Real Estate Inspections

Today it is routine to have various inspections performed when purchasing real estate. In Massachusetts, one inspection is mandatory and others may be a requirement to obtaining a mortgage. The types and extent of inspections vary with the type of real estate such as land, home, commercial property and the specific circumstances.

We'll focus primarily on a single family residential transaction and just touch on a few other types. These are typical but other inspections may be advised and they are not listed in any order suggesting priority.

• Structural or whole house: these are performed by someone licensed by the state (no license required as of yet in Vermont) who will check all visible aspects of the structure, the systems (electrical, plumbing, heating, ventilation), both inside and outside, the foundation, drainage, insulation, in short, everything to do with the house other than cosmetic. Some inspectors will also inspect the appliances, water softeners, filters, AC and other components.

• Water: If the property is served by a private source such as a well then it is advised a water test be taken to check for bacteria, contaminants and even the ph of the water.

• Radon: This is available by the home inspector or by purchasing a simple kit to do it yourself for air testing however testing for radon in the water is also available if on a well.

• Septic System: In Mass., this is referred to as a Title V inspection and must be conducted by a person with the approved state licensing credentials. This particular inspection and certification is required under state law whereas the above three areas of testing are not mandatory though highly recommended.

• Percolation Testing: this testing is done when purchasing vacant land to determine the suitability of the site for a septic system. All states in our region require this to be performed in order to obtain a building permit.

• Soil testing: in any case where contamination from a hazardous spill or leak is suspected then soil evaluations are done to determine the level of contamination, the type of contaminants and the necessary remediation procedure. It is routine to perform initial site history review on any commercial real estate but buyers should be cautious to consider the fuel type history of other properties such as agricultural or even homes to determine if there may have been spills or buried fuel tanks.

• Asbestos: Asbestos may be present in a variety of building materials and as such if demolition or remodeling is under consideration testing should be conducted to determine if there is asbestos containing material present from shingles, to flooring to popcorn type paints and insulation and the process of removal.

• Lead Paint: this is of particular concern in residential dwellings and it is illegal to have children under the age of six occupying full time a dwelling where this is known to be present. A licensed lead inspector is required to perform lead tests although there are very inexpensive self-test kits available at hardware stores. Keep in mind that even if you do the self-testing, if lead paint is discovered under the law de-leading would be mandatory if young children occupy the house or apartment, owned or rented.

• UFFI: Ureaformaldehyde foam was a very popular form of insulation in the 1970s and very effective as an insulator but often the installations gave off excessive formaldehyde fumes which were a troublesome health hazard and thus the foam was banned. There are new foams on the market today that are highly effective insulation materials and non-hazardous. Existing older foams no longer pose a health risk from fumes but information should be obtained about any concerns there may be such as toxic fumes that can be given off when burned.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.

Facilitator, Transaction Broker Agent or Unrepresented?

Real estate practice varies considerably from state to state. Anyone who has moved from another state and purchased in this region understands this.

Besides those "roles" as we will call them, some states in our region have also adopted or are actively considering adopting designated agency, limited agency, and broker agency. As a practicing licensed broker in Massachusetts, Vermont and New York, I have had to adapt myself and my practice to differences in all three states. For the purposes of this column I will primarily focus on real estate practices within Massachusetts and Berkshire County specifically.

Massachusetts currently recognizes the roles of agents and transaction brokers who are also referred to as facilitators. The consumer, buyer or seller, may be represented by an agent as one option. By simple definition, an agent is a licensee that is required under law to follow the specific legal instructions of his or her principal, the buyer or the seller.

As a "fiduciary," the duties required of an agent are remembered by the acronym "OLD CAR." These include obedience, loyalty, disclosure, confidentiality, accounting (of funds) and reasonable care.

A transaction broker's or facilitator's duties are different in some respects. By law the facilitator still has to provide disclosure, accounting and reasonable care and he or she may also provide confidentiality as is practiced in our firm.

The differences are most easily understood by thinking of an agent like an attorney who is duty bound to follow and consider only the interests of their client, regardless of the interests, needs, concerns of the other party. The facilitator can be compared to a mediator who must do his or her best to take the interests, needs, concerns of both parties into account, however different they may be, in order to assist them in fashioning a workable mutually acceptable agreement.

An agent, if they are practicing agency to the letter, has one goal in mind, seek the best outcome possible for only their client, at the expense of the other side. A facilitator seeks to find the middle ground meeting the needs of both sides, neither of which gains any particular advantage over the other.

The agent is biased, the facilitator objective.

Which approach works best or is the right one depends in large measure on all those involved. Our firm practices facilitation and has done so for years with great success and praise from our clients but other firms practice only agency. Therein lies the complication inherent in agency.

If a buyer walks into an office which serves their seller clients as agents that buyer either remains with that firm and effectively has no representation and is at a distinct disadvantage in any negotiations or that buyer has to leave and find another licensee who can represent their interests. Buyers who are unrepresented working with a seller's agent are quite liable to be paying more than they might otherwise and may suffer other disadvantages as well.

Under the law there is a "fix" for the agency conflict within a firm, if that firm elects to offer it which is labeled "designated agency." In that case, it is in theory possible to have two separate agents in the same office, each representing the interests of their individual clients, the buyer and the seller. How this works out in real life is still a mystery to me particularly when those two agents let's say are close friends within the same firm or have both worked on the seller's property previously but now one of them is supposed to become completely independent from the seller's interests and strongly support and represent only the buyer's interests. I think the reader can catch the problem here.

If on the other hand the seller is represented by a facilitator, then a buyer can enter that firm with the confidence they are being given the exact same benefits and advantages as the seller and the playing field is level to begin with.

