Category Archives: buying a house

Buying a house can be a complicated process. Contact RE Platinum to work with professional realtors who know your local area, and the industry

How to Make an Offer on a House

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new home owner receiving key in hand after buying homeYou found the right house! Congratulations! Before you start buying new furniture or contacting a moving company, you need to make an offer on the house and make it yours.  The process of making an offer on a house and having it accepted can come with a million different questions; we’ve heard them all—and have compiled the most frequent into a list of answers. (You can also get the answers—and our expertise—in person. Just contact us.)

How much should I offer on a house? What is the right price to offer?

The right amount to offer on a house is dependent on your budget and the value of the property. Your real estate agent should be able to give you an idea of what the house is worth, based on comparable sales in the area. Basically, the worth of the property is based on the sales prices of other local properties with similar lot sizes and square footage.

There are a few factors to keep in mind as you make an offer:

  • A low-ball offer can offend a seller and lead to a more difficult negotiation (this doesn’t mean you shouldn’t make a lower offer, it’s just something to factor into your decision if you really want the property).
  • The amount the seller sees is the amount with all the “others” factored in. For example, if you make a full offer of $150,000 but ask for $10,000 to cover closing costs, the seller is going to look at the offer as $140,000 (not full price).
  • A large amount of contingencies or major contingencies can make a seller choose not to accept your offer. That doesn’t mean you shouldn’t include contingencies; it’s your right to include as many as you want.

What contingencies should I include?

The exact contingency or combination of contingencies a buyer includes depends on their exact situation. These are some of the most common contingencies buyers include in the offer:

  • Home inspection. This contingency gives the buyer the option to walk away if there is a problem found during the home inspection. If there is a minor issue, the buyer can request that the seller fix the problem. However, if the problem is more severe, like a bad roof or furnace that needs to be replaced, the buyer can opt out of the contract. This is a contingency that we recommend that every buyer include in their offer.
  • Financing. If the buyer is using financing to cover all or part of their home purchase, a financing contingency covers the situation where the financing would fall through before the closing. This contingency gives the buyer the chance to opt out of the contract.
  • Property sale. For buyers who have their home on the market and are making an offer on a new house, a property sale clause gives the buyer the chance to walk away if their home doesn’t sell.

What do I do if the seller does not accept my offer?

If the seller does not accept your offer, you have two choices. You can either make another offer or walk away. Your real estate agent can help you make the choice that best fits the situation, or set up showings for other properties that you make want to submit an offer for.

6 Steps to Buying Your First Home

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Hand of young woman showing home key of new homeReady to buy your first home?  Watching home buying shows and reading articles may be fun, but only gives you half the picture of the home buying process (and often skips over the “technical stuff”). Since the path to home ownership is different for everyone, the steps may vary slightly when you buy your first home; however, in general this is the usual order of steps in the home buying process.

Contact a lender

Before you can close on your first home, you need to get pre-approved for a loan.  Choose a lender that can give you a good mortgage rate, but know up front that you don’t need to apply to find out the lender’s rate (be aware that the actual rate might vary over time and after they determine your eligibility).  Remember, that a good mortgage lender offers more than a just good rate; a good mortgage lender gives you not only a loan, but an education and a smooth home sale process.  Make sure you also ask about any other charges over and above the mortgage rate; you don’t want to be surprised by “extra” fees.

As you choose your mortgage lender, ask yourself if you are more comfortable with an in-person lender or online lender and how much assistance you need as you navigate through the approval and closing.  Whether you choose in-person or online, make sure you vet your lender choices to ensure that you are choosing a reputable mortgage lender.  Once you have a list of potential lenders, ask each lender these questions:

  1. What is the current mortgage rate you offer?
  2. What other fees do I need to pay?
  3. What kind of loans do you offer? (Some lenders may not offer certain kind of loans, such as a HUD or veteran loan.)
  4. How long does the process take? What kind of documents do I need to proceed?

Once you have provided all the necessary documents, your lender should provide you proof of pre-approval, as well as the amount you are pre-approved for.  From these documents, you can decide what the budget is for your first home.

Choose a good real estate agent

Once you have a pre-approval letter in hand, it’s time to find a real estate agent that can assist you in finding properties. Choose a local real estate agent with a lot of experience to assist you as you navigate through the process; finding the right property is more than just showings and signing on the dotted line. A good real estate agent should know your ideal location in and out, and have the experience to help you if you encounter any bumps as you work your way through the process.

