Expert Real Estate Louisville, KY

A home inspection is an important part of any residential real estate transaction. While not required by law or regulation, having a home inspection prior to closing on your new home can reveal potential defects, mechanical and structural problems, plus help provide you with additional negotiating points and peace-of-mind.

In this installment of our interview series we are joined by Mark Hunter of K&I Inspections in Louisville, KY. K&I Inspections was founded by Mark’s father, Charlie, and has been a staple of the local home inspection business for over six years. K&I Inspections has performed over 1500 inspections for local customers and the company follows the American Society of Home Inspectors (ASHI) Standards of Practice.

What is the purpose of a home inspection?

The primary purpose of a home inspection is to locate any defects that might exist in a property. The defects could be structural, such as foundation issues, or mechanical, such as plumbing or electrical. In addition, we strive to protect our client’s investment by giving them an objective opinion regarding the property they are contemplating purchasing.

How are the standards and guidelines for a home inspection determined?

In Kentucky, a home inspector must be licensed through the state, and complete continuing education requirements. Kentucky gives home inspectors the option as to which standard of practice they wish to follow, and their education centers around that specific standard of practice. At K&I, we follow the American Society of Home Inspectors (ASHI) Standards of Practice because we believe they provide us with the most comprehensive guidance for inspecting your home.

What are the basic steps in a home inspection?

The first step for us is to meet our client at the property and review the Pre-Inspection Agreement. This Agreement details exactly what we will be inspecting and what we do not inspect. The best way to describe our inspection is a “non-invasive inspection of readily accessible areas“. This means we do not move anything to perform our inspection, and we are not able to inspect anything that is inside the walls, floor, or ceiling. Our inspection only covers areas of the home that are visible and exposed. That being said, we also look for visible evidence that may indicate a defect or problem hidden behind a wall, in the floor, or the ceiling.

After explaining our services to our client, we fully inspect the exterior of the home, including the roof, gutters, and flashing. We inspect the interior of the home, including the visible plumbing, facets, shut-offs, and drains. We verify that there are no observable issues with the electrical system, and look for features such as ground-fault-interrupt (GFI) plugs near water sources. We also inspect the furnace, AC unit, and water heater for signs of abnormal wear and we will let you know if any unit is beyond it’s useful life according to ASHI standards.

Will a home inspection reveal if the home has all of the necessary building and electrical permits?

No. It is not within the scope of the inspection to verify the home is up to the current local codes. We may point out that inspection stickers are missing, but we are not equipped to inspect the home for code violations. If you suspect there is an issue with building or electrical codes you must contact the local government office that issues permits and follow their instructions.

Do you inspect attics and crawl spaces?

Yes, as long as the space is readily accessible. We will not move furniture, boxes, or anything else that blocks the entrance to these spaces except for the normal coverings. It is very important that the homeowner clear their belongings from these access points before the inspection, but we are willing to return at a later date to inspect a blocked area if that is necessary.

Also, a home that as been winterized with the water shut off will not be able to be completely inspected. If either the electrical or gas is shut off, we will not be able to verify those systems. We will explain these limitations to our clients as the situation arises.

How do you report to your clients the results of the inspection?

Our clients receive a detailed written report that covers every inspected system. Also, we include a summary page that highlights any issues or defects we found during the inspection. We go over this report with both our clients and their Realtor to ensure they fully understand our findings. We prefer that our clients be present for the inspection so we can show them any issues in person and try to answer any questions they may have in the presence of the defect.

Keep in mind that the report will recommend that certain items need to be addressed and repaired, but we do not suggest who should make the repair, or how it should be made. We also do not make any repairs ourselves as it would be a conflict of interest. However, we do strongly recommend that you only use certified professionals when making any repairs to the home so you have receipts, warranties, and can be assured the repairs are made according to the current codes.

The ASHI website includes a frequently asked questions section that has additional information for buyers.

Mark Hunter is a licensed home inspector with K&I Inspections in Louisville, KY. He can be contact through K&I’s website, or by calling (502) 744-1967.  K&I Inspections has four staff inspectors available seven days a week to fit any schedule.

Okay, so the title is a little mis-leading… In a perfect market they would be giving homes away, but if you look at it practically this is as close to an ideal buyer’s market as we are going to get. If you would have told me a year ago that I would one day be thinking that buyers were flat missing the most perfect real estate market in the memorable past, I would have just laughed. Who could possibly imagine?

