Archive for August, 2009

The Home Buying Process

August 29, 2009

Whether you are a first time home buyer or an experienced home buyer the process can seem and sometimes be a daunting experience if you’re not prepared.  I hope that some of these tips will help you to make your home buying experience FUN!

Hire an Agent-

A Buyer’s Agent represents you, as the buyer, and has a fiduciary responsibility to look out for your best interests.  Your Agent is paid a commission at the closing of your purchase.  A Listing Agent will secure a listing with the seller and secures an agreed commission amount to be split between the Listing Agent and the Selling Agent (the buyers agent).  Your buyer’s agent may ask you to sign a buyer’s broker agreement.  This agreement actually tells you how your agent is being paid and it usually states in this agreement that she will be paid by the seller.  The buyer’s agent can be paid by the buyer however, so it is a good idea to discuss this with your agent and have a signed agreement.  It’s a good idea to interview your agent and find one that you feel comfortable with and trust.  Referrals from friends or family are a great way to find an Agent.

Order a Free Credit Report Online-

There are online sites that let you order a free credit report.  It’s a great idea to get these and check for any mistakes or negative marks that you can “fix” before applying for your financing.

Are you Pre-Qualified or Pre-Approved with a Lender? –

Your next step is to get Pre-Approved with a Lender for your financing. Your Agent is a great source for Lender referrals.  If you belong to a Credit Union or have a Bank you like to work with; it’s still a good idea to interview other Lenders and compare rates.

Have your Lender Pre-Approve you versus Pre-Qualify you before you go home shopping.  Pre-Approved status means that your lender has verified your income, pulled your credit report from the credit reporting agencies, verified employment etc.  This gives you a big head start when you get to the point of making an offer on that dream home you just found.  The Seller will look at your offer much more favorably than if you are only Pre-Qualified.  A Pre-Qualified Buyer has given their information to the Lender but this information has not been verified yet.

With your Lender’s help you should determine what your maximum loan amount is going to be.  Many times a Buyer will be pre-approved for a loan amount that is much higher than he is comfortable with when it comes to payments.  Determine a payment level you are comfortable at.  Ask your Lender questions on the type of mortgage he is offering you.  Do you understand the the type of mortgage you are being offered?  Do you understand the terms being offered?  Is there a pre-payment penalty? Is this a fixed interest rate or an adjustable interest rate? If the latter when does it adjust and by how much? Adjustable rate mortgages can still be a good mortgage program for the right buyer.  ASK questions and fully understand what you are purchasing.  Many times a first time home buyer will get their family involved.  I think this is good to have support from your family and they can help you with answers to some of your questions but beware- more times than not I run across well meaning family members that are not in the business everyday and they can unfortunately give false information.  I think it is much better to ask professionals in the industry to get your answers.  Do your homework and rely on the professionals you have hired to help you find the answers to your deserving questions.

Find Your New Home –

Tell your agent what your dream home looks like.  Think of everything you want in a new home and then if need be scale back the items you can live without to fit into your budget.  There is nothing more depressing to me as an agent than to show a client a home that is not in their budget!  It never fails that the client will fall in love with THAT house and everything else is going to be compared to it.  If you are honest at communicating to your agent about what you really want and what is most important to you; your agent will be able to show you the homes in your price range that come closest to your wants and needs in that budget.  Unfortunately, this is a lesson many past buyers are learning today….

Ask your agent to give print outs of the comparable sales in the neighborhood you are looking in off of the MLS (multiple listing service). This will help you in making your offer.  When searching online for homes pass on the mls numbers or address of the homes that catch your attention to your agent and she can look the status of these homes for you.  When attending open houses be sure to let the open house agent know that you have representation with your buyer’s agent.

Writing The Offer-

Your Agent is here to help you through this process.  She will write the offer and should write the offer that you desire; however, do use your agents expertise.  Write offers that are suited for the type of market you are experiencing.  Is it a buyer’s market or a seller’s market? Write an offer based on what you feel a seller will accept or counter.  If you are writing a low-ball offer, can you and your agent substantiate this price?  If your offer is not accepted find out why and use that information when making your next offer.

Counter Offers-

Expect them! If the Seller counters your offer with full price, counter his offer again!  During this time add some personal information about yourself and/or your family.  This is an emotional time for Sellers as well.  The reality of the move is setting in and the majority of the Sellers really do care about just who is moving into their home.

The Earnest Money –

You and the Seller have agreed to terms!  Congratulations!  You will need to deposit an Earnest Money now.  The Earnest Money is deposited normally with either the Title Company, The Escrow Company or the Attorney handling the Escrow.  The check should be made out to this third party. I recommend writing the address of the property on the info line of your check.  Make sure that your offer contains contingencies that will return your earnest money if you for some reason need to rescind your offer.  Your Agent should go over these contingencies with you.  Don’t miss ANY of your TIME LINES for these contingencies.

Escrow-

Usually, the listing agent will open title and escrow once an offer is accepted but if not then your agent should.  You will need the name of the Escrow company and title company as well as their contact information and you will need to give this to your Lender.  I always do this for my clients but an informed buyer will make sure this has been done.

