From the concrete streets of metropolitan cities to the sprawling suburbs in most areas around the country, new construction is present in the form of townhouses, condominiums, single homes and the ever-so-popular “over-55 communities.”

While many of these properties are esthetically impressive complete with over-sized family rooms, open kitchen areas, and every upgrade/option imaginable, there are also the unfortunate, yet inevitable pitfalls associated with new construction such as delayed completion dates, cost overruns and building defects. With respect to the latter, buyers of new construction should be informed of their legal rights in the event that construction defects impede their use and enjoyment of the property.

Responsibilities of a Vendor
Traditionally, a vendor of property is responsible for the quality of the property sold only to the extent that the vendor expressly agrees to be responsible. In years past, the notion was that a seller and buyer dealt with one another at “arm’s length” and, therefore the buyer should only be afforded the specific protection for which he/she contracts. However, in the context of new construction, the laws started to change over the past few decades. In states such as the Commonwealth of Pennsylvania, a well-established body of case law has evolved that has afforded protection to buyers in the form of implied warranties.

The “implied warranty of habitability” and “implied warranty of reasonable construction” exist between a builder-vendor of new construction and a buyer regardless of whether any mention of such warranties is actually written into the contract of sale (those huge 25-plus page contracts that builders make you sign!). These warranties, which automatically exist between builder-vendors and buyers, represent that the property is suitable for living and is constructed with a reasonable level of skill and workmanship. Further, these warranties apply whether the buyer purchases the new home prior to, during or after completion of construction.

There is Legal Recourse on New Construction Properties
So, what does this mean for those of you who are about to purchase a plush, new townhouse on a golf course? It means that you may have legal recourse in the event that the builder has improperly constructed your home and/or constructed the home with defects that make the property unfit for living. Some examples of defects that could trigger these warranties and potentially provide you with a cause of action against the builder-vendor include: severe water leakage leading to mold growth, faulty plumbing, contaminated water supply, improper foundation and faulty landfill/site development.

Even though the courts in Pennsylvania (and some other states) have consistently found that these implied warranties afford buyers of new construction protection from faulty workmanship, BEWARE…a builder-vendor could attempt to disclaim such warranties in the contract of sale. The Pennsylvania courts have ruled that a builder-vendor CAN disclaim these implied warranties but the disclaimer language must be clear, unambiguous and set forth in the contract. This means that the builder-vendor will not get away with burying the disclaimer somewhere in that bible-sized contract of sale. However, if the disclaimer language is clear, easy to find in the contract, and easy to understand, then there is a good chance that a court would uphold the disclaimer. Under that circumstance, it would be unlikely that you would prevail in asserting a claim that the builder breached one or both of these warranties. For this very reason, it is your absolute responsibility to thoroughly read your contract of sale (or at least hire a highly skilled real estate attorney to read through it for you!!). The last thing that a judge wants to hear is that you didn’t realize the builder-vendor disclaimed the implied warranties because you failed to read your contract of sale.

So, here is a little recap:

1. Builders of new construction have an obligation to make sure the property is built in a reasonable, workmanlike manner and fit for living.
2. The implied warranties of habitability and reasonable construction protect buyers regardless of the warranty provisions in the contract of sale.
3. A builder can disclaim these warranties by using clear, unambiguous language in the contract.
4. All buyers should thoroughly read through the contract of sale.
5. If your new home has significant defects and is unfit for you to live in, then you should consult an attorney to see if you have valid claims against the builder.

You are now ready to go looking for that beautiful new home…just remember, if your house has major defects, don’t back down from that big, bad builder—the law looks to protect buyers of new construction and you need to pursue all of your legal remedies!!

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Tags: , , , builders, construction, estate, homes, law, New, new construction, real, Real Estate Law

This has been an interesting past few weeks. I guess the blogging world is pre-empting the entertainment business with its awards season. This blogging award season has been kind to us so far, as I’ve been blessed with some very generous honors that I thought you’d like to hear about.

First, as many of you already know, we were nominated in two categories for the 2007 Real Estate Blogging Awards. The nomination alone was wonderful, and it helps inspire me to continue with the mission of this blog. I think today is that last day to vote, so if you haven’t done so already, you should.

