Making and Negotiating an Offer
So, you’ve found a home that fits your needs and lifestyle and are ready to make an offer. Good for you! So what comes next?
Because you have already been pre-qualified, you know what your loan amount and purchase price cap as well as your payment tolerances, so you will feel comfortable enough with the numbers to determine an offering price. Your Agent will pull recent neighborhood comparable sales to suggest an appropriate value/offer for the home. You should also discuss the listing history, any price changes, etc, to get an idea of what kind of offer may be most acceptable to the Seller. After all, if you like the home the goal is to write an offer that is acceptable to both you and the Seller – if the Seller says “no way”, then no deal!
One way to strengthen an offer for the Seller is to increase the earnest money deposit you write with the offer. The earnest money assures the Seller that you are indeed a “real” Buyer, that you are committed to purchasing their property and will follow-through with the terms of the contract. Be sure to offer enough earnest money for the Seller to agree to take their home off the market and not seek other offers. This amount is also held by the Broker and the Seller usually agrees to accept this amount in the event of Buyer default (it needs to be enough that they will, in fact, accept it in event of Buyer default rather than sue the Buyer to perform). The Seller will weigh an offer with $100 earnest money differently than with $1000 (a Buyer is less likely to be willing to break a contract and walk away from $1000). NOTE: Your earnest money check will most often be deposited upon contract acceptance, so funds must be available at the time the check is written!
Review the home warranty options available. The Buyer may purchase this at closing, ask the Seller for one in the purchase offer, or the Seller may have already offered one to the Buyer. In the event you would like a home warranty included, consider your offer price, how much your price is off the asking price and other factors in the contract. This is a relatively inexpensive item to purchase for either party, but depending on the offer can be the straw that breaks the camel’s back (and the deal!). It’s ok to ask for a home warranty, especially with a strong offer, but be prepared to pay for it yourself also if the Seller baulks.
The closing date may be another way to strengthen an offer. For example, if you are offering on a vacant home, more than likely the Seller will not look favorably on a closing date that is 2-3 months out. If you can close quickly, this will weigh with the Seller, as their ultimate goal is to get it off their books.
What about counter offers? Hopefully there will not be too many. Ideally, the offer was close enough to what both parties want to come to an agreement with no more than one counter-offer. Be ready to give something to get something! If there is too much back-and-forth, one or both parties may become agitated or be more likely to become offended, which can endanger the deal and lessen the chance of a successful agreement!
Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
NEXT: Applying for the Mortgage
Buying and Selling homes in Eastern Idaho made simple.
09 February 2010
10 Things to Take the Trauma Out Of Homebuying - Installment 4
Looking for the Perfect Home?
It’s perfectly natural when you are shopping for a new home to look for your ideal, “perfect”, home. It’s not just a roof over your head, but where you will spend much of your personal time, hard work and sweat (if you plan to improve it), and host events with family and friends. You will build memories there.
So how do you shop for the perfect home? Well, you can’t. But if you follow the guidelines below, you will likely find that you are able to shop for the right home for you, and you may even find looking back that it was the ‘perfect’ home for you at that time in your life.
Consider how long you plan to live in your next home. Do you think you will be relocating within 2 years? In that case, you probably don’t need a home that will fulfill all your needs for the next 30 years. Or look at it in reverse: how long will the home you are considering will meet your needs, and is that long enough for your current timeline?
What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that you'll need. If you are looking at a two bedroom home, that may be fine if you are single or a couple with no children. However, if you plan to expand your family, you could outgrow the space more quickly than you think and perhaps should consider a home with room to grow (it will likely not be cost effective to move every two years, when you consider transaction costs as well). If there is a basement, could it be turned into a den and extra bedrooms? Is it an historic home where the upstairs/attic could perhaps be turned into a master suite? Have a list of "wants" vs "needs."
Contrary to popular belief: this is a process of elimination, not selection! You can only choose from what is currently on the market in your price range.
Do consider resale, even if you think right now that you will live there for many years. If there is one constant in life, it is change, and the average homeowner only lives in their home for five-seven years.
