Real Estate Tips

Buying a Home

Purchasing a home is one of the biggest decisions most people will make in their life. It involves a long-term commitment financially and emotionally, but it can also be a very exciting and rewarding experience.

When buying a new home, there are a few things to consider:

What monthly payment can I afford?
What am I looking for in a home?
Should I work with a REALTOR®?
Once I find a home to purchase, what do I need to do next?
How much cash do I need at closing?
How do I obtain a mortgage loan?

Before You Begin Your Search

Before you begin the process of looking at homes, you should complete the following:

Get Pre-Qualified: Unless you can pay cash for your home, most buyers will need to go through the process of applying for a mortgage. By contacting a mortgage loan specialist before you begin your search, you can determine the amount of loan for which you qualify. Typically, a borrower is prequalified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search. Getting pre-qualified for a loan also increases your chances of your offer being accepted. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.

Prior to getting pre-qualified, you should obtain a copy of your credit report so that there are not any negative surprises when you are ready to apply for your loan. Correct any errors that you may discover on your credit report. Also, you will want to reduce your consumer debt as much as possible by paying down credit card balances.

By going through the pre-qualification process, your mortgage specialist can provide you with an estimate of how much cash you will need for the sales transaction. Cash is needed for the down payment, earnest money, and closing costs of the transaction.

Make an Amenities List: Decide what features are most important to you in a home. By establishing your criteria, you will save time shopping for homes that do not meet your needs. Also, consider what locations you are interested in. When making an amenities list, determine which criteria you absolutely cannot live without and which ones you are willing to budge on.

Some typical criteria may include:

Price range
Neighborhood or subdivision
School districts
Proximity to work
Proximity to shopping, restaurants, hospitals, etc.
Number of Bedrooms
Number of Bathrooms
Storage space
Garages
Lot sizes
Pools

Choose An Agent: Once you have decided on the price range and the features you are interested in, your next step will be to decide whether you will search on your own or use the services of a real estate agent. If you choose to use an agent, make sure you enter into a Buyer’s Agency Agreement. This ensures that the agent will represent you, as the buyer, in the selling process, and not represent the interests of the sellers.

Talk to friends and family for their referrals of agents they have worked with. Once you have some names, interview several agents before making a final decision. Select a REALTOR® that you trust and with whom you feel comfortable working.

Remember, there are no out-of-pocket fees that you pay to the buyer’s agent. These costs are incurred by the seller. Your agent will research property listings for potential matches to your criteria and schedule showings for you at a convenient time. In addition, they will provide guidance to you during the contract negotiation phase of the selling process. Many times, they will also coordinate and schedule the home inspection, appraisal, and closing for you, as well as provide you with referrals for mortgage lenders.

Beginning Your Search

Once you have selected an agent and determined what you are looking for in a home, it is time to begin your active search for homes that interest you. Based on your criteria that you provide your REALTOR®, he/she will be able to search their listing database for homes that meet your needs.

While visiting properties that are on the market, compare homes. Every home is unique! Even if every home you visit has all the main criteria you are looking for, each will have different characteristics. Bring your Amenities Checklist with you to all homes that you visit. Check off which features each house has. Make notes on each home of what you like and dislike.

Additional things to consider when touring homes:

Cost of upkeep and utilities
Amount of maintenance required
Cost of updating or decorating
Homeowner’s dues
Traffic patterns in the neighborhood

Taking notes and using your checklist will help you later when you can sit down and compare properties. By comparing notes, this will help to prevent you from making an emotional and impulsive decision.

Making an Offer

Once you have found your dream home, it is time to prepare an offer to purchase. Your buyer’s agent can provide guidance to you on the price you should offer to pay for the property. Have your agent compare prices for similar homes that have sold in the area recently. This will help you to determine a reasonable price to offer.

In addition to the selling price, the other items to include in the terms of the Offer to Purchase include:

The amount of earnest money (deposit) to offer.
Concessions that you want the seller to make, such as a carpet or paint allowance, or payment towards the closing costs.
Home inspection contingencies.
Financing contingencies.
A clear definition as to what is to be included with the home, such as appliances or window treatments.
A closing date.

Don’t be surprised if your initial offer is not accepted. Your REALTOR® will represent you in all contract negotiations until an agreement is reached between the seller and you.

