What is the single most important rule in house hunting?
• Privacy is a plus
Consider how much privacy the house and lot provide.
• Drive the commute before you buy
Check morning and afternoon drive time to work, schools, shopping, churches.
Look for an established neighborhood that will be enhanced by future growth but not inconvenienced by it.
• Look out for resale value
Seek a prime neighborhood where houses sell well in any market.
• Check out location
Consider availability of all aspects of transportation; even those you may not use.
• Schools are important
Check for quality public schools, whether or not you have school-age children.
• Green is good
Look carefully at the lot for trees and greenery to buffer winter winds or summer heat.
• Make room for visitors
See if ample guest parking is available for you and your neighbors.
• Privacy is a plus
Consider how much privacy the house and lot provide.
• Drive the commute before you buy
Check morning and afternoon drive time to work, schools, shopping, churches.
What are the essential steps every first-time buyer should know?
The best way to prepare to own your first home is to educate yourself about the home buying process. You can take a class or pick up books from the library. Also, read the real estate sections of your newspaper and consumer magazines.
Here are some things you will want to do:
Ask lots of questions
Learn what questions to ask and where to ask them. Your list of questions when you are interviewing real estate agents will be different than those you ask when shopping for a lender.
Prioritize your criteria
Determine what you want and need in a new house and prioritize your list.
Study a variety of mortgage choices
Investigate the available loan options and decide which is best for you. You may want to interview several lenders to learn about the many mortgage products available.
Get pre-approved before you house shop
Get pre-approved for a loan before you start looking for a home so you know how much you can afford to pay. Once you are actively house hunting, lock in your interest rate - if it's a good one. This will speed up the closing process.
Work with your agent
Work with your agent on a purchase offer when you decide on a home. You should ask your agent for a market analysis to find out what similar homes are currently selling for in your chosen area. You and your agent should tailor the sales contract to suit your needs. For example, you can make the sale contingent on a favorable home inspection report.
Finding an Agent
What are some questions I should ask a prospective agent?
So, you're thinking about buying a new home! The first place to start is by looking for a professional to help you. An experienced real estate agent will "bind" together the entire process. The right pro will help you find the right property and keep things on track from shopping to closing.
Here are some key questions to ask the agents you are interviewing:
• Do you represent the buyer or the seller?
• What are your fees and who pays them?
• How much time will you have to help me look for a new home? What tasks will you perform for me as my representative?
• How often will you communicate with me, and how can I reach you?
• Will you refer me to some buyers you have represented recently?
• Do you have access to the area multiple listing service, foreclosed listings and other sources of information about available houses?
• Will you show me all the available houses in my price range, even if they are listed by another company?
• Will you give me a comparative price analysis for any homes I am considering?
What can a real estate agent do for me that I can't do for myself?
As professionals who specialize in real estate, we complete the home-shopping puzzle. We can help open up the possibilities for your next home with a variety of services:
Financing
We can help you evaluate your financial circumstances, help you decide how much house you can afford and help you select the best financing plan.
Housing needs analysis
We can help you sort out housing priorities, the expenses involved in buying a particular home and what steps to take to reach your goal.
Home search
We can show you what properties are on the market in your price range and take you on a guided tour of the homes you're interested in.
Contract
We can make sure you understand the terms and conditions of a contract when you are ready to make an offer on a home.
Loan application
We can help you select the best financing option, help you choose the lender with the best rates and service record and help you prepare your mortgage application.
Inspection and Closing
We will assist you in a pre-settlement inspection to be sure the terms of the purchase contract are kept, and we'll follow through to all the way to settlement.
Call us now at 775-746-7000 or Contact Us to take advantage of our years of experience helping people find the home they want and can afford. We'd love to help you, too!
I've heard about "agency." Who does a real estate agent really work for?
Many home buyers and sellers are confused about who real estate agents represent. Don't worry, they're not trying to disguise themselves. A quick look at the various types of agency should help:
Seller agency
The most traditional situation is one in which the seller is represented by both the real estate company who lists the home for sale and the real estate company who brings in the buyer.
