RECENT ARTICLES

INSURANCE AND ITS ROLE IN HOME OWNERSHIP
By Alan Donald (July, 2008)

Buying insurance makes gives you mixed feelings - one hopes to never have to use it, but will be very glad when you have to! Insurance policies protect the user against different kinds of risk inherent to home ownership.

Here are some types of insurance and their differences:

1. Homeoners (or Hazard) Insurance. This is the most common type of insurance, which protects homeowners against partial or total loss in case of events such as fire, earthquake, hurricane, theft, liability and loss of personal property. This policy generally covers only the replacement value for the structure of the home (given that land is not insurable), plus the cost of replacing the lost contents. It is important to update the replacement cost for the structure from time to time, especially if construction costs rise. This policy is purchased annually - generally the bank pays for it at the beginning of the year and charges the owner 1/12 of its estimated cost as part of the escrow funds charged with the mortgage payment.
2. Wind & Hail Insurance: Supplements the homeowners policy in case that it does not cover wind and hail. This coverage must be purchased separately (the bank will require it) if the home is in the designated "wind pool" areas. It is purchased annually and it does not cover damages by flooding.
3. Flood Insurance: Covers damage by floods, tidal waves, etc. It is supplied by the federal government through FEMA and covers the first $250,000 of value of the home. Supplemental flood insurance can be purchased separately. It is purchased annually and it is required by lenders if the home is in a "flood zone".
4. Title Insurance: It is purchased once (at closing) and covers the homeowners against claims against the title of the property or boundary defects, liens or judgments that were not discovered by the title search or were not properly recorded at the time of closing.
5. Home Warranty: This is an optional policy that protects the homeowners against failure of the mechanical systems of the home: Heating and air conditioning, stove, oven, microwave, washer, dryer, dishwasher, ceiling fans, etc. It is purchased annually.

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HOW DO YOU DEFINE QUALITY SERVICE?
By Alan Donald (June, 2008)

For every business (especially for those of us in professional services) client satisfaction guarantees future success. Happy clients bring more clients, and a great reputation in the marketplace (especially in a small market like Charleston's) is a very desirable asset.

It is essential to have business strategies and practices that result in repeat business and word-of-mouth referrals from our client base.

So, how does one make sure your clients are happy?

Obviously, we need to provide them with "outstanding service". The problem is that not everyone is on the same page when it comes to defining "outstanding service".

In order to avoid disappointing clients, I recommend following these guidelines:

1. Clarify mutual expectations from the beginning. Ask your clients what they expect from your service, as well as letting them know what you expect from them. This way everyone will know what to expect, and you can EXCEED your clients' expectations.
2. Educate your clients. Explain the whole process from A to Z and identify the most common potential problems, so that they don't get surprised if they happen.
3. Keep in constant communication. The worst you can do when there is a problem is to avoid communicating with your clients, thinking the problem may just go away, or that you may be able to solve it without their involvement. It is much better to let them know what the problem is, why it is happening, and how you are working to resolve it.
4. Assume responsibility. If there is an unforeseen event that affects the process, assume responsibility (even if it is someone else's fault) and try to provide proactive solutions.
5. Be honest. Your clients will appreciate your honesty, even if the news that you bring are not favorable to them.
6. Show genuine interest for your clients. Give them personalized attention and be sensitive to their personal situation. This will set you apart from other service providers and will provide the "personal touch" that will remain in your clients' memories looking forward.

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THE "DUE DILIGENCE" PROCESS FOR BUYING A HOME
By Alan Donald (January 2008)

Many people believe that once you sign a contract to buy a home, all business everything is pretty much done. The truth is that many deals are derailed before the closing, mostly due to factors that surface during the due diligence process the buyer (or the bank) perform.

This process includes:

1. Home Inspection - this can reveal structural deficiencies, defects in the air conditioning/heating system, leaks, problems with the electrical or plumbing systems, etc. Unless the home is being offered "as is", generally the seller will have to provide a home that is free of leaks, structurally sound and without safety problems with the electrical or plumbing systems. All repairs are then negotiated with the seller after the inspections are complete. Note: The home inspector may recommend that you hire more specialized inspectors to look at specific issues such as mold, radon gas, structural integrity or electrical issues, as needed.
2. Termite, Pest and Moisture Inspection - in most cases it is required that the home be free of active termites and that all termite or moisture damages be repaired and a "clear" CL-100 certificate be issued prior to closing. Traditionally the seller pays for this inspection, however, I recommend that my buyer clients hire and pay for this inspection to have their choice of inspector and make sure they are looking after their interests. If the inspector determines that repairs are needed, he may recommend using a qualified, specialized contractor to do the required repairs, treat the home and provide a termite bond to guarantee a clear CL-100.
3. Title Search - the closing attorney will perform a title search using public records to make sure that the seller on the contract actually owns the house and is able to sell it, and to determine if there are any mortgages, liens or judgments against the property or the seller.
4. Survey - the buyer can also request the closing attorney to order a survey showing the property boundaries, that the structures are within those boundaries and that there are no encroachments. It also will show any right-of-way and utility easements on the property. If requested, the surveyor will also shoot the elevation and the flood zone of the property, which will be used for purchasing flood insurance.
5. Mortgage Balance - The closing attorney will contact the existing mortgagees to get a "payoff balance" figure as of the date of closing, so he can discharge these mortgages before transferring title.
6. Other Due Diligence - the buyer has the right and the responsibility to perform all the due diligence to verify all the information about the home. Other common due diligence steps may include:
   • Find out taxes owing
   • Verifying which public schools are assigned to the area
   • Verifying zoning and permitted uses for the home
   • Reading the Community Covenants and Restrictions
   • Verifying HOA transfer fees, if applicable

It is important to point out that these investigations must be done before purchasing the home, you do not want to have nasty surprises afterward! Your REALTOR® can help you in most instances.

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