We’ve all heard about the three most important aspects of real estate: location, location, location! But seriously, don’t get so caught up in the physical aspects of the house itself (room size, kitchen, etc.) that you forget such issues as neighborhood amenities, noise levels, and other factors that will have a big impact on what it would be like to live in your new home. Even in our smaller local community there will be locations that will better work for you and your lifestyle. Consider where you work, where your children go to school, and your preferences in terms of commuting, shopping, recreation and other factors that are important to you or other members of your household. In other words, you may find what you otherwise would think is the home for you and your current needs, but it does not exist in a vacuum, and these lifestyle needs are an important part of your decision.
Who is making the buying decision for your next home? Is it just you, or you and your spouse/significant other? Have you decided that you want your mom to see the home first and approve of it, or you Auntie Grace? This can quickly get out of hand as more and more friends and family members get added or add themselves to the list of people to see the home first. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision, and at the end of the day it will be you living there, not Auntie Grace. And it’s happened more than once to my own personal clients that while they are touring with various family members and delaying their decision, someone else has come along and purchased the home. This can happen in any market, as sooner or later houses will sell if priced correctly.
Start now, don't wait! Especially if you are a tax credit Buyer, in which case you have a built-in deadline along with most of the other buyers shopping in your same price range (under $150k in our market). The longer you wait, the higher the home prices will be as you will be competing with these other buyers. Not to mention the impact on your buying power of potentially rising rates…
NEXT: Making and Negotiating an Offer
It’s perfectly natural when you are shopping for a new home to look for your ideal, “perfect”, home. It’s not just a roof over your head, but where you will spend much of your personal time, hard work and sweat (if you plan to improve it), and host events with family and friends. You will build memories there.
So how do you shop for the perfect home? Well, you can’t. But if you follow the guidelines below, you will likely find that you are able to shop for the right home for you, and you may even find looking back that it was the ‘perfect’ home for you at that time in your life.
Consider how long you plan to live in your next home. Do you think you will be relocating within 2 years? In that case, you probably don’t need a home that will fulfill all your needs for the next 30 years. Or look at it in reverse: how long will the home you are considering will meet your needs, and is that long enough for your current timeline?
What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that you'll need. If you are looking at a two bedroom home, that may be fine if you are single or a couple with no children. However, if you plan to expand your family, you could outgrow the space more quickly than you think and perhaps should consider a home with room to grow (it will likely not be cost effective to move every two years, when you consider transaction costs as well). If there is a basement, could it be turned into a den and extra bedrooms? Is it an historic home where the upstairs/attic could perhaps be turned into a master suite? Have a list of "wants" vs "needs."
Contrary to popular belief: this is a process of elimination, not selection! You can only choose from what is currently on the market in your price range.
Do consider resale, even if you think right now that you will live there for many years. If there is one constant in life, it is change, and the average homeowner only lives in their home for five-seven years.
We’ve all heard about the three most important aspects of real estate: location, location, location! But seriously, don’t get so caught up in the physical aspects of the house itself (room size, kitchen, etc.) that you forget such issues as neighborhood amenities, noise levels, and other factors that will have a big impact on what it would be like to live in your new home. Even in our smaller local community there will be locations that will better work for you and your lifestyle. Consider where you work, where your children go to school, and your preferences in terms of commuting, shopping, recreation and other factors that are important to you or other members of your household. In other words, you may find what you otherwise would think is the home for you and your current needs, but it does not exist in a vacuum, and these lifestyle needs are an important part of your decision.
Who is making the buying decision for your next home? Is it just you, or you and your spouse/significant other? Have you decided that you want your mom to see the home first and approve of it, or you Auntie Grace? This can quickly get out of hand as more and more friends and family members get added or add themselves to the list of people to see the home first. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision, and at the end of the day it will be you living there, not Auntie Grace. And it’s happened more than once to my own personal clients that while they are touring with various family members and delaying their decision, someone else has come along and purchased the home. This can happen in any market, as sooner or later houses will sell if priced correctly.