Buyer agency
This is a relatively new trend in real estate. Just as a written Listing Agreement is required to represent a seller, a written Buyer Agency Agreement is required to represent a buyer. Under that written agreement, the agent represents the buyer with confidentiality and loyalty, and shares with the buyer any material information.
Disclosed dual agency
In this case, an agent helps both the buyer and the seller. There must be informed consent of both the buyer and seller, using a written agreement with the involved broker(s). Special conditions apply regarding disclosures to both parties, including limitations on an agent's ability to represent either buyer or seller fully or exclusively.
Who pays the fee of a buyer's agent?
Your purchase offer looks good to the sellers. They are ready to accept it, but you are using a buyer's agent (also called buyer's broker). You know that sellers pay their agent, but what about yours?
Who represents whom?
A buyer's agent is retained by a buyer to look out for the buyer's interests and to negotiate the best price from the buyer's point of view. Just as the agent who lists the seller's house owes the seller complete loyalty, the buyer's agent owes the buyer the same degree of loyalty.
What do sellers do?
Sellers generally indicate on the listing agreement whether the seller is willing to pay the buyer's agent. Most sellers choose to work with a broker who splits the commission with a buyer's agent even though that agent does not represent the seller's interests. This, of course, maximizes the number of potential buyers for the home. Because the listing broker is already prepared to share the commission with a seller's agent who produces a buyer, most sellers don't mind when their broker, instead, shares the commission with a buyer's agent.
Buying a home directly from the owner will save on the cost of the house, right?
Wrong! The "for-sale-by-owner" sellers are doing their own marketing to save the commission a professional real estate agent would charge. So what is left for you to save? In fact, you might end up paying more if the house is overpriced. Beware of these costly pitfalls:
Confusion
You end up dealing, in many cases, with an untrained novice who is not familiar with real estate law or the real estate code of ethics. Something might be overlooked that will cost you money later.
Additional legal costs
You will need a lawyer to draw up your sales contract, which should include safeguards for you that an experienced agent would typically suggest, such as making the contract contingent on a home inspection and approval of your mortgage loan.
You will have to be your own negotiator
Also, without agents involved, you would have to conduct your own negotiations on the contract and make sure all the details are taken care of before closing.
As professionals with the answers to your home-buying questions, we can make your search for a new home less confusing. Call us at 775-746-7000 or Contact Us!
Finding A Home
What advice would you give to help me decide between my two favorite houses?
You can make such a tough decision easier by going back to your starting point. Ask yourself these questions:
Review your priorities
Do both properties meet your stated housing needs?
Seek new information
What else should you know about the house, the neighborhood, local schools, transportation, and community facilities?
Get out the crystal ball
How long do you expect to stay in your next home, and how will each house fit your expected needs and lifestyle over that time period?
Compare the added features for each home
Are there benefits that outweigh any shortfalls in your priority list?
Keep resale in mind
If you intend to move in five or 10 years, which home will probably be easier to resell?
Analyze the costs of both homes
How does the price of each compare, and how do the long-term costs such as heat, local taxes and fees, transportation and other day-to-day living expenses stack up?
Is there more you would like to know about that final home-buying decision? Simply call us at 775-746-7000 or Contact Us
Beyond the house itself, what should I look for in the property?
Once you've found the right home, take a good look at the land it's built on before you buy. Check for:
• Easements
Whose are they and where are they located? Will you be able to build a garage, shed, fence or other improvements while avoiding the easement areas?
• Flood plain
Is part of the lot marked for flooding areas? How often and for how long is the area under water? Has the house ever been flooded or threatened by high water?
• Boundaries
Where are the true lot lines? Is the fence properly placed within the lot? Will there be room to build a deck or addition to the house later on?
• Utility cables
Where are they located? Will it be possible to add phone lines or upgrade electrical capacity later?
• Hydrant
How close is the nearest fire hydrant? This, and the proximity of the fire station, are often important when purchasing homeowner's insurance.
You may have to do a little research to answer some of these questions, and may want to make any contract contingent upon your being satisfied with the results.
