Category Archives: homebuying tips

When Buying a House Always Keep These 4 Things in Mind

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couple signing home purchase...
ShutterstockEven if you’re pre-approved for a loan, make sure you give yourself enough time for the extensive documentation.

By Geoff Williams

Buying a house is a little like asking someone to marry you. In both cases, you make your offer believing there’s a good chance you’ll get a yes, but you know you could get a no. If the answer is yes in either situation, your fates will be linked for many years to come — possibly until death do you part. But if you don’t get an immediate answer, the wait can be excruciating. We may not be able to help you with your love life, but if you want your house offer to be greeted with a yes — and a quick one — here are four rules to follow.

Be likable. Money talks, but so do you. And you don’t want to say anything that could turn off a seller.
“You’re most likely buying someone’s home that they have memories and a lot of emotional ties to,” says Marc Takacs, a real estate agent with Keller Williams Realty in Atlanta. So if the seller is present when you see the house, keep quiet about your grand plans for landscaping or repainting the living room.

[Read: The Hidden Costs of Buying a Home.]

“Don’t tell someone how bad, ugly, stupid, etcetera, that someone’s house is, and then try to buy it. That doesn’t work,” Takacs says.

Well, it might, if the homeowner is desperate and primed to sell, but if there are other buyers circling, you’ve given the seller an excuse to reject your offer and accept someone else’s.

Another no-no, according to Takacs, is being high-maintenance. “Don’t overstay your welcome,” he advises. “I don’t think anything irritates a seller more than when a buyer visits a house too much or stays for too long.”

He also suggests that when you submit your offer, avoid making unreasonable demands such as a lightning-fast closing date. “Try to be considerate of the fact people are trying to carry on with their lives, move and all the other stuff that goes along with that. Being pushed out of your house can be very unsettling,” Takacs says.

Don’t be stingy with your offer, but don’t overreach. If you offer exactly what the seller is asking, you will get his or her attention and probably their respect and appreciation. In many cases, your offer

“If you buy it for more than you can afford, you’ll end up hating the house and yourself in the long run.”

will be accepted. Offer a tad bit more, and you may chase other buyers away whose offers are at or below the list price.

At the other end of the spectrum, a lowball offer may insult the homeowner. In some instances, it may be shrewd to offer significantly less than the list price, but first consult your real estate agent, who will probably have the best read on what your seller is likely to accept.

If you’re looking to make the strongest offer possible, make sure it’s not so high that you can’t afford it, warns Kelly Long, a Chicago-based money coach and member of the National CPA Financial Literacy Commission. “Don’t offer more than you can practically afford, even if you’re approved for more,” she says, adding that this can easily happen if you’re looking at a house that’s out of your price range.

[Read: How to Compete in a Seller’s Housing Market.]

“If you buy it for more than you can afford, you’ll end up hating the house and yourself in the long run,” she says.

That’s because the more expensive your house is, the higher your monthly payments will likely be. Long cites the rule of thumb that a monthly payment shouldn’t exceed more than 28 percent of your gross income. That includes taxes and insurance, she adds.

Be ready for a yes. If the seller says no, the next steps are clear enough: You make a better offer, or continue house-hunting. But even if the seller accepts the offer, you don’t have those front door keys yet.

“You may be pre-approved based on your credit report and supplying your W-2, but the [mortgage] application process is much more involved and requires extensive documentation in a short window of time,” Long says. “Make sure you have some time set aside to gather all the necessary information in the week following the offer’s acceptance. You’ll also need to schedule, attend and pay for an inspection in that first week, so make sure you have the money on hand to pay for that.”

You may also be asked to offer earnest money, a deposit you give a homeowner to show you’re serious about your offer. Generally, earnest money is anywhere from 1 percent to 3 percent of the house’s total purchase price. You can get the money back if the sale doesn’t go through, but you can also lose it if you flake out and decide not to buy the house for no reason, or you don’t follow what you’ve agreed to in the purchase contract.

Don’t sabotage yourself to seal the deal. Speaking of that contract, be careful about what you put in it.
Yes, you want the house. You want the sellers to like you. But in an effort to get those keys from the sellers, don’t be their doormat.

According to Kent Sisk, an account executive at NexTitle, a title and escrow agency based in Bellevue, Washington, “the market is so hot right now [that] many buyers are waiving the inspection period, sometimes waiving the inspection altogether, in order to get their offer approved.”

