Residential Real Estate
Decisions on home-buying and selling can sometimes be daunting, but here is some sound advice that may make the choice more clear. Click the links below to jump to the topic.
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Advice for Buyers
Whether you’re a first-time home buyer or a veteran, deciding to buy a new home is a complex process. By answering a few questions, you can get a better idea if buying a new home is in your current best interest.
1. Don’t buy if you can’t stay put.
If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner – even in a rising market. When prices are falling, it’s an even worse proposition.
2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.
3. Aim for a home you can really afford.
Look at your budget and determine how a house fits into it. Fannie Mae recommends that buyers spend no more than 28% of their income on housing costs. Go much past 30% and you risk becoming house poor. It could make sense to continue renting. The rule of thumb is that if you pay 35% less in rent than you would for owning – including the monthly mortgage, property taxes, and any homeowner’s fees – then it’s smarter to continue renting.
4. If you can’t put down 20%, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3% of the purchase price. There are also USDA rural development loans that offer rates with almost no down payment if the property and buyer meet their criteria. Remember to also find out how much you’ll likely pay in closing costs. The upfront cost of settling on your home shouldn’t be overlooked. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowner’s insurance or homeowner’s association fees. This is money that will be paid in addition to the principle and interest of the mortgage.
5. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points in exchange for a lower interest rate. If you stay in the house for a long time, paying points will give you a lower interest, thereby, saving you money over time.
6. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. The pre-approval from a lender is based on your annual income, debt, and credit history.
7. Buy in a district with good schools.
In most areas, this advice applies even if you don’t have school-age children. Reason: When it comes time to sell, you’ll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.
8. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers are more protected and well-informed when they choose a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process. Ask the real estate professional about the
price trends of the current local housing market.
9. Do your homework before bidding.
After understanding the current local housing market, your opening bid should be based on the sales trend of similar homes in the neighborhood ideally within the past three months.
10. Hire a home inspector.
By hiring a home inspector, you will be made aware of potential problems and evaluate the cost of the repairs.
Advice for Sellers
Here are a few questions and concepts to follow when selling your house.
Is it a good time to sell my home?
When you decide to sell, the first thing to do is investigate the local housing market. Consult the large real estate sites such as realtor.com to look at the comparable home prices in your neighborhood and length of time that the property has been on the market. To understand the local trends, pay attention to the prices for your neighborhood during the last several months as well as the last two years to see if the housing demand is rising, dropping, or staying the same.
Pay attention to the length of time that the property is on the market. During a seller’s market, with listings moving in a week or two, think about adding a premium to the asking price. The demand will justify it. Conversely, in a buyer’s market, it’s especially important to get the price right. The critical selling time is within the first month after your home hits the market. If the price is too high, you’ll turn off potential buyers and agents and then have a hard time attracting them back, even if you lower your price later.
Are you ready to list your house?
Whether you choose to list your house for sale by owner or select a real estate agent, you will need to create a welcoming environment for potential buyers to see before it is listed on the market. The presentation to potential buyers is the most important aspect of quickly selling your home. Buyers are attracted to a bright, clean space that is free of clutter in rooms, tables, and other flat surfaces. Remember that buyers like to visualize your house as their potential new home and it can be difficult for potential buyers to view your home if your personal items are still marking the territory. Take an objective look at it and invite neighbors, friends, and family to your house for presentation ideas.
Here are several ideas to improve the appearance of your home. Consider a new paint job. Tidy up. Move unneeded furniture into the attic, basement, or rented storage. Clean the carpets. Wax the hardwood floors. Scrub the house from top to bottom. Fix broken steps and tiles. On the outside of your home, landscaping should be neat and trimmed. Mow the lawn. Plant flowers. These details can add many thousands of dollars to your eventual sales price. If you do not feel comfortable making these beautification decisions or if you simply do not have time, consider hiring a home stager who can help prepare your home for a showing. Their fees can be more than offset by quicker sales and higher selling prices.
What is your home really worth?
To determine an asking price, you need to forgot the original cost of the house, renovations, and the moving expenses to your next house. These costs have no basis in determining the value of your house. The ultimate determination in pricing your property is the selling price of comparable homes in your area that have recently been sold preferably within 6 months. This estimated market value might indicate that the seller has put too much money in the property relative to its estimated value on the market, but overpricing a house to recoup the lost expenses can result in not selling your home. Your agent can provide you with comparable sales and discuss a good price point for your house.
Be willing to negotiate and accept guidance.
When you receive an offer from your agent, ask for guidance to respond. This will depend on the pricing of the property, market in your area, and your selling urgency. Make sure your lawyer or agent reviews the contingency clauses included with the bid. For example, it’s generally not a good idea to agree to sell your home with the contingency that the buyer must first sell his or her own home. Also make sure that all the buyer’s contingencies are restricted within specific amounts of time. For instance, if the deal is contingent upon the home passing an inspection, then the inspection must occur within a week to 10 days of an accepted bid. The same is true of the closing date: Closings usually occur 30 – 45 days after you have signed the sales contract.