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A Wake-Up Call to Review Replacement Coverage in Your Homeowner’s Policy
Burned oak trees from the fire in Anderson, California.
People often don’t give much thought to their homeowners policy until a disaster strikes. Personally, I’ve been through 3 home disasters in my life. A 40-foot tree fell on the roof of our home in Land Park during a torrent rainstorm in 2008. In 1996, our Victorian in south Minneapolis flooded and hail the size of golf balls tore holes in our siding and roof during another storm. The granddaddy of all was when my house slipped into the ocean in Ventura during a 1981 winter storm.
We didn’t have the protection in our homeowners policy for the house in Ventura that covered water damage from the ocean sucking the walls into its waves because we didn’t apply in enough time to obtain a 30-day time period between the disaster and the date of our policy. Many people do not know the stipulations of their policies, nor whether their policy contains replacement coverage to allow for increased construction costs or appreciation in the event the home needs to be rebuilt.
Hiking through the Happy Valley area under restoration.
My friend in Anderson lost her entire home in a fire several years ago. An arsonist started a fire in the Happy Valley community of Anderson, CA. From where I sit at the moment, burned trees are still standing and there are remnants of lawn art, i.e. burned out cars, mattresses, what-have-you. Members of a church came to help after the fire and they sifted through the debris to find personal items of sentimental value for my friend.
We hiked down the road behind her home to walk the dogs yesterday and get a little exercise ourselves after a lovely excursion into town to first hit the Flea Market followed by lunch. My friend was lucky at the Flea Market to find a two-person log hauler, which looked like a dangerous rusty tool, capable of causing serious damage to, say, one’s inner thigh, but it was a big hit with the Old Timers chewing the hay. One of the guys laughed that my friend had plans for me, but that wasn’t gonna happen.
Abandoned car and remains of a garage in Anderson, CA
The most work I afforded myself was to walk a few miles to the neighboring property, which also overlooks Mt. Shasta to the left all the way to Mt. Lassen to the right. This home, like the others around it, lost its integrity and disintegrated during the fire. It seemed spectacular because the foundation was much larger than my friend’s home, it featured 3 sets of stairs, and there were signs of a foundation for a detached barn, a water fountain and a garage. Those homeowners chose not to rebuild or maybe their policy didn’t give them enough coverage to adequately replace what was once there.
It is just an abandoned lot now. A rusted vehicle or two remain. You might not believe a disaster will ever hit but this is concrete evidence that reviewing your homeowners insurance policy and discussing your home’s replacement coverage with your agent is probably a good idea. I’m heading back to Sacramento this morning, and you can bet this will weigh on my mind during the drive home.
Top 7 Things You Should Know about the California Residential Purchase Agreement
There is much more to the California Residential Purchase Agreement than the sales price.
Somewhere in the early 1980s I decided to create my own purchase contract to use for sellers and buyers of California real estate. Granted, I was then as I am now a real estate broker and not a lawyer, not licensed to practice law, which writing your own residential purchase contract most certainly falls into, but it was pretty much the Wild West back then as compared to today. Today, I wouldn’t dream of doing such a thing. OK, maybe I’d dream it, but I most certainly would not attempt it. Forty years of experience teaches us a few things, which includes looking back at the idiots we once were.
The thing about writing your own purchase contracts is when a term of the contract is in print, people tend not to challenge it. It seems too official. Unless, of course, we’re talking about the California Residential Purchase Agreement and Joint Escrow Instructions. In which case, nobody even reads it, especially not many Sacramento Realtors. Oh, sure, S.A.R. offers classes on the purchase contract, or the RPA as we call it, but how completely boring — where is the sparkle and pizazz, agents cry.
I’m not sure they realize this is the document that can keep you out of court, out of litigation, and it protects your clients, which are very good reasons in my mind to know the contents of that purchase contract forward and backward. But you know how some people are, la-tee-da guys. If they can figure out where their clients should initial and sign, they figure they’re ahead of the game. Even if it’s the clients that suffer.
So the following tips are for our Sacramento clients. I advise clients to read the purchase contract. Perhaps, ask your agent to give you a copy of the contract before you make an offer on property. Often, there is not enough time for a marathon reading session prior to writing an offer, especially in the midst of multiple offers, which can happen in this seller’s market. Read it in advance. Pay special attention to the following particulars:
- Closing date. It’s noted on page 1 in paragraph D. If you can’t meet your closing date, your contract could expire and the seller might not renegotiate with you.