Start now, don't wait! Especially if you are a tax credit Buyer, in which case you have a built-in deadline along with most of the other buyers shopping in your same price range (under $150k in our market). The longer you wait, the higher the home prices will be as you will be competing with these other buyers. Not to mention the impact on your buying power of potentially rising rates…
NEXT: Making and Negotiating an Offer
05 February 2010
February Financing Updates
Good news for our local market!
For those of you that do not follow me on Twitter, here is a recap of financing changes over the last week designed to help move some inventory.
Last Friday, Jan 29th, Fannie Mae announced it would pay up to 3.5% of Buyers closing costs for purchases of foreclosed homes in it’s inventory. You must close on the purchase between January 28th and April 30th, 2010 and Buyers must be owner-occupants (investors are excluded). If you do not use the entire amount for closing costs, they may also be used towards the purchase of Whirlpool appliances purchased by Fannie Mae, but however you use the credit, the limit is 3.5% of the final purchase price. For more information, visit http://www.homepath.com./
In related news, as of February 1st, FHA suspended it’s anti-flipping rules, opening the FHA-backed foreclosure market to investors. The rules were that you could not buy a home and flip it within 90 days if it was purchased with FHA insurance, in order to stem fraud losses at FHA. However, many foreclosures are in need of repair, and the reality is that investors can purchase these homes, fix them quickly and resell the renovated homes to first-time buyers and other purchasers who might not otherwise buy a home in need of repair. It should also help stabilize values in neighborhoods that have been hard-hit by foreclosures where homes have been sitting vacant and uncared for. The rule suspension is expected to be in effect for at least a year. For more information, read this Washington Post article or the press release on HUD’s website.
If you are interested in foreclosures or short sales in our area, please contact me today!
For those of you that do not follow me on Twitter, here is a recap of financing changes over the last week designed to help move some inventory.
Last Friday, Jan 29th, Fannie Mae announced it would pay up to 3.5% of Buyers closing costs for purchases of foreclosed homes in it’s inventory. You must close on the purchase between January 28th and April 30th, 2010 and Buyers must be owner-occupants (investors are excluded). If you do not use the entire amount for closing costs, they may also be used towards the purchase of Whirlpool appliances purchased by Fannie Mae, but however you use the credit, the limit is 3.5% of the final purchase price. For more information, visit http://www.homepath.com./
In related news, as of February 1st, FHA suspended it’s anti-flipping rules, opening the FHA-backed foreclosure market to investors. The rules were that you could not buy a home and flip it within 90 days if it was purchased with FHA insurance, in order to stem fraud losses at FHA. However, many foreclosures are in need of repair, and the reality is that investors can purchase these homes, fix them quickly and resell the renovated homes to first-time buyers and other purchasers who might not otherwise buy a home in need of repair. It should also help stabilize values in neighborhoods that have been hard-hit by foreclosures where homes have been sitting vacant and uncared for. The rule suspension is expected to be in effect for at least a year. For more information, read this Washington Post article or the press release on HUD’s website.
If you are interested in foreclosures or short sales in our area, please contact me today!
21 January 2010
10 Things to Take the Trauma Out Of Homebuying - Installment 3
Why should I get pre-qualified?
One of the questions I often address up-front with my Buyer clients is the importance of being pre-qualified by a local lender. While you may have an idea of what you would qualify for by using online calculators or by speaking with friends, there are several reasons to go ahead and take the hour to meet with a local lender before beginning your home shopping.
• Determine how much home (and mortgage payments) you can afford and how much you want to afford – these may be different numbers! You may find you qualify for a much larger mortgage and payment than you are willing to make or comfortable making each month. It is okay to be conservative here!
• You will also be given an estimate of your down payment and closing costs, which you will need in the form of a cashier’s check at closing. Have you saved enough? Will you need to structure an offer that requires or requests the Seller contribute toward your closing costs (for which a higher offer must be considered to cover the difference)?