Think about it… Basic supply and demand principals say prices will need to be adjusted in favor of the buyer for quite a number of homes due to the significant inventory of homes for sale. And this is actually happening. As always, the homes that have been correctly updated, in desirable locations, and priced fairly are going to hold value, but this is not the norm in our current market. It is more likely that you are going to find a home that needs some basic updating, and you can use that as a negotiating point.

Unfortunately, we have been inundated by media resources that seem to think promoting doom and gloom is the way to report a story. The story that is not being told is the fact all real estate markets are isolated and local. Louisville, KY is very, very different from San Diego, CA. There is little comparison. We have endured several market setbacks, including a high foreclosure rate, a significant increase in homes for sale, changing mortgage rules that make it harder to get money, and a few local economic issues, but for the most part we are still far from the negativity portrayed in the media.

My professional opinion is that we are going to see a few more years of a “soft” real estate market as we emerge from the mortgage lending debacle that hurt so many homeowners. During this time, buyers are going to be afforded very favorable conditions for committing to joining the ranks of homeownership. At some point in time our market is going to begin to appreciate at a much faster rate. Unless new mortgage products become available to allow buyers to keep pace with the market, it will be a challenge to exercise the same purchasing power now available.

What does all of this mean? Simple… If you have had any inkling of a thought of buying a home in the Louisville, KY area it is time to act. You need to get your finances in order, and give serious consideration to speaking with a professional financial adviser, especially if you are a first time home buyer. The cost is nothing compared to the confidence, knowledge, and peace of mind you will have when starting the process of buying a home. Here are a few more tips for buyers in this market.

You need to speak with a mortgage professional who can guide you through the murky waters of the current lending industry. No matter what you have heard, there are still a huge variety of mortgage products that can fit all manners of incomes and credit scores. In addition, there are down payment assistance programs and other alternative financing options that can sweeten the deal for the buyer.

You need to find yourself a competent, professional, Realtor (okay, I’ll volunteer for the job ;). You need a quarterback who can guide you through the transaction, protect your interests, introduce you to real estate vendors that can help you with all of the various facets of the transaction, and educate you completely about this market.

But most of all you need to, as Nike says, just do it! You need to take action now because you may need to save money for a down payment, work on your credit scores, or pay down other debts. In the meantime, you can visit this link to begin to view all Louisville, KY homes for sale, and then give me a call so we can begin to make plans for you to take advantage of this perfect market!

Have you ever wondered what happens during a real estate closing in Kentucky?

Fortunately, we have been able to interview Mr. Harry Borders of Borders and Borders Attorneys, and he has provided excellent answers for you, the real estate consumer. These questions and answers should help anyone who has a pending closing on a piece of residential property in Kentucky.

Borders and Borders Attorneys has been a staple of the local real estate community since the mid-1970s. Mr. Borders has been involved with the family business for 17 years, and works primarily in residential real estate. He has presided over literally thousands of closings and draws from a vast storehouse of knowledge and experience to help you understand how real estate closings work.

What is a closing?

A closing is most easily defined as a final compliance with the terms of the Sales and Purchase Agreement (S&P). During the closing, all of the required loan documents will be explained and signed, and the new title to the property will also be signed.

Is an attorney required to conduct a closing in Kentucky?

Attorneys are not required to conduct a closing in Kentucky. The requirements for the person administering the closing are they must be a notary, and they must not be a felon. The reason using an attorney is beneficial to you during closing is they are able to provide legal interpretations of the documents being signed, though technically they remain a neutral party in the transaction.

What are the general steps involved in a real estate closing?

After a Sales and Purchase Agreement has been accepted on a property, the lender will coordinate with the closing attorney to ensure all of the required documents are available at closing, and to help generate the closing settlement statement (HUD-1). The lender will notify all parties when the transaction is “clear to close” and all parties involved will attempt to coordinate a specific date and time to conduct the closing. This will be guided by the S&P Agreement. In addition, the closing attorney will need at least one day to draft all of the documents.

On the day of closing, all parties will meet at the agreed upon location and the buyers and sellers will sign all of the required documents. Typically, both parties are present at the closing table, but it is possible to conduct the closing separately. In addition, if one party to the contract is unable to be present due to logistical reasons, a power of attorney can be prepared to allow a designated person to sign the paperwork and complete the closing.

