Improve Your Chances of Winning in a Bidding War

biddingwar

When it comes to buying a home, most individuals hope to stake out their dream property and close on it quickly and without problems. However, when there is a high amount of interest for a single house, a bidding war might ensue. Entering into a bidding war can be stressful for buyers, but there are steps they can take to both lower their anxiety and increase their chances of coming out on top.

Work with the right people

Teaming up with the right real estate agent can be in a buyer’s favor when a bidding war situation occurs. Working with a local agent can be beneficial as they often have insight about the area so they are able to explain whether the prices being offered are realistic for the location. In addition, local agents who have a strong reputation in the area can be more attractive to sellers, because they might feel more confident that a sale will actually go through, according to Fox Business.

In addition to working with a reputable agent, getting prequalified for a loan can also make buyers more attractive to sellers. This can ease sellers’ fears about a buyer’s ability to obtain financing, and make the closing process go more smoothly. Buyers should be prepared to provide written confirmation that they have been preapproved.

Provide an incentive

Buyers who are prepared to provide a large down payment are also more likely to come out ahead during a bidding war. Making a sizable down payment demonstrates to sellers that individuals are serious about the property. In addition, buyers who offer to pay cash may also boost their chances of securing the home.

In some cases, buyers may also speed up the process by agreeing to purchase the home without requiring the seller to make certain repairs. However, it’s important that buyers are careful when agreeing to these terms. While small repairs, such as fixing broken fences or replacing fixtures, can be done easily by buyers, more costly problems, such as structural issues or electrical problems can be more expensive.

Know when to call it quits

Few buyers want to give up during a bidding war, but it’s important to have a spending limit in mind to avoid going over their budget. A real estate agent can be helpful in determining the worth of a home, and if the asking price has significantly exceeded that figure, buyers may consider continuing their home search elsewhere.

Holiday Home Sale Can Work in Seller’s Favor

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Year end seems like an odd time to sell your home. However, it has been a long time since we’ve seen a home sale market that approximated normal. So, I wouldn’t necessarily abide by the guidelines that applied to another time.

2011 was a lackluster year for the housing market. The spring and summer markets, usually a busy time for home sales, were sluggish. The market picked up in November 2011. Many sellers who chose to sell then had a successful result.

Several factors contributed to this. Interest rates were low. The bad global news — the catastrophic earthquake in Japan, Greece on the edge of bankruptcy, problems in the eurozone, and a stuck-in-the-mud unemployment rate — had been absorbed and digested by consumers. Buyers began to believe that home prices were bottoming; there were years’ worth of pent-up demand.

Sellers in some areas who sold at the end of last year presented their homes well and priced them right for the market. Some received multiple offers, although this didn’t always result in a higher price. Many were sold and closed by the end of the year.

The dynamic that contributed to this seemingly unusual phenomenon was a high demand from buyers who’d been waiting for years for the right time to buy and a paucity of homes listed for sale at that time.

HOUSE HUNTING TIP: Most sellers aren’t inclined to sell their homes during the late fall and winter months, so they wait until spring. But then they are confronted with more sellers bringing their homes on the market. Buyers have a choice. You aren’t the only game in town.

Some sellers worry about the holidays. If you travel during the holidays, this might be a perfect time to have your house on the market. You won’t be inconvenienced by showing activity and open houses.

Sellers who are home for the holidays can ask their agent to remove the lockbox and have showings made by appointment through their listing agent.

The showing activity will be slower during the holidays, but the buyers who are looking are serious. Sometimes, buyers who have been transferred will take the opportunity of time off over the holidays to go house hunting.

The other alternative is to ask your agent to remove your home from the active market, but make sure the real estate agent community knows that the home is still for sale. You wouldn’t want to miss out on a good opportunity. The best bet is to keep your home actively listed. Most homes look festive and inviting at this time of year.

Depending on weather conditions, which can put a damper on showing activity, early in the year before the spring season is often a good time for sellers, particularly when interest rates are at historic lows, buyers are out in force and most sellers are waiting until April or May to bring their homes on the market.

Some sellers are inclined to wait until spring to sell because they think that the improved housing market will result in a higher sale price. There’s no way to know. Hopefully, prices will be higher then. But in most areas it will be only marginally higher.

