by jeffp | May 14, 2015 | Inside Real Estate
One of the most exciting times in a person’s life is when he or she purchases a home. While it is a very exciting time, it can also be a very stressful process. The experience is different for each person, and there are always emotional highs and lows involved in the process of purchasing a home. For example, a buyer may be ready to celebrate when the seller accepts an offer. However, the next weeks could bring great disappointment if an inspection shows some serious problems. Some sellers may be difficult to deal with. However, motivated sellers are often agreeable and friendly. There may also be problems with the title clearing, or a lien may be placed on the property. These are all issues that can cause a great deal of stress for buyers. When facing this process, it is helpful to divide it into three increments.
1. Start by reading a sample purchase agreement.
For many buyers, stress can start when they are completing a purchase agreement. If an agent does not offer a copy of such a document, it is helpful to request one. Read it carefully to better understand all of the terms. A good agent will also explain to buyers that purchase agreements with the blanks filled in will look different than the closing documents featuring empty lines. This is not a reason to panic. The agent will be able to help with reviewing the offer before it is submitted. Some of the most important points to read and understand include the following:
– Earnest Money Deposit
– Purchase Price
– Down Payment
– Closing Date
– Loan Terms
– Loan Amount
– Closing Cost Allocation
– Agency Relationship Disclosure
– Acceptance & Delivery Terms
– Contingencies
2. Be patient when waiting for acceptance.
Waiting for offer acceptance is one of the most stressful steps in the process of buying a home. In some cases, an offer may be accepted immediately. However, it may take several days in other cases. The quickness of acceptance often depends on the type of sale and how motivated the seller is. To combat this stress, it is helpful to call people who have bought their own homes. If this is not possible, discuss concerns with an agent. It is best to avoid putting too much focus on the unknown. Try picking up a new hobby or resuming an old one while waiting. Keeping the mind occupied is a good way to pass the time and reduce stress. If the offer is accepted, it is time to breathe a sigh of relief and brace for the next stressful point in the process.
3. Stay occupied while waiting to close.
Waiting for an approaching closing is stressful to all buyers. During this time, the lender may need more information or problems may arise. It is helpful to stay on top of what is happening. However, it is also helpful to avoid stress by keeping busy. A good agent will be able to predict problems and address them beforehand, which results in an efficient process and a quicker closing time. Keep in mind that agents want to get paid, so they will take on many burdens included in the process. If concerns arise, discuss them with the agent. Once the closing date has passed, the only stress will be the moving process.
by jeffp | Apr 21, 2015 | Inside Real Estate
Whether you’re buying, selling or renting a home, all real estate transactions begin with the signing of a contract. This legal document is necessary for outlining the essential terms of the agreement as well as the rights and obligations of the parties involved. Unfortunately, generic forms in real estate deals are all too common these days—and not just when selling or purchasing For Sale by Owner properties. These boilerplate contracts can lead to massive headaches should your real estate arrangement go awry.
Most sources of generic real estate contracts do not tailor them to your state. Every state has its own real estate contract and disclosure laws. Use a boilerplate contract template that does not take your state’s particular rules into account and a judge could declare it null and void, or your buyer’s lawyer find it full of exploitable loopholes, should the deal eventually land you in court.
Most boilerplate real estate contracts only cover the most basic issues. Because a lawyer did not compose it to address your transaction, it’s likely a generic contract will fail to cover some of the details essential in your situation. For example, a purchase offer template may not include a mortgage contingency—a must have in a tight financing environment—that would allow you to back out of the deal and reclaim your earnest money deposit should you be unable to secure an affordable loan within a set period.
Generic real estate contracts rarely cover all the appropriate elements of a specific deal. When dealing with legal documents, even small differences in wording can have big consequences in the outcome of an agreement. For example, a contract for a lease with an option to buy is very different from that of a lease with the right of first refusal. In the first, the renter may purchase the property for an agreed upon price within a set period. In the second, the seller must offer the renter an opportunity to purchase the property under the same terms suggested by a third-party buyer.
Boilerplate real estate contracts are not one-property-fits-all. Different property types—like apartments, condominiums and townhouses—may require different contracts. For example, when buying or selling a condo, an agreement that includes the specific rules and policies of the building, as well as how its association operates and governs it, is necessary.
Anyone can easily find generic real estate contracts online. However, they were not written to protect your interests, were most likely not drafted by real estate specialists, and they won’t include the essentials necessary to prevent costly legal problems. It’s better to find a trusted advisor—such as a lawyer, real estate agent or both—who can help you review your options and craft a contract that properly protects you from potential pitfalls. Upfront legal costs are a small price to pay for the protection a solid contract offers.
by jeffp | Apr 7, 2015 | Inside Real Estate
What’s the hardest part of the process for anyone preparing to buy a home? According to many in the real estate industry, it’s saving up a down payment. In fact, the National Association of Realtors and RealtyTrac have reported that at the rate Americans generally save, first-time homebuyers have to spend an average of 12.5 years amassing their 20 percent upfront investment. While you can buy a home with less—such as 3.5 percent down through the FHA, for example—you’ll pay a penalty in private mortgage insurance and, often, higher interest rates.