Not smart, Sisk says.

[See: 10 Saving Strategies That Can Backfire.]

After all, you don’t want to learn after you buy the house that the roof leaks or there’s mold hidden away in the ventilation. Or you may end up berating yourself if you waive the appraisal contingency, which lets you back out of the deal if the lender concludes the appraised value is less the sale price, and later learn that you vastly overpaid for your home.

Ideally, your offer will be one that makes everyone, the seller and you, happy and reassured that everything between now and the closing will go smoothly. If you feel like you need to win this house at all costs and things go badly after your offer is accepted, not only will you lose — it will definitely cost you.

 

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5 Ways to Gain an Edge in a Competitive Homebuying Market

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happy african american father...
ShutterstockGone are the days when you could simply get pre-approved to buy a home and get into a homebuying contract quickly.

By Scott Sheldon

Demand for real estate is growing in many markets across the country. That’s great, but it creates competition in the form of all-cash offers, offers for thousands of dollars over list price, and a growing gap between affordability and prices in a given area. This dynamic only adds to the frustrations many buyers face in the market. If you are a part of the majority who are buying a home with financing, these following tips can help you solidify the deal.

Note that price is certainly a factor — if not the factor — most sellers are concerned about. However, while price is crucial, there are other factors that can give you an advantage when you’re trying to secure an initial commitment from the seller.

1. Get the Right Lender. Gone are the days when you could simply get pre-approved to buy a home, use that pre-approval letter to make offers and expect to get into contract quickly. Your loan officer’s reputation in the community is critical, especially among the agents who are controlling the deals. If your loan officer has a trusted name, recognition and a favorable presence in the local market, this can

“Even if another offer is higher than yours, the offer with 20 percent down still looks stronger on paper to agents.”

be communicated via the listing agent, who has a direct influence on what offer the seller takes.

2. Get the Right Buyer’s Agent. You’ll need a real estate agent to represent you if you’re going to be making offers on properties listed on the open market, and picking an agent to represent you in your house hunt can be no easy feat. Getting personal recommendations from family or friends is a great start. Another possibility is to explore review sites and pick an agent who has experience and has open-ended honest reviews by other consumers. Ideally, the person you’re going to want representing you is someone who has a reputation for delivering in the local market. This is especially important as many real estate agents network with each other and work with each other on a regular basis. If your buyer’s agent has a favorable reputation not only in the local community, but with the listing agent in a previous transaction, for example, this is a very good sign that person can influence the seller because they know the offer is strong and they trust the other side.

3. Get an Introduction to the Listing Agent. Upon your buyer’s agent (who’s representing you) offer submission, your loan officer calls the listing agent to introduce themselves and explain how well-qualified you are to purchase that property. There is tremendous opportunity to create a relationship from the financing side in further supporting a strong offer. Many listing agents inevitably call the lenders of the buyers whose offers are strong on paper in an attempt to feel them out about the buyer’s qualifications. Preemptively, taking this step is a favorable approach that makes it easier for the listing agent to influence the seller to accept your offer.

4. Understand How You Appear on Paper. It doesn’t matter if you have $500,000 in income; if you’re buying a home and putting less than 20 percent down, even if another offer is higher than yours, the offer with 20 percent down still looks stronger on paper to agents. The old 20 percent down approach is still king. Granted, you can still buy a house with as little as 3.5 percent down on an FHA Loan, and if your offer is higher, that can help offset the perceived lower financial strength indicative of a less than 20 percent down offer.

Another approach to take to increase your odds of getting the seller to accept: Don’t request a credit for closing costs in your initial purchase offer. When you ask for a credit for closing costs based on whatever purchase price amount you are looking for, that gives the seller less net proceeds at closing — that is, unless you offer a higher purchase price and ask for a credit that way. But be aware, doing the latter means the house must appraise for a higher value to support your higher offered amount with your requested credits for cash to close.

