Buyers and Sellers Articles

Buying your new home is a serious venture. It can be an absolute pleasure or a massive headache. Your house is not just your home, it is a serious investment in the dwelling, the area and your future.

When buying a home - you're bound to have many questions. For example, "In what area can I find a home that suits my needs?", "How much money will I need to afford the monthly payments?" and "How long will the home buying process take?"

Below are some articles that you might find useful in the home buying process.

Advice for First-Time Buyers

1. One or more detailed maps with your areas of interest highlighted.         
2. A file of the properties that your agent has shown to you, along with ads you have cut out from the newspaper.              
3. Paper and pen, for taking notes as you search.              
4. Instant or video camera to help refresh your memory on individual properties, especially if you are attending a series of showings.              
5. Location: Look at a potential property as if you are the seller. Would a prospective buyer find it attractive based on school district, crime rate, proximity to positive (shopping, parks, freeway access) and negative (abandoned properties, garbage dump, source of noise) features of the area?

1. Include inspection & mortgage contingencies in your written offer.     
2. Have the property inspected by a professional inspector.              
3. Request a second walk-through to take place within 24 hours of closing.
4. You want to check to see that no changes have been made that were not agreed on (i.e., a nice chandelier that you assumed came with the sale having been replaced by a cheap ceiling light).

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How to Negotiate with Sellers

Buying a home is one of the most important purchases most people will make. In order to make the right decision the first time, potential buyers need to be prepared. Consider the following before starting negotiations:

• Be prepared
  
  Research the housing market in the target area. Once you have information about the general area, focus on the particular property and seller. Look for answers to questions such as:     
1. Why is the homeowner selling? (If they're moving because they find the area undesirable, you might want to consider this issue.)         
2. How long has the home been on the market? (If it has been on the market for a long time, perhaps there are negative facts about the property that you need to know.)         
3. How much did the seller pay for the home compared to the current asking price? (If the seller paid more, find out why. Was it a general real estate trend, or did property values in that particular neighborhood go down?)         
4. What is the seller's time frame for selling and moving? Does it fit within your needs?         
5. Are there any defects in the home or problems with the surrounding neighborhood? (For example, is the roof so old that it will likely leak during the next storm? Is there a new construction project in the area that will lead to major traffic congestion?)     

As the potential buyer, you want the advantage. While you want answers to all your questions to the seller, reveal very little about your circumstances. Do not give the seller personal information such as your income, the maximum you are able to pay for a down payment or the home, or when you want to move. Make sure that your agent knows not to reveal any such information to the seller or his/her agent.

Also, do not let the seller see how much you want the property. If you appear desperate or overly enthusiastic, the seller then has the stronger bargaining position. When meeting with the seller or listing agent, keep your emotions in check.

• Establish a Timeline
  
  Find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating. Even if you, the buyer, are the one with the deadline for purchasing a home, don't let yourself be rushed into making concessions or a purchase you may regret later.     

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Types of Mortgages

Fortunately for buyers, there are a variety of mortgages to choose from. It is in your best interest to investigate each of them to determine which is the best for your situation. You probably won't qualify for all of them. In fact, you may only qualify for one. But if you do qualify for more than one, you may save yourself money (and worry) in the long run if you do your homework before signing on the dotted line.

• Fixed-Rate Mortgages     

• Adjustable-Rate Mortgages
         
  
• The Convertible ARM
         
  
• FHA and VA Loan
  
  

Consider a fixed rate mortgage if either of the following describes you:

• You plan on living in your new home for many years, and/or
• You are not a risk-taker and prefer the stability of knowing how much your payment will be each month.

Since most home loans are for a period of 30 years, if you want a payment you can count on for that long of a period of time, a fixed rate mortgage may be what works best for you. Once your loan amount and interest rate are calculated and locked in, a fixed rate mortgage will guarantee that you will have the same payment over the life of the loan. Making extra payments to principal will allow you to pay your loan off sooner.

This may not always be the best choice, however. If interest rates are very high at the time you take out your loan, with a fixed rate mortgage you'll be stuck with that high interest for the life of the loan (unless you choose to refinance). Conversely, if interest rates are very low, you'll come out the winner with interest rates that will stay low no matter how high interest rates go in the future.

The following are the advantages and disadvantages of the varying lengths and terms of fixed-rate mortgages:

        15-Year Fixed-Rate:

• Pay off the loan in half the time of a 30-year loan.
• Equity builds up more quickly than in a 30-year loan.
  
• Payments are higher (which may be a problem if you lose your job or become unable to work).
  
  

        20-Year Fixed-Rate:     

• Pay off the loan in 2/3 the time of a 30-year loan.             
• The overall interest paid is considerably less than for a 30-year loan.    
  
  

        30-Year Fixed-Rate:     

• The most common choice, especially for first-time homebuyers, as it's the easiest of the fixed-rate loans to qualify for.             
• Monthly payments are lower than for 15-year and 20-year loans. This can prove especially helpful if you do not have a lot of "padding" between the amount you can afford to spend and the monthly payment for your desired property. 
• More desirable if you plan on staying in the same home for years, since equity builds more slowly than for shorter-term loans.             
• For income tax purposes, this term provides the maximum interest deduction.     

If you are more comfortable in taking a risk with your money or if interest rates are very high at the time you take out your loan, an adjustable-rate mortgage (ARM) may be the solution for you. You might also choose this type of loan if your planned ownership of the property is short-term or if you expect your income to increase to cover any potential rise in the interest rate.