The spring market is bound to have more inventory of homes for sale than we’re likely to see between November 2012 and March 2013. More homes for sale could dilute the buyer pool for your home. When your home is one of the few on the market, you have a better chance of a quick and profitable sale.

THE CLOSING: If you and your home are ready for sale, and the weather isn’t slowing the market down, go for it.

Article by Dian Hymer, Tuesday, November 27, 2012. Inman News®

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

6 Tips for Selling Your Home This Fall

Fall is second only to spring as the busiest time of the year for home sales — and Idaho Realtor Gail Hartnett sees this autumn as an especially good time to have your property on the market.

“Inventory is low, so if you have your house on the market, and it is priced well, it’s going to sell,” says Hartnett, a National Association of Realtors regional vice president and an agent with Keller Williams Realty Boise.

Home sales in Idaho and many other U.S. locales are rebounding this fall as low prices, improved consumer confidence and rock-bottom mortgage rates bring buyers out. At the same time, many would-be sellers are either too discouraged to put homes on the market or are waiting for prices to rise, creating a shortage of available homes in much of the country.

Add in the fact that many people travel to their hometowns for Thanksgiving, football games and the like, and Hartnett believes it’s a bad idea to keep your property off of the market this fall.

“People who’ve been thinking of moving back home will look at some houses when they come for a visit, and finding the perfect place will push them into action,” she says. “But if your place isn’t on the market, they won’t see it.”

Houses that boast green grass and lush gardens in the spring, though, look a lot less inviting during the fall.

Here are six things Hartnett recommends all would-be sellers do this autumn to adjust for that and get a home moving:

1. Give your home a cozy smell.

Fall brings back childhood memories of hayrides and Thanksgiving dinners for many, and Hartnett recommends maximizing your place’s “homey” feeling this time of year.

The Realtor always has spiced cider, fresh-baked cookies or other warm and friendly fare cooking up during showings and open houses at properties she’s listing.

“We take some big old pots and dump cider in them, then warm it up and the whole house smells good,” Hartnett says. “It’s just a warm, homey smell that makes people feel good when they enter.”

She places cider and cookies ready for serving in a strategically out-of-the-way place visitors reach only after touring the house. That way Hartnett has a chance to “pitch” the house to buyers while they snack.

2. Rake up the leaves.

You don’t have to remove every single leaf as soon as it falls in your home’s yard, but you have to keep the property’s exterior looking tidy and well-maintained.

“Leaves actually look nice as long as they have some color to them,” Harnett says. “But you need to make sure that your walkways are swept clear for safety purposes.”

3. Use seasonal decorations.

Homes in most parts of the country lack the blooming flowers and grass that make their yards look particularly nice during warmer months. Hartnett says you can give a property’s exterior an attractive “harvest” feel by adding fall-themed decorations.

“You lose some of the curb appeal that goes along with [spring and summer’s] nice landscaping, but something like a seasonal wreath on the door can bring some of it back,” she says.

Also consider placing pumpkins and pots of mums on your home’s front porch or portico.

4. Maximize lighting.

Shorter days and less-intense sunlight make good interior lighting more important than ever when showing a home during the fall.

Hartnett recommends opening all blinds and turning all lights on when you know a potential buyer plans to stop by — even if you’re leaving for work and the showing won’t happen for hours.

“You have to make sure everything looks light and bright,” she says.

Another tip: Make sure all windows are sparkling clean inside and out.

5. Hold earlier showings.

Hartnett doesn’t bother at this time of year to schedule the evening open houses she often holds during spring and summer to catch house hunters on their way home from work.

Instead, she typically hosts open houses on Saturdays and Sundays between 2 and 4 p.m. — but also keeps big sports contests and other autumn events in mind when setting times.

“This time of year, we schedule our open houses around Boise State football,” she says. “We know what’s going on in town and base our open-house times on when we think people will be around.”

6. Provide warm-weather photos.

The beautiful grass and garden your home has in the spring might be long gone by the fall, but you still want would-be buyers to know it exists.

Hartnett suggests making spring and summer photos of your home’s exterior available online, as well as putting out hard copies during showings.

But you don’t want to use spring or summer photos exclusively with an autumn listing.