Make a list of ‘must haves’ and ‘wants’ to take into your first meeting with your real estate agent.  Do you need three bedrooms? Would you really like a large yard? Are you open to the idea of a condo or townhouse?  Your list helps your agent get a clear picture of what you really want in a property so they can choose appropriate properties. Be aware that what you want may change as you look at homes—and that your ‘must have’ list may not fit with your budget.

Let the search begin…and end

Once you have a pre-approval letter and budget number, ask your real estate agent to set up showings at properties that fit with your ‘must have’ list.  Depending on the market you are searching in and your budget, you may need to prioritize your list.  What do you want the most?  What feature is the most important?

As you tour homes, look for red flags that could signal you are purchasing a money pit. Don’t be afraid to ask more questions about anything you see that might concern you (your agent can forward your questions to the seller).

Make an offer

Once you’ve found the ‘one,’ it’s time to put an offer (purchase agreement) in on the property you are interested in. An offer is the document you submit to the seller that contains an asking price and any contingencies, or conditions, of the sale. For example, a common contingency is a financing contingency which means your loan must go through for the sale to be final. Another common contingency is an inspection contingency where the house must pass a home inspection or both parties come to an agreement on how to handle an issue that arises during the home inspection. There are other contingencies that can be included in your offer; discuss your options with your real estate agent.

Your offer may also include an earnest money amount. Earnest money shows the buyer you are serious about the property; if there is a lot of interest in the property, earnest money can set your offer apart. Earnest money is applied toward the balance of the home at closing; if you offer $215,000 with $5,000 earnest money, the final amount to pay at closing is $210,000. Ask your real estate agent how much earnest money they would recommend you should include.

Get a home inspection

A home inspection is a safeguard for buyers; it is a chance for a home inspector to look over the home and alert the home inspector to any potential problems.  A home inspector can let the buyers know the home needs a new roof, there is an electrical issue, or if there is maintenance that needs to be done soon.  If the home inspector does find a major or minor issue, the buyers can ask that the item be repaired or negotiate a lower price because of the issue.  Your real estate agent can assist you through any snags found during the home inspection.

Close on the sale

The final step is closing day.  This is the last step to homeownership; it’s also the day to sign a stack of documents so be ready with your pen.  You may also need to bring documentation to closing day; make sure you ask your lender and real estate agent exactly what you need (if anything).  If everything goes smoothly, you should receive the keys to your first home—and be home to head to your first home to enjoy it.

Home Buyers: 10 KEY Questions to Ask Your Real Estate Agent

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real estate agent with small house on hand ready to help buy a homeReal estate agents can seem like a dime a dozen; you might even know one.  But when it comes right down to it, buying or selling a home is a big financial move.  Blind trust in a friend-of-a-friend or a cousin may seem like a wise decision, but can cost you big when you’re navigating your way through a major financial transaction like buying or selling.

If you want to choose the right real estate agent from the sea of agents, do your due diligence.  Contact the top real estate agents in your area and ask them some key questions that’ll help you weed out the right real estate expert for your home purchase.

How much experience do you have selling homes? Do you buy and sell full-time or part-time? How many homes have you bought? How many have you sold?

These are questions that give you important insight: the amount of time the real estate agent has spent buying and selling homes, what area (purchases or home sales) they have more experience in, and the number of clients they have assisted over the years.  Hiring a full-time agent can also be helpful when time is the only obstacle between landing your dream home or accepting a great offer.

Do you have any references?

Don’t be afraid to do a bit of research on your own, so you can find out what their past clients say.  Check out any their agency social media pages for reviews, and ask around to see if their past clients are satisfied.

Do you know our area?

What’s the difference between two real estate agents in towns just a short distance apart? Often, it’s their knowledge of the town.  A real estate agent that knows the area can give you key information about commute times, school district, and the values of homes in neighborhoods within your town.  The latter pieces of knowledge can be invaluable for home buyers and sellers both, so they are making smart financial moves based on the values around the neighborhood they are interested in.

How much does it cost to list or buy with you?

The difference between a percentage point may not seem like much, but it can mean a big difference in dollars when you are dealing with a huge real estate transaction.  On the other hand, you want to make sure you get the quality advice you pay for and hire the best agent with experience that can help you through the process.

Who else will I be working with?

Purchasing and selling a home is a team effort, so don’t be shy about asking for the other names of your team members.  Having a huge team of agents at your fingertips can also be a huge asset; if your real estate agent is not available, it pays to have another agent to show you a home or a friendly receptionist you can leave an urgent message with.