Closing the Deal

Once your offer has been accepted, it is time to work on the final details of purchasing your home. There are several tasks that will need to be accomplished during this phase of the sales transaction:

Home Inspection: Arrange to have a professional come out to inspect your home. They are able to spot electrical, plumbing, and structural problems that may not be noticeable to you at first glance. The home inspection is not required, but it is in your best interest to have one done on the home so that you do not receive any surprises once you move in. This is an expense incurred by the buyer and is included in your closing costs.
You may also need to get a pest inspection on the property to make sure there is no structural damage to the property caused by termites. Your REALTOR® can usually make a recommendation of a reputable inspector.

Apply For A Loan: Once an offer has been accepted, you will need to contact your mortgage specialist to officially apply for a loan.

Items that you will need for your loan application include:

W-2s and/or tax returns from the past 2 years.
Proof of gross monthly income for the past 30 days.
Proof of investment income, including rental incomes.
A list of creditors, including account numbers, balances, and monthly payments.
Two months of banking statements.

The Final Walkthrough: Prior to closing, you should be given access to the house so that you can walk through and give it a final inspection. This should be done as close to the closing date as possible, preferably on the morning of the closing proceedings. When you go to do your final walkthrough, your home inspector will not be with you. It is your responsibility to inspect the home and ensure that everything meets your approval.

Things to look for during your walkthrough:

The seller has repaired items included on the purchase agreement.
The house is in "as-was" condition (everything is in the same condition as it was when you signed the purchase agreement).
The house is vacant and clean. The home does not have to be spotless, but there should be no remaining trash or junk left behind in the house or in the yard.
Tenants have moved out prior to your closing unless you have agreed for them to stay.

Closing: Usually at the time an offer is accepted, or after you have a commitment from your lender, a date and time will be arranged for your closing. The closing procedures will be handled by an attorney of your choosing. The day before, you will be told the total dollar amount you will need to bring to closing by the closing attorney. They will also provide you with any additional information you may need to prepare yourself for the proceedings.

On the day of closing, remember to bring:

A certified check for the total amount of your closing costs.
A picture ID, such as a driver’s license.
Your personal checkbook.
Evidence of mortgage insurance (if this information has not already been requested).

During the closing, details of the sales contract will be explained to you. If everything meets your approval, you will sign the contracts to finalize the deal. Congratulations! You are now a new homeowner!

Choosing an Agent

Once you have made the decision to purchase or sell a home, the next step is to find a real estate agent who will best represent you and your housing needs.

There are three types of real estate agencies: the Buyer’s Agent, the Seller’s Agent, and the Dual Agent.

These are the three typical Agent/Client relationships that may occur. The terms of these relationships may vary from state to state, so please verify the terms of these Agency Agreements in your local area before signing any agreements.

The Buyer’s Agent

Many prospective home buyers do not feel it is necessary to contract the services of a real estate agent. They feel that the listing agent will represent them fairly during the buying process. However, what many buyers do not know is that the listing agent, or Seller’s Agency, works solely on behalf of, and in the best interest of the home seller. Therefore, it is essential that the buyer seek out and find a Buyer’s Agent that will best meet their needs.

A Buyer’s Agency works solely on behalf of the buyer. The buyer’s agent will assist their client in the negotiation of the terms of a contract. In addition, they will gather information on zoning issues, past tax data, schools and community services, and any other information deemed necessary by the buyer before making the decision to extend an offer on a home.

Many prospective home buyers have the misconception that once they begin working with an agent, he/she represents the buyer. However, this is not always the case. Unless there is a signed Buyer’s Agency Agreement, the agent that is working with the buyer still represents the seller’s interests in the transaction. Without the agreement, there is certain information that the agent cannot disclose to the prospective buyer:

The reason that the owner is selling the property.
Any concessions that the seller is willing to negotiate.
Any conversations between the seller and the agent.
Any disclosed information that would harm the seller and/or give the buyer an advantage in the contract negotiations.

Normally, there are no extra costs associated with signing a Buyer's Agency Agreement. Any commissions paid to agents in a sales transaction are usually paid at closing by the seller.