Generally, the interest rate when you take out your loan will be lower than a fixed-rate mortgage. Please note that this is true initially, not necessarily long-term.

Since an ARM rate rises and falls depending on the prevailing interest rate, your mortgage payment will rise and fall accordingly. If your income is not sufficient to cover the highest possible payments, then this option is not for you. On the positive side, the lower initial payments will allow you to qualify for a larger loan than if you choose a fixed-rate. The downside is that your payments will increase if/when the rates go up.

Typically, ARM interest rates are tied to a specific financial index (such as Certificate of Deposit index, Treasury or T-Bill rate, Cost of Funds-Indexed Arms or COFi, or LIBOR [London Interbank Offered Rate]) and your payment will be based on the index your lender uses plus a margin, generally of two to three points. Get the formula used by your lender in writing and make sure you understand what it means.

Fortunately, the amount an ARM can increase is limited. There are "caps" on how much your lender can increase your rate, both for a period of one year and for the life of the loan. Plan ahead, and have your lender calculate what the maximum payment would be if your rate went to the highest amount allowed by the cap for your particular mortgage. If you are not confident you'll be able to pay that amount on a monthly basis, perhaps you should reconsider this type of loan.

If neither the fixed-rate or the adjustable-rate mortgage seems like the best option, perhaps the convertible ARM will be right for you. This alternative combines the initial advantage of an ARM with a fixed rate after a predetermined number of years. Obviously, this type of mortgage has more advantages when the initial interest rate is low and the future rate is not guaranteed.

Another mortgage option available to some people is a government loan, providing that you meet the qualifications for these loans.

• VA Loans: Veterans may qualify for a loan from the Veterans Administration. There is a limit on the amount you can borrow, so this option works best for those buying a lower priced home.
          
• FHA Loans: The Federal Housing Association offers loans to lower-income Americans. Look for the phrase "FHA approved" when looking at ads for homes.

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Getting The Best Mortgage Rates Online

Naturally, you want to get the best deal for the least amount of money. This holds true for mortgage rates as well.

A lower interest rate means a lower monthly mortgage payment, which can save you money in the long run. Also, it is easier to qualify for a lower payment than a higher one.

You basically have two routes to finding the best rate. The first is to do all the research on your own. The second is to use a mortgage broker.

Do-It-Yourself

With the advent of the Internet, much of this information is readily available online. Once you have educated yourself sufficiently about real estate loans, all it takes is the time and energy to sift through online resources to find the information you need.

Rates change quickly. That great rate you find today might not be there tomorrow. Once you find the rate you are looking for, submit a loan application and lock in that rate.

Some sources for interest rates on the Internet include:

Bank Rate Monitor (http://www.bankrate.com)

                  E-Loan (http://www.eloan.com)

When comparing loans, make sure that you're comparing loans of the same type. For example, you find that "Loan A" for a 30-year loan has a much lower interest rate than "Loan B" (also for 30 years). Upon further inspection, you find that "Loan A" is technically an adjustable rate mortgage. Its payment is based on a 30-year amortization, but becomes due through either payment or refinancing at the end of 5 or 7 years. These are frequently referred to as a 5-year or 7-year fixed-rate mortgage. While both said "30-year", they are not the same type of loan.

Ask the lender for a statement detailing all fees associated with the loan. Factors such as "points" (loan fee), interest rate and "garbage fees" (extra fees which some lenders charge) can vary greatly from one lender to another.

Mortgage Broker

If you do not have the time or experience to "do it yourself," look for a qualified mortgage broker that can assist in finding the right mortgage for you. Ask friends and associates who have refinanced or purchased recently if they have a broker they can recommend. You'll want to find a broker who is energetic, flexible and knowledgeable about finance and loans and someone who has your best interests in mind.

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Surviving Escrows

You've Opened Escrow, Now What?

Congratulations, you are on your way to owning your very own home!  Follow these suggestions (and your realtor's advice) so that escrow and settlement with go as smooth as possible.

You will be asked for a down payment on the home you are purchasing.  You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.

During this period of purchasing your home, you are going to need an escrow or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes on during the escrow period.  This deposit check may also be held by an attorney or in the broker's trust account. Make sure that there are sufficient funds in your account to cover this check.

The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.

The period that you are "in escrow" is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following:

1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.            
2. Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.              
3. A requirement that the seller must provide marketable title.

Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.

Secure homeowner's insurance. This will probably be required before you can close the sale. Due to such requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period of time. It would be in your best interest to apply for insurance as soon as possible after the contract is signed.

Contact local utility companies to schedule to have service turned on when you close escrow.

Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.

You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!

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Seven Steps to Buying Your Home

1. Define your needs.

Congratulations on your decision to purchase a new home! It is important to select a professional real estate agent to work with you before you begin house hunting, so that your agent can help you define what kind of home and neighborhood would best suit your desires and needs. The finer the details on your wish list, the more effective your home search will be. To further define your needs, you may want to divide your lists into negotiable and non-negotiable items, so your agent can operate with some flexibility when scouting for homes on your behalf.

2. Get preapproved.

Now that you know what you want in a home and neighborhood, you need to find out what you can afford. The best way to do this is to get prequalification or preapproval for a home loan. Your real estate agent can refer you to a mortgage broker to begin the process. In most markets, preapproved buyers are preferred by sellers over those who are prequalified. Your preapproved status lets the seller know:

• You have gone through an extensive financial background check.
• A lender is willing to do business with you.
• The likelihood of unexpected obstacles regarding financing is minimal.