This morning, I opened my email to see a message from a great blogger who many of you are already familiar with, Teresa Boardman. She told me that I should take a look at her blog, as I was named one of her 10 good men. It is quite an honor, and I’ve found myself in some wonderful company.

Here is a blurb from her site:

“As I announced last week the St. Paul Real Estate Blog would like to recognize 10 good men who have consumer oriented blogs, today I present 9 good men. My origional criteria was that the blogs should be at least six months old, post on a regular basis and that the content be consumer oriented and “low ego”. The six month requirement was removed because blogs are still new in our industry, and a few good men would have been left out. I could write an entire post about each of our winners and maybe some day I will.

So here are 10 very good men

Josh Dorkin - Real Estate Investing For Real, The BiggerPockets blog is among the top 5 in the nation, with advice and news for everyone interested in real estate. Amazingly low in ego considering the size and reach of the blog. Josh is a very nice person and is a good net citizen, helping and encouraging other blog writers.”

As I mentioned in my comments on her blog post, I have been humbled by this wonderful honor. It does mean a lot to me. I did think that it was worthwhile to mention the other bloggers in the list, as they are all worthy:

Larry Cragun -Mortgages Undressed & RealEstateUndressed
Jonathan Miller -Matrix Blog
Doug Quance - Brokers First Realty Atlanta
Alex Stenback - Behind the Mortgage
Norm Fisher -Saskatoon Real Estate (Check out Pimp my Igloo!)
Noah Roseblatt - Urban Diggs
Ed Rybczynski - Title-Opoly
Erik Hare

I feel like many bloggers don’t have enough focus on the consumer, and I’m happy that I’m not alone in this. Its great to see these other guys really doing their thing. Congrats to the rest of you as well for all your work!

Tags: alex, alex-stenback, awards, bigger, bigger pockets, biggerpockets, biggerpockets.com, blogger, blogging, Boardman, Cragun, estate, fisher, joshua-dorkin, Larry, Larry-Cragun, matrix, norm, norm-fisher, pockets, real, real-estate-blogging-awards, real_estate_investing, saskatoon, stenback, Teresa, teresa-boardman

Those crazy guys at Flipper Nation premiered the latest episode of their web comedy.

Check out:

Flipper Nation: Episode 3: The Flippin’ Fight

If you liked this episode, check out Episode 2!

Tags: David, David-Kimball, episode, estate, flipper, flipper-nation, flipping, itunes, Kimball, Nation, partnership, partnerships, podcast, real, real estate, realestate, Richie, Richie-Tatum, Tatum, web_comedy

It’s Friday, January 5, 2007, the final day of our 2007 Real Estate Goals Group Writing Project. Over the past two weeks, we’ve seen some incredible posts from other real estate bloggers out there. While I’m a bit disappointed in the turnout (I was expecting at least 50 posts - I guess my goals were set a bit too high! lol), I have to hand it to everyone who participated — you are all winners in my book!

While this post is coming out early in the day, if there are any other submissions today, they will still be valid for our random prizes, and they will be included in our shared linking strategy.

Today’s posts include:

• Real Estate Goals for 2007 Group Writing Project by Spencer Barron

Special Guest: Real Estate Goals Post by Teresa Boardman

We also have a special guest today, who emailed me with their goals. Teresa Boardman is one of my favorite real estate bloggers. Her St. Paul Real Estate Blog is a shining example of what a successful blog can be. With that said, I thought you’d like to hear her goals.

My business plan has been done since November. I do a formal plan each year, I figure out how much money I want to make, then based on my average gross commission I figure out how many homes I need to sell, subtracting my expenses to arrive at my net income. It is a simple process for me at this point because I know my numbers and my conversion rates so I can figure out how many appointments I need each week to get X amount of sales each month. The rest of the plan is really about the activities or tasks I must complete to get the appointments. Business planning and goals are an essential for all businesses big and small.

My plan has not yet been printed because before I pressed print, I started thinking . . . How is it that the world has changed so much over the last few years but real estate companies have pretty much remained the same? In fact they are not even being talked about by the people that talk about how our industry needs to change. As an agent my marketing expenses have gone down because I use the internet more and print media less which works out well considering my potential clients also use the internet more and print media less.