The Seller’s Agent

This agent solely represents the seller. If there is an agent involved in a sales transaction, by default, that agent will represent the home seller unless there is a signed Buyer’s Agency Agreement with the buyer.

When looking for an agent to work with, it is best to interview a minimum of 2 to 3 real estate agents before making your final decision. Ask friends and relatives for names that they would recommend.

Below is a list of questions that may help you in deciding on which agent will best meet your needs:

How long have you been in the Real Estate Business?
How familiar are you with the area? How long have you lived in the area?
How long have you sold houses in this area?
How many clients are you currently working with?
Do you work with more sellers or buyers?
How many homes did you sell last year?
What is your typical commission?
How do you plan on marketing or promoting my home?
Can you provide me with names and phone numbers of some of your most recent clients who would be willing to give me a reference (if this agent has not already been referred to you by a friend or family member)?

When selecting a real estate agent to represent your interests, it is important to find an agent that you trust and feel comfortable with. Remember, this is probably the biggest sales transaction you will have in your life, so it is important to work with someone that you are sure will get you the best offer!

The Dual Agent

A Dual Agency Agreement occurs when two agents who work for the same Broker each represent a buyer or a seller in the sales transaction. This agreement must be disclosed to both the seller and the buyer, and any privileged information cannot be disclosed to the interested party without the permission of the other party.

What to Look for in an Agent

In addition to finding a real estate agent that you feel comfortable with and whom you trust, make sure that he/she is a dedicated professional who will work with you until your goals have been met.

They should be familiar with the area. Not only should they be familiar with the housing market, but also with area churches, schools, clubs, and parks.

Also, look for an agent that is a licensed REALTOR®. REALTORS® are individuals who are members of the National Association of REALTORS® (NAR) and must adhere to its strict code of ethics.

By following these guidelines, your home buying or selling experience should be a pleasant one!

Home Search Checklist

Use this checklist to record your thoughts and comments while viewing a property. You may then refer to this checklist later to help you decide which property best meets your family’s needs.

Download

Mortgage Tips

Very few people have the luxury of paying cash for a new home. When purchasing a home, most buyers must take out a mortgage. A mortgage is an instrument that secures a loan against a house. It may also be referred to as a Deed of Trust.

When you secure a loan to pay for a home, you will sign a promissory note and a mortgage at the closing proceedings.

Below are some helpful hints to aid you in the process of applying for a home loan:

The First Step:

Before you even begin looking at homes to purchase, you should contact a mortgage specialist to get pre-qualified or pre-approved. By doing this, it increases your chances of having your Offer to Purchase accepted by the seller. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.

In addition, it is a good idea to obtain a copy of your credit report prior to contacting a mortgage specialist, so that you can clear up any errors that may appear on your report.

Pre-Qualification: This is an informal way to see how much you may be able to borrow. Pre-qualifying can usually be done over the phone by providing the mortgage specialist with your income, your long-term debts, and the amount of down payment you can afford.

Pre-Approval: This is a mortgage lender’s commitment to loan money to you. When getting preapproved, you provide your loan specialist with all the necessary financial records needed to apply for a loan. Getting pre-approved will provide you with the exact amount that you can afford, and it shows sellers that you are serious about buying a home.

Applying for a Loan:

There are several financial records that your mortgage specialist will need to process your loan application:

W-2s or tax returns for the past 2 years.
Proof of gross monthly income for the past 30 days.
Proof of investment income, including rental incomes.
A list of creditors, including account numbers, balances, and monthly payments.
Two months of banking statements.

Your lender will also need a copy of the sales contract for the property you wish to purchase. In addition, if you are selling a home, you must also provide its sales contract to your lender.

During the processing of the application, you can expect the lender to verify all the information you have provided. They will also run a credit report to see your past payment history as well as to verify outstanding credit balances. Be careful not to apply with too many lenders, in that numerous checks against your name within a recent period can throw up a red flag and cause your credit worthiness to go downward. Your lender will also check your FICO score, which is a points system that indicates your credit worthiness.

Types of Loans:

There are several different types of loans available when applying for a mortgage:

Conventional: These loans can be broken down into two types: Fixed-Rate loans and Variable-Rate loans. A Fixed-Rate loan is generally a 15-year or 30-year loan. The interest rate of this type of loan does not change during the life of the loan; therefore, your principal and interest mortgage payment will stay the same until the loan is paid off.
A Variable-Rate loan is one in which the interest rate will change over the life of the loan period.
These types of loans are commonly referred to as Adjustable-Rate Mortgages, or ARMs.