3. Let the house hunting begin!

Now you are ready to embark on your home search — an endeavor that can prove overwhelming if not approached with some forethought. The most efficient route is to allow your real estate agent to do the initial scouting for you. Using your wish list as a guide, he or she will alert you of new and existing listings that have strong potential. If these listings pique your interest, your agent will arrange home tours at your convenience. Many agents send alerts via email — sometimes as often as daily, depending on the available inventory in your market. Let your agent know how you’d like to receive these alerts, whether by phone, email or fax.

You also can do some research on your own. Read local real estate publications, contact your local neighborhood associations, visit the local chamber of commerce, surf the Internet, or drive around your favorite neighborhoods. While these methods certainly can lead to your dream home, it’s important to note that 82 percent of home sales are the result of agent connections.* That means it’s more likely your agent will find your dream home through being in the real estate business than you driving around on the weekends.

* National Association of REALTORS®

4. Make an offer.

When you’re ready to make an offer on a home, your real estate agent will help you determine the offer price by reviewing recent sales of homes similar in size, quality and amenities. With your input, your agent will draft a written contract that outlines what needs to be done by both parties to execute the transaction. If the seller accepts the offer, the document becomes a binding agreement, so it is imperative that you carefully review it with your agent and speak up if anything is not clear to you. It’s important to note that if the seller changes any aspect of the offer, it is not a binding agreement until the buyer agrees to the seller’s changes.

5. Strike a deal.

Sometimes, you get lucky and the seller accepts your offer as is. However, in most instances, the seller will make a counteroffer. This is where your real estate agent’s experience in negotiations will be invaluable. Keep in mind almost everything is negotiable when you are buying a house. This can give you a great deal of leverage in the buying process — that is, if you have adequate information and you use it in an appropriate manner.

Some items you may negotiate:

• Price
• Financing
• Closing costs
• Move-in date
• Repairs
• Appliances and fixtures
• Landscaping
• Painting

Remain in close contact with your real estate agent so you can quickly review any changes from the seller. Remember: Bargaining is not a winner-take-all deal. It is a business process that involves compromise and mutual respect.

6. Prepare for the closing.

When an offer becomes a binding agreement, your real estate agent will help you tackle the checklist of action items that you, as the buyer, have agreed to perform prior to closing. Depending on how the responsibilities are divvied up in the agreement, this is typically when you will:

• Conduct a home inspection.
• Get an appraisal and finalize your financing.
• Secure title insurance.
• Shop for a home warranty.

Having these procedures done in a timely and professional manner is a must, as any delays could threaten a successful closing. A first-rate real estate agent should be able to serve as your “one-stop shopping” referral source for service providers. Your agent also should serve as your advocate, helping to coordinate activities and making sure the vendors have access to the property to perform their jobs.

7. Close the deal.

Congratulations! The moment you’ve been anticipating has arrived. The closing is where home ownership is legally transferred from the seller to the buyer. It is a formal meeting that most parties involved in the transaction will attend. Closing procedures usually are held at the title company’s or lawyer’s office. The closing officer will coordinate all the document signing and the collection and disbursement of funds.

In advance of your closing date (24 hours at minimum), your lender will send a final closing statement that outlines your closing costs, if applicable. Your real estate agent will review this document with you to ensure its accuracy, as well as help you gather any necessary documentation that you’ll need to bring to closing.

Courtesy of Keller Williams Website

10 Things You Should Ask a Real Estate Agent

Having the right real estate professional by your side can greatly improve your home-buying experience. A good rule of thumb is to interview a minimum of three candidates. Here are 10 questions to ask during an interview:

1. Are you a full-time professional REALTOR®? How long have you worked full time in real estate?
2. What geographic areas do you specialize in?
3. Do you have a Website? What information can I find there?
4. How will you keep me informed during my home search and throughout the transaction?
5. Do you have a staff or a team? If so, what roles will they play in my transaction?
6. Will you show me properties from other companies’ listings? (Some real estate companies do offer their buyers’ agents a higher commission if they are able to sell “in-house” listings. In those instances, there can be added incentive to limit the range of homes you are shown. This may affect your home search and how much your agent’s fee will be.)
7. Will you represent me exclusively, or will you also represent the seller? May I have that in writing?
8. How will you get paid? How are your fees structured? May I have that in writing?
9. What distinguishes you from other real estate agents? What is your negotiating style?
10. May I contact some of your recent clients as references?

Do you have a performance guarantee? If I am not satisfied with your performance, can I terminate our buyer agency agreement? (In the heavily regulated world of real estate, it can be difficult to offer a performance guarantee. Typically, agents will outline verbally what you can expect from their performance. Keller Williams Realty understands the importance of win-win business relationships: The agent does not benefit if the client does not benefit.)

Courtesy of Keller Williams Website

Deciding How Much House You Can Afford

Before you start house hunting, you need to determine how much house you can afford, which will entail getting preapproved for a home loan. A real estate agent can help you find a mortgage broker to begin the process. While getting preapproved is a more in-depth process, a preapproval letter lets both real estate agents and sellers know that you’re a serious shopper who means business.

What do I do to get preapproved?