“There’s nothing worse than looking at a home’s listing in the fall and seeing photos from the spring,” Hartnett says. “That immediately gets buyers thinking: ‘Gosh, this home has been on the market forever.'”

 

Homebuying Wish List Lets Buyers See the Big Picture

<a href="http://www.shutterstock.com/pic.mhtml?id=112113500" target="_blank">Stged dining room</a> image via Shutterstock.

“I’ll know it when I see it.” “This doesn’t feel like home to me.” “Someday the right one will come along; I’ll keep looking until it does.” “It’s going to be my home; it has to feel special.”

These comments are typical of buyers who’ve looked for a while but haven’t committed to buying. The objections sound sensible. Yet, they could be excuses not to buy.

Homebuying is not for everyone. It’s a major commitment and is often the most expensive purchase most people will make in their lifetime. It’s understandable that some buyers approach the home search with reservations.

You’ll save a lot of time and energy if you can determine if homebuying is for you before you start looking. Then for the best result, approach the house hunt methodically and with the understanding that it will take time.

The first step is to make a list of all the features you need and want in a home. Think about your current home, and others that you’ve lived in. Consider what you liked and disliked about them.

The next step is to prioritize the list distinguishing what you must have and what you’d like to have. You’re unlikely to find all of the items on your list in one home.

HOUSE HUNTING: It will help to prioritize your list if you look at some homes for sale in your price range and in the areas where you’d like to live. Visiting Sunday open houses or looking at listings online can help you to familiarize yourself with the local inventory if you haven’t already selected a local real estate agent.

You may find that some of the items you’d like to have in your home don’t exist in your target area. For example, let’s say you want to live in a neighborhood of charming older homes that are close to shops and transportation. You also want a two-car attached garage. Smaller homes built in the 1920s or earlier usually don’t have two-car garages.

This is where compromise comes into play. If the older, conveniently located neighborhood is high on your wish list, you will need to be willing to settle for a one-car garage, or perhaps no garage. If the two-car garage is a must, you may need to consider homes that were built more recently, and are not as conveniently located.

As you’re looking at homes for sale, try to see beyond the seller’s décor and the staging. A well-staged home can mask floor plan defects. It can be misleading in terms of what you need in a home. For instance, a first-time buyer made the mistake of buying a home that was staged so well that she didn’t realize that there was no formal dining room and no eating area in the kitchen.

On the other hand, you may be tempted to turn down a home that’s staged to appeal to the widest audience but appears not to suit your needs. Let’s say a home has three bedrooms but no home office. If you need only two bedrooms, you could use the third bedroom as an office, even though it’s not represented that way.

The best way to see a home you’re really interested in is with your agent. Many buyers aren’t good at visualizing a home any other way than how it’s shown. An experienced agent should be able to show you how you can adapt a home to your needs.

It’s often hard to make a good assessment of a home you’re serious about at a Sunday open house. Have your agent take you back for a second or third look.

THE CLOSING: Bring your wish list and discuss the pros and cons before you make a final decision.

Small DIY Updates Can Change the Look of Your Kitchen

After buying a home, one of the first areas new owners concentrate on updating is their kitchen. This area experiences the most traffic from family members, and many households which have a joint kitchen and dining room host holiday dinners, family get togethers and parties in these areas. However, many new owners may be sticking to a budget after the home sale is over and are hesitant to spend money to renovate or completely redo this room.

Luckily, there are several small tasks that homeowners can complete themselves that can change the look and atmosphere of this space.

Focus on small accents

The term “the devil is in the details” can apply to remodels that focus on updating small features and characteristics. Tiny upgrades and accents can make a large difference in making a room look more spacious, modern and inviting. For example, owners can update the hardware on their cabinetry to shiny nickel, copper or burnished bronze for a more contemporary look to make cabinets look new, according to HGTV.com. In addition, painting dull cabinets to more colorful ones can add a freshness and modernity to a kitchen that can be accomplished without having to paint the entire room. This can be a good alternative for owners who want to choose darker colors, but have a small kitchen that they are trying to paint as more spacious. Painting the trim of cabinets a different tone can also make a room pop.