5. Offer a Short Closing. Upon making an offer to buy a property, making an offer to close in less than 30 days is an aggressive approach, communicating to the seller that your financing is lined up and it’s time to play ball. Know that lenders are up against federal mandatory disclosure time frames and, as such, have certain thresholds they have to meet in order to be federally compliant with recent regulatory changes. As a homebuyer, this means you will need to jump through the hoops faster to meet the contractual stipulations. For example, if your lender needs an explanation about your income or needs a bank statement, proactively providing whatever condition is needed for underwriting by the lender within a 24-hour period of time will dramatically aid your lender in helping you close faster.

It can also help, several months ahead of when you expect to buy, to check your credit reports and credit scores to see what condition your credit is in. Giving yourself time correct any errors or work through any other problems that are hurting your credit can possibly mean the difference between qualifying for a loan … or not. You’re entitled to one free credit report a year from each of the three major credit bureaus, and you monitor your credit scores for free through a service like Credit.com.

When you plan to buy a home, making sure you’re covering all these bases when you’re making offers and getting acclimated to the local housing market could dramatically increase your odds of getting your offer accepted, and you can go get your officially approved loan with the lender of your choice.

 

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Why the All-Cash Buyer Still Rules the Real Estate Market

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a model house sitting with a...
ShutterstockToday’s cash buyers aren’t necessarily institutional investors. They found their deals when housing prices were lower.

By Vera Gibbons

Even as the share of all-cash sales falls in many areas, it’s pretty clear that cash is still king, especially at the lower end of the market. This makes it more difficult for traditional buyers to compete with cash offers, especially in a tight inventory environment. So who are these cash buyers, and where are they located? Here are answers to some of your questions.

Why is this happening now? It’s happening now for a couple of reasons. Lending standards are still very restrictive, and buyer competition is intense, particularly in markets with lots of demand and not much supply. The thinking is: If I pay with cash, I’ll get to the front of the line and have a leg up on the competition.

Where is this trend most prevalent? This trend is nationwide, and while the share of cash sales is higher than “normal” in many parts of the country (even in rural heartland states that never had a

More than one-third of all sales of the lowest-priced homes were made with cash.

housing bust), it’s most prevalent in Florida and Midwest markets. In the first quarter of this year, Miami had the largest share of cash buyers in the country at nearly 65 percent of total sales, down from 71 percent in 2012. Tampa and Cleveland were close behind with 57.1 percent and 54.2 percent, respectively.

Who are these all-cash buyers, anyway? They aren’t all institutional investors, necessarily. After all, they found their deals last year and have more or less exited the party as home prices have risen. Rather, they are baby boomers, empty nesters, wealthy families buying second homes/vacation properties and foreign buyers who are coming to the U.S. from all over the world and snatching up properties in places such as Miami, New York City and Las Vegas.

What does this mean to traditional buyers? Traditional buyers are faced with greater hurdles when making offers because they are likely to have to compete with cash offers, especially in the tight inventory environment in the bottom tier of the market.

Zillow examined the share of cash sales made in the bottom, middle and top one-third of home values and found that in 27 of the top 30 metros, more than one-third of all sales of the lowest-priced homes were made with cash. In three of the top 30 metros — Tampa, Detroit and Miami — more than 80 percent of all sales in the lowest price bracket were cash deals.

The good news is the portion of home purchases made with all cash is down from last year, which will help even the playing field for first-time and low-income home buyers.

How can non-cash buyers possibly compete with all-cash buyers? Your best defense is to be a well-qualified buyer. You’re gainfully employed, able to make a substantial down payment (20+ percent), have been pre-approved, and, of course, have good credit. You should also make a strong offer and ideally one without any contingencies.

Finally, sweeten the offer any way you can. Find out what’s motivating the sellers and give them what they want. Remember, at the end of the day, money is money, and many sellers may not be in a great rush to close; they are simply looking for clean offers that are going to go through, hassle-free.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow or AOL.

 

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Orange County Housing Trends Newsletter

Garry Loss www.occoastal.com
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OC Coastal Housing TrendaWelcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.

OC Coastal Housing Trends

Please click on this link to view the Housing Trends JUN-2014 Newsletter http://theoccoastalgroup.housingtrendsenewsletter.com

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.

Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports.

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:

http://theoccoastalgroup.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.

Sincerely yours,

Garry Loss
The OC Coastal Group Realty
www.occoastal.com
1278 Glenneyre Street, 259 Laguna Beach CA 92651 888-622-8439 | 949-235-3474 [email protected]

Home prices jump nearly 11% in April

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