How can I be certain I'm getting what I think I'm paying for?
When you have found the house you are ready to buy, you might assume you will get everything you see, besides the family's furnishings. That is not always the case. Even if the multiple listing profile lists certain items that are to convey with the house . lawn furniture, window shades, a special chandelier, washer and dryer . those items might not remain behind.
How can you be certain you are getting what you think you are paying for? Here are some tips:
Make a list
List everything in the purchase contract, a legally binding document that defines the terms of the sale. When offering a price for the house, state exactly what you expect to convey with the house.
Keep all negotiations on the same form
Even if it gets messy, do not retype the original contract, because some provisions could get left out.
Be prepared to negotiate
You can also list items not specifically indicated by the seller, such as living room drapes, that you want to convey with the house, and negotiate for the value of the added items.
As real estate professionals, we can help you understand every step of the home-buying process. Call us at 775-746-7000 or Contact Us
Are there guidelines to how much a buyer should offer?
Now you've found the house you want, how much should you offer to pay for it? This can be a tricky puzzle, because there are no carved-in-stone guidelines. Some homes are overpriced, while others are a "real steal" at the full asking price. Here are some tips:
Ask your agent for comparables
To determine a fair purchase offer, ask your agent to prepare a written comparative market analysis showing the sales prices of similar neighborhood homes that sold recently and the asking prices of comparable homes currently on the market.
Compare the details
To calculate your best offer, compare the features of the home that interests you with the features of similar homes that have sold recently in the same neighborhood.
Negotiating The Contract
Should I ask for a home inspection before I buy?
When buying a home, leave yourself the option to get a second opinion. Consider putting a contingency clause in your offer that allows you to get a home inspection and cancel the sale if the results of the inspection are unsatisfactory. If there are serious problems, a home inspection can prevent some serious hassles.
Who pays for the inspection?
The buyer usually pays for the inspection, which can cost several hundred dollars. The seller generally wants the inspection completed within a short time period, say five or ten days. For this reason, when you start shopping for a home, also look around for a good home inspector. Ask your agent for several names.
Who should attend the inspection?
You. You'll learn a lot about the house that could soon be your home. If it's practical, your real estate agent and the seller should also accompany the inspector. Wear old clothes and comfortable shoes, as a complete inspection goes from attic to basement. The inspector should check for structural defects, plumbing and wiring problems, dampness in the basement, leaks from the roof, termites, lead paint, dry rot, energy efficiency and compliance with local building codes. Any visible and accessible problems should be noted immediately and then included in the report.
What happens if the inspection uncovers problems?
If you put an inspection clause in the contract, you may back out of deal if serious defects are found. What happens more frequently is the buyer will negotiate with the seller to have the problem repaired or the sales price adjusted.
Call us at 775-746-7000 or Contact Us for answers to other questions you might have about contract negotiation.
What happens after I present my offer?
When a buyer presents a purchase contract, it is usually the starting point of negotiations, so keep your mind sharp and your pen handy. The seller can accept, reject or modify the contract. Most often changes are negotiated and the sale goes forward. Here are some points to remember:
Keep the calculator handy
Both the buyer and seller should total up the value of negotiable items, and keep in mind how the price bid by the buyer compares to recent sales of comparable homes. If the bid is already low, the seller may not be willing to pay points or closing costs, but when a home price is a little high, the seller has room to offer financial considerations.
Try to nail down intangibles
Other negotiable items may be hard to quantify, such as including the drapes or a special chandelier, or the 5-year old washer and dryer. Anything pertaining to the sale is up for negotiation and has a value. For example, changing the date of settlement to accommodate one of the families or inserting a mortgage approval contingency can be discussed.
Put it all in writing
Be sure all changes to the contract are made on the original form, no matter how messy it gets; important items can be missed during retyping.
How does a "drive-by appraisal" help me bargain better?
If the house you are interested in seems over-priced, there is a new tool to help you get a quick and inexpensive second opinion before you make an offer.