Fortunately, there are ways to save up faster and even find alternative sources of cash. Give these a try and 20 percent down may no longer seem like that large of an obstacle.
1. Find a Down Payment Assistance Program
According to RealtyTrac, 87 percent of U.S. homes qualify for down payment help, and there are more than 2,290 down payment assistance programs across the nation. You can start your search at Down Payment Resource, a website that connects homebuyers with down payment assistance opportunities. Use their online program finder to explore your eligibility. You can also check out your state’s housing authority website for a list of programs and participating lenders. Not all lenders participate in down payment assistance programs.
2. Make Saving for a Down Payment Automatic
Instead of waiting until the end of the month to see what you have left over to save for a down payment, schedule automated contributions to your designated savings account. It’s a lot easier—and less painful—to save when you budget accordingly and pull contributions from your checking account weekly, bimonthly or monthly. You can schedule transfers through your bank or ask your employer about your direct deposit options. Some give you the ability to divide and deposit your paychecks into multiple accounts.
3. Stash Extra Cash
Did you just win $50 on a lottery scratch ticket? Put it in your down payment savings account. Did your employer give you a 5 percent raise this year? Schedule an additional 5 percent of each paycheck for transfer into your down payment savings account. You get the idea; any extra cash that comes your way—from tax refunds and work bonuses to yard sale profits and inheritances—goes into your down payment savings account before you’re tempted to spend it on anything else.
4. Ask Your Family for Help
Most lenders will allow you to use cash gifts from family to cover at least a portion of your down payment. As of 2014, conventional mortgages generally allow you to use gift funds for your entire down payment as long as you’re putting down 20 percent or more of the purchase price. If you’re putting down less than 20 percent, part of the money can be from gifts, but part must come from your own earnings as well. The exact contribution limits vary by loan type. FHA and VA loans allow for gift assistance on the entire down payment provided your credit score is 620 or above.
5. Talk to Your Employer
Some employers offer mortgage assistance programs to their workers. Talk to your human resources department about the options—from down payment assistance to low-interest mortgages—that may be available to you. If you’re in the market for a new job, you might even be able to request down payment assistance as a signing or relocation bonus.
Anything worth doing is worth doing right, and for many, that means buying a home with 20 percent down. Whatever your real estate plans, please don’t hesitate to give us a call for further insight. We look forward to assisting you soon.
by jeffp | Mar 23, 2015 | Inside Real Estate, Uncategorized
Whether someone is selling his or her current home or scouring the market for a new one, finding a good agent is the key.
A great agent makes the process of selling or owning a home a smoother process. An agent is not just someone who knows the ins and outs of the housing market. They serve as guides faster and easier home buying or home selling transactions. They also work hard to be sure you’re happy.
But with so many agents in a local market, how does one find someone who can be trusted to do a great job of helping sell or acquire a new home?
Here are four tips to help in the search.
1. Identify specific buying and selling requirements.
Determine if what’s needed is a buyer’s agent or a seller’s agent. There’s a difference between the two. Depending on whether the aim is selling a home or buying one, one agent is better for a specific purpose than the other.
Ask for a buyer’s agent if the aim is to buy a home. Conversely, ask for a seller’s agent if the aim is to sell. This ensures that the agent will work according to what’s best for the hirer’s interests.
Note also that there are differences between real estate agent, real estate realtor, and real estate broker. It’s important to know the differences in jargon while transacting in the market.
A real estate agent possesses a real estate license from the state where he or she works. Meanwhile, a Realtor is associated with the National Association of Realtors® and therefore has the business rights to use the REALTOR name and logo. Last but not least is the real estate broker, who possesses the most training in the field, especially with regards to real estate law and ethics. A broker also possesses the license to arrange buying and selling transactions of properties.
2. Ask from referrals from friends and acquaintances.
This is the time to utilize that extensive network of friends and acquaintances, be they from the offline or online world of social networking.
Since trust is an important part of the buying and selling experience, getting a well-trusted and reputable agent serves one’s best interests. This is especially useful if planning to live in a new city or town.
Get in touch with friends and acquaintances and ask them about their experiences with agents. Since they are friends, they will give an honest rundown of their experiences.
3. Do some legwork – Personally watch agents in action.
The adage that goes “Seeing is believing” holds true in this case. Seeing and watching agents while they are on the job gives a firm idea on what the market entails and what kind of steps the purchasing process has.
It is best to take a drive along areas where open houses are being held. Mingle for a little while, observe, and interact with agents, as well as buyers or sellers alike. Get a feel of the market and what a potential agent’s work style is.
4. Go ahead and ask potential agent some questions.
This is the time when it pays to be proactive in asking the questions one has always wanted to ask an agent.
Once your choices have been narrowed down to two or three potential agents, arrange informal interviews with them. Get to know them better and determine which one among them is the best.
Determining the best fit carefully ensures that the agent is compatible with the hirer’s needs and interests. Making sure that the hirer is comfortable with the agent’s work practice and style is also important.
Some possible areas of concern are the length of time they’ve been working in the market, the number of home sales they transact successfully in a year, whether they’re representing the hirer or the seller, and whether they’re willing to provide references.