• With the lending changes the last year or so, your credit score now factors in significantly as far as the program you can qualify for and the interest rate. Some programs and rates are not available unless the borrowers’ credit score is over 740. That’s not to say that if you are under 740 you cannot get a loan. However, it may affect your monthly payment and, by extension to some extent, the price range in which you decide to shop. You do not want to begin to shop only to find out that the home you just fell in love with is just beyond your payment’s reach!
• Similarly, if you find the best product for you is a Rural Development (RD) loan, this will affect the location in which you may purchase, as RD has fixed physical boundaries in which they will invest and in which the property must lie. If you determine that an IHFA loan is best for you, you will need to complete the Finally Home! borrower education class prior to the loan closing. These are typically offered only once to twice a month locally; not having it completed will delay your closing.
• Once you are pre-qualified with a local lender, as you shop with your REALTOR® you are ready to move on a home when you find one you would like to buy. And if you are competing with other Buyers, you will be better prepared to write a thoughtful offer, putting you in a stronger negotiating position (a Buyer who has already taken the time to personally pre-qualify shows to a Seller to be a serious Buyer – not one that might change their minds and try to back out). The idea of competing Buyers seems silly on the onset in this market, but consider: if the majority of Buyers looking right now are first-time homebuyers due to the tax credit, they are largely looking in the same price range and they ALL have the same deadline to be in contract to qualify, therefore they are creating competition by the laws of supply and demand. (Another way to lessen your competition is to not wait until April to get into contract, but beat the majority of the Buyers to the market.)
• You may find that REALTORS® are less willing to spend their time showing you homes if you have not shown the personal commitment to at least get pre-qualified. With all the recent lending changes and constrictions, Agents can no longer assume a Buyer will qualify for some kind of loan, and are reluctant to spend time showing homes to Buyers who, in the end, may not actually qualify. While it is a service business, Agents are finding they need to be more certain their potential clients are actually potential clients. Future clients are always welcome and advice is always free, but unless a client is actually in the market to buy, REALTORS® have a fiduciary responsibility to the Seller to not inconvenience them and show their home to people who have not been properly vetted and are not active Buyers (it’s not an open tour to the general public, which I’m sure you can appreciate).
• Lastly, but not least, getting pre-qualified will help you to determine your true costs of homeownership, including property taxes, insurance, homeowner/association fees (if applicable), etc. Do remember, as your eyes glaze over with the initial sticker shock, the financial BENEFITS of homeownership as well, which will not be shown to you by the bank – the tax deductions available to you through your mortgage interest paid, property taxes paid, etc (contact a tax advisor for details and tax advice).
NEXT: The Perfect Home?
One of the questions I often address up-front with my Buyer clients is the importance of being pre-qualified by a local lender. While you may have an idea of what you would qualify for by using online calculators or by speaking with friends, there are several reasons to go ahead and take the hour to meet with a local lender before beginning your home shopping.
• Determine how much home (and mortgage payments) you can afford and how much you want to afford – these may be different numbers! You may find you qualify for a much larger mortgage and payment than you are willing to make or comfortable making each month. It is okay to be conservative here!
• You will also be given an estimate of your down payment and closing costs, which you will need in the form of a cashier’s check at closing. Have you saved enough? Will you need to structure an offer that requires or requests the Seller contribute toward your closing costs (for which a higher offer must be considered to cover the difference)?
• With the lending changes the last year or so, your credit score now factors in significantly as far as the program you can qualify for and the interest rate. Some programs and rates are not available unless the borrowers’ credit score is over 740. That’s not to say that if you are under 740 you cannot get a loan. However, it may affect your monthly payment and, by extension to some extent, the price range in which you decide to shop. You do not want to begin to shop only to find out that the home you just fell in love with is just beyond your payment’s reach!
• Similarly, if you find the best product for you is a Rural Development (RD) loan, this will affect the location in which you may purchase, as RD has fixed physical boundaries in which they will invest and in which the property must lie. If you determine that an IHFA loan is best for you, you will need to complete the Finally Home! borrower education class prior to the loan closing. These are typically offered only once to twice a month locally; not having it completed will delay your closing.