Replacing sink fixtures is another easy and affordable task homeowners can complete. In addition to the several finishes and styles sink faucets now come in, many also have modern features, such as soap dispensers, detachable sprayers and automatic functioning. Hanging new lighting is another popular decoration new owners add, which make a kitchen look more spacious. Recessed and track lighting can modernize older kitchens and create a certain level of ambiance that homeowners may be seeking.

New appliances

Homeowners should not underestimate the power of new appliances. Not only are many new items that are being sold more energy efficient, but they are an affordable way to make a kitchen appear new. Individuals who want to make small splurges do not have to stop with small appliances, such as blenders and toasters, but might also invest in a new gas stove.

Hanging pot racks and purchasing new utensil and spice stands is another way both save space and add a measure of color to a kitchen.

Look for Kitchen Design & Decor Inspiration? Start here.

How to Keep Your Home Remodeling Budget in Check

Whether individuals are planning on putting up their house for sale or are simply trying to make it more comfortable and modern, home remodels can be a large undertaking. To help make costs more manageable, most homeowners develop a budget that allows them to make their homes more beautiful without going into debt. It’s easy to stray away from a remodeling budget and wind up spending more than initially planned. To avoid financial setbacks, individuals should familiarize themselves with the most common mistakes and the best ways to avoid them.

Failing to comparison shop

Visiting the nearest home improvement store or furniture factory is certainly one of the most convenient and time-effective ways to begin a remodel project. However, it may not be the most affordable. Remodels can be expensive, depending on the type of update, the materials being used and the size of the home. For this reason, shopping around and examining different types of materials can help save owners between hundreds or thousands of dollars.

Owners should also not hesitate to look at large warehouses and outlets that may have the same materials they are looking for at a more affordable price. Lastly, individuals should speak with a professional about the quality, durability and shelf-life of various materials before making a decision on which to use. They may initially feel like they are getting a top-quality, durable product, but find that another material is actually stronger and more affordable.

Hiring the cheapest contractor

Most homeowners want to save money on contractor costs, but hiring the contractor that offers the cheapest rates without doing background research can backfire. Homeowners should ask for references, examine a contractor’s background and speak with several potential contracting companies before making a decision. This can help owners avoid hiring a professional that does poor work and being forced to pay more to have the job corrected. Learn more about finding the right contractor.

Splurging on new furniture

Replacing furniture after remodeling a room can be as costly as the remodel itself. However, there are other options to giving a room a fresh look that don’t involve tossing old furniture. If owners like the size and shape of their current couches and chairs, it can be more cost-effective to have them reupholstered with new materials. Consumers can also save money by selling items they plan to toss at a yard sale, and using the proceeds to purchase new items, MSN Real Estate reports.

5 ways to help your agent find your dream home

<a href="http://www.shutterstock.com/pic.mhtml?id=44311504" target=blank>Megaphone</a> image via Shutterstock.

The vast majority of homebuyers like — even love — their agents; in the National Association of Realtors’ most recent survey of homebuyers and sellers, more than 96 percent of those who recently bought homes said they liked their agent, and 85 percent said they would work with that agent again.

But, as always, there are exceptions to this rule: buyer-agent combos that seem to be full of friction.

In those exceptional cases, a common complaint is that buyers feel their agent simply doesn’t understand or listen to them, as evidenced by the disconnect between their vision for their home and the homes the agent shows them. And no one likes to be misunderstood, especially when trying to get professional help making wise decisions about the financial, location and brick-and-mortar property characteristics that will shape many areas of one’s life for years to come.

Most often, in my experience, this is an issue of a disconnect between a buyer’s fantasy home and the reality of what their budget can buy on the market. The agent shows the buyer homes that the buyer sees as falling short of his location, size or stylistic standards, but in fact, the agent is showing the best homes that the buyer can actually afford. (This is otherwise known as having champagne wishes on a beer budget.)

Other times, though, there is an even deeper communication issue: The buyer hasn’t been clear, or the agent truly hasn’t heard him out. To avoid this issue and make sure your agent is picking up what you’re putting down, in terms of your preferences for your home, here are a few tools for vividly communicating your vision to your real estate agent:

1. Digitally. If you want to communicate your style and aesthetic preferences to your agent, consider creating a digital notebook on the Web application Springpad. Here’s the thing: You can start keeping this notebook as soon as you start thinking about buying a home — you don’t have to wait until you have an agent to do it.