Hybrid Loans: These loans will generally have a fixed rate for the early life of the loan, such as the first 3, 5, or 7 years, and then roll over to a variable rate loan once the fixed period ends.

Government Program Loans: These loans are insured loans through either the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). A government program loan generally requires a smaller down payment than a conventional loan. In addition, the interest rates on these loans are commonly below the current market rates. FHA loans have special programs for first-time home buyers and low-income home buyers.

Bridge Loans: This type of loan is for buyers who plan to close on their new home before they can sell their current one. A bridge loan can be set up to completely pay off the old home’s mortgage, or it can be set up by adding the financial obligation of the new home to the existing amount of debt. A
bridge loan is a short-term loan, usually one year, and includes large, prepaid interest.

Loan Approval:

Once your application for a loan has been processed, the lender will make a decision concerning making a commitment on the loan. If the lender decides to approve the loan, you will receive a Commitment Letter from the lender notifying you of their decision. The Commitment Letter may include certain conditions, such as repairs to the home, before the final approval is made. Also included in the Commitment Letter is the "lock-in" rate. This is the lender’s promise to make the loan to you at a specified interest rate and number of points. A lock-in rate is generally honored for a certain period of time, such as 30 days. If the lock-in period expires before your closing date, you may have to pay additional fees to extend your lock-in period.

If the lender decides to reject your application for a loan, you will be sent a rejection letter notifying you of their decision. If you receive a rejection letter, you may present this to the seller to reclaim your earnest money you offered with the Contract of Sale. This letter is proof that you complied with the purchase agreement and have been formally rejected for a loan.

The Closing:

Once your loan has been approved and you have decided on a closing date, you will want to do a final walkthrough of the home to ensure that the home is in "as-was" condition. In other words, you want to ensure that the home appears as it did when you offered the Contract of Sale. In addition, this is your opportunity to determine if requested repairs have been made to the property and meet your approval.

The closing procedure will be conducted by a lawyer, generally at the closing attorney’s office. The day before, you will be told the total dollar amount you will need to bring to closing by the closing attorney. They will also provide you with any additional information you may need to prepare yourself for the proceedings.

On the day of closing, remember to bring:

A certified check for the total amount of your closing costs.
A picture ID, such as a driver’s license.
Your personal checkbook.
Evidence of mortgage insurance (if this information has not already been requested).

Closing Costs Include:

Attorney’s fees
Property taxes (to cover the tax period up to that date)
Loan origination fees (this covers the lenders expenses)
Recording fees
Interest (paid from the date of closing to the 30 days before first payment)
First premium of mortgage insurance
Title insurance
Survey fees
First payment to the escrow account for future taxes and insurance
Loan points (a "point" is a fee that equals 1% of the loan amount. They enable you to
secure a lower interest rate for the mortgage.)
Home inspection fees (if you choose to have an inspection)
Any additional preparation fees.

During the closing, details of the sales contract will be explained to you. If everything meets your
approval, you will sign all the contracts to finalize the deal.

Packing Tips for Your Big Move

Now that you have found your dream home, it is time to begin to think about the packing process and what all is involved. You will want to start early, so as to give yourself time to sort through all that you have accumulated throughout the years. The less you have to transport, the easier the moving process will be.

Below are some general packing guidelines:

Pack items that are used least in your household first.
Clearly mark fragile items for your mover.
Pack one room at a time, and label each box indicating its contents and room name.
Use smaller boxes for heavier items.
Ensure that your boxes are well taped to hold their contents.
Place heavier items on the bottom and lighter items on top.

Items Not to Pack

There are certain items that movers will not transport because they are classified as dangerous or hazardous. These items will need to be disposed of properly prior to your move, or you will need to make alternate transport plans for these items.