What this boils down to is the perspective of the typical consumer. If the consumer is the sort that is clearly hoping to gain a significant advantage over the other party they may believe there is to be an advantage in having an agent working exclusively for them. Of course they had better hope that the other party doesn't find a more competent agent or facilitator is representing the buyer in which case they may wind up at the short end of that match.

If on the other hand the seller or consumer is more typical and their perspective is to settle at fair value in the marketplace and no surprises, then facilitation is the most direct route to achieving that result.

Another concern when hiring an agent that is rarely mentioned is the vicarious liability exposure that flows from an agent's acts to their principal for any errors, misstatements of facts, misrepresentations or any act that causes liability. By contrast there is no vicarious liability exposure from a facilitator to their clients. That is a potentially very significant concern regarding agency that consumers and licensees need to take into consideration when deciding on what form of representation is best for them.

In sum, before committing to work with a real estate licensee, be certain you understand all of the ramifications of the choice you make and that the licensee explains your options thoroughly.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.

What Do Buyers Want?

If you're a seller in this market it is crucial you and your representative take carefully into account what buyers are looking for or chances are less than ideal for a favorable sale or a sale at all for that matter.

If you're a buyer you know what you want and as such you aren't going to waste your valuable time on any listing or any real estate agent that doesn't offer it.

Here's what buyers want:

The best property they can purchase for their budget meaning great value.

• A real estate licensee who is forthright, honest, diligent, pleasant and above all knowledgeable
• Unless they specifically want a fixer-upper to flip, buyers want as close to move-in condition as possible. The more that needs doing from paint, to floors, to bathrooms, kitchens, repairs the quicker the house will fall off the list of possibilities … unless of course it’s a steal.
• Energy efficiency
• A desirable location
• There are a number of "wants" that fall lower in priority but which can tip the scales between two similarly priced properties such as nice view, level usable yard, quiet neighborhood, attractive exterior, good floor plan.

Here's what buyers don't want:

• Overpriced property
• Poor upkeep and condition
• Highly personalized decoration or property features
• Significant projects such as repairs, major upgrades
• Pushy, evasive, flaky, disinterested, distracted, part-time or brand-new agent
• Anything that is significantly different from what they described they are looking for

I find the Golden Rule works really well in real estate as in virtually any aspect of life. In other words, sellers who can put themselves in the buyers' shoes, who can be more objective and see their house as a buyer might view it have already improved their chances of selling.

One of the hardest steps for sellers to take is to separate emotionally from their property, let it go, when they place it on the market. So often sellers will be expecting buyers to pay a premium (of course the sellers don't think of it as a premium) for the property because of the enjoyment and satisfaction that property has given them over the years. All buyers will have a different perception and perspective and will not pay for the sellers' emotional ties.

If as a seller you can offer what buyers want your property won’t last long on the market and they don't.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.

Real Estate Perspective 2013-2014

This is to be the first in a regular series of real estate columns I'll be writing for iBerkshires. I want to thank iBerkshires for inviting me to write these columns and at the same time thank those who read them and invite you my readers to provide me with suggestions for new columns on topics you would find of interest.

Naturally the first of the series should be on 2013 looking back and 2014 looking ahead.

There is a great deal in the national and even local media on real estate trends and statistics so I hope to provide a slightly different slant offering primarily a local flavor. Reading national headlines proclaiming a dramatic increase in sales or median prices leaves one naturally wondering how come we or you in particular if you're a seller in this market, haven't experienced the same results.

Of course, real estate is local in nature. We all know that but there are national and even global events and currents that impact even a local market like the Berkshires.

The market here in the Berkshires was significantly improved from a sales and price perspective in 2012 over 2011; however, 2013 was a mixed bag around the county. Pittsfield grew sales nicely and South Berkshire saw improvement while North County was not so fortunate. In the north, sales fell in many towns and remained flat in Williamstown.

In prior recession/recovery periods, we were accustomed to seeing sales recover following a recession much like spring does, from south (NYC) moving northward, first through Southern Berkshire and on up the county. Therefore if this were a "normal recovery"  we could expect a similar trend with North County following the trend that South and Central County experienced in 2013. Mind you it was not a rush or landslide by any means, just a modest uptick.

This recovery, such as it is, has been stimulated by exceedingly low interest rates (Fed policy) and dramatically lower prices. It, however, has been modest due to, as we all know, weak employment figures. North County as well as the core area of Pittsfield has traditionally been a stronger industrial base than South County, which is largely second home and tourist based. Williamstown in the north centers now on Williams College for its financial base having lost virtually all industrial and manufacturing jobs in the past 45 years.

The phenomenon of retiring baby boomers cannot be overlooked either, as a substantial factor in the real estate trends of today. As this aging and very significant demographic retires this population is gravitating to smaller homes and often to warmer climes where winters are not such a factor.

Sellers of real estate need to take these trends into consideration as they approach the market. With an ample supply of homes on the market plus the addition of new construction, supply is still outpacing demand be a considerable degree. Of course this is good news for buyers who have many reasons to plunge into a home if they are in a position to do so.

The year 2014 is likely to see a stable to very modest improvement once again, depending on where in the county the real estate is located and of course on other factors such as the direction of interest rates as we move through the months ahead. There is absolutely no justification for postponing selling based on expectations for a significantly rising market. That doesn't appear to be in the forecast based on market and economic trends.

Buyers should carefully consider the possibility that higher interest rates as frequently forecast in various media may impact their options going forward.

In sum, unless there is any sort of major new force or series of high impact events that might affect the economy and housing in particular, it would make little sense to postpone your housing plans.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.