• Once you are pre-qualified with a local lender, as you shop with your REALTOR® you are ready to move on a home when you find one you would like to buy. And if you are competing with other Buyers, you will be better prepared to write a thoughtful offer, putting you in a stronger negotiating position (a Buyer who has already taken the time to personally pre-qualify shows to a Seller to be a serious Buyer – not one that might change their minds and try to back out). The idea of competing Buyers seems silly on the onset in this market, but consider: if the majority of Buyers looking right now are first-time homebuyers due to the tax credit, they are largely looking in the same price range and they ALL have the same deadline to be in contract to qualify, therefore they are creating competition by the laws of supply and demand. (Another way to lessen your competition is to not wait until April to get into contract, but beat the majority of the Buyers to the market.)
• You may find that REALTORS® are less willing to spend their time showing you homes if you have not shown the personal commitment to at least get pre-qualified. With all the recent lending changes and constrictions, Agents can no longer assume a Buyer will qualify for some kind of loan, and are reluctant to spend time showing homes to Buyers who, in the end, may not actually qualify. While it is a service business, Agents are finding they need to be more certain their potential clients are actually potential clients. Future clients are always welcome and advice is always free, but unless a client is actually in the market to buy, REALTORS® have a fiduciary responsibility to the Seller to not inconvenience them and show their home to people who have not been properly vetted and are not active Buyers (it’s not an open tour to the general public, which I’m sure you can appreciate).
• Lastly, but not least, getting pre-qualified will help you to determine your true costs of homeownership, including property taxes, insurance, homeowner/association fees (if applicable), etc. Do remember, as your eyes glaze over with the initial sticker shock, the financial BENEFITS of homeownership as well, which will not be shown to you by the bank – the tax deductions available to you through your mortgage interest paid, property taxes paid, etc (contact a tax advisor for details and tax advice).
NEXT: The Perfect Home?
18 January 2010
Bonneville County Relay for Life
Relay for Life Kick-off Event!
So, Relay fans! It's time again to kick-off the new year's event! The Bonneville County Relay for Life is Friday, July 9th starting at 6pm through 6am Saturday. It will again be at the Bonneville High School track.
Team WCR (Women's Council of REALTORS) will again be entering, and I am proud to say last year we came in 4th place in total team fundraising - and it was our first year participating!
The kick-off event is this Wednesday, January 20th from 6-8pm at the Civic Auditorium. Come see the "Dancing with the Stars" theme. Team WCR will again be raffling off a pink and purple cruiser bike, thanks to the generosity of last year's winner who donated it back to the cause! Tickets are $5 or 5 for $20.
I hope to see you there on Wednesday!
So, Relay fans! It's time again to kick-off the new year's event! The Bonneville County Relay for Life is Friday, July 9th starting at 6pm through 6am Saturday. It will again be at the Bonneville High School track.
Team WCR (Women's Council of REALTORS) will again be entering, and I am proud to say last year we came in 4th place in total team fundraising - and it was our first year participating!
The kick-off event is this Wednesday, January 20th from 6-8pm at the Civic Auditorium. Come see the "Dancing with the Stars" theme. Team WCR will again be raffling off a pink and purple cruiser bike, thanks to the generosity of last year's winner who donated it back to the cause! Tickets are $5 or 5 for $20.
I hope to see you there on Wednesday!
15 January 2010
10 Things to Take the Trauma Out Of Homebuying - Installment 2
So after only a *short* break from my new blog series, here is the second installment. I know you are all loyal readers and fans, and will forward this to anyone you know who might benefit from it. Hopefully, I have all the *math* right!
2. The Right Time to Buy?
While in most price ranges home prices have fallen locally over the last two years, I am seeing signs that Buyers are still afraid to buy. Mortgage rates remain at the lowest rates in decades, first-time Buyers and now qualified “move-up” Buyers can benefit from an $8000 and $6500 tax credit respectively, and yet Buyers are still leery to pull the trigger. How will they know when to buy?
The tax credit for first-time Buyers has enough media coverage and Buyer attention to get the word out on the financial benefits of homeownership: not only the potential of equity growth over time, but the ability to deduct mortgage interest and property taxes and that any gains made on sale are tax-free if you occupied the home two of the last five years.
