun.com) wrote:
: >
: >: How about otherwise reasonably priced houses
: >: whose asking price is artifically inflated 6% to cover agents' fees?
: >
: >This infers that owner-represented homes have asking prices 6% less
: >than agency-represented homes, which I didn't see even once.  Unless
: >you're a naive buyer, before you make any bid on a home you've
: >already studied what similar houses in the area have recently sold
: >for; their asking prices and their sales prices. 
: 
: Exactly.  The challenge in any negotiation is to separate the asking
: price fluff from the real selling price.  Doing your homework as you
: describe prepares you for that.  For a listed house, that's it, that's
: what you pay.  For a FSBO, that is just the starting point, there is
: another 6% to be considered.

As I said in my last post, I didn't see one whit of difference
between the asking prices of agency-repped and seller-repped homes.
This extra 6% bargaining margin you keep bringing up with regard to
the latter is a straw man, Ed.  If the seller knocks 6% off the
price it's STILL 6% out of his pocket, whether or not the home is
being represented by an agency.

I also have to mention a point that should be self-evident: the
reason why most people rep their own homes is because they want to
maximize profits and don't want to let go of that 6% agency fee.
Contrary to your statement, such people are, naturally, less
flexible about being dicked down considerably in negotiation.

: >Unless you're paying cash for the house, any mortgage lender will
: >insist that the house be inspected by a licensed housing inspector
: >prior to contract, for everything from code violations to termites
: >to a leaky roof.  
: Not around here.  My lender got a survey and appraisal, and told me I
: had to get a termite report.  That was all.  I had a structrual
: engineer ispect the house from top to bottom, and I got the seller to
: fix several items, but none of that was required by the lender.

Things are tougher in the northeast.  Lenders want to make sure that the
buyer isn't going to suddenly find himself saddled with any additional
major expenses that might affect his/her ability to make the mortgage
payment.  It may be that such inspections are required only for older
homes (mine was built in 1894).

A sad anecdote related to this: twenty years ago a film maker
friend of mine went in with the rest of his building's tenants and
bought their NYC Soho loft building from the absentee landlord, who
had driven the place into disrepair. They got an incredible deal,
even for then.  It worked out to ~$25,000 per floor.  The floors were
10,000 square feet, some with 16 foot ceilings!  Anyway, since the
building was in such bad (but repairable) shape the tenant/buyers
knew that no bank would lend them the money and so didn't even
bother to apply for a mortgage.  Instead, they bought it for cash,
securing personal loans where necessary.

Three weeks later, cold weather hit and the aging boiler blew up
with such force that it knocked down the 100-foot brick chimney
into the adjoining parking lot, demolishing twenty cars.  Of course,
the tenants hadn't gotten around to insuring the building yet
either.  The lawsuits for the destroyed cars and parking lot
eventually cost nearly $200k to settle, which is more than they
paid for the building.  The new boiler and flue, and basement
repairs from the subsequent fire, ran another $200k.  Then there
were attornies' fees since everyone in the world sued them,
including each other.

So I can understand a bank wanting to see thorough building
inspections as a condition of loan.
-- 
Stephen Manes					   manes@magpie.nycenet.edu
Manes and Associates/Commontech-NoHo		   New York, NY, USA  =o&>o

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