And you can use photos you snap on your phone while you’re out in the world, images from homes you see on design and magazine websites and even MLS listing pics, and you can annotate them with lists of features you do and don’t like about the homes or the images, links to the MLS listings, even voice memos or videos you shot yourself. And you can do this all privately, for as long as you want before you kick-start your house hunt, then share the notebook with your agent when you do get one on board.

A word of caution: If you truly want to use a digital notebook to communicate your vision with your agent, then fill it with reality-based images. Don’t just stick every fantasy home you see on the “Real Housewives” or “Million Dollar Listing” in there — use a separate board for that. On this board, keep to homes with discrete features, looks, etc., that you hope to find in the home you eventually buy and own.

2. Show your agent listings/homes that you like. Do this: As you’re ramping up for your house hunt, start online, looking at listings that you love; if you’re not the type to save images digitally, print out the listing and keep a file folder collection of them. Better yet, run your numbers (down payment, etc.) in an online mortgage calculator to get a very rough idea of your price range, then get out into the world and start attending open houses that come up for homes that are similar to what you hope to buy. Collect the fliers of the homes you visit and like, to show to your agent, once they are engaged.

And this doesn’t have to stop when you actually initiate your house hunt, in earnest. Don’t just sit back and wait for your agent to send you listings you like — though your agent should and, most likely, will. Be proactive: When you see listings you like online, send those over to your agent. When you’re out in the world and happen to come across homes for sale that seem like what you’re looking for, use one of the mobile apps, like Trulia, that will detect your geographic location and serve you up the listings of the nearby homes for sale. Then send them to your agent. (Frankly, sending your agent images and listings of homes that are not even for sale can be helpful at resolving communication roadblocks.)

Passively waiting to be shown homes you like is simply not an efficient way to get house hunting satisfaction, nor is it necessary for 21st-century homebuyers, given the unprecedented access you have to home listing information online.

3. Let your agent show you what she thinks you are saying you want, irrespective of price. This can be especially helpful for people relocating to a new area, or first-time buyers who are still trying to wrap their heads around what kind of home they can get at various price points. If you are concerned that your agent is not listening to your wants and needs, but she insists that she is, ask her to show you at least one house that she thinks reflects your vision as she understands it, irrespective of the price at which that home is listed.

I have done this myself, and have seen it done, maybe a dozen or so times, and let me tell you: It is the single most powerful way to go from feeling misunderstood to understanding the truth of the market, instantly. Nine times out of 10, the agent will show you precisely what you want, but it’ll be much more expensive than the budget that you’ve given her. While there’s always a little emotional letdown involved when you realize that the issue is your pocketbook and not your agent, it’s also empowering. It positions you to either up your budget, if that’s possible, or to be thoughtful and conscious about the compromises you will need to make to stay within it.

4. Write out your vision of home. I’ve long encouraged buyers to do a writing exercise at the very beginning of their house hunts, something I like to call the Vision of Home exercise. More accurately, though, what I’m proposing is that you set aside an hour and actually write down your vision of the life you want to live, once you are warmly ensconced in your home. It should cover everything from:

Family: Who will live with you in the home, throughout the time you plan to own it — any parents or extended family members? Any kids that you think will move out?

Work: Where will you work? And how much or little do you want to work? How will you get there? What does your commute look like? What does your income trajectory look like for the time you expect to be in the home? Do you have — or plan to have — any side jobs or businesses? Do you ever work at home, or want to?

Activities: What does everyone who will live in the home need to be able to do there? Are there any hobbies, work or other activities that require space at home, inside or out? Do you spend your weekends walking to the corner yoga studio and brunching, or do you spend it hitting up Lowe’s to prep for your DIY-home improvement handiwork?

Most of the time, buyers start communicating their vision with some sort of boilerplate house-hunting form, checking boxes for the numbers of beds and baths, etc., that they want. Starting with a free-form vision of home before you move to that level of detail will help you get clear on the big picture you’re trying to achieve with your home and, in turn, help you communicate the overarching goals and details of your house hunt in a clearer way to your agent.

If you’re comfortable with it, you might want to go so far as to let your agent review the results of this exercise, or cover the big picture it creates with her; this gives you the advantage of putting your agent’s experienced mind and networks to work to creatively spot properties that might work for you. If you don’t feel comfortable sharing your life vision, though, feel free to boil it down to a list you can share of your house-hunting wants, needs and deal-breakers.