Included in the items that cannot be moved by your movers are:

Paints and Paint Thinner
Batteries
Aerosol Cans, Bleach, and Cleaning Supplies
Pressurized Tanks
Loaded Firearms and Ammunition
Gasoline or Kerosene or Other Flammable Chemicals
Perishable Foods in Glass Jars

Any items of great value should remain in your possession during the move. These items include:

Cash
Legal Documents
Passports
Stock/Bond Certificates
Jewelry
Any Contents of your Safety Deposit Box
Irreplaceable Family Mementos

Packing Materials You Will Need

Once you are ready to begin packing, you will need to collect all of the materials you will need to pack your furnishings. Recommended packing materials include:

Cartons: Make sure the cartons you collect are in good shape and will not fall apart. Check to see that none of the corners are crushed and the covers are intact. You can purchase cartons from your movers in various shapes and sizes.
Packing Paper: Use this instead of newspaper. The ink on newsprint will rub off on and damage your items. Packing paper can be purchased from your movers.
Bubble Wrap and Tissue: Use these supplies to wrap delicate or fragile items.
Packing Tape: The best tape to use is plastic and approximately 1.5 to 2 inches wide. Using masking tape is not recommended.
Markers: Use a black marker to label each carton with the room name and contents.
Scissors and/or Cutting Blades.

Other Tips For Specific Items:

Computers: Make backup copies of all files on the computer. All detachable cords and cables should be removed and individually wrapped. If possible, it is best to pack these items in their original packaging. If the original carton and packaging is not available, be sure to use plenty of padding to protect these items when packing. When packing printers, be sure to remove the ink cartridge before transport.
Glassware: Pack each glass with 2 pieces of packing paper and fold the 4 corners into the glass. This will create a protective lining for the second glass to be inserted into. Wrap the third glass as you did the first and add the fourth and stack onto the other glasses. Completely wrap the stack of glasses with several pieces of paper and tape securely to the bundle. Place the bundles upright in a carton that is packed with newspaper bundles at the bottom for extra padding. Stemware should be packed separately. Place newspaper on top of the items as well for extra security. Once the carton is securely taped, mark its contents as "Fragile-Glassware."
Dishware: Place wadded newspaper along the bottom and sides of the packing carton. Place the first plate in the center of a stack of packing paper and then wrap 2 sheets over the plate. Place a second plate over the first and repeat. Continue until you have a bundle of four plates and tape the bundle securely. Place the bundle in the box on its edge instead of flat in the carton. Add extra wadded newspaper to the top of the box for extra security. Secure the carton and mark the box "Fragile-Glassware."
Lampshades: Place packing paper between each shade and then nest together into a single stack. Lampshades should be packed exclusively in their cartons without any other items. Fragile shades, such as ones made of silk, should not be nested with others, and should be packed in a carton alone. Pad the carton with packing paper before sealing.
Pictures and Paintings: Place an "X" of masking tape over the glass to help protect the picture itself in case the glass is broken during transport. Wrap small pictures individually with bubble wrap and place upright in the packing carton. Fill the cartons with towels and/or bedding for extra padding. Larger items, including mirrors, should be specially packed by your movers. Once all your pictures are packed, fill the carton with extra packing paper and seal the carton. Mark the box "Fragile-Pictures/Paintings."

Tips For Selling Your Home

The process of selling your home can be an emotional and exhausting process. There are many things you will need to do in preparation of placing your home on the selling market. By following some simple guidelines, selling your home can be a more enjoyable and smoother process.

Plan Ahead

If you are planning on purchasing a new home in the near future, it is a good idea to place your home on the market as far in advance as possible. If you wait to place your home on the market until after you have found a new one, you may end up paying two mortgages until you find a buyer for your home.

Also, consider the fact that closing and moving dates will need to be coordinated. More than likely, the buyer of your property is selling their current home as well. Make sure that all parties involved commit to a specific time period for the closing dates. Put your closing date agreement in writing and negotiate monetary penalties for failure to comply.

As you begin to think about looking for a new home to purchase, you may also want to start preparing your current residence to be placed on the market. Start cleaning out attics and basements of any unwanted or unused items. By doing this early on, it will save you time when beginning to pack for your big move.

Choosing An Agent

Many homeowners decide to sell their property on their own to save themselves the cost of commissions paid out to a real estate agent. Commissions are generally around 5% or more of the selling price. You may want to consider, however, the costs you will incur to market your home yourself. You will be responsible for placing ads and creating flyers for your house. Also, you will have to devote much time to answering phone inquiries about your home and showing the property. Consider whether you will feel comfortable showing your home to strangers who show up unannounced.