Even with homes are on the market longer and each needing a virtual tour and it’s own domain name, my marketing costs are still lower. Buyers no longer come to me through open houses or mailings they come in through my web sites and contact me via email or telephone which saves a lot of money.

My life has changed a lot in the last year. I used to work out of a real estate office at a big real estate company and now I work out of my own home, and am with Keller Williams. I can rent an office but the closest one is just too far away. My conference room is the coffee shop a couple of blocks away and I get my faxes through my email or my cell phone. My real estate forms are all electronic and reside in cyberspace. and I have a contract with a local copy store that gives me a great discount on copies. When I need business cards I upload them, and 3 days later I hear the thunk of a box being dropped on my front porch with 1000 high quality business cards for $37.00.

My sales were down this year because of market conditions and because I moved my business from one real estate company to another. I did just fine because my business expenses were so much lower that my profits were enough to pay the bills and stash some money away just in case. I have enjoyed my job this year, more than I ever have before and feel as though I have learned more in this past year than I did in the previous ten years. I struggled for the first few months as I broke away from a large national internet presence and went about creating a strong presence of my very own. The process became more difficult when one of NAR’s attorneys asked me to cease and desist using the domain name that I have used since 2002 and had built much of marketing and branding around.

My plan is done but I can’t press the print button. Why is our industry operating the same way as it has for the last 30 years? Why are we still using similar fee structures when in most cases our costs should be lower? There are some road blocks to passing the savings onto our clients, one of the biggest obstacles is the traditional real estate company. They take a cut of each commission making it harder to charge less and make a profit. They provide one stop shopping which is supposed to be convenient for buyers and sellers. A single agent can provide one stop shopping just as easily since it seems to be about referring clients to ancillary services like lenders and title companies. The big companies have these services to raise profits by getting revenue from multiple sources from the clients that individual agents bring in. From a business point of view they seem to be there just grabbing the low hanging fruit.

My plan is done but I can’t press the print button. After doing some research I have concluded that the newer non-traditional real estate companies are probably worse than the traditional in that they charge consumers less but give the consumer almost nothing in return and seem to use a lot of miss-leading advertising to get business. The agent centric type of real estate companies seem to give agents more money but it is even less clear what they do for the home buyer or seller. Maybe the idea is that if they take care of the agent, the agent will take care of the clients. I take care of my clients because they put food on my table and I
like to eat.

Most of the real estate companies charge the consumer what is called a broker commission. They tack a fee of $200 to $400 onto each transaction and charge it to the buyer or seller, or both if the agent is representing both in a transaction. The money is in addition to their cut of the agents commission and helps keep them profitable. How does this fee help the buyer or seller? What value does the consumer get from the fee?

My plan is done but I can’t press the print button. I talked to some people in my neighborhood and asked them what they thought about real estate companies. It was enlightening. When I asked them who they worked with the last time they bought or sold a home each gave me the name of an agent, none gave me the name of a real estate company. This makes sense because real estate companies do not sell homes, but real estate agents do.

After hours of research my world has been turned up side down. I move into 2007 with a tremendous amount of enthusiasm and energy because I love what I do, but I can’t seem to print my business plan. I started thinking outside the box and now I can’t get back into it. I actually stopped seeing the box and am not sure I want to find it ever again.

Teresa Boardman

There is still time to get your goals in! It’s not over until midnight tonight!

Tags: 2007, bigger, biggerpockets, Boardman, contest, estate, goal, goals, pockets, real, Teresa, writing

Recognize Great Marketing When You See It
When someone has a good idea, you have to acknowledge them. As a long-time real estate blogger (that is in relative terms), I’ve seen thousands of blogs pop up throughout the past year. Many have been good, but I did not really take notice, as I currently subscribe to hundreds of real estate blogs. A few days ago, I was told that BiggerPockets was nominated for the 2007 Real Estate Blogging Awards (the REBAs).

I was not fully aware of these awards, so I took a look at the site offering them, Housing Wire. The site has been around since December, and according to most measures, was not very highly ranked. Over these past few days, I’ve watched the site quickly climb in traffic (according to several sources). I must applaud their efforts, because it takes a TON of hard work to create a popular blog, and they are well on their way thanks to this little Award idea. I guess the lesson here is that linkbaiting does work for real estate (we all knew that anyway).