How are you going to contact me?  When will you contact me?

One of the top frustrations for home buyers and sellers is a real estate agent who stops…everything.  You meet with the agent, then never hear from them again.  To avoid this scenario, ask your agent how they will contact you—and be sure to hire an agent that communicates with you in the manner you are most comfortable.  Some people like phone calls, others are more comfortable with emails or text messages.  Ask them when they are going to contact you again so you know what to expect and don’t feel like your real estate agent isn’t doing their job.

5 New Year’s Resolutions That’ll Help You Buy a Home

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small house on hand buying a homeIs your New Year’s resolution to buy a home next year? A condo, townhouse, or single family house that you can call home sweet home? If so, you may want to add a few more resolutions to your list—real estate resolutions that can make your home buying process smoother and less stressful. Even though the first step of the home search that comes to mind is contacting a realtor, your first resolution should be in motion well before you look for homes with your real estate agent.

I will prepare financially to buy a house.

There’s more to buying a house than saving money.   Obviously, saving up a good down payment is not going to hurt, but your lender is going to base your pre-approval on more than just your savings account balance. Lenders also look at factors such as financial history, employment, current and past debts, and credit score. If your credit score is low, you may not get approved or not be able to take advantage of the lowest mortgage rate. Once you know your finances are in order for buying a house, start compiling documents your lender needs: past tax returns, W-2s, bank statements, pay stubs, and any other paperwork specific to your financial situation.

I will find out my budget first.

dollar sign to get ready for buying a homeBefore you contact a realtor, before you start looking at houses, before you making a list of must haves for your new home, contact a lender to find out the amount of money you are approved to borrow. You can find a reputable lender by asking your realtor, family, and friends for suggestions, or research your options online (carefully). Once you have a list of potential lenders, vet your mortgage lenders by asking them these questions to determine what lender is right for you.

I will select the best realtor in my area.

You rely a lot on your realtor throughout the home buying process, so why wouldn’t you take the time to find a quality realtor? Look for a realtor who knows your area, has the experience and expertise you need, and comes highly recommended by past clients. You can read more about selecting the right real estate agent in our recent blog post.

I will know what I want.

Make a list of ‘must haves’ for your new property. Do you want a big backyard? Where do you want to live? Once you have a list, know that there is a high probability that items on your list may change, or take a higher priority over another item, as you search for homes. It’s okay to change as you learn what you want—and don’t want—in your future home.

To make sure you don’t get overwhelmed, factor in your limitations as you search for a home. If you haven’t picked up a hammer recently—or ever—perhaps a fixer upper is not the property for you. If you still want to put your personal touch on a home, look for a property that has small projects you can manage or a property that can be bought and remodeled within your budget (if you can get a loan or have funds to do so).

I will get a home inspection.

Your home purchase is most likely the biggest purchase of your life, so make sure your new home is sound. Hire a home inspector to do a thorough inspection of your purchase and look for red flags that could signal the home is a money pit. If you do find a problem with the home, don’t panic. Talk to your realtor about negotiating with the home owner on the price, or to have the present owner fix the problem. This is one New Year’s decision that can keep you from repeatedly investing in a money pit.

3 Real Estate Professionals That Can Make or Break Your Home Sale

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home saleWhether you’re buying or selling your home, it can be the little things that make the sale: an open floor plan, size of the yard, the garage…the list can go on and on. Just as much as those little things can make you want to buy or sell your home, it’s the big things—the professionals involved—that can make the sale go smoothly or fall apart. That’s why it’s so important to select the real estate professionals you want to be part of your home sale carefully.

Mortgage Lender

The first step in any home sale is to contact a mortgage lender to set the budget for your new home, and, if you are a seller, to discuss your financials after you sell your home. We cannot possibly stress enough the importance of a good mortgage lender in your home sale. A good mortgage lender gives you not only a loan, but an education and a smooth home sale process. There are a lot of options for mortgage lenders, so start sifting through your home lending options by asking yourself these questions:

  1. How much do you know about mortgages? Are you a first-time home buyer or a seasoned real estate (or financial) professional? Or a household that has bought and sold many homes?
  2. Do you need someone to educate you about your loan options (i.e. the pros and cons of fixed rate vs. adjustable mortgages)?
  3. Are you more comfortable meeting with someone face-to-face or comfortable with phone and online interactions?
  4. Who do I know—and trust—to refer their mortgage lender to me? Or who can I talk to about a lender they would not recommend?
  5. Which lender offers the best customer service? What are their response times?

