Buying · Financing · Real Estate

Make Me a Match

Real estate agents are not necessarily mortgage specialists.   However, we all know that financing is an integral part of any real estate transaction, and buyers often look to agents for some guidance relating to their loan options.

It is for this very reason that agents maintain strong relationships with local lenders and mortgage specialists.  With all the issues involved in coordinating the sale and purchase of property, many agents simply don’t have the resources to become experts in such an ever-changing field as mortgage products.

There are now more choices than ever in terms of documentation, payment options, and loan terms.  Just as examples, some of the most popular loans are Fixed-Rate Mortgages, Adjustable-Rate Mortgages (ARMs), and Interest-Only loans.

“Fixed” are just that – regular principal and interest payments for an established period of time.  ARMs fluctuate, but new “hybrids” offer a fixed rate after a certain number of years.  Interest-only loans are uncertain if you choose not to pay any principal in the early part of the loan, but can work out if you need short-term cash flow or intend to move or refinance shortly.

Every buyer has a best mortgage match, and there are literally hundreds of options.  It can make your head spin!  Have an agent recommend another professional who can help get you into the home of your dreams.

 

Note:
This article was originally published on this site on January 30, 2015. It has been updated reflect the current home market.

Real Estate

Make It Legal

Millions of people each year move from one state to another.  Reasons for relocating range from a new job to retiring to simply better housing.  The financial and personal impact of buying and/or selling a home can be enormous.  One aspect you should fully understand before making a big move is the tax implications.

Real estate agents are not financial advisors, but they do know a thing or two about what to do before relocating.  At the top of the list is to legally change your state of residence and determine how that affects taxes on income, property, and your estate.

Once you’re a legal resident of your new home state, you can apply for incentives like homestead exemptions (if available).  Also make sure you’ve updated the address on your credit report.  Investigate how the enforcement of certain legal documents like wills and powers of attorney might change because of the change in residence.

Rules are different from state to state, and many experts suggest trying to make your move as early in the year as possible in order to minimize the impact.  Tax returns can be confusing when you’re claiming part-time residency in two different states during the year you move.  Trust a real estate professional to help with selling, buying and moving, and seek advice from a tax consultant about the financial implications.

Inspections · Real Estate · Selling

Offer "Peace of Mind"

Do you want to add to the appeal of your home when selling? Aside from basic mechanical or cosmetic repairs your home may need before you list, there’s one other easy and inexpensive way to make buyers feel good about purchasing your home. It’s called a “home warranty,” and for years it’s been a popular marketing tool, especially for older homes.

We all understand that appliances and home systems like heating and air eventually wear out and break down with age. By offering a home warranty to buyers, they are actually receiving “peace of mind,” since the warranty will cover repairs to appliances and other systems for the first year of new ownership.

You also increase the likelihood of a better offer, since buyers won’t try to subtract the cost of expected repairs. They will know they are covered by the home warranty if anything should go wrong. To file a claim, the buyers call a single toll-free number to arrange repairs for any item covered in the policy. Home warranties are so practical that buyers often continue their coverage past the first year.

When selling your home, ask your agent about the different home warranties available, various coverage plans, and their cost. You’ll find that this minimal investment could pay off handsomely in a full price offer from confident buyers! Sound good?

Note: This article was originally published on this site on September 29, 2015. It has been updated reflect the current home market.

Buying · Real Estate · Selling

How Much is Enough

My word is my bond!  That expression held great meaning to land buyers and sellers in the “olden” days.  Most real estate sales were made with a handshake, and a verbal promise to complete the transaction at some future date.

Later, as a show of their good intentions, buyers would give sellers a sum known as “earnest money” to be held until the sale was consummated.  This deposit had more ceremonial significance than monetary assurance of a completed sale.

Today, earnest money deposits are a part of most every real estate transaction.  The amount used as a deposit is negotiable between buyers and sellers, with no minimum or maximum required by law.

There is, however, a strong message attached to the amount of money tendered by buyers.  As the saying goes, “Money talks!”  If sellers are presented with two identical offers on their home, one with a $10,000 deposit, and the other with $500, which do you think they are most likely to accept?  Sellers believe the higher deposit indicates buyers who are more qualified to complete the purchase.

