First Time Home Buyers #3

First Time Home Buyers

Making an Offer

You’ve found a home that meets your wants, needs and budget. It’s time to make an offer.

The offer is a legally binding commitment stating that you will buy the property for an agreed-upon price provided certain terms and conditions are met. An accepted Offer to Purchase Real Estate must be in writing and signed by both parties.

 

Considerations for the Offer

When you prepare your offer, consider the following points:

• What is the age and condition of the home?
• Are any repairs needed? What will they cost? Are the sellers willing to share any of the expense?
• How long has the property been on the market?
• How active is the market (i.e., buyer’s or seller’s market)?
• Are the sellers anxious to sell?
• Is the property in a particularly desirable location or school system?
• Does the home meet many, most or all of the items on your wish list?

 

Preparing the Offer

The offer should clearly outline all terms and conditions of the sale, including:

• Your name and the name and that of the seller
• The property's address
• Any special provisions regarding fixtures, appliances, etc.
• The purchase price being offered (including the deposit put down to bind the offer and the deposit to be paid upon the execution of the Purchase and Sale Agreement)
• Any additional riders and deadline dates
• Any contingencies to which the offer is subject (e.g., pest inspection, securing financing)

Timing and deadlines are very important in real estate transactions. Allow yourself enough time in your offer to get an inspection, negotiate the Purchase and Sale Agreement, apply for and obtain mortgage financing, and set a closing date. Real estate deals often fail based on the inability to meet deadlines.
The seller may accept, reject or counter your offer. If there is a counter-offer, you may in turn accept, reject or counter that. Remember that regardless of the progress of your negotiations, the house remains on the market during negotiations.

Does a First Time Home Buyer Need an Attorney?

It is recommended that you retain an attorney when purchasing your first home. An attorney will protect your interests and will

• Help you prepare the offer
• Help negotiate the sale price and conditions of the sale
• Draft and/or revise the Purchase and Sale Agreement to protect you and your money
• Assist you with the mortgage process
• Prepare you for the final walk-through of the property
• Attend the closing and represent your interests

The Purchase and Sale Agreement

Once your offer has been accepted, a Purchase and Sales agreement is drawn up by the broker. It is likely the second contract between buyer and seller, and spells out the agreement in specific detail. This is a legally binding contract that should be reviewed by your attorney before you sign it.


Adding Provisions and Contingencies:

You can provide protections for you and your money by including provisions and contingencies in your offer. The Purchase and Sale Agreement should include a mortgage contingency clause, stating that your ability to buy the house is contingent upon your obtaining financing by an agreed-upon date. Such a clause ensures that you do not lose your deposit on the house if your loan is not approved.
Other contingencies should include acceptable home, pest, radon and lead paint inspections. The loan closing date and occupancy date should also be indicated in the agreement.

Though not required by law, a satisfactory home inspection is a major part of buying a home. The inspection examines the condition of the property and identifies necessary repairs and potential problems before you buy the home. The inspection generally costs a few hundred dollars, and is paid for by the buyer.

• More Tips for First Time Home Buyers to come!

First Time Home Buyers #2

Finding an Affordable Property!

 

As a First Time Home Buyer, once you've determined your price range, it's time to start looking at houses. But where should you look, what can you expect to find? While no property will have everything you want, the home you purchase should meet as many of your expectations as possible.

You've probably made a mental list of expectations for a new home. Get that list on paper. Consider the home's interior, amenities and size, as well as location and lifestyle, commuting distance and community, schools services. Whatever you jot down, the list should be a reflection of you.

After you make it, take the time to review and update your list throughout the entire home buying process. The more items on your list that your new home has, the happier you'll be when you're living in it.

What are my options?

Before you can find the right house, you need to decide what type of home you want. There are a number of housing types to choose from, including:

• Single-Family
• Condominium
• Multifamily
• Fixer-Upper

Consider discussing your options with a real estate professional.  Get the pros and cons of each option and consider what you are willing to live with.

Location, Location, Location

Here are some things to consider when choosing a location:

• How far are you willing to commute to work?
• How accessible is the home to highways or public transportation?
• How close are shopping, churches, day care facilities and recreation areas?
• What is the quality of the public schools?

Again, prioritize the attributes that are most important to you. Would you trade a larger yard for highway access, public transportation for shopping and restaurants, a shorter commute for better public schools? With your list in hand, you'll be better equipped to find towns that suit your desired lifestyle.

Finding the Right Home

Conducting the search yourself is certainly manageable, but a fair bit of organization is required. First identify towns that fit your needs, and then seek out homes in those towns. Arrange appointments to view homes for sale, or find open houses you can attend.