Getting preapproved requires that the lender review your finances, confirming pay stubs, tax records, credit accounts, bank statements and sometimes more. The preapproval amount will not only be a reliable estimate of what you can afford, but your preapproval also indicates that a lender is willing to do business with you, pending the purchase price, market appraisal and the underwriting process.

You can also get prequalified for a loan, which means that a lender has taken some information from you, and made a tentative decision without necessarily verifying any of the information. Prequalification provides you with a quick estimate of the amount you can afford, but is not considered as reliable as preapproval.

What should I ask when shopping for a lender?

Your real estate agent should have a mortgage broker they are willing to put you in contact with — this lender will be someone they have done business with in the past, and feel comfortable recommending. However, if you decide to do a little comparison shopping and look for a lender on your own, here are a few important questions to ask.

1. What loan programs do you offer and which one do you think is best for me?
2. How long will the loan approval process take?
3. What line items of the loan agreement  —  if any  —  are negotiable?
4. What is your policy for locking in interest rates, and will you honor a lower rate if it declines during the lock-in period?
5. Are there fees for prepaying on my loan?

Courtesy of Keller Williams Website

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How Can A Real Estate Agent Help Me?

Whether you’re in the market for a primary residence, an investment property or a second home, purchasing real estate involves many important considerations and decisions. A real estate agent can provide the focus, due diligence and expertise needed to help you find the home of your dreams.

 

A real estate professional will:

 

• Assist in determining how much house you can afford and help you get prequalified or preapproved for a loan.
• Simplify your search by helping you define home and neighborhood criteria.
• Screen new listings daily and alert you of homes that match your criteria.
• Keep you abreast of local market conditions, so you can make informed decisions.
• Gather in-depth detail on each home, schedule tours and point out the advantages and possible drawbacks of each property.
• Work with you in drafting an appropriate offer and serve as your representative when presenting it to the seller.
• Negotiate a contract that considers your goals and leads to a successful closing.
• Personally refer you to proven service providers, such as inspectors, appraisers, title companies, warranty providers, insurance agencies, attorneys, carpenters, movers and more.

 


IMPORTANT TO NOTE: Real estate professionals can represent the buyer, the seller or both. When agents represent both parties, it is called dual agency. In some states, dual agency affects the real estate professional’s fiduciary responsibilities to the seller. Keep in mind that real estate laws differ from state to state and even from locale to locale. For more in-depth answers, talk with a knowledgeable real estate professional and ask about local practices.

Courtesy of Keller Williams Website

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Location, Location, Location

Where you buy not only affects the home’s current and future value, but it also affects your lifestyle. Your agent will be able to conduct a more targeted home search if you outline your preferences in neighborhoods and nearby amenities. Here’s a checklist of items you should consider and communicate to your chosen real estate agent.

• Urban, suburban or rural
• Commute time
• School districts
• Desirable neighborhoods
• Proximity to the airport
• Proximity to restaurants and retail
• Access to major highways and thoroughfares
• Access to public transportation
• Health care facilities
• Parks and recreation
• Length of time you plan to live in the home (Your agent should be knowledgeable about growth trends and projections that could affect your investment.)

Courtesy of Keller Williams Website

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Opting For New Home Construction

Whether to buy an existing home or have one built is yet another decision to make during the home-buying process. If you decide to go with new construction, a real estate agent can be a powerful advocate in your corner as you negotiate upgrades, a move-in date and other terms with the home builder.

Below are some basic pointers to prepare you for the journey ahead.

 

Selecting a builder


Shopping for a large production or custom home builder can be a daunting task. Start by defining what architectural styles appeal to you and then seek out the builders in your area who offer those styles. Due diligence is essential. Ask friends for referrals to get firsthand accounts; verify the builder’s state license status, if applicable; and check whether they’re certified by the National Association of Home Builders.

 

The builder representative and your real estate agent


A builder representative’s ultimate goal is to sell you a home. His or her role is to provide a wide range of information to help you in your decision-making, from building restrictions, roads and easements to inspections, warranties, rebates and upgrades. A real estate agent knowledgeable in new-home construction will be able to help you wade through all the data and point out the downsides and upsides of each line item. Your agent also can look out for your interests in reviewing the builder’s contract, which often contains more legal jargon than consumer-friendly language.

 

It’s all about timing


Market conditions greatly dictate a builder’s incentive to make a deal you cannot refuse. When a builder has inventory on his hands, his carrying costs start adding up. When this happens, a builder might be more amenable to strike a favorable deal, whether it’s throwing in upgrades or taking a bit off the asking price. A real estate agent can help you know when market conditions are right for these benefits. Also, watch for builder close-out sales. Builders promote these special events when a new subdivision is near completion but empty inventory still remains. 

 

A word about paying up


While there are always exceptions, most builders require a deposit when a purchase agreement is signed. They also require that the buyer pay for any upgrades prior to closing. If you back out prior to closing, unless the agreement states otherwise, you will lose that money. Make sure you understand every detail in the builder’s contract before signing it.

Courtesy of Keller Williams Website

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Making Your Home Wish List

Before the home search begins, your real estate agent will want to know as much as possible about the features and amenities you desire. To help your agent better serve you, divide your preferences into “negotiable” and “non-negotiable.” Here are some details to consider:

 

Exterior

Type of property (house, condominium, town home, loft)
Age of property
Preferences in architectural style
Number of stories
Type of foundation
Roof construction
Lot size and/or location
Landscape preferences (fencing, built-in sprinkler system)
Pool/spa
Garage or carport

 

Interior

Number of bedrooms
Number of bathrooms
Minimum square feet
Central air/heat
Wiring
Electrical or gas appliances
Security system
Basement/attic
Fireplace
Kitchen amenities
Formal dining room
Home office or study
Laundry room
Flooring preferences:
How much renovation would you be willing to do?
Must your home accommodate any special needs?