Having said that, understand that earnest money is just one factor to be considered when buying or selling a home.  The amount of the deposit is relative, and depends on the unique nature of each property.  Detailed information about earnest money deposits is available from the real estate agent you choose.

Buying · Financing · Real Estate

Keep the Horse Before the Cart

While many buyers are aware that a mortgage pre-approval letter increases their buying confidence and power, most may not understand exactly why pre-approval is so important.  Why should you jump through the application hoops before even beginning your home search?

First, you’ll know exactly how much loan you can afford, making your initial home search much easier.  Why waste your time looking at homes either out of your reach or well below your financial grasp?

Second, pre-approved buyers stand on solid negotiating ground with sellers.  Sellers working with well-qualified buyers are more likely to accept the offer and less likely to stall on terms and conditions.

Notice that the topic of this column is “pre-approval,” and not “pre-qualification.”  What’s the difference?  Pre-qualification is easy – you provide basic information to a lender, and in a few short minutes, you have an answer.  Pre-approval requires strict verification of documentation relating to your employment, credit history, sources of income, etc.  It takes more time, but is more accurate and carries more weight.

Understand that pre-approval is not binding, and is still subject to a satisfactory appraisal on the prospective purchase.  If your financial situation changes, interest rates rise or fall, or the deadline passes, a recalculation will be necessary; but a little legwork now will pay off handsomely as you approach the finish line on your contract.

Note: This article was originally published on this site on May 5, 2016. It has been updated reflect the current home market.

Inspections · Real Estate · Selling

Inspection Misconception

Inspections are a part of most residential real estate transactions, but because they are so common, their role is often taken for granted or misunderstood.  There are some important points you should think about before ordering an inspection on a home you’ve offered to purchase.

Remember that a home inspection is not a witch-hunt!  It’s not a tool for finding flaws to allow you to renegotiate your offer.  An inspection is an educational exercise that allows buyers and sellers to better understand the home’s condition.  An inspection can alleviate the buyer’s anxiety while also providing a basis for repair suggestions.

Don’t think that you won’t need an inspection for new construction!  Nobody wants any surprises when purchasing an older home, but imagine what could happen in a brand new one that hasn’t even been lived in yet!  If you’re considering the purchase of a home under construction, ask about “phase inspections,” which are completed at various stages in construction for your peace of mind.

Finally, don’t assume that inspections are exclusively the responsibility of the buyer.  Many sellers have benefited from pre-listing inspections that identify potential problems before the home is listed and the defects are discovered.  Both sides can use the inspection to make smart decisions and feel more confident about the transaction.  If you’re still uncertain, contact a local real estate professional with your questions.

Note: This article was originally published on this site on September 29, 2016. It has been updated reflect the current home market.

Credit · Financing · Real Estate · Selling

Saved By The Net

You’re ready to list, but are you ready to sell? Let’s say that on the first day your home is for sale, your agent shows it to prospective buyers. They love it, and sign a purchase offer on the spot. You were asking $750,000, and they offered $720,000. Because they are relocating, they need an answer right away, by 6:00 pm. What do you say?

You don’t say, “We just can’t give you an answer that soon.” These buyers are motivated and prepared to buy your home, with a written offer and earnest money deposit.

So how do you make up your mind so quickly? You must simply decide what your rock bottom price is before your home is even shown. Be prepared to negotiate on-the-spot by first asking your agent for a “Net” sheet based on your asking price.

The sheet will show what expenses must be paid out of the gross sales price, i.e. closing costs, brokerage fee, the payoff on your existing mortgage, etc.—resulting in the “net” proceeds that you will receive at closing.

Next, ask the agent to figure other net sheets based on receiving 95% or even 90% of the asking price. This helps you determine the absolute lowest offer you can accept. Once you know that figure, keep it to yourself and be prepared for all possibilities!

Note:
This article was originally published on this site on April 23, 2012. It has been updated reflect the current home market.