Sunday, July 21, 2013

Pre-Approved? STAY THAT WAY!

When buying a home, there are several things to know to help you get ready for closing day. The main rule of thumb is do NOT do things that will change or affect your "financial picture".

Keep your job.
Changes to your employment (changing jobs, becoming self-employed or quitting) could prevent you from closing as income needs to be verified and pay stubs are required.
Avoid accumulating additional debt.
Applying for new credit cards or making major purchases can negatively impact your debt ratios and may prevent you from closing your loan. Try to keep balances below 30% of the available limit at all times during your loan process and save large purchases for after the close of your loan. Don't co-sign on anybody else's loan as this affects your credit too!

Maintain a stable credit picture.
Closing accounts, paying off collection, consolidating cards or making late payments can all adversely affect your credit score.

Maintain your bank accounts.
As part of the approval process, bank accounts need to be verified and changing or closing accounts could cause issues at close. Unusual transactions or deposits can also cause red flags. Don't consolidate accounts or move any money around.

Stay in touch with your Mortgage Person.

If you have questions about actions that may affect your financial picture during the mortgage process, call your lender right away and avoid mistakes that may cause problems with closing.

Want more insight? Have a specific question? Contact your lender and ask them to talk you through it.

Need a lender? Contact me for qualified referrals!

Sunday, July 14, 2013

Is a foreclosure worth it? Issues and upfront costs...

Despite all these potential problems and upfront expenses, foreclosures can still be a good deal. 

If you are willing to fix problems that most people do not want to deal with, you can buy a home at a significant discount. However, you may encounter additional issues when it comes to actually purchasing the property and getting it into move-in condition.

"Buyer Beware" is a good rule of thumb when considering buying a foreclosure (bank-owned or REO house).  Here are just SOME of the reasons why...

•Issues With Lenders
Buying a home from a lender has its issues as a result of the increased level of bureaucracy and the limited transparency afforded to those who buy foreclosures.

•Financing a Foreclosure
Lenders will not loan you money for a home they consider uninhabitable or that appraises below the purchase price. Appraisals for government insured loans are more strict about the condition standards than conventional but of course if you are an investor paying cash this will not be a problem. Also, beware of the hidden costs that can be lurking around a foreclosed property.

•Time Delays With the Owner Bank
Common sense says that banks should want to unload REOs as quickly as possible, but in reality banks sometimes drag their heels in considering offers and throughout the escrow process.

•No Seller Disclosures
Since no one from the bank has ever lived in the house, they are unlikely to have any knowledge of existing problems with the property. You will have to uncover everything yourself, either during the home inspection, by asking neighbors or through experience after you become the homeowner.

•Competition When Making an Offer on a Foreclosed Home
Because foreclosures can be great deals, they are attractive to investors looking to flip properties or use them as rentals. Since investors can make all-cash offers with fewer or no contingencies and fast closings, their offers may be more attractive to the bank than those from would-be owner-occupants who desire inspections, financing or other contingencies.

To help more owner occupants take advantage of these "deals" some bank-owned properties have a set timeframe when the home is first put on the market where only owner-occupant offers are considered.
Search for Foreclosed Homes

OK - so there is A LOT more to consider but I want to keep these posts short.  Please search this blog for posts tagged "Foreclosure Headaches" for more considerations.

All this have you thinking about purchasing short sales?  That is another conversation. 
Call me to further discuss your property purchase plans!

Sunday, July 7, 2013

The Home Selling Process

A guide to the home selling process.

By +Sarah Marrinan

1) Choose a Listing Agent
  • A listing agent will represent you and have a fiduciary responsibility to look out for your best interests.
  • Interview agents and review their experience and marketing plan.
  • Negotiate and sign your listing agreement, including term.

2) Get Home Ready for Sale
  • Prepare your home for sale by cleaning, decluttering and improving curb appeal.
  • Hire a professional stager to stage your home, or ask your real estate agent for help in staging.
  • Make repairs before selling. Get a home inspection if you are not sure what the most important repairs will be.
  • Hire a handyman for repairs you can't make on your own.
  • Protect your privacy while your home is on the market.  Keep all your personal documents locked away. Remove personal photos. Lock up your valuables.
  • If you're selling a home where pets live, make alternate plans for your pets.

