Point of Sale Inspections, Certificates of Occupancy and Home Inspections

Quite often I get phone calls from potential home sellers asking for advice. One common question is ‘should I get a home inspection prior to selling?‘ There is no right or wrong way to answer this. The person who buys your home will most likely get a home inspection. It’s always recommended by me, as a part of a buyer’s due diligence process. Once in a while they say no inspection but 95% DO get them. This would be done once you and the buyer have agreed upon other details and the contract between you both is fully accepted. Inspections, depending on a few things including how large is your home, can run between $300-$450 on average. It might give you peace of mind, it might allow you to get the inspection, do any needed repairs, and allow you to adjust your listing price more to your satisfaction. Just know that a buyer’s inspection could show items your own inspector did not mention. Meaning, you still may have to negotiate through inspection results to move forward on the sale. The buyers pay for their own inspections but these are all things to consider when deciding if you should get one. If you’ve lived in a home for 20 years without having done a lot of regular maintenance, painting or repairs, it might be a good idea. Or not! ☺ Nothing is etched in stone here.

There is an area where I make an exception: you may live in a community that requires a point of sale inspection or certificate of occupancy if your house has been rented out. I lived in Lakewood, owned a two family, people before me had utilized the entire house for decades. I did the same. No renters. So no point of sale/cert of occupancy required. If you do not occupy your Lakewood home and renters do, then you need an inspection. Besides Lakewood (and off the top of my head) there are other communities with inspection requirements upon sale of your home: City of Cleveland (if rented, not owned), Cleveland Heights, Berea, Shaker Heights and the City of Brooklyn. There are more, these are the ones I can rattle off. Why am I not looking all of the communities up and posting them here? Because you need to call your municipality’s building department.

Laws and practices can change every year. My suggestion is, as soon as you begin thinking about selling your home within a year, give City Hall a call and ask for the building department. They can tell you how much it costs, approximately how long it takes for them to schedule an inspection once you make the call to schedule one, how long you have to make repairs once one is completed, can the repairs be transferred to a buyer,etc. It’s important, really, that you know this as you start preparing to sell.

By the way, some places call these inspections certificate of occupancy not point of sale.

To sum up: a regular home inspection is not mandatory, you can decide to get one or not. Or we can decide together if you invite me to come for a consult. However, a point of sale inspection should be completed and available for a prospective buyer to view prior to us posting your listing on line. You can be working on the repairs, but they need to know the information as part of a disclosure process. That’s my two cents on the subject!

 

 

Looking At Actual Sales To Determine Home Improvement Value

Would it be helpful to have a few tips about return on investment for house repair/remodel projects related to future sales of your home? If you said yes, are not alone. It’s such a hot topic (and has been for many years). I’m going to link one article because it’s one of the few that actually mention that there are other factors regarding a sale price (not list price) for your home, besides what you’ve remodeled or enhanced. It’s from the HGTV websiteI caution everyone about trying to attach specific percentage values to upgrades. Yes, basic upgrades like a roof and furnace or upgraded electrical will almost always give you a percentage return on those upgrades. But they are not a guarantee of a certain price!  I’m only going to focus on a few things in this post.  Two things I know to be true, without assigning a percentage value to a home repair/improvement.

If your home is a resale with wood floors, I feel comfortable saying that shiny, clean wood floors are involved in the majority of home sales within the City of Cleveland. Younger buyers are not crazy about wall to wall carpeting and if they are looking at a 1920s Arts and Crafts style home, well they probably want wood floors. Of those 56 homes sold in my last post? 90% of them had floors like the ones in the above photo. They are refinished, clean and shiny. Yes, it may have cost $2500 (what I was told) to refinish the living room, foyer and dining room at the home in the photo but buyers might move on to another home to purchase, one that already has shiny wood floors, if you don’t do it.

An example of a house that sold for more than normal market value in 2017. This house sits on W. 122nd street. Maybe you’ve walked these blocks south of Lorain. To me, these blocks are fantastic. Pretty, well kept homes, yards, flowers.  Still, we’ve just come out of a recession, right? During that time, there weren’t a lot of homes sold.  The above house is special because it’s ‘energy efficient.’ So much so that it has  certification paperwork to prove it. Newer windows, HVAC, insulation, you name it. This makes the house much, much less expensive to operate per month. Lower heating and cooling bills. They DID open up one wall, 1/2 way. So you still did not lose the separation to the dining room but you can talk to people in there.

What’s unusual? Two other homes that sold on this street in 2017, one was a 3br 1 1/2 bath home for $33,500 and one was a 4 bedroom one bath home for $45,000. This house once went into foreclosure, the Land Bank (discussed in an earlier post on here!) took it over, a housing non-profit took it over and here it is. Also, remember how many bedrooms in the other two homes sold? This home has 2 bedrooms and one bath. The first two sales on W 122nd had about the same square footage, in the 1200 sq ft range. This home? 1,089. And yet it was listed at $99,000 and sold for $97,000. Cash deal? I don’t know but not necessarily because this house, via tax auditor’s info, is ‘tax’ valued to sell between $86,000 and $108,000.

Why the heck am I telling you all this? Because getting an energy efficient home is one thing you can do to garner more money When you sell it. Get it upgraded with an energy efficiency certification.

By the way, there is a true market for 2 bedroom one bath homes. (More reasonable than a 500 sq ft rolling tiny home, right?).  But this one’s true value is total upgrading and upgrading to a terrific energy savings level. Which by the way also gave this house a tax abatement (yes, you can get this for your home too) which still has 5 yrs ish to go on it. Currently paying around $400/yr on taxes. Plus the savings on utility bills. So on a  street where a normal, pretty or upgraded home might go for 65 to 79k, this house with really good amenities to offer to garner a sale price almost 20k more.

You will spend money to do the energy efficiency update, no question! But if you bought the house a long time ago and don’t have a mortgage on it, or if you bought it more recently at a below market rate price, I swear this is the way to go. And depending  where your home is located, a lack of  those first two things may not hinder you from making money on your sale.

I suggest everyone: check out an energy efficiency certified upgrade before you do any renovations on your home. It doesn’t cost you anything and gives you something to consider. Both for your own value (less taxes, utility bills) or a future buyer for your home.

Let me know if you have questions or would like me to preview your home to discuss the above suggestions further.