Once you know your preferred mode of communication (face-to-face vs. virtual), and the amount of assistance you need navigating through the home buying process, make a list of possible mortgage lender possibilities and screen them by asking these questions.

  1. What are your current mortgage rates (be aware that mortgage rates, even fixed rates, do change over a period of time and that buyers get different rates based on their credit)?
  2. Can you get me a complete (COMPLETET) list of fees?
  3. What kind of loan is the best option for me? (If you are interested in a loan specifically for veterans or think that a HUD loan is the best option, be aware that not all lenders can assist you.)
  4. What kind of documents do you need to approve my loan (if I decide to proceed with you)?
  5. How long does the home sale process take? What can I do to expedite the process?

Let’s make one thing clear: though you do need to apply to get the exact mortgage rate, you do not need to apply to get possible mortgage rates and a list of fees. If you want more information on local mortgage lenders, ask your real estate agent about their experiences.

Real Estate Agent

A good realtor is worth their weight in knowledge and savings. From defining terms like foreclosure and short sale, to identifying home repairs that can sell your home, to assistance with pricing and negotiating, to finding a solution that fits your needs after a bad home inspection report, a real estate agent’s first priority is to assist you through the home selling and buying process. Real estate agents offer local connections to professionals you need during the home sale process, and the objectivity to help navigate a fair deal. So how do you find the best of the best real estate agent?

Testimonials

What do a real estate agents’ past clients say? Were they satisfied with the services they received? Did the real estate agent make their home sale smooth? Ask the real estate agent for references and look on social media to see what kind of rating they have received from their clients.

Knows your area

If you’re looking to buy a home, a real estate agent familiar with the area you are buying the home in can give you information about the area: commute times, school district, local neighborhood info. On the flip side, if you are a home seller, a local real estate agent knows what prices sell and don’t sell—one of the most important factors that sell (or don’t sell) your home.

Has experience

Choose an agent that has a large amount of experience to assist you through your home sale. You can find this information by asking the real estate agent, or by requesting this information from the state license board.

Good (and prompt) communication

One of the top frustrations from home buyers and sellers is a real estate agent who drops off the planet. You sign the papers to put your home on the market, or enlist their services to find your next dream home and then….nothing. Or they don’t return your calls with questions. Either way, one of the questions you should ask your potential real estate agents is, “How will you communicate with me? Can I email you? Or call you?”

A good real estate agent can also connect you with other professionals you need in the home sale process, such as a home inspector, contractor, or landscaper.

Home Inspector

A home inspector is invaluable to both a home buyer and seller. A good home inspector can spot potential issues that need repair, and can also educate home buyers on home maintenance. We’ve seen home inspectors that have saved home buyers and sellers thousands of dollars, so be selective about the home inspector you choose. A good home inspector has past experience in construction, can provide samples of their home inspector report, is a member of a professional association, and can provide testimonials from past clients.

For a seller, a pre-listing home inspection can be the difference between a quick sale and a dragged out process. A pre-listing home inspection can locate potential red flags before the home hits the market, putting the seller in control of choosing who makes the repairs and the cost. If you’ve located and made all the repairs found during the pre-listing home inspection, you don’t need to worry about delays during the sale process or any renegotiations on price because of issues found during a potential buyer’s home inspection.

Many a buyer has been tempted to waive the home inspection in their offer, either because they think they’ve found the perfect home or because there is strong competition for the property. Fight the temptation. A good inspection is invaluable for buyers for several sound business reasons:

Avoiding a money pit

Some of the most expensive repairs can be hidden, such as structural and electrical issues. Buying a home is a sound investment, and should remain as such. You don’t want to sick more money into the property than you have, or than it’s worth.

Outside verification of the previous homeowner’s work

Did you know the wall that the previous owner removed caused structural damage? Or that the person who flipped the home did not have any experience installing plumbing? A home inspector can tell you if work done by the previous owner—even if you can’t tell the work was even done—was done correctly, or can recommend professionals that can inspect the structure or foundation.

Still have time to ask for a seller to make repairs

If you do find issues, don’t panic. Until you close on the home, you have time to renegotiate with the owners (visit our previous post to find out what your options are). You can go back to the owners and ask for funds to fix the house, or ask them to fix the damage. If your offer is contingent on the home inspection, you can also back out of the sale.