- Paragraph 3-J-3: By contract default, the buyer has 21 days to remove a loan contingency and cancel a contract without penalty. That time period is negotiable.
- Paragraph 7: Some fees the seller may agree to pay are based on local custom and vary from county to county. Also, realize that although it’s “customary” for a seller and buyer to pay certain fees, “who pays what” is also negotiable.
- Paragraph8: Describes fixtures and notes personal property to stay with the home. Sacramento sellers, did you just give away your refrigerator without realizing it?
- Paragraph 9: Is the buyer an investor or a person who will live in the home? On what specific day and time do the sellers or tenants have to move out?
- Paragraph 14-B1: By contract default, the buyer has 17 days to complete home inspections and cancel the contract without penalty. That time period is negotiable.
- Paragraph 31: How long does the seller have to accept an offer and at which point is the contract considered accepted? Many agents forget to enter their own name in this spot, which means the contract is not legally delivered until the buyer receives it.
This list is by no means comprehensive, but it hits the highlights of the top negotiable items in the California Residential Purchase Agreement. The devil is in the details. It extends beyond the purchase price.
How This Sacramento Realtor Uses an AT&T Go-Phone on Vacation
Elizabeth Weintraub at a phone booth in Dunsmuir, CA, before Go-Phones
How do drug addicts do it, I wonder, because somehow in their addled minds they are still capable of refilling their burner phones? Yet, I struggle with this issue. I have taken apart computers and put them back together again and I have a hard time figuring out these AT&T Go-Phones. Granted, those computers were an XT that ran on DOS — not to mention, it was the 1980s, a forgettable decade in so many ways, an astounding 25-some years ago — yet, you’d think that in 2015, stuff would be simpler and easier to operate.
Reading the directions would solve a lot of these problems, most likely, but that would involve extra time that I don’t have during my 12-hour workday. Plus, there are those stupid pictures that don’t mean anything to me. I hate the secret world of icons and don’t get me started on laundry symbols. Everybody knows what they are except me. The AT&T directions make the activation difficult and refilling almost impossible.
You might ask why would a Sacramento Realtor need a Go-Phone, and that would be a reasonable question. I use a Go-Phone when I travel to areas where I don’t get reception from my cellphone service provider. As of yet, there are still places in America that are served by only one service provider and some not at all. I have a weekend trip coming up that will take me to a remote area in the mountains northwest of Redding, and I may need to talk with clients outside of email.
Other agents might say screw it, I’m on vacation, anybody who calls can talk to one of my team members, but I feel an obligation and duty to personally stay in touch, even if it’s only for a 2-day period. I’m a nut-job that way. When I went back for a reunion several years ago in Nederland, Colorado, I bought a Go-Phone from AT&T. I tried to refill that phone this weekend, and spent more than 2 hours on the phone with AT&T to no avail. The end result — after setting up a new account at AT&T, discovering that despite what the website promised, I cannot merge all of my AT&T accounts into one account and, after wasting time with the Go-Phone department on top of it — is that my old Go-Phone cannot be refilled through the website.
I suspect AT&T doesn’t want you to refill a phone unless you do it every 30 days. So after I figure out all the nuances with my new Go-Phone, it will end up being thrown away after I leave the mountains and come back to Sacramento. I can always buy another burner phone. For next weekend, though, at least it will keep me in touch with my real estate clients. Life doesn’t stop for them just because their Sacramento Realtor is in the mountains.
A Negotiation Tactic for Sacramento Realtors Dealing With Unreasonable Demands
Sellers deserve a Sacramento Realtor who is fearless with strong negotiation skills.
Whenever I am faced with a dilemma, the way this Sacramento Realtor works her way out of it — as hokey as this might sound to some of you — is to consider my fiduciary duty to the client first. Forget what I might think or what the other parties might want, which negotiation tactic is best for my seller? The answer is almost always crystal clear at that point. That’s a little secret I pass along from me to you. It keeps things more simple when focused.
Notice I didn’t say it makes my job easier because much of the time it doesn’t. The negotiation that is best for the seller almost always involves extra work and it can be complicated. Not only that, but I can’t go around making unilateral decisions without my client’s acknowledgement and permission. It’s not my house nor my transaction. That’s a good point to remember. As a Sacramento Realtor, you can’t get too wrapped up in somebody else’s situation that you start to make decisions for them. Because that would be bad.