Even with the recent value drop, the common consensus among investors is that real estate remains one of the best performing long-term investments. Yet what about the near-term? No one wants to feel like they made one of the largest purchases of their life only to wonder if they could have gotten the same home for $10,000 less in six months!
So, let’s create a scenario. Say you are looking to buy a home for $200,000 with 3.5% down. Your loan amount would be $193,000 and your down payment $7000, your Principal and Interest Payment $1036/mo.
But you were not sure it was the right time, so you waited. Six months later the Seller reduced the price to $190,000 (a 5% price reduction). Your loan amount now is $183,350 and your down payment $6650 (saving you $350). But the rate in the mean time has gone up to 5.5%. Still incredibly low! However, your payment now is $1041/mo.
Yes, it’s only $5/mo more, and you saved $350 in down payment. But if you plan to live in the home 5 years, that is an extra $300 in payments, and while you were waiting the six months for the price to drop, you were still paying rent! If your rent is $500/mo – that’s $3000 out of your pocket that you could have used for a down payment! Or to build equity in YOUR home instead of someone else’s. And you cannot deduct ANY of that $3000, while if it was being applied to your mortgage payment, the bulk of that would be deductible on your Federal Taxes (please consult a tax advisor for information). Is it possible rates won't rise 0.5%? Yes. But what is more likely: a Seller reduces the asking price by 5% or rates rise 0.5%?
Consider further the chart to the right, as provided by the National Association of REALTORS®. This assumes a purchase price of $200,000 with 10% down at a rate of 5.5% vs $1000/mo in rent (a bit high for this area, but comparable to a mortgage payment in this price range). Not considering any equity gain from payments made toward the principal, in a year of no growth the annual cost of the loan is $9,673 vs $12,000 renting. That means even with no market value growth, the homeowner would still have an extra $2327 in his pocketbook vs. renting. Who couldn’t use that? Even at a 1% depreciation in value, the homeowner would be up $327 on the investment vs. renting. And obviously even better off with below trend growth.
So is it a good time to buy? Yes! Most price ranges currently have increased inventory to choose from. And if you are a first-time or “move-up” buyer, the scenario above does not even take into account the added tax credit available – which is refundable – cash in hand! And this time, it is NOT likely to be extended again.
Think you are interested in more? Call me today!
NEXT: Why Should I Get Pre-qualified?
2. The Right Time to Buy?
While in most price ranges home prices have fallen locally over the last two years, I am seeing signs that Buyers are still afraid to buy. Mortgage rates remain at the lowest rates in decades, first-time Buyers and now qualified “move-up” Buyers can benefit from an $8000 and $6500 tax credit respectively, and yet Buyers are still leery to pull the trigger. How will they know when to buy?
The tax credit for first-time Buyers has enough media coverage and Buyer attention to get the word out on the financial benefits of homeownership: not only the potential of equity growth over time, but the ability to deduct mortgage interest and property taxes and that any gains made on sale are tax-free if you occupied the home two of the last five years.
Even with the recent value drop, the common consensus among investors is that real estate remains one of the best performing long-term investments. Yet what about the near-term? No one wants to feel like they made one of the largest purchases of their life only to wonder if they could have gotten the same home for $10,000 less in six months!
So, let’s create a scenario. Say you are looking to buy a home for $200,000 with 3.5% down. Your loan amount would be $193,000 and your down payment $7000, your Principal and Interest Payment $1036/mo.
But you were not sure it was the right time, so you waited. Six months later the Seller reduced the price to $190,000 (a 5% price reduction). Your loan amount now is $183,350 and your down payment $6650 (saving you $350). But the rate in the mean time has gone up to 5.5%. Still incredibly low! However, your payment now is $1041/mo.