The opportunity to look ahead

Home inspectors can not only give you insight into the quality of past repairs, but can also give you a list of repairs that need to be made and a timeline. If the house needs a new roof, for example, he can give you his opinion on the damage and when it needs to be repaired or replaced. The most important item that any home inspector can give you is peace of mind and an education about your future investment.

Want more information on your home sale process? Contact a local real estate agent who has years of experience assisting other home buyers and sellers through buying and selling their home.

What is earnest money?

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earnest moneyIn a seller’s market, every buyer is looking for an edge—a way to show the sellers you’re serious about the property. For some properties, that edge comes in a serious purchase price or in another way: earnest money.

Earnest money is a deposit included with your offer that shows you’re serious—earnest—about purchasing a property. The amount of earnest money is applied to the purchase price at sale. For example, if you include an earnest money amount of $5,000 in your offer of $115,000, you will pay $110,000 at closing.

To determine the amount of earnest money you should include, ask your real estate agent for their recommendation. The amount of earnest money varies nationally, and even among communities and counties in Wisconsin.

If the purchase falls through due to contingencies included in your offer, such as an issue found in the home inspection report, the buyer should receive the earnest money in full. If the buyer defaults on the sale, an agreement can be made to compensate the buyer while still giving the buyer a partial refund.

So why should you include earnest money with your offer? Earnest money is the edge that sets your offer apart, and shows your offer is genuine and committed. Including earnest money up front shows the seller you are making a down payment not only on a property, but also in the future.

Have any more questions about earnest money? Ask us your questions on our Facebook page, or via email. We’d be glad to answer your questions about earnest money, and help you navigate through your home sale.

8 Real Estate Terms to Know Before You Buy

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home buyingFor most buyers, buying a home—a house, condo or townhouse—is the biggest purchase of their lives. That’s why it’s so important to “know your stuff” BEFORE you jump into the purchase. A little bit of knowledge, and choosing a good real estate agent, can be the key to finding the right property and saving thousands of dollars in the process.

Buyer’s Agent

A buyer’s agent is working for you, the buyer, during your home search and home-buying process. However, you as a buyer don’t pay them for their work; their commission comes from the seller. In most home purchases, the seller also has a real estate agent representing their interests called the seller’s agent.

The seller’s agent is paid by the sellers when they put their home on the market. Their home—whether it’s a condo, townhouse or house—becomes a real estate listing. Once you’ve narrowed down your criteria on your must have list for your ideal home, you’ll start to receive listings from your agent. Each listing includes important information such as estimated square footage, address, number of bedrooms, lot size, etc. If you receive a listing and find you are interested in the property, contact your real estate agent to set up a home tour or showing.

Condition Report

In 1992, Wisconsin became one of the first states requiring sellers to fill out a document disclosing defects that could affect the value or structure of a property. The Condition Report needs to be part of all transactions involving 1-4 properties and has more than 20 categories of disclosures, including important items such as unsafe well water, roof defects and problems within the electrical system. If the property does not have a defect in that category, and has never suffered damage as a result, the seller can indicate that the property is clear in that area.

So what do sellers have to include in the report? Everything—and what was done to fix it. If a problem occurred on the property, even for an insignificant length of time, it needs to be included in the report. Include the issue, what was done to fix the problem, and that it never happened again. For instance, if the basement flooded with a foot of water for a just a few hours 10 years ago, the flooding needs to disclosed. Also write down that the problem was caused by a faulty sump pump that was replaced that same day.

The report cannot be completed by a seller’s real estate agent. Truly, the Condition Report is not protecting the real estate agent, it’s protecting the sellers. That’s why sellers need to fill this important document out—and fill it out completely with full disclosure. A completed Condition Report is more than just a piece of paper. It’s a shield for sellers now—and after the sale is complete.

Earnest Money

Earnest money is a deposit included with your offer that shows you’re serious—earnest—about purchasing a property. The amount of earnest money is applied to the purchase price at sale. For example, if you include an earnest money amount of $5,000 in your offer of $115,000, you will pay $110,000 at closing. Earnest money is the edge that sets your offer apart, and shows your offer is genuine and committed. Including earnest money up front shows the seller you are making a down payment not only on a property, but also in the future.

To determine the amount of earnest money you should include, ask your real estate agent for their recommendation. The amount of earnest money varies nationally, and even among communities and counties in Wisconsin. If the purchase falls through due to contingencies included in your offer, such as an issue found in the home inspection report, the buyer should receive the earnest money in full. If the buyer defaults on the sale, an agreement can be made to compensate the buyer while still giving the buyer a partial refund.