There are a number of resources that will help you find the right house for you:

• Getting on the internet and looking up each towns website will tell a bit more about what the town is like
• Driving around and looking at what the town has to offer such as waterfront, shopping, highway access
• Talk to your Real Estate Professional, they will be very knowledgeable about the local area and when given a list of your criteria can make suggestions as to which town would likely suit you best

Open House Advice

Attending open houses is serious business. Don't underestimate the exhaustion factor. It's not just a matter of being physically tired: after a while, the houses start to look the same. Therefore, keep in mind the following:

• Bring a notepad and map so you can mark each home's location and note its special features
• Pick up a listing sheet whenever one is available. After a day of open houses, you may find that a home has more appeal than you initially thought
• Pace yourself. Visit too many homes without a break and you'll start missing details
• If you are going to look at a lot of houses, take big breaks. See three homes in the morning, then stop and have lunch then see three more.
• Make a rough sketch of the floor plans of the homes you are considering
• Remember, there are no foolish questions. Ask away!

You want to know everything you can about each property. Often, one question about pipes, heating or cooling systems, taxes, or recent repairs will lead to other questions. You may find areas of concern about a specific property that looked trouble-free. It's far better to know about a home's problems before you buy than it is to discover them once you own the property.


Next week we will discuss how a First Time Home Buyer should go about making an offer on a house!

First Time Home Buyers

What do First Time Home Buyers need to know?

 

What can I afford?

First things first: it's time to review your financial picture, consider the expenses involved in owning property, and determine your budget. Can you afford to buy a home? Let's find out.

Am I Ready?

All first time home buyers should take a hard look at their personal finances.
Get a better grasp of your financial situation by using this  income worksheet.

The Costs of Home ownership:

As a renter, you do not have to pay for a variety of regular and as-needed expenses that are the responsibility of the landlord. When you buy a home, you take on these costs as well. Some fees are part of your monthly mortgage payment while others are not. Among the costs shouldered by homeowners but not by renters:

• Property taxes and special assessments
• Home/hazard insurance
• Property maintenance
• Association and membership fees (for condominiums, townhomes and some developments)

 

Credit and Credit Histories:

Your credit history—how you’ve borrowed and repaid money in the past—plays a big role in your ability to purchase a home. It’s one factor used to determine your credit score, generally called a FICO score. FICO scores range from 300 to 850, and lenders believe that borrowers with higher scores are more likely to repay their loan.

First Time Home Buyers should obtain a copy of their credit report by contacting the Consumer Credit Counseling Service at 617.426.6644 .

Down payments

The down payment, the initial payment made when buying a home, will impact your ability to get a mortgage as well as the loan’s interest rate and terms. Lenders view buyers who contribute their own funds to the purchase of a home as a better overall credit risk.

If you're making a down payment of less than 20% of a home’s price, you’ll also get mortgage insurance, which banks require in exchange for the larger loan. MassHousing mortgage insurance includes MI Plus, a unique borrower protection that covers principal and interest payments if you lose your job.


It's always a good idea to speak to a professional before starting your home buying process.
You can contact me anytime with any questions at billyd@kw.com

This is just the beginning of the process, more First Time Home Buyer advice to come!

FSBO's Must Be Ready to Negotiate

In a recovering market, some sellers might be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional. The real estate agent is a trained and experienced negotiator. In most cases, the seller is not. The seller must realize the ability to negotiate will determine whether they get the best deal for themselves and their family.

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to sell on their own:

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies which work for the buyer and will almost always find some problems with the house.
• The termite company if there are challenges
• The buyer’s lender if the structure of the mortgage requires the sellers’ participation
• The appraiser if there is a question of value
• The title company if there are challenges with certificates of occupancy (CO) or other permits
• The town or municipality if you need to get the Cos permits mentioned above
• The buyer’s buyer in case there are challenges on the house your buyer is selling.
• Your bank in the case of a short sale

In Short, It's never a good idea to go it alone.  Hire a professional if you want to get the best possible deal on your home!

What are buyers willing to do for the House they want?

The Housing Market is picking up, however the inventory is still low!
If you have been thinking of selling your house this is the perfect time. 
You may just have the upper hand in the negotiation process!

Here is a look at what some buyers are willing to do when they find their perfect home

• 25% of buyers are willing to pay 1-5% OVER asking price
• 9% of buyers are willing to pay 6-10% OVER asking price
• 4% of buyers are willing to pay 10+% OVER asking price

Other things buyers are willing to do:

• 25% will pay the sellers closing costs
• 17% write a personal letter to the seller
• 8% are willing to remove all contingencies
• 12% are willing to ask family & friends to borrow money so they can have 20% down payment
• 5% are willing to ask family & friends to borrow money so they can offer a full cash payment

New FHA Program Seeks to Give Borrowers Back their Buying Power

It’s no surprise that over the last several years a lot of people have experienced financial problems due to the economic downturn. Now that consumer confidence and employment opportunities have returned (respectively), traditional buyers are looking for ways to get back in the home buying game. 