Consider a limited-scope appraisal
The new, limited-scope appraisals use databases as a source of information to estimate the value of a home. The information comes from prior appraisals, property tax assessments, sale and resale information and, sometimes, a drive-by to come up with a professional estimate in a few hours. The cost is generally under $100.
Get less than a full appraisal
The more traditional, complete appraisal -- required by lenders for a mortgage loan -- can take several days, usually involves a personal inspection of the interior as well as exterior of the property and costs several hundred dollars.
Negotiate a more accurate price
Determining the fair value of a home with a quick, limited-scope appraisal before signing a contract may help the buyer negotiate a lower sales price. Also, some lenders now accept limited-scope appraisals for refinancing, thus saving the borrower both time and money.
What are some inside tips to close a deal if the seller won't budge on price?
Negotiating is an important part of many home sales. If you have found the home you want, but the price isn't just right, both you and the seller may have to adjust your expectations to close the sale and get you in the door.
Keep searching for common ground
If the seller won't budge on the price, perhaps there are other items that can be negotiated, such as closing fees or loan discount points to bring the cost of the home within reach. Or perhaps the seller will add the washer and dryer, drapes or other amenities not originally included in the sale. The key is to keep talking until you find common ground.
We can answer your specific contract negotiation questions. Call or e-mail us or click on "Ask Your Own Questions."
We're in a competitive market. What can I do to make my offer look better than another buyer's offer?
It takes more than good luck to get the right home at the right price. One advantage you can have on your side is a conditional loan pre-approval. When you are pre-approved your offer is more attractive because the seller doesn't have to wonder if you can afford to buy. The seller will know in advance that your offer is as good as money in the bank.
Pre-approval versus pre-qualification
A pre-approval is a conditional loan approval from a lender based on your application. Pre-approval differs from pre-qualification, which is a verbal exchange with a lender about how much you can probably afford. Pre-qualification does not obligate the bank to make the loan, whereas a pre-approval is a conditional loan commitment. Final approval is made when both your finances and the property pass review.
Close the deal faster
Lining up your mortgage loan before you start house hunting could make buying your new home quicker and easier. A pre-approval can speed closing because most of the paperwork is already in place for the loan. You have already started to learn about the financing process, and any problems will have been resolved.
Closing
What do I need to know about closing on my home?
Once you've signed a contract to buy a house, the preparation for settlement begins. Settlement, or closing escrow, is the process of transferring the title (ownership) of the home from seller to buyer.
Often, the real estate agents involved in the sale help you take care of these arrangements. But the buyer and seller are ultimately responsible for attending to these details.
Here are the basics.
Buyer's Responsibilities
Getting financing
The buyer must first secure the financing to buy the house. Usually this means taking out a mortgage loan. Most lenders require a complete financial picture, including income and expenses, and a credit check. In addition, most want an up-to-date appraisal of the home, a survey of the property and, often, some inspections (for termites, radon gas, etc.). Some lenders specify which service providers they want the borrower to use. Once all the paperwork is in, the borrower should keep in touch with the lender until receiving a loan commitment.
Buying hazard insurance
The buyer needs to purchase a hazard insurance policy (also called homeowner's insurance) . usually bringing a paid receipt to settlement . to protect the lender. If the buyer wishes to bring an attorney to settlement, arrangements should be made 30 to 60 days in advance.
Expect an estimate of closing costs
A few days before settlement, the buyer should receive a Good Faith Estimate of settlement costs. In addition to the loan commitment letter, the buyer must bring a certified or cashier's check for the down payment and any other costs due at settlement. These costs include mortgage interest from the closing date to the first payment due, escrow for property taxes and insurance, and various taxes and recording fees. Be sure to bring your regular checkbook in case miscellaneous costs need to be paid.
Plan ahead for settlement
Both the buyer and seller need to give the settlement agent all pertinent information requested. And, since many long and detailed forms are usually signed at settlement, you might consider requesting copies of the basic settlement forms several days in advance to read them and familiarize yourself with the process. The focus at the settlement table will be on checking the exact figures to be sure everything is accurate.