Courtesy of Keller Williams Website

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Expert's Advice: Mortgage Information

Whether it's getting to know the mortgage process, reversing bad credit, reducing your debt, or just wanting to learn more about Mortgage terms, this page featured on the Keller Williams website provides you with all that and more!

Visit KW.com for Mortgage Information

Courtesy of Keller Williams Website

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SELLER ARTICLES

When selling your home, there are no guarantees that a buyer will simply walk through the front that your property receives maximum exposure to attract a ready, willing and able buyer.

The appearance of your home, a buyer's first impression, and other considerations can also affect the sale of your home. Have you considered that home prices in your neighborhood and the value of your property are also factors used for pricing your home?  door. In many cases you may have to bring your home to the buyer. Effective marketing will help ensure

Below are some articles that you might find useful in the home selling process.

Risks of Remodeling Without a Permit

Most cities require that homeowners obtain a building permit before making modifications to their residence. Which modifications require a permit vary by city. Also, some cities are more vigilant than others in enforcing permit laws.

In order for the homeowner to receive a permit, the homeowner or his/her designee are required to file plans and pay fees to the city. In addition, the improvements are given a value. If they increase the value of the property, this may result in an increase in property taxes. Inspections are often required, and this means having to schedule and then wait for inspectors to approve the work to be done. This process can be time consuming and inconvenient in the short run. It is for this reason that some homeowners skip the permit process.

If a permit is needed and you fail to get one, the city may discover this at some time in the future and getting a permit retroactively can frequently be significantly more expensive and much more problematic than having obtained the permit before work commenced. If work is not done in accordance with city procedures or if the inspector is unable to determine if the work has been done properly, the homeowner could be required to open walls, tear up floors, so that the inspection may take place. In addition, by law, work not permitted where a permit was required must be disclosed to any prospective purchaser. This may cause the owner to discount their sale price or perform costly or time-consuming repairs before title can be transferred.

For prospective buyers of a property, save yourself the future hassle and loss of money by researching whether all work on the premises has been done according to code and with the proper permits. You may obtain these permits by going directly to Building & Safety in the municipality in which the property is located or by hiring a "permit puller" who will research the permits for you.

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Traversing The Pitfalls of Home Inspections

June and Fred Smith were diligent about getting their home ready for sale. They ordered a pre-sale termite inspection report. The report revealed that their large rear deck was dry-rot infested, so they replaced it before putting their home on the market.

The Smiths also called a reputable roofer to examine the roof and issue a report on its condition. The roofer felt that the roof was on its last legs and that it should be replaced. The Smith's didn't want buyers to be put off by a bad roof, so they had the roof replaced and the exterior painted before they marketed the home.

The Smith's home was attractive, well-maintained and priced right for the market. It received multiple offers the first week it was listed for sale.

But the buyers' inspection report indicated that the house was in serious need of drainage work. According to a drainage contractor, the job would cost in excess of $20,000. Fred Smith was particularly distraught because he'd paid to have corrective drainage work done several years ago.

First-Time Tip: If you get an alarming inspection report on a home you're buying or selling, don't panic. Until you see the whole picture clearly, you're not in a position to determine whether you have a major problem to deal with or not.

What happened to the Smiths is typical of what can happen over time with older homes. The drainage work that was completed years ago was probably adequate at the time. But since then, there had been unprecedented rains in the area, which caused flooding in many basements. Drainage technology had advanced. New technology can be more expensive but often does a better job.

The Smiths considered calling in other drainage experts to see if the work could be done for less. After studying the buyers' inspection report, the contractor's proposal and the buyers' offer to split the cost of the drainage work 50-50 with the sellers, the Smiths concluded that they had a fair deal.

The solution is not always this easy, especially when contractors can't agree. Keep in mind that there is an element of subjectivity involved in the inspection process. For example, two contractors might disagree on the remedy for a dry-rotted window: one calling for repair and the other for replacement.

Recently, one roofer recommended a total roof replacement for a cost of $6,000. A second roofer disagreed. His report said that the roof should last another three to four years if the owner did $800 of maintenance work. Based on the two reports, the buyers and sellers were able to negotiate a satisfactory monetary solution to the problem for an amount that was between the two estimates.

It's problematic when inspectors are wrong. But it happens. Inspectors are only human. Here is another example: A home inspector looked at a house and issued a report condemning the furnace, which he said needed to be replaced.

The sellers called in a heating contractor who declared that the furnace was fit and that it did not need to be replaced.

The buyers were unsure about the furnace, given the difference of opinions. The seller called in a representative from the local gas company. The buyers knew that the gas company representative would have to shut the furnace down if it was dangerous. He found nothing wrong with the furnace, and the buyers were satisfied.

In Closing: Sometimes finding the right expert to give an opinion on a suspected house problem is the answer, but it is always good to get two opinions.

copyright © Agent Image 2007

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What is a CMA and Why Do You Need One?

CMA is real estate shorthand for "Comparative Market Analysis". A CMA is a report prepared by a real estate agent providing data comparing your property to similar properties in the marketplace.