It can be a fine line to walk. To want to protect your client and negotiate what is best while at the same time not making the decisions for your client. It’s in the approach though. I’ll give you an example that happened a few days ago on a home that just closed escrow on Friday.
The buyer’s agent has had terrible experiences in the past with tenants, which might have clouded his judgment somewhat. Although this home was not tenant occupied, he felt the family who lived there acted like tenants, and that was enough, probably through transference, for his buyer to submit a Request for Repair asking for the squeaky front door to be unsqueaked and a minor hole in the closet patched. The buyer asked for a few other things, including shampooing the carpet, and he tried to force the family to move prior to closing.
While we were pondering how to respond to this unreasonable request at the 11th hour, the agent hit me with an email to say he also decided they would prefer to close escrow on Monday and not on Friday. Our purchase contract stipulated a closing on Friday. The seller was about ready to agree to credit a small amount of money to the buyer to compensate for his anguish over the squeaky front door until the buyer’s agent came up with an additional demand.
At that point, the seller rejected the Request for Repair outright. In addition, I mentioned to the seller we should submit a Demand to Close Escrow because the buyer appeared to require a kick in the seat of his pants. She wasn’t sure what that meant, I suspect, but she agreed to the negotiation. You really can’t renegotiate a contract, I explained to the buyer’s agent, without an agreement from the seller, and while I could not speak for the seller, I had a suspicion she would cancel the contract if they tried.
The best way to cancel a contract is to first send a Demand to Close. The buyer’s agent forced us to produce it. That negotiation tactic was the best protection for the seller. The seller has less to lose than the buyers, I pointed out. Now the home would be vacant, making it easier to show, which means we would get more showings and, in our tight market, probably a higher offer. Yeah, let’s go back on the market.
Painful to say, but the right negotiation for the seller.
We closed escrow on Friday on time. No Request for Repair, either.
When a Sacramento Realtor focuses on the negotiation that is best for her seller and takes herself out of the situation, the solution is apparent.
Dealing With Square Footage Problems at Sacramento County Assessor
Unpermitted additions can cause square footage problems when selling
We didn’t have to worry too much years ago about the square footage problems of a home in Sacramento not matching the property records on file at the Sacramento County Assessor’s office because appraisals were less restrictive. Nowadays, though, it’s a different story. The first thing I do when analyzing a potential listing is to look for variances between the stats I can find in MLS with the tax records. They’ve gotta jibe, and if they don’t, that can spell trouble for my sellers.
I address this situation upfront. Sometimes, there is a permit on file that the assessor hasn’t picked up. There are many reasons why a variance may exist, but the most common issue is a square footage problem for an unpermitted addition. In that event, the appraiser might not consider the additional square footage. You might think to yourself, oh, who gives a crap about a 12 x 12 room until you stop to consider that at $300 a square foot, that equates to a $43,200 loss.
Immediately, my sellers of a home in Carmichael appeared in person at the County. They believed they had a permit for a master bedroom and master bath addition. They also believed the appraisal they had received from The Golden1 when they refinanced. That appraisal referenced a permit number for the addition that, when we looked it up, was a permit for an HVAC and not a room addition. That appraisal also showed the home had an additional 500 square feet, which it did not; turns out it was only 300 more square feet over the tax records.
We lost the first buyers for the home, who had offered more than list price during a multiple-offer situation. Their appraiser discovered the home was 200 square feet less, and the buyer freaked out. He canceled and did not want to buy a home with square footage problems. At this point, I called the agent for the second buyer in line and we offered the home to that buyer at a price reflective of the lower square footage, including a promise the sellers would obtain an AS BUILT permit. Because the difference still between the tax records and the actual square footage was another 300 square feet.
This meant in retrospect The Golden1 appraiser messed up and had prepared a lazy and inaccurate appraisal. The contractor who completed the addition had misled the sellers to believe they had a permit. You can bet the sellers were disappointed to have to deal with the square footage problems but not nearly as disappointed as they would have been had I not brought this up at the inception of the listing.
Bottom line, we got the AS BUILT permit and closed. The sellers were still financially ahead of the game, and they paid an extra $3000 to expedite the permit. From start to finish, the entire process took about 3 weeks. It could have been much worse had we not started the process when we did. They were able to close on schedule and move out of state as planned. Another crisis averted.
Hiring a Sacramento Realtor with experience matters.