5. Good, bad, ugly feedback sheet. Once you’re actively working with your agent and viewing properties, you might need to fine tune and course-correct your agent’s understanding of what you’re looking for.

One of my favorite tools for doing that is to simply give written feedback for each property, bucketing that into the good, bad and ugly (i.e., deal breaker-level disadvantages) of each home, as you see it. Then, at the end of every property tour, you can more readily remember what you liked and disliked about each property, even if you saw five or eight or more, and you can communicate those likes and dislikes in a way that empowers your agent to constantly uplevel the listings she shows you in terms of her alignment with your wants and needs.

5 Real Estate Gotcha’s to Look Out For

The following is a guest post from Coldwell Banker Vanguard Realty agent, Cara Ameer, in Ponte Vedra Beach, Florida.

Real estate is complicated – from inspections  to title searches, property lines and issues affecting appraisals, there are potential “gotchas” looming at every turn in a real estate transaction.  Here are five issues that can potentially derail a home sale and preventative steps you can take to ensure a smooth transaction.

 

1)     INSPECTIONS

As a seller, you are standing behind the most expensive item you will likely ever sell.  A home purchase is the single largest transaction a buyer will probably ever make, so of course they want what they are purchasing to be in good condition.  An inspection can potentially through a transaction off course, but it doesn’t have to.  Rather than be at the mercy of a buyer’s inspector, shift the power to you as the seller by having a prelisting inspection done.  Would you rather find out what areas of your home need attention with an inspector that you have hired vs. an inspector that the buyer brings in that you don’t know?

Yes, the buyer is still going to get the house inspected, BUT by hiring your own inspector, you will have a report that can serve as a baseline as well as another expert that you can consult.  Many sellers fear inspections because of what might be found, but these issues are going to be found no matter what, so best to do it on your time and BEFORE you put the home on the market.  I am continually amazed at how many sellers take a “kick the can down the road” approach and simply want to leave items unaddressed for the next owner.   Keep in mind that certain things like the age of a roof, plumbing or old electrical wiring can affect the insurability of the property.  Insurance is becoming more difficult to obtain because insurance companies are increasingly requiring four point inspections in order to bind insurance on a property.

You don’t want to be in the middle of a home sale dealing with a roof that needs to be replaced before closing because the buyer can’t get insurance.

 

2)     SURVEY

The survey is not typically ordered until a week or so prior to closing and usually the buyer does not see the survey for the first time until they are at the closing table.  You don’t want any potential issues to come up right before closing that could potentially throw a wrench in your deal.

Do you have the survey from when you last purchased your home?  How old is that document?  If you don’t have one, you may be able to contact the title company or attorney’s office that handled your closing to see if they can pull it from their archives.  Since you have owned your home, have any changes been made to your property or to the neighboring properties on either side or behind you such as fences, pools, property additions, docks, bulkheads, etc.?  If you have any concerns about improvements that could affect your property lines, order a survey BEFORE putting your home on the market – the cost generally runs around $300 for a typical size lot – something larger or more involved will be more.

You can use this survey when you close on your property so long as there are no encroachments or issues that arise that may need to be resolved.  The survey document will verify your lot size and define what the boundaries of the property are.  This way you can market your home with confidence as to your lot’s dimensions.  There is nothing worse than noting that your property is a certain size, only for the survey to reveal it is smaller and the buyer wanting to renegotiate the purchase price of the home or possibly not want to move forward.

If your property is located on a body of water, a survey can also be extremely helpful to verify if any of your property rights extend into the water (also known as riparian rights).

Fences can be another potential issue.  Fence companies require a copy of a survey before they will install one, but if a fence was put up by a handyman type and a survey was not used, there could be issues if the survey reveals that your fence or the neighbor’s  is encroaching and not within the boundaries of the property it belongs to.  Again, you don’t want to find all of this out on the day of closing as some of these issues do not have a quick fix.

A home’s lot size can easily be misrepresented by fences that do not conform to property lines.  In visually looking at a lot, sometimes property lines appear as if they extend beyond the fence line or the yard has been fenced to include an area that is legally not part of the property (preserve areas, easements, etc.).  A survey is the only way to verify what a true picture of the property lines are.