The first thing an agent will need to do to provide you with a CMA is to inspect your property. Generally, this inspection won't be overly detailed (she or he is not going to crawl under the house to examine the foundation), nor does the house need to be totally cleaned up and ready for an open house. It should be in such a condition that the agent will be able to make an accurate assessment of its condition and worth. If you plan to make changes before selling, inform the agent at this time.

The next step is for the agent to obtain data on comparable properties. This data is usually available through MLS (Multiple Listing Service), but a qualified agent will also know of properties that are on the market or have sold without being part of the MLS. This will give the agent an idea how much your property is worth in the current market. Please note that the CMA is not an appraisal. An appraisal must be performed by a licensed appraiser.

The CMA process takes place before your home is listed for sale. This is a good assessment of what your house could potentially sell for.

CMAs are not only for prospective sellers. Buyers should consider requesting a CMA for properties they are seriously looking at to determine whether the asking price is a true reflection of the current market. Owners who are upgrading or remodeling can benefit from a CMA when it's used to see if the intended changes will "over-improve" their property compared to others in the neighborhood.

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The Home Sale: Securing The Deal

Ready to close the deal? Maybe not.

Sometimes unforeseeable issues arise just prior to closing the sale. Hopefully, with negotiation, most of these have a workable solution. Unfortunately, this is not always the case. But don't panic. Another buyer might still be found who is willing to accept the house as is.

Imagine that your prospective buyers are a couple with young children. They envision your unused attic as the perfect playroom for the kids but, before closing the deal, they request an inspection to see if it's safe and also if they will be able to install a skylight to provide natural light to the new space.

This inspection reveals that under the shingles that are in good condition is a roof that will only last another year or two. The prospective buyers immediately balk, not wanting to incur the time and cost of replacing the roof. Their plans were to move in and only have to spend time and money renovating the attic. The additional cost of the new roof, they say, is just too much.

At this point, you sit down with the prospective buyers and calmly discuss the situation and how it can be solved to the benefit of all. First, you agree to get another professional opinion on what really needs to be done. Inspectors are only human, and are not infallible. Once the extent of the damage is agreed upon, you can jointly decide what to do about it. While the buyers hadn't planned on that expense, you show them that instead of a limited roof life that they would get with most existing homes, they'll have a new worry-free roof that won't cost them in repairs for the next decade or so. Since the roof wasn't in as good shape as you had thought, you agree to lower the purchase price to help offset the cost of the new roof.

By negotiating calmly and looking at all possibilities, what could have been a "deal breaker" can be turned into a win-win situation for both the buying and selling parties. In other cases, the most workable agreement for both parties might be for the deal to be called off. The seller can always find another buyer and the buyer can always find another home.

To protect yourself against last minute "buyer's remorse," make sure the purchase contract anticipates and closes as many loopholes as possible after all known defects have been fully disclosed.

copyright © Agent Image 2007

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Eight Steps To Selling Your Home

1. Define your needs.


Write down all the reasons for selling your home. Ask yourself, “Why do I want to sell and what do I expect to accomplish with the sale?” For example, a growing family may prompt your need for a larger home, or a job opportunity in another city may necessitate a move. For your goals, write down if you’d like to sell your house within a certain time frame or make a particular profit margin.

 

Work with your real estate agent to map out the best path to achieve your objectives and set a realistic time frame for the sale.

 

2. Name your price.


Your next objective should be to determine the best possible selling price for your house. Setting a fair asking price from the outset will generate the most activity from other real estate agents and buyers. You will need to take into account the condition of your home, what comparable homes in your neighborhood are selling for, and state of the overall market in your area. It’s often difficult to remain unbiased when putting a price on your home, so your real estate agent’s expertise is invaluable at this step. Your agent will know what comparable homes are selling for in your neighborhood and the average time those homes are sitting on the market. If you want a truly objective opinion about the price of your home, you could have an appraisal done. This typically costs a few hundred dollars.

 

Remember: You’re always better off setting a fair market value price than setting your price too high. Studies show that homes priced higher than 3 percent of their market value take longer to sell. If your home sits on the market for too long, potential buyers may think there is something wrong with the property. Often, when this happens, the seller has to drop the price below market value to compete with newer, reasonably priced listings.

 

3. Prepare your home.


Most of us don’t keep our homes in “showroom” condition. We tend to overlook piles of boxes in the garage, broken porch lights, and doors or windows that stick. It’s time to break out of that owner’s mindset and get your house in tiptop shape. The condition of your home will affect how quickly it sells and the price the buyer is willing to offer.

 

First impressions are the most important. Your real estate agent can help you take a fresh look at your home and suggest ways to stage it and make it more appealing to buyers.

 

A home with too much “personality” is harder to sell. Removing family photos, mementos and personalized décor will help buyers visualize the home as theirs.

 

Make minor repairs and replacements. Small defects, such as a leaky faucet, a torn screen or a worn doormat, can ruin the buyer’s first impression.

 

Clutter is a big no-no when showing your home to potential buyers. Make sure you have removed all knickknacks from your shelves and cleared all your bathroom and kitchen counters to make every area seem as spacious as possible.

 

4. Get the word out.


Now that you’re ready to sell, your real estate agent will set up a marketing strategy specifically for your home. There are many ways to get the word out, including:

 

• The Internet
• Yard signs
• Open houses
• Media advertising
• Agent-to-agent referrals
• Direct mail marketing campaigns

 

In addition to listing your home on the MLS, your agent will use a combination of these tactics to bring the most qualified buyers to your home. Your agent should structure the marketing plan so that the first three to six weeks are the busiest.