Send a representative if you can't attend
If you cannot come to closing, be sure to notify the settlement agent in advance so a Power of Attorney can be prepared. Once the papers are signed and money paid, the keys are handed over to the buyer and the sale is complete.
Call us at 775-746-7000 or Contact Us for answers to all of your concerns about buying a home.
What are some typical closing costs?
When you apply for a mortgage, the lender must respond with a Good Faith Estimate of Closing Costs, which explains the costs you will likely have to pay at settlement. But the numbers on the form are estimates, and the final tally could be higher or lower.
Some of the more common charges are:
Loan Origination Fee: usually 1% of the loan;
Loan Discount Points: a form of accelerated interest; each point is 1% of the loan amount (who pays points is negotiable between buyer and seller);
Appraisal Fee: the charge to have a professional appraiser certify the value of the property being purchased;
Credit Report: the cost of getting a credit history from a credit service;
Tax Service Fee, Document Preparation Fee: charges to set up a tax escrow account and prepare mortgage documents;
Attorney Fees: the settlement agent's charges for processing the sale closing;
Title Insurance: charges for insurance to guarantee the validity of the property's title for the lender; buyers can also purchase title insurance at settlement to protect their interests;
Recording Fees, Tax Stamps: local charges to officially record the deed and mortgage, and transfer taxes;
Survey: the charge to verify the boundaries of the property being purchased
We're a little tight on cash. How can we shift some settlement costs to reduce out of pocket expenses?
Some buyers reduce the cash needed at settlement by scheduling closing at the end of the month. But there are several other ways to save on closing costs that may work better in the long run.
Skip late-month settlement
Since interest on the loan is paid to the end of the month at settlement, the interest payment gets lower as you get closer to the end of the month. But another approach is to wait a few days until the beginning of the next month. That way, you'll need to pay more up front at settlement, but you'll gain a whole month's delay before the first full mortgage payment is due, because mortgage interest is paid in arrears, after the month has passed.
Reduce out-of-pocket cash
Another way to reduce the cash needed at settlement takes some advance planning. By negotiating with the seller, the buyer may be able to pay more for the home and finance it, while the seller puts an equal amount toward out-of-pocket settlement costs.
Finance closing costs
A third option is to find a lender who will finance closing costs by wrapping them into the mortgage. This method may, however, cost more over the long run, as lenders often will then charge a higher interest rate for a "no closing costs" loan.
What are some sources for out of pocket cash to pay closing costs?
Sometimes the amount of cash needed to close a sale comes as a shock to the buyer. Taxes, recording fees, insurance premiums, pro-rated interest, escrow deposits and other expenses can easily reach into the thousands of dollars. Rather than reduce the down payment to pay these costs, many homebuyers have other sources of funds they might not think of using.
Here are seven to consider:
Gifts
Lenders like these best because they do not have to be repaid. Miss Manners may object, but this would be a good time to ask for cash in lieu of a birthday or wedding present.
Concessions
Ask the seller to pay some of the closing costs. You may pay more for the home, but you will have more cash to use for down payment than if you use part of your savings for settlement expenses.
Lender programs
Some lenders are willing to wrap the closing costs into the loan total, but will charge you a higher interest rate for the loan. You may be able to refinance for a lower rate later.
Sell something
Some people have sold assets like an extra car, land, or stocks to raise the extra cash for closing.
Housing assistance programs
Borrowers who meet moderate-income guidelines may be eligible for state or local loans or grants to help first-time home buyers.
Employer assistance
Many companies have housing-assistance programs available through the Human Resources department. Some firms will allow an employee to borrow against a year-end bonus.
Borrow from yourself
You may be able to take a loan out against your retirement account, life insurance or other restricted savings. You pay the interest to yourself. But be sure to repay what you borrow, since some programs have hefty fines and tax consequences if you don't.
What should I expect at the final "walk through?"
Whether you buy a new house or one that has been occupied before, you want to make a final inspection before settlement. The "walk-through" should be scheduled long enough before settlement so any problems can be solved before you receive the keys.