3) Figure Out How Much Your Home is Worth
  • A seller's biggest mistake is to overprice.
  • Price your home in line with sold homes identified in a comparative market analysis report.
  • Consider your market competition. 
  • Consider whether your market is hot, cold or neutral, and price according to the market temperature.

4) Obtain Seller-Required Inspections
  • If your contract calls for a Truth-in-Housing inspection, your agent will help arrange it. 

5) Seller Disclosures
  • All homes in the US are subject to lead-based paint and Radon disclosures.
  • If you are aware of material facts, disclose them. Hiding material defects could result in a lawsuit down the road.
  • If you are in an association you will be required to provide copies of the association documents to the buyer.

6) Market Your Home
  • You or your agent should identify the selling points and choose advertising words to sell.
  • Approve your agent's marketing campaign and advertise your house for sale yourself amongst family and friends.
  • Follow the top 10 home marketing tips for selling your home.
  • Hire a virtual tour company to take quality photographs and put a 360-degree virtual tour online.
  • Tweak marketing to increase traffic and showings while the home is on the market.
  • Your agent should saturate the internet with photographs and description of your home.

7) Receive Purchase Offers and Negotiate
  • Make certain that buyers use the right form for writing a purchase offer.
  • Even if you receive a lowball offer, negotiate by issuing a counter offer. Don't ignore offers.
  • Ask for first right of refusal if the buyer's offer is contingent on selling a home.
  • Consider making a counter offer contingent on buying a home, if market conditions warrant.
  • Don't be afraid to make a full-price counter offer based on your agents suggestion, if you are priced competitively.
  • If you are priced right, you may receive multiple offers depending on the level of competition and local market activity.

8) Show Your Home
  • Most agents use a lockbox.
  • Your home may show better if you are selling in spring-fall than selling in winter.
  • Selling during the holidays will likely result in a lower sales price, regardless of what agents tell you.
  • Follow the top 10 home showing tips. You've got only one chance -- and sometimes only 3 seconds -- to make a good first impression.
  • Prepare for an open house and use the approach sparingly.
  • Ask for buyer feedback so you can adjust your price, condition or marketing campaigns accordingly.

9) Cooperate with Home Inspection
  • Get ready for the home inspector.
  • Ask your agent to provide you with a home inspection checklist so you will know which items an inspector will want to see.
  • Expect that the inspector will want access for an attic inspection and will look for a wet basement; prepare those areas for inspection.

10) Negotiate Request for Repair
  • Ordinarily, sellers do not need to accept a buyer's request for repair; however, buyers can generally then cancel.
  • You are entitled to a copy of the home inspection report, if the buyers request repairs.
  • If you do not choose to make repairs, a buyer might instead accept a closing cost credit.

11) Open Escrow / Order Title
  • Your agent or transaction coordinator will open escrow and order a title policy.
  • Write down the contact information for the closing agent.
  • Select a date to close based on when the buyer's loan will fund.
  • Ask for a receipt for the buyer's earnest money deposit.

12) Appraiser Appointment

  • Clean the house the day before the appraiser arrives.
  • If you receive a low appraisal, ask your agent about alternatives.
  • You are not entitled to receive a copy of the appraisal because you did not pay for it.
  • If the buyer decides to cancel the contract based on an appraisal, ask your agent or lawyer about your rights.
  • This is separate from the home inspection but looks at many of the same items to determine a condition level

13) Ask Buyer to Release Contingencies
  • If you do not demand a release, buyers are not obligated to provide it.

14) Move Out
  • Once all contingencies have been removed and all parties have receive a final closing notice move out.
  • Unless otherwise agreed, the house should be completely empty before final walk-through

15) Final Walk-thru
  • The buyer is entitled to a final walk-through just before closing to make sure the home is in the same condition and when they agreed to purchase it and all negotiated repairs/updates have been done.

16) Closing
  • Bring a valid picture ID.
  • Bring keys and garage door openers.
  • Be on time.

17) Post Closing
  • File for homestead if the property will be your primary residence
  • Your property deed, reconveyance and deed of trust will record in the public records.
  • Title will notify you when it records.
  • Depending on buyer's possession rights specified in the contract, you may be required to move on the day it closes.