You can't ignore property tax! Especially When buying a home in Connecticut!

Home buyer’s in Connecticut are often caught off guard by property tax because it varies so much from town to town. Property tax is going to have a drastic effect on whether you can afford a property or not. You may be preapproved for 300k in one town but 250k in another just because of the property tax.

Why you need a buyer's agent in Connecticut!

I’ll be honest this was tough to write because I think it comes across as salesy. I promise I’m not writing this with the intention to deceptively convince you that you need a buyer’s agent so that I potentially get new business. I find the following to be incredibly important information for home buyers to be made aware of.

Dual Agent: A real estate agent acting on behalf of both the buyer and seller in a transaction.

I should also note that as a buyer you typically do not pay your agent. The buyer’s agent’s commission is paid by the seller of the property. A dual agency situation does not save the buyer any money necessarily, in most cases it just makes the dual agent more money.

Disclaimer: I think most real estate agents are very capable of acting as dual agents and doing it as fairly and ethically as possible. At the end of the day, however, we are all human and it is near impossible to represent both sides in a transaction equally. After all, there is a reason that in some states dual agency is illegal. I’m adding this disclaimer because this topic is probably going to come across as somewhat negative.

Conflict of Interest 

First and foremost, the listing agent is under contract with the seller to act in their best interest (make them the most money possible). The listing agent has a fiduciary duty to the seller, and if a listing agent breaks that fiduciary duty their license to practice real estate could be put in jeopardy.

A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties.

A seller/listing agent relationship typically starts with a listing appointment where they discuss things like listing price, getting the house ready for photographs, things the seller could change or repair, how showings will work etc. this process could take weeks or months as they work together to get ready for market.

The house is listed, and a buyer contacts the listing agent, falls in love with the house and wants to make an offer.

This is where conflict of interest comes in. Is the listing agent going to be able to casually put aside the relationship previously formed with the seller and truly represent both side’s interests to their full potential? It’s a massive risk to think that they can.

The Information Spin

A price is agreed upon, a contract is formed. It’s time for the home inspection. The buyer hires a home inspection company and finds out the house has a bunch of issues. Mostly minor issues that come up regularly during inspections but there are also a couple of major issues that worry the buyer.

The buyer brings the issues to the agent, and how does the agent react? The agent brings the issues up with the sellers and they might say something like “Oh, it’s been like that since we bought the house and we’ve never had a problem.” The agent then downplays the issue to the buyers and because the buyers are not in real estate, they trust the agent and disregard a major home inspection issue that should have been addressed in some manner.

A buyer’s agent working exclusively for the buyer would not have let the issue just slide by.

Disclaimer: This is an example of a worst-case scenario. There are dual agency situations where home inspection issues are addressed to the buyer’s liking.

Increasing Skepticism 

The buyers are through inspection, and everything is looking good. Then the buyer’s attorney finds out that permits were never pulled or closed for certain modifications. The agent says not to worry everything was done by a licensed contractor we should proceed with closing as planned. The buyer starts to question the entire transaction thus far and its difficult to get back to the positive excitement felt at the beginning of the process.

To avoid all of this get yourself a buyer’s agent. As mentioned earlier the seller (in almost all cases) pays the buyer’s agent commission, so why put yourself in a dual agency situation if it does not save you any money? And possibly ends up costing you MORE money.

Happy to discuss this more and hear your thoughts/questions on the matter!

Considering going solar in Connecticut? Read this first!

With utility companies seemingly increasing rates across the board I’m seeing and hearing a lot more chatter about installing solar panels. There is no doubt that for some homeowners it can save them a TON of money. However, make sure you are doing your due diligence before signing on the dotted line. I hate to sound pessimistic but sometimes it is a terrible idea. It could hinder a future sale and/or you may just not save any money.

First and foremost, you need to have a solar audit done to see if your home is a good candidate and how much electricity your system could produce. Southernly facing roof with little to no shade from trees or other obtrusions? Good chance that you’ll be able to produce a lot of electricity. Keep in mind that geographic location matters too, sunlight hours are going to vary. Panels in Arizona are going to get more sunlight per year than panels in Maine, especially when snow is taken into consideration. Ideally the auditor won’t be someone that benefits from giving you an inflated estimate of how much electricity your system could produce.

So you’ve got your audit and you know how much electricity your system will potentially produce on a yearly basis. Now you have options.

Buying Outright

If you can do it, this is the best option. No interest or monthly payments to worry about. You will also add value to your property by doing so, however at a steep discount compared to what you paid. A typical system may cost in the range of $20k-$30k but only add $10k-$15k in the eyes of an appraiser. Definite cost saver in most cases if you plan on owning the home for 10+ years. If you plan on selling sooner than later there are better investments.

Financed Purchase

Use your solar audit to figure out when your break-even point should be. For example, if your typical electricity bill is $300 a month prior to solar, and you expect to save 50% that equals $150 per month in savings. If your system paid in full with interest costs $35k its going to take a little over 19 years to start capitalizing on the savings.

A financed solar system does add value to your home, however, if you sell the home before its paid off you will need to do so at closing. Or you can always keep paying for something you no longer own.

Leased System

They can save you money, but you need to read every line of the lease and make sure the math works out. When it comes to solar leases make sure you are shopping around and not just going with the first company to knock on your door.

Most solar leases come with an escalation clause that’s going to increase your monthly payment over time to stay on par with rising utility rates.

Leased panels do not increase the value of your home. In fact in many cases they can become a hindrance to selling because you will either have to buyout the lease (exorbitantly expensive usually) or the buyers need to qualify to take over the lease.

Anecdotally, when I have buyer clients looking at a house with leased panels (or any panels for that matter) I ask for a copy of the lease agreement, to see what the monthly payments are and will be as well as the buyout amount. I also ask for a copy of historical utility bills prior to the panels being installed. On 2 occasions when comparing the lease payments and utility bills I found the homeowners to be losing a substantial amount of money in the long term even when factoring in a yearly rise in electricity cost.

Solar leases can save you money, but you need to shop around, read the fine print, and do the math.

Homebuyers should ask the following:

1.    Does the system actually save the homeowner money?

2. Is there maintenance involved? (One of the positives of a lease is no maintenance)

3.    What if the roof needs to be replaced?

4.    Do I need to qualify for and take over a lease?

5.    Do the panels detract from the curb appeal and potential marketability?

6.    What is the system’s life expectancy? Am I going to need to deal with removing them soon?

Need to sell your home with solar panels?

1.    Make it easy for the buyers to form a decision, have utility bills etc. ready to go so you can show off your savings.

2.    Document the yearly cost of maintenance.

3.    Be prepared to pay off the loan or lease if necessary.

At the end of the day, solar can and most likely will save you money in the long run. Just remember to do your research and make sure its the right decision for your given circumstance...and make sure you read the fine print.