Even worse, when a permanent type of structure has been erected that sits on a neighboring property line.

On one of the first transactions that I was involved with, the house my customer was attempting to purchase had the garage unknowingly expanded onto a city easement between their soon to be house and the next door neighbor’s property.  The garage would have had to have been chopped to bring it within the home’s property lines.  A big part of the reason the buyer was buying the home was for the garage – needless to say this purchase did not happen!

 

3)      TITLE ISSUES

Title searches go on behind the scenes and are something that a buyer or seller would never think about, however you need to.    If a property is being sold and there is more than one person involved with ownership, you need to make sure you have whatever legal documentation to provide to the title company or closing attorney’s office in regards to that –

if you are selling your deceased Aunt’s home, make sure you have documentation that shows that you have the legal authority to do so.

In a situation where a property is being sold on behalf of a seller by their legal representatives,  you also need to find out who is able to sign the documents on behalf of the seller.  If there are multiple people involved- siblings, nieces, nephews – find all of this out ahead of time.  The same applies with changes in marital status- need to check with your attorney to ensure a smooth transaction with respect to who is required to sign when buying and/or selling – will one or both spouse’s signatures be required?

Issues can also arise from errors made on mortgages and deeds that are prepared in which the property address was not correct.  It is not uncommon to encounter a mortgage note that was erroneously recorded to the wrong property or an incorrect address that was typed on a deed.  Although these mistakes are clerical in nature, one wrong address number can throw a wrench in things.

I recently encountered a situation where I was handling the sale of a condominium that was owned by one person and another set of owners turned up on the title search as owning the unit!  The seller was just as shocked as I was.  It turns out another property owner in the same complex had the unit number of the condominium I was selling typed on their deed!  Simple enough correction, right?  Not so fast.  In this situation, the additional parties have to be tracked down in order to sign release documentation.  This may not be easy as the owners in question have to be located and contacted.  This can easily cause unanticipated delays in the closing process.

Two preventative steps a seller can take:

  1. Check the documents pertaining to your home purchase in the appropriate county or local government office that handles the recording of deeds and mortgages.  In some states, this is the clerk of the court in the county or town where the property is located.  Many municipalities have made this information accessible online, but in some cases you may need to call or visit the office in person.  Check the names and addresses on the loan documents
  2. Consider having a title search run by a title company or closing attorney’s office.  The cost is around $85 and is well worth it to confirm all information.  You won’t be able to determine if your property has been erroneously recorded to another person by checking public records on your own, but a title search can help in this regard.

4)     APPRAISALS  

This is a big concern that agents, buyers and sellers are sweating out these days.  If there is a mortgage involved, this can make or break a deal depending on the outcome.  A home’s value is of course influenced by what has transpired around it.   If a property appraises for less than what a buyer is paying, then that can trigger a renegotiation or ultimately everyone walking away.  As a result in declining home values, a seller may not be in a position to sell the property for a lower appraised value if there is a mortgage to payoff in addition to their closing costs.

On the size of the home, you may be representing that your home is a certain amount of square feet, but in reality it could be less.  If you are relying on incorrect information for that – your own measurements, tax records, etc.   there could be some issues here.  This can come into play when there has been an unpermitted addition or bathroom ,etc. to a home.  In some cases, the addition is not heated and cooled.  Appraisers only count heated and cooled square footage and a permit for the structure being filed with the county property appraiser’s office would trigger validation/recognition of the additional space.   You don’t want a buyer to discover through the course of their appraisal that the home is actually smaller than what was initially represented to them and they may want to readdress the price they are paying because of it.

If you are in a neighborhood where values are all over the place or have had quite a bit of short sale and/or foreclosure activity, etc. consider getting an appraisal before you put your home on the market.  It will help give you a baseline from which to work from.  Consulting with a highly knowledgeable real estate agent is also important on comparables and they can recommend reputable appraisers that work in your area.  Give the appraiser a detailed list of all of the upgrades and improvements you have made to your property but keep in mind that you are never going to get a dollar for dollar return on those items, and some things simply may be nice for a buyer to have with your home but they are not going to constitute a ton of value, if any.    Pools for example cost much more to install (around $50K to start) vs. the return you in an appraisal (an appraiser may only give $15K in value).