Home Inspection

A home inspection is typically requested by a potential buyer, though a pre-listing home inspection also makes sense for anyone thinking of putting their home on the market. During a home inspection, a hired home inspector examines the interior and exterior of a house and compiles a report detailing issues that the potential buyer may need to remedy. For example, the home inspector may spot a roof that needs replacement, a gas leak from a furnace, electrical issues, plumbing problems or any other issues that may come up after the home sale. A good inspection is invaluable for buyers for several sound business reasons:

  • Some of the most expensive repairs can be hidden, such as structural and electrical issues. Buying a home is a sound investment, and should remain as such. You don’t want to sick more money into the property than you have, or than it’s worth.
  • A home inspector can tell you if work done by the previous owner—even if you can’t tell the work was even done—was done correctly, or can recommend professionals that can inspect the structure or foundation.
  • If the home inspector finds any issues, you can go back to the owners and ask for funds to fix the house, or ask them to fix the damage. If your offer is contingent on the home inspection, you can also back out of the sale.
  • Home inspectors can give you a list of future repairs that need to be made and a timeline. If the house needs a new roof, for example, he can give you his opinion on the damage and when it needs to be repaired or replaced.

For buyers, the most important item that any home inspector can give you is peace of mind and an education about your future investment. To find a good home inspector, talk to your agent. They can recommend a home inspector with the experience and knowledge that you need to make an informed decision about your home—and the amount of work and money needed to make it the perfect home, both aesthetically and structurally, inside and out.

Foreclosure

Foreclosure is a legal process used by a lender when a previous owner stops making payments on their property. In today’s market, the term “foreclosure” can also be used to describe properties that are owned by the bank—though technically, these properties are “bank-owned.”

The process of buying a bank-owned property can be lengthy, with some buyers enduring more than a year of paperwork before they can buy a foreclosed property. However, because lenders are eager to sell these properties, bank-owned properties promise the biggest bang for your buck, as properties are often sold for an incredible value. It is important to note when buying a bank-owned property, however, that all properties are sold “as is.” “As is” means that the lender that owns the property will not pay for any repairs that may be needed. In addition, if a bank-owned property has sat vacant for a lengthy period of time there may be unforeseen problems after you take ownership of the property. One buyer I knew even encountered a flood in her basement. The bank had turned off the water to the property but had not drained the pipes properly, leading to a swimming pool in her finished basement. Foreclosed properties are great values, but be prepared for the possibility of a long buying process and unforeseen repairs.

Mortgage lender

A mortgage lender is the entity that is borrowing you money to purchase a property. One of the most common home buyer mistakes is looking for a home without knowing how much you can afford. Don’t assume that you are going to be approved for a certain amount without talking to a mortgage lender. There are many factors that mortgage lenders use to determine the amount you are approved for, and a simple online calculator is not going to be 100% accurate. Don’t be afraid to “shop around” and find out what mortgage lender offers the best rate. Make sure that you are asking about more than just the mortgage rate, however, as some lenders add additional fees that can offset the low rate.

Before your first visit to the mortgage lender, be prepared. Ask your mortgage lender what documents to bring to your meeting so you can expedite your approval process. Depending on your lender, you need to bring documents such as your W-2, past tax returns, profit and loss forms if you own a business, documents that pertain to your debts, etc. Based on their research from the documentation you provide, the mortgage lender can either decline to give you a loan or approve you for a loan in the amount they specify. If you are approved, your mortgage lender will give you a pre-approval letter. How do you find a mortgage lender? Ask your realtor for information about local mortgage lenders.

Offer

Once you’ve decided you are serious about a property, it’s time to submit an offer (otherwise known as a purchase agreement). An offer contains a price and any contingencies, or conditions, of the sale. For example, a common contingency is a financing contingency which means your loan must go through for the sale to be final. Another common contingency is an inspection contingency where the house must pass a home inspection or both parties come to an agreement on how to handle an issue that arises during the home inspection. There are other contingencies that can be included in your offer; discuss your options with your real estate agent.

An offer is not a binding agreement until both parties have agreed upon the price and contingencies included in the purchase agreement. So how do you decide on the price to include in your offer? Use comparable sales as a compass. The best way to determine a fair price for the property is to compare the home to all area homes for sale, or that have sold, with comparable lot sizes and square footage. A real estate agent can assist with the process, and use their experience to hit upon a fair sales price. Just remember to compare apples to apples, and oranges to oranges. For some properties, especially in rural areas, this can be challenging because of the low inventory of homes for sale in the area; ask your agent to help you navigate through the offer process fairly and affordably.