Yes, it’s only $5/mo more, and you saved $350 in down payment. But if you plan to live in the home 5 years, that is an extra $300 in payments, and while you were waiting the six months for the price to drop, you were still paying rent! If your rent is $500/mo – that’s $3000 out of your pocket that you could have used for a down payment! Or to build equity in YOUR home instead of someone else’s. And you cannot deduct ANY of that $3000, while if it was being applied to your mortgage payment, the bulk of that would be deductible on your Federal Taxes (please consult a tax advisor for information). Is it possible rates won't rise 0.5%? Yes. But what is more likely: a Seller reduces the asking price by 5% or rates rise 0.5%?
Consider further the chart to the right, as provided by the National Association of REALTORS®. This assumes a purchase price of $200,000 with 10% down at a rate of 5.5% vs $1000/mo in rent (a bit high for this area, but comparable to a mortgage payment in this price range). Not considering any equity gain from payments made toward the principal, in a year of no growth the annual cost of the loan is $9,673 vs $12,000 renting. That means even with no market value growth, the homeowner would still have an extra $2327 in his pocketbook vs. renting. Who couldn’t use that? Even at a 1% depreciation in value, the homeowner would be up $327 on the investment vs. renting. And obviously even better off with below trend growth.
So is it a good time to buy? Yes! Most price ranges currently have increased inventory to choose from. And if you are a first-time or “move-up” buyer, the scenario above does not even take into account the added tax credit available – which is refundable – cash in hand! And this time, it is NOT likely to be extended again.
Think you are interested in more? Call me today!
NEXT: Why Should I Get Pre-qualified?
22 December 2009
10 Things to Take the Trauma Out of Homebuying - Installment 1
You a first-time buyer, or perhaps it's just been awhile since you've been in the market. Buying a home is one of the largest financial transactions you will likely undertake in your life. Knowing this can create a cloud of fear and hesitation in your mind and around the transaction; it is only natural.
How do you work through it and fulfill your plans to reach your goal of homeownership?
Consider these points below to help focus your search and set your goals within your financial plan for 2010.
1. The Inside Scoop to Hiring a REALTOR
Find a REALTOR that will represent you as a Buyer, and consider a Buyer's Representative contract to align your interests; The Argument for a Buyer's Representative Agreement Contract
In Idaho, without a Buyer's Rep Contract (Buyer Agency), your information does not need to be held confidential by your agent in negotiating...which can certainly work against you in the wrong situation! It guarantees the Buyer their personal information will be held confidential, surviving the transaction itself, and allows the REALTOR to negotiate on behalf of the Buyer. For example, when the REALTOR presents an offer to a Seller without a Buyer’s Rep in place, if the Seller’s Agent asks, “Can they offer more?” and the Agent knows they can and their circumstances, the Agent can respond, “Yes, I believe so, they have just received a large inheritance!” This obviously does not help the Buyer in negotiating! (More details of the Agency relationships in Idaho are in the Agency Disclosure Brochure, which may be found on my website here.)
Have you been in touch with a REALTOR and wondered why they stopped communicating with you? It may be they will not work without a Buyer's Rep contract in place. In addition to protecting the Buyer, the Buyer’s Rep contract also assures the REALTOR that the Buyer has committed to working with them, and is not still shopping other Agents or working with more than one. When an Agent puts the time into finding and showing homes to a Buyer and advising them along the way, the Agent is not going to be compensated for his/her time unless a transaction closes.
The Buyers Rep also sets out a clear set of expectations for both parties. If either party is dissatisfied with the service, typically either party may cancel the contract in writing. Confirm with your REALTOR that they have and support this policy.
Will I have to pay my Buyer's Agent?
If the home you are buying is listed in the MLS, the Buyer's Agent's commission is being paid by the Seller; therein, FREE to you, the Buyer. Sellers agree to pay this fee because this assures the Seller that the Buyer is represented, will be appropriately advised and pre-qualified, and once an offer is accepted it will be less likely to fall through as all the appropriate steps are being taken along the way. It also reassures them that the people who come into their home are “real” potential Buyers, that the Sellers are not taking the time to clean and prepare their home (disrupting their schedules) for a showing that is in fact just a curious looky-loo. Even For Sale by Owners are almost always willing to pay a Buyer’s Agent, as often they aren’t educated about the entire process anyway, and do not know the laws about what they are required to disclose about their home, etc, where to find forms, etc.