If ready to buy or sell a home, these simple tips will help you find a real estate agent that is the right fit for you and your needs.
by jeffp | Mar 5, 2015 | Inside Real Estate
According to RealtyTrac, a housing data and analytics company, U.S. homeownership rates are still at their lowest level in 20 years. Combine this fact with relatively low home prices in many parts of the nation, and investors will find numerous opportunities to profit while buying and renting single-family properties. You might even be thinking about joining them and becoming a landlord yourself. However, consider these must-dos before you make the leap.
1. Research your rental rate carefully.
Unless you bought the property with cash, you probably have a mortgage payment. However, you shouldn’t just set the rent at that amount. You’ll need to factor in homeowners association fees, property taxes and the cost of upkeep as well. Then take a look at what similar properties are renting for in your area. If you want to find a tenant, your asking rent must be comparable.
2. Write a comprehensive lease.
Constructing a good lease takes time, so put one together before you start advertising for tenants. While you can find hundreds of templates online, you’ll need to make sure that your final document complies with the laws in your city, county and state. Details required within the lease include the term, security and pet deposit, due date for rent, penalties for late payment, pet and visitor policies, routine upkeep and maintenance responsibilities, rules of behavior, rental renewal and property damage terms, inspection and showing policies, and actions that can lead to eviction.
3. Thoroughly evaluate rental applicants.
There are many ways to find potential tenants, from on-site “For Rent” signs to free Craigslist ads and paid listings on real estate rental websites. While you may want to get someone into the property quickly—you can’t start making money until someone is paying rent, after all—don’t cut corners when evaluating your applicants. You should require everyone to fill out a rental application that includes his or her current employer, monthly/annual income, and previous landlords and references.
You’ll need written permission to run a background check including criminal history and credit report. Many pros suggest using a vendor for this portion of the screening process, and you’ll find many—at various prices—online. You can verify employment and speak with previous landlords on your own or outsource that as well.
4. Take care of insurance.
Talk to your insurance agent about rental property insurance. In addition to covering the structure itself, rental property insurance policies cover personal liability and medical expenses as well as loss of rental income in the event of a property-damaging event. If you plan to leave personal belongs in the property (say, you’re renting it out furnished or storing things in the basement), you’ll need additional coverage.
You should encourage your tenants to purchase renters insurance of their own as well. Your insurance policies do not cover their belongings, and renters are less likely to file lawsuits against landlords in the event of break-ins, fires and other disasters if they have their own insurance to fall back on.
5. Determine how you will handle property management.
Prepping a property for rental, screening tenants, collecting rent and dealing with lease violations can be frustrating and time consuming. If you’re not comfortable tackling these tasks yourself, you might want to consider hiring a management company. You’ll have to pay fees for their service (such as one month’s rent for filling the vacancy and a percentage of the monthly rent for ongoing management), but your time just might be worth it.
Whether you think becoming a landlord is the right choice for you or have decided you’d prefer to sell your home outright, we’re here to help. Give us a call or send us an email any time to discuss your situation.
by jeffp | Feb 17, 2015 | Inside Real Estate
When people think about buying a home or refinancing their current mortgage, interest rates are often top of mind. After all, the news has been full of speculation—for more than two years—on when the Federal Reserve Bank would taper its bond buying (which it has done) and raise its prime rate (which is still a question that remains to be answered). However, while a percentage point—or even fraction of one—will make a difference in the amount of interest you’ll pay on home loan, it isn’t the only factor you need to consider.
Determine how long you’ll stay in the home.
Every mortgage comes at a price (all those fees and closing costs) and you need to live in the home long enough to recoup what you’ve spent to secure the loan. While costs vary based on situation and locality, experts advise it generally takes four to seven years to break even. If you’re not going to stick around that long, renting (or maintaining your current mortgage) could be the better option.
Evaluate your job security.
Is there any chance your employer might downsize you, cut your hours, or ask you to move across the country for a new position? If so, it’s probably not the right time to buy. However, if you can refinance and lower your monthly payments (and are confident you can find a new job quickly and in the same area), it still may make sense to do so. Your mortgage advisor is the best one to help you evaluate the situation.
Take stock of your down payment.
While there are now loans available with down payments as low as 3 percent, putting less than 20 percent down will result in private mortgage insurance. This will increase your monthly mortgage payment and may even lead to a higher interest rate. Can you weather that financial burden? Would it be better to buy once you’ve amassed a larger down payment, or refinance once your home equity is at 20 percent? Again, your mortgage advisor can provide insight.
Closely examine your finances.
You can bet any mortgage lender is going to go through your financial affairs with a fine-toothed comb before giving you a new loan. Do this on your own ahead of time, and you’ll be better prepared to address whatever he or she might find. Things you’ll want to consider include your credit score, income, savings and debts.
Learn about the local market.
Housing affordability varies by city. In some, buying a home is decidedly cheaper than renting. In others, the opposite is true. You’ll also find cost variations among similar homes in different neighborhoods. The more you learn about the area and factors driving those costs, the better decision you can make on where (and where not) to buy. Most real estate agents will be happy to help you find this information.