Short Sale

Short sales are properties that are often owner-occupied. A short sale occurs when an owner owes more for the property than the value of the property. For example, an owner owes $150,000 for a property that is appraised at $120,000. During a short sale, the lender—the institution who is owed the $150,000—agrees to sell the property for (let’s say) $120,000, less than the amount of the loan.

During a short sale, the owner and the lender have to approve the offer made by a buyer. This can mean a lengthy buying process, but, as with foreclosures, the value per square foot can be higher than a traditional sale.

Have any questions? Ask us on our Facebook page or send us an email. We’re experienced real estate agents with a passion for assisting buyers through the home-buying process. We’ll help you navigate through the real estate terms so your home purchase is a knowledgeable and satisfying buying experience.

Home Buying Tips

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home buyingBuying a home is a major decision, and probably one of the most expensive purchases you’ll ever make in your life. That’s why it’s a good idea to use a “look before you leap” strategy BEFORE you sign the paperwork. In this case, the “look” part not only means doing a home tour, but following these home buying tips—for the sake of your heart and your pocketbook:

  1. Buy a house you (or someone else) is going to stay in. Home prices rise and fall, so look at a home purchase as a long-term purchase. If you think you’re going to be getting a job transfer, or moving to a new city in a few years, don’t purchase a home unless you’ve accepted the risk. With closing costs and other transactional fees associated with buying and selling a home, there’s a good chance you’ll lose money from a quick buy-and-sell.
  2. Talk to a mortgage lender before you start looking. One of the most common home buyer mistakes is looking for a home without knowing how much you can afford. Don’t assume that you are going to be approved for a certain amount without talking to a mortgage lender. There are many factors that mortgage lenders use to determine the amount you are approved for, and a simple online calculator is not going to be 100% accurate.
  3. Be comfortable with your budget. Don’t automatically assume that the amount you are approved for is the maximum budget you set for your search. Just because you are approved for a $200,000 budget doesn’t mean that is the amount of money you can afford to part with on a monthly basis. Write down all your present expenses on a piece of paper—car payments, medical costs, etc.—and be comfortable with your budget, and that you can still live while making your monthly home payments.
  4. Budget for the expected expenses of home ownership—and the unexpected. We’re going to be honest with you: homes cost money even after you’ve signed the paperwork. At some point, you’re going to need to replace the furnace, buy a new roof, repave the driveway, install new windows—in addition to the annual maintenance your home needs to stay in good shape. Set aside money for annual home maintenance costs, and for those unexpected breakdowns that come with home ownership.
  5. Know what you’re looking for. Make a list, or use a checklist. Where do you want to live? How many bedrooms do you want or need? How much maintenance do you want to take on? Do you want a lot of land? Prioritize this list, and expect that you’ll make changes to the list as you look at homes.
  6. Know what red flags to look for during your home tour. Don’t fall in love with a money pit. Be cautious and look for issues that could cause issues later, such as electrical issues, water damage, and a decomposing roof.
  7. Get a home inspection. Unless you have a huge budget that can handle a huge unexpected expense, get a home inspection. We’ve written about the benefits of hiring a home inspector in the past, and what to do if you get a bad home inspection report from your dream home. A home inspection can save you thousands of dollars of trouble, and can also point to safety hazards (such as a gas leak) that you might not have noticed during your home tour.
  8. Hire a real estate agent. Hiring a real estate agent is a good first step to learning what to do and what not to do when navigating through the home buying process. They’ve been there, and they can give you advice about what to do and not to do. Contact a good, experienced realtor who has bought and sold houses in your area, and take their advice to heart. Their advice can be the difference between a wise or poor home buying decision in the largest purchase of your life.

Red Flags to Look for During a House Tour

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house tourWe see it: you’re captivated by the winding staircase or the open layout during the house tour. You love the big yard and the beautiful trees. But are you looking beyond the aesthetics as you tour the home? Do you know what red flags to look for during a house tour, so you don’t have to pay for the previous owners’ delayed maintenance or improper repairs? Undoubtedly, the location, layout and everything else on your ‘must have’ list is important, but are you looking at the whole property during your house tour? What lies behind those walls?