Although you will not be able to have a buyer use your appraisal if they are obtaining a mortgage as their lender is going to order one for their benefit, it can help give you some concrete information to work from.  You will also have updated measurements of your home’s square footage that you can use in the selling process.

 

5.)     FINANCING

Get PRE-APPROVED BEFORE you go property shopping.  Know exactly what you are comfortable spending and how much cash you will need to bring to closing with respect to a down payment and closing costs and prepaids.

Consult with your real estate agent to find out what type of properties match the financing you are doing.  For example, condominiums often require a higher down payment (20% – 30%) vs. purchasing a townhome or single family property.  In some cases, certain condominium complexes are not financeable at all or must be approved by Fannie Mae, FHA or VA, depending on the type of loan you are doing.

If you want to buy a property that needs work, you may have to use a renovation type of loan product that will allow improvements to be done after closing vs. before.

In other words, don’t assume that you can buy a property that you see with the type of loan you are qualified for.   Consulting with a highly knowledgeable agent once you know what kind of loan you qualify for can start your search on the right foot.

Knowledge is power and information is priceless.   Surprise is NEVER a good thing in real estate.  Fear results from what we don’t know.  Remove the unknown from the equation and function from a position of strength knowing that you are positioning your transaction on solid footing before you go under contract.

4 questions to ask before following the homebuying herd

Many pundits believe that now is a good time to buy a home. Interest rates are low and are predicted to be higher by the end of next year. Home prices are still low in many places. And, there are indications that prices are starting to rise, at least in major metropolitan areas. From June to July, the S&P/Case-Shiller Home Price Index rose 1.6 percent in 20 big cities in the nation.

Although buyers are clamoring to buy, don’t make the mistake of buying now just because many people are house hunting. Before jumping into the fray, ask yourself the following questions:

1. Are you prepared for the responsibilities and risks of homeownership?

Unlike renting, where the landlord usually pays for maintaining the property, you are responsible for repairs when you own. And, it’s ongoing.

Most buyers don’t factor in the cost and time of maintenance into their homebuying decision. It’s a must to keep up on maintenance for your personal enjoyment of the property and to protect its value. Deferred maintenance can diminish your net proceeds when you sell.

HOUSE HUNTING TIP: Buying is a more permanent commitment than renting. Real property is not a liquid asset. You can’t cash in a home like you can a bond or stocks. You shouldn’t buy if you don’t plan on staying in your home for a reasonable period of time, say five to 10 years. If you’re not forced to sell your home in a down market, you can avoid a loss.

2. Can you afford to buy a home with the amenities you need in a location where you want to live?

Contact a mortgage broker or loan agent to find out how much you can afford to pay. Then, consider your personal financial situation and determine how much you feel comfortable paying. In some places, it’s actually less expensive to own than to rent a home because rents have skyrocketed. And, there are tax benefits associated with owning your home that aren’t available to renters.

Once you know how much you are able and willing to pay, find out what sort of housing is available in neighborhoods where you’d like to live. You can do some of this research on the Internet. Search by area to see what’s available in your price range. Attend Sunday open houses to get a feel for what kind of home you can expect to buy.

3. Are you willing to compromise?

The perfect home does not exist. So, you will have to compromise to some extent. Make a list of the features you need and want in a home. Then prioritize the list. For example, you may want to have four bedrooms but can live with three if the home has the other essentials you need.

4. Are you willing to take the time and make the effort to carry out due diligence investigations in order to ensure that you make a wise purchase decision?

You can’t delegate this important step to someone else. A good real estate agent will help you make good choices. However, you are the decision-maker.

In addition to having the property thoroughly inspected by qualified inspectors, you need to find out if there is any reason why you shouldn’t buy a property you’re considering. Is there any change in the neighborhood that will impact its value, like a freeway due to be built nearby that will create a noise nuisance? Try to keep your emotions in check and don’t dismiss negative news about the home you love, or pay too much.

THE CLOSING: Homebuying is a lot of work and can be stressful. The benefit is that you will be master of your own domain, which could increase in value over time and improve your net worth when you sell.

 

By Dian Hymer, Inman News®