 

5. Receive an offer.


When you receive a written offer from a potential buyer, your real estate agent will first find out whether or not the individual is prequalified or preapproved to buy your home. If so, then you and your agent will review the proposed contract, taking care to understand what is required of both parties to execute the transaction. The contract, though not limited to this list, should include the following:

 

• Legal description of the property
• Offer price
• Down payment
• Financing arrangements
• List of fees and who will pay them
• Deposit amount
• Inspection rights and possible repair allowances
• Method of conveying the title and who will handle the closing
• Appliances and furnishings that will stay with the home
• Settlement date
• Contingencies

 

At this point, you have three options: accept the contract as is, accept it with changes (a counteroffer), or reject it. Remember: Once both parties have signed a written offer, the document becomes legally binding. If you have any questions or concerns, be certain to address them with your real estate agent right away.

 

6. Negotiate to sell.


Most offers to purchase your home will require some negotiating to come to a win-win agreement. Your real estate agent is well versed on the intricacies of the contracts used in your area and will protect your best interest throughout the bargaining. Your agent also knows what each contract clause means, what you will net from the sale and what areas are easiest to negotiate. Some negotiable items:

 

• Price
• Financing
• Closing costs
• Repairs
• Appliances and fixtures
• Landscaping
• Painting
• Move-in date

 

Once both parties have agreed on the terms of the sale, your agent will prepare a contract.

 

7. Prepare to close.


Once you accept an offer to sell your house, you will need to make a list of all the things you and your buyer must do before closing. The property may need to be formally appraised, surveyed, inspected or repaired. Your real estate agent can spearhead the effort and serve as your advocate when dealing with the buyer’s agent and service providers. Depending on the written contract, you may pay for all, some or none of these items. If each procedure returns acceptable results as defined by the contract, then the sale may continue. If there are problems with the home, the terms set forth in the contract will dictate your next step. You or the buyer may decide to walk away, open a new round of negotiations or proceed to closing.

 

Important reminder: A few days before the closing, you will want to contact the entity that is closing the transaction and make sure the necessary documents will be ready to sign on the appropriate date. Also, begin to make arrangements for your upcoming move if you have not done so.

 

8. Close the deal.


“Closing” refers to the meeting where ownership of the property is legally transferred to the buyer. Your agent will be present during the closing to guide you through the process and make sure everything goes as planned. By being present during the closing, he or she can mediate any last-minute issues that may arise. In some states, an attorney is required and you may wish to have one present.

 

After the closing, you should make a “to do” list for turning the property over to the new owners. Here is a checklist to get you started.

 

• Cancel electricity, gas, lawn care, cable and other routine services.
• If the new owner is retaining any of the services, change the name on the account.
• Gather owner’s manuals and warranties for all conveying appliances.

Courtesy of Keller Williams Website

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How Can a Real Estate Agent Help Me Sell My Home?

There are countless decisions to be made when selling a home, and many of them will significantly affect whether or not you make a profit and how much time it takes to sell your home. A real estate agent can offer specialized knowledge in research, marketing and negotiations to help you meet or exceed your goals. According to the National Association of REALTORS®, 82 percent of home sales are the result of agent connections.

 

A real estate agent will:

 

• Serve as your advocate and representative when dealing with buyers, buyers’ agents and service providers.
• Help you establish a fair asking price that also meets your goals.
• Advise you on how to present your home aesthetically to maximize its appeal to buyers.
• Design a customized marketing plan that will promote your home 24 hours a day, seven days a week. Tactics can include the MLS, direct mail campaigns, fliers, yard signs, advertising, Internet listings and open houses. 
• Schedule and host open houses and home tours.
• Screen all written offers and discuss their advantages and disadvantages.
• Assist you in making counteroffers.
• Prepare your closing documents.
• Represent you at closing and mediate any last-minute obstacles to ensure a smooth, successful transaction.
• Provide referrals to proven service providers, including title companies, inspectors, appraisers, pest control, moving companies and more.

 

IMPORTANT TO NOTE: Real estate professionals can represent the seller, the buyer or both. When agents represent both parties, it is called dual agency. In some states, dual agency affects the real estate professional’s fiduciary responsibilities to the seller. Keep in mind that real estate laws differ from state to state and even from locale to locale. For more in-depth answers, talk with a knowledgeable real estate professional and ask about local practices.

Courtesy of Keller Williams Website

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How To Price To Sell And Still Make A Profit

The asking price you set for your home significantly affects whether you will profit in the sale, how much you will profit and how long your home will sit on the market. Your real estate agent’s knowledge of the overall market and what’s selling — or not selling — will be invaluable in helping you determine the price. The objective is to find a price that the market will bear but won’t leave money on the table.

 

Here are some points to consider:

• Time
  Time is not on your side when it comes to real estate. Although many factors influence the outcome, perhaps time is the biggest determinant in whether or not you see a profit and how much you profit. Studies show that the longer a house stays on the market, the less likely it is to sell for the original asking price. Therefore, if your goal is to make money, think about a price that will encourage buyer activity (read: fair market value).
  
  
• Value vs. Cost
  Pricing your home to sell in a timely fashion requires some objectivity. It’s important that you not confuse value with cost — in other words, how much you value your home versus what buyers are willing to pay for it. Don’t place too much emphasis on home improvements when calculating your price, because buyers may not share your taste. For instance, not everyone wants hardwood floors or granite countertops.
  