Should you decide to sell through a licensed real estate agent, ask your friends and family for recommendations. Interview several agents before choosing the one you wish to hire. Find an agent that you trust and feel comfortable with.

Below are some of the advantages of working with a licensed real estate agent.

The seller’s agent will:

Help you to establish a fair asking price.
Handle all advertising and marketing of your home.
Schedule appointments and show your home without your presence.
Market your home to other real estate offices and agents.
Represent you in the negotiations with the prospective buyer.
Guide you through the closing process.

Setting a Price for Your Home

Once you have decided to sell, the next big step is to determine what the fair asking price should be for your home. Try to avoid overpricing your property; this may cause your home to remain on the market for an extended period of time. Instead, you should price your home so that you get a fair return on your investment and in a reasonable time period.

If you have chosen to use a real estate agent to represent your interests, he/she can guide you in setting the price at just the right amount. The agent, or a licensed appraiser, can complete a Comparative Market Analysis on your home. A CMA compares your home with similar properties that have sold within a specified period of time. This will enable you to set a comparable price to others that have been on the market.

Other factors to consider when setting a price for your home:

Economic conditions of your community
The supply and demand ratio in your local housing market
The location of your property (school districts and subdivisions)
Your home’s special features (garage, pool, fireplace, in-law or guest quarters)
The age and condition of your home
Seasonal influences (the housing market may be stronger during certain times of the year).

Preparing Your Home to Sell

There are many minor things you can do to your home to enhance its marketability. Remember, you want your home to make a great first impression to a potential buyer. Spend some time prior to placing your home on the market cleaning out storage spaces, closets, and cabinets. Remove any excess clutter from your home as well. You want the prospective buyer to remember the architectural features of the house and not the furnishings you have in it. The potential buyer needs to be able to envision their furnishings in your home.

Below is a list of things you can do to increase the value of your home:

Consider Curb Appeal:

It is estimated that more than 50% of homes are sold before the buyers even get out of their cars. Stand across the street from your house and review the curb appeal.

Keep the lawn mowed and raked, shrubs trimmed, and the sidewalk swept.
Plant shrubs or install fencing to block unpleasant views.
Clean the exterior of your home. Clean oil stains from the driveway and garage.
Repair and/or paint exterior siding, trim, gutters, shutters, glazing, and window frames.
Repair or replace the street numbers on the house.
Make sure all exterior lighting is working.

Garages, Carports, and Sheds:

Replace burned out lights.
Clear away cobwebs.
Keep areas clean and uncluttered. Organize and put away tools.
Lubricate, adjust, or repair garage door.

Interior Maintenance:

On the inside, remove as much clutter as possible. Hire professionals to do a deep cleaning. Cleanliness is a sign to buyers that the home has been well cared for.

Clean and vacuum carpets. Replace worn carpet and use area rugs as needed.
Apply a fresh coat of paint.
Wash curtains and draperies.
Clean ceiling fans and light fixtures. Check for cobwebs in all corners.
Clean and organize all closets and cabinets.
Lubricate window slides; make sure doors close smoothly.

Kitchens and Bathrooms:

Overall, kitchens and bathrooms should be spotless. These two rooms alone can sell a home.

Clean all appliances inside and out.
Replace all light bulbs (appliances included).
Clean floors and light fixtures.
Deodorize disposal, dishwasher, and refrigerator. Neutralize odors and clean all mold and mildew.
Repair leaky faucets. Make sure toilet flushes properly.
Test all electrical outlets.
Unclutter counters and cabinets.
Clean shower door or replace curtain. Remove soap residue and lime deposits from sink, shower, and bathtub.
Put out fresh towels.

Create a Pleasant Atmosphere:

Overall, make sure your home exudes an inviting atmosphere. You want the potential buyer to have a pleasant experience visiting your home so that they remember the positive attributes that your home possesses.

Turn on all lights. Open drapes to allow natural light as well.
Light candles and put out fresh flowers.
Play quiet background music.
Turn on the air conditioner or heater so that your home is at a pleasant temperature.
Be absent during showings and keep pets outside.