What happens if I want to read all of the closing documents?

You absolutely have the right to fully read and completely understand every document you sign during closing. Because there is a large amount of paperwork associated with a real estate transfer, it is best to let the closing attorney know in advance you intend to read every document, and they will provide you with the paperwork prior to the closing for you to study. Keep in mind that the closing attorney is obligated to explain to you every document that you will be signing.

Does the closing attorney need to know your marital status and how you wish to hold the title?

Definitely. How you choose to hold the title affects the specific wording in the title, and even more importantly, what happens to the property in the event one of the parties should pass away. It is also a good idea to consult with an estate planner to best determine how you should hold title.

What is a HUD-1 / Settlement Statement?

It is a document required by the Real Estate Settlement Procedures Act (RESPA) that clearly defines all charges and credits to the buyer and seller related to the real estate transfer. It also includes such expenses as taxes, commissions, fees, and any monies due to or from the buyer and seller. No money can change hands between the buyer and seller that is not included on the Settlement Statement. The HUD-1 is required by law to be provided to the buyer and seller 24 hours prior to closing.

What is a title examination and how is it conducted?

The title examination is required by the lender to ensure that there are no outstanding claims against the property that could affect ownership rights. It is usually conducted by an experience title examiner who follows general practices to verify no valid claims exist against the title. The title examination is used to generate a title commitment that the lender uses to insure their interests in the property through a Lender’s Title Insurance policy. If there are any problems with the title, they will need to be resolved prior to closing per the S&P Agreement.

What is you opinion regarding Owner’s Title Insurance?

Simple, if you cannot afford Owner’s Title Insurance, you cannot afford the home. It is usually a very minimal expense, and provides a critical protection to you, the buyer, in the event a claim arises against the property. The Lender’s Title Policy will not cover you!

You will have the option to purchase an Owner’s Title Insurance policy at the original price offered at closing for up to 30 days after closing, but I suggest making the commitment at the closing table so you do not forget.

What documents must a buyer and seller ensure they bring to closing?

To verify their identity, buyers and sellers must bring a government-issued photo ID, whether it is a driver’s license, passport, military ID, etc. If a power of attorney (POA) is going to be used, the original document must be present at closing. In addition, the closing attorney will most likely want to review the POA prior to closing if they did not draft the document to ensure it a valid POA.

Any money that needs to be brought to closing must come in the form of a certified check. Each attorney will have a different policy regarding acceptable funds, so be sure to call ahead to get this information. You can use the HUD-1 statement to find out the correct amount of the check.

What happens to all of the paperwork after everyone leaves the closing table?

Once all of the documents are signed, everyone will receive copies of the documents they signed, and anything else required by law. The attorney will scan a copy of the documents for their records and forward the originals to the lender. All monies taken in by the attorney will be distributed to the appropriate parties, and the attorney will ensure all the necessary paperwork is recorded at the county clerk’s office.

The buyers should expect to receive the newly recorded title in the mail in a few weeks (and should store it in a very secure location), and will receive a copy of the Owner’s Title Insurance policy. The sellers should be on the lookout for any tax bills that might arrive in the mail. While all tax prorations are taken care of at the closing table, it is possible that the seller’s lender could double pay the taxes. The seller should be expecting a refund from their escrow account and ensure they receive all of their money back.

What is one good piece of advice you would give to anyone contemplating buying or selling a home?

Use a Realtor to help you with the transaction. Realtors act as your quarterback in the transaction and there is always a noticeable difference in organization, detail, and completeness between closings that involve a Realtor and ones that do not.

Mr. Harry Borders is a practicing real estate attorney with Borders and Borders Attorneys in Louisville, KY. You can contact him by calling (502) 894-9200.

Today, the Jefferson County Property Valuation Administrator’s Office (PVA) published an extremely detailed statistical analysis of the Louisville real estate market. You can download and read the analysis at your leisure here.

I am going to keep my comments on the market analysis relatively brief as I feel it speaks for itself, but I do want to re-emphasize a point I continually make to my clients…Louisville, KY is an isolated real estate market that, in general, fares much better than the rest of the Nation. Regardless of what you hear on the radio, see on the news, or read in the papers, Louisville’s market continues to hold it’s ground as the rest of the Nation faces significant real estate setbacks.