One way to spot, and deal with, red flags is to hire a real estate agent. A real estate agent can help you spot red flags during a house tour based on past experience. They’ve seen fixer uppers and damage at other properties and can help you find the most obvious signs during your initial tour:

Curled and cracked roof shingles. Do a visual inspection of the roof. If you see curled or cracked roof shingles, or missing shingles, take that as a red flag. Look for water damage inside the home, in case the deteriorating roof has allowed water in. While a damaged roof is a red flag, don’t panic. If you still are interested in the property, there are ways to deal with this red flag after the home inspection is completed.

Signs of water damage. Are there discolorations or stains on the walls or ceiling? Is the drywall bubbling or soft? Look for signs of water damage during the house tour, especially in the bathrooms and kitchen. Be aware, though, that water damage can be in any room and on the walls and ceilings. In extreme cases, a long-term leak can also lead to mold in the walls or attic, so have your home inspection check for any signs of mold in the drywall (as much as possible, anyway, without opening the walls).

Water in the basement. Most likely, you are not going to walk into a pool of water at the bottom of the basement stairs, but look for signs that water has been in the basement. Signs of water in the basement include staining, bubbling or soft drywall or a musty smell. If the previous owners do disclose a water problem in the basement, ask what was done to rectify the problem. Make sure the water was properly cleaned up, drywall was bleached or replaced and repairs were made (such as a sub pump installed) to prevent the water from coming in again.

Furnace age. The furnace may not be the most beautiful part of a house, but it is one of the most important parts of your home—and one of the most expensive appliances to replace. In addition to replacing the furnace, an impromptu breakdown can cause pipes to freeze. Ask what the age of the furnace is and what kind of fuel it uses.

Smell. Trust your nose. If you smell a musty smell or a strange odor, don’t be afraid to ask questions. Has there been water in the basement? Have the air ducts been cleaned? Is there a gas leak?

Electrical issues. Test the switches in the home. If switches don’t work, you have flickering lights, see burned or dangling wires, ask the home inspector to look into possible electrical issues.

Remember a real estate agent is not a home inspector, though they can help you be on the lookout for red flags during a house tour. If you are serious about the home, put an offer in on the property. When the offer is accepted, hire a home inspector to get an in depth examination of the property by a professional so you don’t get stuck with a “money pit” home (among other valid reasons for a home inspection). Your real estate agent can suggest home inspectors they have worked with in the past. Don’t panic if the home inspection hits a few snags, your real estate agent can walk you through your options. That’s why you have a real estate agent: to guide you through the house tour, explore options that can take care of those red flags and get you into the right home.

Why should I use a realtor?

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sold homeIf you think realtors haven’t heard this question before, you’re wrong. Most realtors have faced this question throughout their career, and have some very good answers for the question, “why should I use a realtor?” Their answer isn’t short, though, because there are many, very good reasons to use a realtor for home selling and buying:

Assistance in navigating through the home selling and buying process. From defining terms like foreclosure and short sale, to identifying home repairs that can sell your home, to assistance with pricing and negotiating, to finding a solution that fits your needs after a bad home inspection report, a realtor’s first priority is to assist you through the home selling and buying process.

Local connections when you need professionals beyond a realtor. Lending services, home inspections, repairs, deep cleans—the home selling and buying process is full of situations where you need professionals beyond your realtor. An experienced realtor has connections in your community to experienced and competent home inspectors, handymen, cleaning services, insurance agents, lenders—everyone you need as you navigate through the home selling and buying process.

Objectivity when you need it. It’s hard when you are so emotionally involved, and close, to the home selling or buying process, or the person going through it. A realtor is unbiased, and can give you advice on challenges, pricing and anything else you encounter during the home selling or buying process.

Expertise when your home selling or buying process goes awry. A bad home inspection. Home negotiations that take a turn for the worst. Complicated communications with a bank selling a foreclosure. Sometimes selling your home or buying a house can seem like a race full or hurdles. A realtor can help you through the challenges that may arise during home selling or buying, so you can buy your new home or sell your property.

Experience to help you save money, price your property or save money to make money. Sounds like a mouthful, doesn’t it? An experienced realtor has seen it all: what home prices convert into quick home sales, how much money you should invest to sell your home (so you don’t overdo it), what you should and shouldn’t do to your home.

Remember, you realtor is looking out for your best interests. Your goals are their goals. They’re working for you, and can use all the experience from the home selling and buying processes they’ve been involved with to make your process successful. So what are you waiting for? Contact a realtor so you can get your home selling or buying process started, and achieve that happy ending.