Inspections-

If you have put an Inspection contingency in your offer then now is the time to order your inspection.  Most good buyer agents will have referrals to 2 or 3 reputable home inspectors.  It will be your responsibility to order and pay for the inspection.  Your agent is not allowed to do this for you.  This is part of your due diligence.  I accompany my clients to their inspections for information and possible negotiation purposes.  A good inspector will thoroughly go through your new home from top to bottom and point out everything they find from the good, the bad and the ugly.  In most instances a seller should be called on health and safety issues.  Cosmetic issues are just that, cosmetic issues and don’t normally affect the health and safety of the home.

The Appraisal-

Your Lender will order the appraisal and many times will require that you pay for that up front.  This varies between lenders and is something you should ask about in your initial interview with the Lender.  Ask for a copy of your appraisal.  You should receive this but many times if you don’t ask for it you may not receive a copy of it.

Processing your Loan-

During this time your Lender may ask you for additional documents. You should supply these items as quickly as possible.  When something is needed, many times this will put a hold on the processing of your loan until those items have come in.  You don’t want to be put at the bottom of the underwriters work load.  DO NOT go shopping during this time!  No car purchases etc.  Wait until your home has closed!  Don’t take out any other loans or use credit.

Disclosures- Disclosures- Disclosures-

Read them all.  You will receive something called a “form 17” or a Sellers Disclosure form.  This disclosure form is provided by the Sellers who is disclosing everything they know about the property, to the best of their knowledge.  You should read it carefully and then you will be required to sign off on it. In some cases, depending on the age of the home you may received a lead based paint disclosure.  You will also receive the title policy.  Please read all of these documents as they contain important information for your review. Again, this is all part of your due diligence and should be part of your written contingencies in your offer.  If you have questions – start with your agent to point you in the right directions for answers.

Homeowners Insurance Policy –

Check with your Lender on this.  Many times your Lender will order this for you.  Don’t rely on it – order it early so you aren’t waiting for it from your insurance company on closing day.  If there have been previous claims on the home this can sometimes make it difficult to get insurance on the property.  You want to know this asap.  Get replacement coverage.

Removing of Contingencies-

Make sure your loan is firm and the appraisal is acceptable.  Then remove your financing contingency.

Walk-thru-

I highly recommend doing a final walk thru a week before closing. Make sure that the property is in the same condition or better as when you agreed to purchase it.  If something is amiss- address it now.

The Signing-

Normally, a day or two before the actual closing date you will go to escrow to sign the documents.  Remember to bring valid ID.  You will need to bring in a certified check payable to escrow for any amount due at closing and many times the escrow company will pad this amount slightly and then refund you after closing.  .

Closing-

Your deed of trust, property deed and reconveyance will record in the public records.  You will be notified when these have been recorded.  After recording (unless otherwise specified in the purchase contract) the property is YOURS!

Congratulations on your new home.  Don’t forget to check the batteries in any smoke detectors and change your door locks for security.  You never know who was given a key in past.

Home Selling Tips for Today’s Market

August 28, 2009

With so many foreclosures and/or short sales on the market and the decline of sold homes in today’s market how do you successfully compete? Believe it or not it is not as difficult as you may think.  Using these simple tips will put you in front of the serious homebuyer looking for that new place to call Home Sweet Home.

First Impressions are probably the most important. When you are trying to sell your home you want the homebuyer to take notice right away. Keep your lawn mowed and gardens tidy.  A green lawn does wonders for the homes facade.  Don’t leave the water hose strung across the lawn when not in use, remove the pile of shoes from the front porch, keep the porch swept as well as the drive and walkways.  Leaving the kids toys and bikes in the middle of the walkway are an obstacle to the potential homebuyer.

The Pink or the Blue bathroom is probably not every buyers favorite color.  Try to stay more neutral.  There are great “decorator” colors available today that are still more neutral and pleasing to most buyers.  These more neutral colors are more pleasing to the buyers eye and don’t make them think of what they will need to do to the house before move in day.  Using lighter tones makes a house look larger.  If you know a buyer is going to be touring your home open the drapes and blinds and turn on some lights to keep the home bright.  You don’t have to turn on every single light!

Make sure your home is CLEAN!  I have more buyers comment on this than anything else!  “Why wouldn’t they at least clean their home before putting it on the market?”  Clear off all the countertops and straighten up the closets.  Now is the time to get rid of the things you don’t want to take with you once your moving day arrives.  Make sure the windows are clean, the kids bedrooms are straightened up and please clean the bathroom.  Keep the shoes in the garage rather than at the entry.  You know what?  Mrs. Buyer ALWAYS looks in the oven!

Do you have pets? Even if you have an outdoor pet your home most likely has some sort of pet order.  To help with this have your carpets cleaned and then use baking soda on the carpets before vacuuming.  Reptiles? Do you have a relative that will babysit for you while you are on the market?  If not, then keep the area as clean as possible and do use note cards for tidbits of information on these special creatures.  They are scarey to a lot of people.  Dogs should be at least kenneled outside during a showing of your home.

These are all simple and reasonable tips you can use to keep your home at the top of the buyers list.


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