Now, that being said, our unique market has unique challenges. The first and foremost is the tremendous number of homes available on the market today. We are averaging 40% more homes on the market than in years past. This over-supply has stagnated prices, overwhelmed buyers, and forced sellers to make additional updates and concessions to sell.

My professional opinion remains that while Louisville is much better off than the rest of the Nation in terms of our real estate market, we still must continue to work together to find solutions, educate buyers and sellers, remain honest and realistic with our expectations, and be prepared for several more years of a less-than-stellar marketplace. It will remain a great time to buy a home, but will present challenges to sellers, especially those who are financially burdened through job loss, or a poor mortgage product.

I recommend that all buyers take advantage of this market, with the great interest rates still offered and the tremendous number of homes available. I also strongly recommend that all buyers consult a professional financial adviser prior to purchasing a home and work with that person to maximize your credit scores. You will also need to consult with a competent mortgage professional for the latest information regarding lending products. Keep in mind that there are numerous ways to finance a home, so be patient, be prepared to do a little research, and don’t be afraid to negotiate. In addition, it is imperative that you seek out and secure competent, professional representation from a real estate agent to guide you through the process of buying a home.

As for sellers, I recommend that you give serious consideration to not selling your home at this time. Unless you must move due to financial distress, a job, or any other pressing reason, I would consider holding out until the market improves to get a much better return on your investment. If you decide to sell, I strongly recommend securing the services of a competent, professional real estate agent to guide you through the transaction, plus to seek the services of a professional home stager. A properly updated, staged, and marketed home is far more likely to sell in this market than not. You must be prepared to make that commitment.

I will be happy to recommend the professional services of local vendors to help you buy or sell a home. In addition, I can provide both buyers and sellers with competent, professional representation designed to meet all of your real estate needs. Contact me at any time for further details…

In the recent past, conventional mortgages held numerous advantages over FHA-backed loans. FHA loans were typically more expensive with their upfront 1.5% mortgage insurance premium (MIP) and the monthly mortgage insurance premium included in the mortgage payment.

Times have changed.

With rising foreclosures, mortgage companies are sustaining record losses and are tightening their lending qualification criteria, plus altering or eliminating numerous conventional loan products. The first to go was the 100% loan-to-value or zero-down conventional mortgage. In January of this past year, Fannie Mae (a company that buys and sells mortgages on the secondary market as investments, and has a huge influence over the types of loans available to the consumer) announced risk-based pricing adjustments (mortgage-speak for “costing you more money”) for high loan-to-value ratios, low credit scores, and features such as taking “cash-out” of the property on a refinance.

For example, prior to the change a conventional borrower with a 640 credit score borrowing at 95% loan-to-value could get the exact same interest rate as a 740 credit score borrower putting 20% down. During those times you were either in the club or you were out. You were either an “A Paper” or “Conforming” borrower or you were a “Sub-Prime” borrower. The main difference now is that there are many different levels of qualification for conventional borrowing. Today, a 740 credit score will get a better rate than a 640 credit score, and 20% down will get a better deal than 10% down. The greater the risk, the greater the rate when it comes to conventional loans.

FHA Government Loans have become the better alternative in many cases for those who are not eligible for the absolute best rates on conventional mortgages. This group mainly consists of those with credit scores under 720, those exceeding 80% of their homes value, or especially those taking “cash-out” greater than 80% of their home’s value. There is small rate adjustment for credit scores between 580-600 with FHA, and a bigger one for those under 580, but 600 plus borrowers are on the same playing field as everyone else. Because FHA interest rates are in line with the best conventional rates, it will usually result in a better deal for those subject to Fannie Mae pricing adjustments. Additionally, FHA has become almost a no-brainer for those who are still stuck with a sub-prime mortgage. They allow for manual underwriting which looks at the person more than the credit score.

Now more than ever, borrowers need a competent mortgage professional who is up to date on the current market conditions. Gone are the days where you can call around asking what interest rates are and hope to get a fair deal. All the numbers for your specific situation have to be plugged in to see what adjustments you may be subject to, and what type of mortgage is best. I offer a 100% free mortgage analysis to all Louisville area residents. To learn more visit www.billsexpert.com.

Mike Roberts is a senior loan officer at The Mortgage Warehouse. You can reach him at 502-244-4700, ext. 117 with any of your questions.