Examine the house closely
Examine the house closely to see that any contingencies the seller agreed to have been attended to. Then look for any flaws that might have escaped your notice earlier. For instance, how does the house look without your predecessors' furniture? Has the builder made any changes since you saw the house before? Are the items that are supposed to remain still there?
Negotiate problems
In some cases, problems will have to be taken care of after settlement. Just make sure you have a written agreement to that effect (with a timetable specified), to prevent misunderstandings.
Ask all your questions
Don't be shy about asking questions during your final walk-through. Make a checklist of questions and answers and put your requests in writing as soon after the inspection as possible.
Get some help if needed
If you're not sure what questions to ask, take your agent or an experienced inspector along with you. Or consult a home maintenance book ahead of time to alert you to problem areas.
We can help with every step of your home-buying experience. Call us or e-mail us now.
Once a settlement date is set, can it be changed?
Settlement it the last step in home buying . before the moving begins, that is! Sometimes called closing, settlement is where the seller receives the funds from the buyer and the buyer gets proof of ownership. While everyone does their best to meet the settlement date, it is important to remember that many things can crop up to delay the settlement.
For instance:
Credit problems
Problems with buyer's credit history that must be explained.
Paperwork delays
Unforeseen delays in processing lending paperwork.
Appraisal problems
Delays in property's appraisal.
Contingencies
Inspections and/or repairs that must be completed before settlement.
Unresolved liens
Liens against the property that need to be resolved.
Personal Problems
Personal problems (such as a death in the family) that lead to rescheduling.
Remember, delays in settlement do not necessarily mean the transaction is falling apart. Most transactions do eventually go to settlement. Many problems can be straightened out in a day or so. The key is flexibility.
What is earnest money?
Earnest money is a cash deposit buyers make when they sign a contract to buy a house. It makes the contract binding and signifies the intention of the buyer to complete the purchase. At closing, the earnest money becomes part of the down payment. If the buyer defaults without a good reason, as spelled out in the contract, the earnest money becomes payment for damages suffered by sellers and their agents.
The earnest deposit could be several hundred or even several thousand dollars, but usually no more than 5% of the purchase price. If the buyer's contract is not accepted by the seller, the money is returned to the buyer.
What is a contingency?
A contingency is a condition on the sale put into the contract by either the buyer or seller to protect against specific eventualities. Examples of common contingencies are: a requirement that the buyer obtain financing or sell the current home; the seller has a home inspection done; or the seller must repair certain items before settlement. Contingencies can be removed by an addendum to the contract, or they can expire if a time limit is specified in the contract.
Do you have more questions? Are there other terms you don't understand? Call us at 775-746-7000 or Contact Us
Which settlement expenses can buyers deduct on their taxes?
Some of the biggest costs at settlement are tax deductible in the year the home was bought. The loan fee or points, even if paid by the seller, as well as the pro-rated mortgage interest and property taxes, are tax deductions.
Increase your basis
Most of the rest of the closing costs are not deductible, but can be added to the home's purchase price to increase the basis of the property. These costs include attorney and recording fees, transfer taxes and termite inspection. The homeowner's property insurance is a personal expense, so it's not tax deductible and cannot be added to the basis of the home.
How do you buy a house at auction?
Buying a house at a real estate auction can be tricky at best, even for the experts. It's all too easy for the unwary buyer to get caught up in the thrill of bidding and wind up owning a costly mistake.
Get pricing help
Your best bet is to ask a knowledgeable real estate agent to assist you in arriving at an appropriate purchase amount. A savvy bidder needs to know comparable home prices; we can provide you with a range of prices for similar properties.
Review property package before bidding
Review the bidder's package with the agent's help. The package should include a copy of the title search, tax information, a current appraisal, special fees and the auction rules.
Arrange financing in advance
Make sure you've arranged financing before the auction.
Keep your head
Most of all, remember to buy sensibly; don't let the excitement of the auction cause you to pay more than the home is worth. After all, not every home sold at auction is a bargain.
Call us at 775-746-7000 or Contact Us We will be happy to help you assess your own home-buying situation.