Check for any designations the REALTOR has earned.
For example, are they an Accredited Buyer’s Representative (ABR)? Designations are additional education pursued by the REALTOR beyond the minimum continuing education credits required by the State of Idaho. The quality of their knowledge and education is an asset to you!
Consider your personality and your comunication style
Be sure you find a REALTOR with whom you are compatible. Homebuying is not only a big financial commitment, but also an emotional one. Do you prefer frequent phonecalls? Are you email and text only? Are you a numbers and charts person?
It’s critical that the agent you chose is both skilled and a good fit with your personality and that you bond with your agent in a way that you feel you can trust them. Remember, your agent has guided many transactions in his/her career, and will likely have some insight into the transaction options for you along the way.
NEXT: The Right Time to Buy?
How do you work through it and fulfill your plans to reach your goal of homeownership?
Consider these points below to help focus your search and set your goals within your financial plan for 2010.
1. The Inside Scoop to Hiring a REALTOR
Find a REALTOR that will represent you as a Buyer, and consider a Buyer's Representative contract to align your interests; The Argument for a Buyer's Representative Agreement Contract
In Idaho, without a Buyer's Rep Contract (Buyer Agency), your information does not need to be held confidential by your agent in negotiating...which can certainly work against you in the wrong situation! It guarantees the Buyer their personal information will be held confidential, surviving the transaction itself, and allows the REALTOR to negotiate on behalf of the Buyer. For example, when the REALTOR presents an offer to a Seller without a Buyer’s Rep in place, if the Seller’s Agent asks, “Can they offer more?” and the Agent knows they can and their circumstances, the Agent can respond, “Yes, I believe so, they have just received a large inheritance!” This obviously does not help the Buyer in negotiating! (More details of the Agency relationships in Idaho are in the Agency Disclosure Brochure, which may be found on my website here.)
Have you been in touch with a REALTOR and wondered why they stopped communicating with you? It may be they will not work without a Buyer's Rep contract in place. In addition to protecting the Buyer, the Buyer’s Rep contract also assures the REALTOR that the Buyer has committed to working with them, and is not still shopping other Agents or working with more than one. When an Agent puts the time into finding and showing homes to a Buyer and advising them along the way, the Agent is not going to be compensated for his/her time unless a transaction closes.
The Buyers Rep also sets out a clear set of expectations for both parties. If either party is dissatisfied with the service, typically either party may cancel the contract in writing. Confirm with your REALTOR that they have and support this policy.
Will I have to pay my Buyer's Agent?
If the home you are buying is listed in the MLS, the Buyer's Agent's commission is being paid by the Seller; therein, FREE to you, the Buyer. Sellers agree to pay this fee because this assures the Seller that the Buyer is represented, will be appropriately advised and pre-qualified, and once an offer is accepted it will be less likely to fall through as all the appropriate steps are being taken along the way. It also reassures them that the people who come into their home are “real” potential Buyers, that the Sellers are not taking the time to clean and prepare their home (disrupting their schedules) for a showing that is in fact just a curious looky-loo. Even For Sale by Owners are almost always willing to pay a Buyer’s Agent, as often they aren’t educated about the entire process anyway, and do not know the laws about what they are required to disclose about their home, etc, where to find forms, etc.
Check for any designations the REALTOR has earned.
For example, are they an Accredited Buyer’s Representative (ABR)? Designations are additional education pursued by the REALTOR beyond the minimum continuing education credits required by the State of Idaho. The quality of their knowledge and education is an asset to you!
Consider your personality and your comunication style
Be sure you find a REALTOR with whom you are compatible. Homebuying is not only a big financial commitment, but also an emotional one. Do you prefer frequent phonecalls? Are you email and text only? Are you a numbers and charts person?
It’s critical that the agent you chose is both skilled and a good fit with your personality and that you bond with your agent in a way that you feel you can trust them. Remember, your agent has guided many transactions in his/her career, and will likely have some insight into the transaction options for you along the way.
NEXT: The Right Time to Buy?
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