Now that you know about this smart marketing move, I thought it was a good time to let you know what we’re nominated for:

Best Overall Blog
Recognizes the best overall real estate blog, regardless of how much traffic or what focus the blog has.

AND

Best Corporate Blog
Recognizes the best real estate-focused blog sponsored by a traditional media outlet or other corporate entity.

I am honored, regardless of who established these awards. It is nice to be recognized by your peers for your work. I guess we’ll find out who the winner is of the awards after the 10th of January, since that is that last day of voting. . .

VOTING???
That’s right! You can actually vote for your favorite blogs (you can even vote for us, incase I haven’t gotten my point across). Since we’re already nominated, I figured it wouldn’t hurt to win . . . so, that’s where you all come in!

Take a minute out of your day and let everyone know that Real Estate Investing For Real is your favorite blog in the above categories! Make sure to do so by January 10, 2007, though.

Yes, I realize I’m being a real shill here, but I’ve been having a terrible day, and I wouldn’t mind having a little award on the mantle or something. It may make all the bad feelings go away, sorta like a cone of mint-chip ice cream. Make sure you vote in all categories, or the votes don’t count.

Whether or not we win, the only real recognition we need is your support! Keep coming back to our site and our blog, and I’ll be content!

Thanks everyone!

Tags: 2007, awards, biggerpockets, biggerpockets.com, blogging, estate, real, Real Estate Investing, REBAs

A few days have passed in 2007, and there are a few stories I think are worth a look. Enjoy!

• Manhattan real estate market remains strong
  The Manhattan Market is INCREDIBLE! “The average price of a Manhattan apartment rose to more than $1.14 million in the fourth quarter of last year, up 5 percent compared to the same period the year before, according to two reports released Wednesday.” In addition, “The average price per square foot in Manhattan rose to $1,050, topping $979 in the fourth quarter a year ago and setting a new high.” WOW!
• Construction activity dips as housing falls for record eighth straight month
  “Housing has been in a slump this year after a prolonged boom that was fueled by the lowest mortgage rates in more than four decades. However, that boom triggered increased speculation, driving home prices up sharply in many parts of the country.”
• 2007 Predicted to be Poor Real Estate Year in California.
• Subprime Lender Implosion: Bad Omen For Housing Market
• Foreclosures Skyrocket in 2006 according to Default Research. This is nothing new, but there are a few things in the report that are worth reading.
• “The Beginning Of The Domino” In California
  A look at how the California market is begging to topple (compiled from various news sources).

Tags: construction, estate, foot, Foreclosures, housing, manhattan, market, per, price, real, spending, square, US

Hello everyone! I’ve been out of town, and have been a bit slow on posting the latest submissions to the 2007 Real Estate Goals Group Writing Project. At the same time, we have not been getting many new posts over the past 3 days. REMEMBER - There are only 2 days left of the project, so if you haven’t already, please get your goals completed and let us know when you’re done!

Here are the latest submissions:

• Our First New Year by Bonnie Erickson (Posted 12/31)
• Goals for the year 2007 by Jarkko Aho (Posted 1/1)

Just as a reminder, I’d like to thank:

• Jeff Byer of Print Fellas for donating 100 business cards, valued at $25.
• James Klobasa for donating his ebook Residual Income Through Real Estate, valued at $27.
• Michael Mulrooney for donating a signed copy of his book, The Real Truth about Real Estate Investing valued at $30.00 .
• “Roni” M. Wilcox for donating a Free Rehab Project Planning CD valued at $49.95.
• Mike Schendel for donating $60 worth of electronic product online, including 1) The Spill Zone (e-book), Author Ed Ross 2) Audio electronic “Navigating the Market Series” (40 minutes) and 3. An assortment of Bonus Gifts.
• Michael Price for tossing in a free Video Podcast & Set Up Fee from MLPodcast.Com, valued at $79.90.

Be sure to check out the complete list of submissions

Tags: 2007, bigger, biggerpockets, Bonnie, contest, Erickson, estate, goal, pockets, real, writing