 Now there is “The Back to Work Extenuating Circumstances Program,” and is designed to allow people who experienced a “Negative Credit Event” like a short sale, foreclosure or bankruptcy during the housing crisis to purchase a home.  Typically these people would have experienced an extended delay of anywhere between two and seven years before they could purchase a home. Through this program, they have an opportunity to get back in within as little as 12 months. The program is going to remain in effect for any applications that have a case number through September of 2016.

In order to be eligible for this program, applicants are going to need to prove four things.

• First, they need to prove that they’re income declined by 20 percent or more for a six month period and that those circumstances were the result of a negative credit event.
• Second, they’ll need to be able to provide documentation if the negative credit event qualifies under the “Job lost beyond applicant’s control” category. This might include publicly available information on a reduction in workforce or that a company closed. Applicants can also look to see if they had unemployment compensation.
• Next, they have to prove that, over the course of the last twelve months, they haven’t had any credit hiccups like a late installment or any new collections or judgments.
• They also have to have a clean credit record for the last 12 months. So, they’ll need to show that they’ve had a positive rental history or that if they’re living with their parents they haven’t had any other credit issues.
• The last criteria is that applicants will have to go through Housing Counseling with an approved counselor no later than six months from the application date and no sooner than 30 days from the application date.
  
  
  Another bonus is that this is an FHA program. So not only does somebody have the ability to get back in after a 12 month delay, they have the ability to do so with a 3.5 percent down payment if they still qualify for that loan type.
  
  
  

  “You may not have thought that you could purchase a home today. But I’m here to tell you that many of you can. Call me for information on the new ‘Back to Work Program’ from HUD so we can try to put you in a position to buy.”

5 Reasons to Hire a Real Estate Professional

The real estate market is a place where most people will make their largest investment ever. It is a place where fortunes can be, and often are, made.  It is not a place, however, for you to
“wing it”.

 

While the myriad TV shows about real estate make the process look so simple – it’s not really that simple… they make it seem like all you need to do is slap a for sale by owner sign in the yard, have one open house with fresh flowers and fresh baked cookies and bam! SOLD! in one day.  On average in Massachusetts it takes roughly 100 days to sell your home (That is just an estimate, some may take less and some longer).

You need a professional, full time, well educated, ethical and trustworthy REALTOR to represent you whether buying or selling real estate.

* There are about 180 typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided by  full service real estate brokerages in return for their sales commission. (Based on a report prepared by the Orlando Regional REALTORS Association).  So this means that if you choose to go it on your own, you are going to have to do all these things yourself… or they don’t get done… which probably means your transaction doesn’t end in a successful purchase/sale.

* While there will always be that one guy (or gal) who thinks he (she) is the all-time greatest negotiator, the vast majority of folks do not like confrontational interactions.  A negotiation for the purchase/sale of an asset as large as a piece of real estate can be a very confrontational interaction. The role of the REALTOR is to act as a buffer between the two parties who are in the midst of a very emotional and high-level financial transaction, both wanting to get the best they can get often at the detriment of the other party. A real estate professional is experienced in all aspects of the negotiation and is bound legally to do only what is in the best interest of his/her client. 

*  Perhaps the single most important aspect of the transaction is the value of the piece of property.
If you are a seller you want to know how much you can expect to get for the sales price and how much of that you will walk away with in your pocket. You want to advertise the property for sale at the right price so you sell for as much as possible but you don’t want to price it so high that no buyers make you an offer (and YES if you price it too high MOST buyers will not want to offend you by making a low offer…thus you don’t get any offers).
If you are the buyer, you want to know how much to offer. Now multiple offer situations are happening more frequently and if a buyer offers too low, they can either be rejected completely by the seller or they can cause the negotiation to take too long thus allowing time for a competing bid to come in… allowing the seller to be in the driver’s seat.

*  Any good professional, whether a real estate professional, doctor, lawyer, CPA, etc., will have the heart of a teacher. Real estate brokerage is a service business. The professional REALTOR is there to educate you about the conditions impacting today’s real estate market.  It is as easy as picking up the newspaper or searching the Internet for real estate news to see conflicting headline after conflicting headline. “Prices are up 20%”, “Among worst markets in nation”, “Best year since the crash”…well which is it? All real estate is local and your real estate professional will know the local market conditions and will lead you through the process, like any good teacher would, making sure you understand all that is going on around you.

A real estate professional is a crucial member of your team when buying or selling real estate.

You could be buying your first home or your tenth home, an investment property or a vacation home, commercial or residential…whichever it is you are best served in the care of a full time, well educated, ethical, trustworthy real estate professional.