  
• Keep it simple
  Because time is of the essence, make it easy for the buyers. Remain flexible on when your agent can schedule showings. Also, avoid putting contingencies on the sale. Though a desirable move-in date makes for a smoother transition between homes, it could cause you to lose the sale altogether.

Courtesy of Keller Williams Website

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Increasing Your Home’s Appeal

Remember the 60-second rule: That’s all the time you have to create a winning first impression. Here are some simple to significant ways to maximize your home’s appeal.

 

Exterior

• Keep the grass cut and remove all yard clutter.
• Weed and apply fresh mulch to flower beds.
• Apply fresh paint to wooden fences.
• Tighten and clean all door handles.
• Clean windows inside and out.
• Powerwash home’s exterior.
• Ensure all gutters and downspouts are firmly attached and functioning.
• Paint the front door.
• Buy a new welcome mat.
• Place potted flowers near the front door.

 

Interior

 

• Evaluate the furniture in each room and remove anything that interrupts “the flow” or makes the room appear smaller.
• Consider renting a storage unit to move items off-site.
• Clean and organize cabinets, closets and bookshelves.
• Clean all light fixtures and ceiling fans.
• Shampoo carpets.
• Remove excessive wall hangings and knickknacks.
• Repair all plumbing leaks, including faucets and drain traps.
• Make minor repairs (torn screens, sticking doors, cracked caulking).
• Clean or paint walls and ceilings.
• Replace worn cabinet and door knobs.
• Fix or replace discolored grout.
• Replace broken tiles.
• Replace worn countertops.
• Special details for showings.
• Turn on all the lights.
• Open all drapes and shutters in the daytime.
• Keep pets secured outdoors.
• Buy new towels for bathrooms.
• Buy new bedding for bedrooms.
• Replace old lamps or lampshades.
• Play quiet background music.
• Light the fireplace or clean out the ashes and light a candelabrum.
• Infuse home with a comforting scent, such as apple spice or vanilla.
• Set the dining room table for a fancy dinner party.
• Vacate the property while it is being shown.

Courtesy of Keller Williams Website

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Practicing Good Seller’s Etiquette

Let’s face it: When your house goes on the market, you’re not only opening the door to prospective buyers, but also sometimes to unknown vendors and naïve or unqualified buyers. As with any business transaction, there is an expected protocol to how sellers, buyers and their respective agents interact. Should you find yourself in a sticky situation, alert your agent so he or she can address and remedy the problem.

 

The aggressive agent


When your agent puts your house on the market, typically all promotional materials state clearly that your agent is the primary contact for buyers and buyers’ agents. However, sometimes a buyer’s agent will contact a seller directly to try to either win over their business or cut the seller’s agent out of the deal. This is not reputable behavior and you should report it to your agent immediately if it happens to you.

 

The unscrupulous vendor


Have you ever started a business or moved into a new house and suddenly found your mailbox full of junk mail? Unfortunately, this also can happen when you put your house on the market. When you sell your home, it necessitates all kinds of new purchasing decisions and less-than-ethical vendors are keenly aware of this. Though MLS organizations enforce rules on how posted information is used, some companies have found ways to cull information from various sources to produce mass mailing lists. If you find yourself regularly emptying your mailbox of junk, let your agent know. He or she can tap the appropriate sources to prompt an investigation into the matter. 

 

The naïve buyer


Yard signs, Internet listings and other advertisements can generate a lot of buzz for your home. Some prospective buyers — particularly first-timers — will be so buzzed to see your home that they’ll simply drop by. If this happens, no matter how nice these unexpected visitors are, it’s best not to humor their enthusiasm by discussing your home or giving an impromptu tour. Instead, politely let them know that your real estate agent is in charge of scheduling tours and provide them with the agent’s contact information. If you attempt to handle these surprise visits on your own, you might inadvertently disclose information that could hurt you during negotiations down the road.

Courtesy of Keller Williams Website

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Understanding The Buyer

As the seller, you can control three factors that will affect the sale of your home:

 

• The home’s condition
• Asking price
• Marketing strategy

 

However, it’s important to note that there are numerous other factors that influence a buyer, and you need to understand these consumer trends when you enter the sellers’ market. The more your home matches these qualifications, the more competitive it will be in the marketplace. Your real estate agent can advise you on how to best position and market your home to overcome any perceived downsides.

 

Location
Unfortunately, the most influential factor in determining your home’s appeal to buyers is something you can’t control: its location. According to the National Association of REALTORS®, neighborhood quality is the No. 1 reason buyers choose certain homes. The second most influential factor is commute times to work and school.

 

Size
While some buyers want to simplify their lives and downsize to a smaller home, home sizes in general have continued to increase over the decades, nearly doubling in size since the 1950s. Smaller homes typically appeal to first-time home buyers and “empty nesters,” or couples whose children have grown up and moved out.

 

Amenities
Preferences in floor plans and amenities go in and out of fashion, and your real estate agent can inform you of the “hot ticket” items that are selling homes in your market. If your home lacks certain features, you can renovate to increase its appeal, but be forewarned: That’s not always the right move. Using market conditions and activity in your neighborhood as a gauge, your agent can help you determine whether the investment is likely to help or hinder your profit margin and time on the market.

Courtesy of Keller Williams Website

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