| You
found a house that seems perfect and you really love it--the
chemistry is there-and the price is right. If you are like
many buyers, you start off by asking the Realtor if the sellers
will take less than they are asking. A Realtor doesn't know
what the sellers bottom price is. The sellers often don't
know themselves until they get an offer. In many cases, the
price is negotiable, but the only way to test it is to make
the sellers a written offer to accept or counter. Attractive,
well-priced homes usually sell quickly in any market. If you
get involved in offers and counter offers, another buyer could
come in with a better offer while you are negotiating back
and forth. If you cannot qualify for financing at the asking
price and you are willing to risk losing the house, you can
make a lower offer. But if it will break your heart to lose
a home in you really love that you can afford--it may be worth
paying the asking price. |
| You
and your buyers reached an agreement and signed all the paperwork
for the sale of your home. After all of the documents were
signed, however, the buyers began to get a little "crazy"
and started making additional demands. It is important to
remember that people are rarely at their best when they are
buying a house. The buyers may be suffering from "Buyers Remorse"--that
intense feeling that they have paid too much and the house
is going to fall down as soon as they assume ownership. They
may start questioning the fine points of the structural integrity
of your home or ask you to include your new washer and dryer
and power mower in the transaction. Most buyers are easy to
do business with, but don't take it personally if your buyers
begin going through the "home-buying jitters". An important
part of a Realtor's job is to do the necessary "hand holding"
to get them happily settled in your home. |
Buying
New vs. Buying Old |
New
homes typically have a higher sales price than comparable
existing homes, and buyers are usually willing to spend more
on a new home because of lower maintenance costs. Builders'
warranties on new homes, along with a new roof, appliances,
and major systems, usually make major repairs unnecessary
and help to counter a slower initial rate of appreciation.
A 1991 Census Bureau Housing Survey suggests that operating
costs are lowest for brand new homes, slightly higher for
relatively new existing homes, but lower on average for older
existing homes. Operating costs per square foot of living
space, however, are consistently higher for progressively
older existing homes.
Utility costs represent the largest factor in operating costs.
Energy consumption per square foot depends on the size of
the home, the insulation and quality of the windows, air leakage
and the efficiency of the furnace. New homes require fewer
expenditures for routine maintenance. The cost of maintenance
first increases with age, then declines, so you will generally
spend less maintaining a home built before 1960 than for a
home built between 1970 and 1975. |
There
is a federal law which requires mortgage lenders to give prospective
buyers an itemized, "good-faith" estimate of their closing
costs. Sometimes buyers arrive at the closing with this document
firmly clutched against their chests, and proceed to question
each item on the form that does not match perfectly. These
"good-faith" estimates are just that--estimates. The lender's
charges will be fairly accurate, but the charges for attorneys,
termite inspections, title insurance, and other items that
appear on the closing sheet may be a little bit different.
Some pro-rated items, such as taxes or homeowner's association
fees, will also be different if you don't close on the date
that was used to calculate the estimate. The purpose of the
disclosure law is to give you a ball park figure of your closing
costs. But the estimate you are given won't be to the penny--probably
not even to the dollar!
| PRICE
OF HOME |
ESTIMATED
CLOSING COSTS
|
| $80,000 - 100,000 |
$1,600 - 2,000
|
| $100,000 - 125,000 |
$2,000 - 2,500
|
| $125,000 - 150,000 |
$2,500 - 3,000
|
| $150,000 - 200,000 |
$3,000 - 4,000
|
| $200,000 - 250,000 |
$4,000 - 5,000
|
| $250,000 - 300,000 |
$5,000 - 6,000
|
| $300,000 - 500,000 |
$6,000 - 10,000
|
|
| Most
people are not at their best when they are at the closing.
They are feeling nervous and vulnerable as they sign the papers,
and may even be fighting off an attack of buyer's remorse.
Even though you may be inclined to just sign the papers, it
is a good idea to check the paperwork and ask any questions
you have. If you are signing a mortgage or deed of trust,
be sure to review the document carefully. Check the spelling
of your name, the property address and all of the inserted
items for accuracy. Since much of the paperwork is prepared
on short notice, occasionally mistakes are made. They are
usually easier to fix while you are still at the title office,
so don't be shy about asking questions before you sign on
the dotted line. |
Data
Needed For Loan Application |
Employment
History
Copies
of last 2 yrs W2's
Copy of most recent paycheck
Copies of 2 yrs tax returns for self-employed borrows, sales
rep & commissioned people
Statement from courthouse showing child support payment
Award letter from Social Security or Perm. Disability
Financial
Info
Copies of 3 months of all bank statements, savings, checking
and credit Union Accounts
Stock Certificates or Bonds (if used for closing)
Gift from relative: Will need a letter from donor Need verification
of donor's account that holds the funds for the gift
Purchase contracts on sale of present home and/or relocation
agreements for transferee
List
of Creditors
Name and account numbers of all credit cards
Name, address & account numbers of all loans (auto, student,
personal)
Recent 2-year history for a present mortgage: Name, address
& account numbers
Recent 2-year history for rent: Name & address of landlords
FHA/VA
Loan-Name and address of nearest living relative
Photo ID and Social Security Card
VA Certificate of Eligibility & Copy of DD214 (Discharge
Papers)
Miscellaneous
2 year address history for each borrower
Copy of canceled earnest money check
Divorce Decree
Copies of leases if rental property is owned by the borrower
Condominium documents Application fee
|
| When
you decide to buy a home, you may feel resistance to doing
some of the things that are necessary to turn your dream into
a reality. An important part of a professional Realtor's job
is to help you overcome such resistance. When you locate the
property you want to buy, you will have to handle many details
within a very short period of time. There is a lot of paperwork,
such as the financial statement and purchase agreement, in
addition to the negotiations with the sellers. You may also
experience a wide range of emotions at each step of the way,
everything from mild jitters to profound buyers' remorse.
Just take a deep breath and trust your Realtor. It also helps
to remember that everyone who has purchased a home has experienced
these same feelings--"it's too much money" or "the local market
will collapse completely the day after we close". Fortunately,
almost none of these fears ever come true. A professional
Realtor is trained to take you through the home-buying jitters.
|
| When
we help prospective buyers locate a new home in Fort Collins,
we listen carefully to your goals. What are your criteria
for selecting a neighborhood, what style of house do you prefer,
what price range and floor plan meet your needs? Are there
any special considerations that will go into making your decision?
When we have a good picture of what you want, we will go to
work as the master matchmaker to find the best property on
the market for your needs. We succeed when we can make our
buyers' goals our goals. Finding you the perfect home is a
collaborative effort. The buyers communicate what they want,
why they want it, and where compromise might be possible,
and we listen carefully and select the homes that come as
close as possible to meeting the needs expressed. When there
is trust and communication between you and the Realtor you
are working with, miracles can happen! Creating these miracles
for buyers and sellers is "Job #1" for us. |
| After
many months of searching, you have found your ideal house.
You are a little older and a little wiser now, so you want
to give the impression that you are serious without appearing
to be too eager. What should you do? In the marketplace, "money
talks." There is no absolute rule about how much "good-faith"
deposit you should put down--but it is a tool to make your
point with the seller. The typical $1,000 will hold many homes
for you, except in larger home markets where it may be critical
for you to show that you are a serious and able buyer. You
don't want to make a deposit that is too large in case there
is a problem getting your money back, but if your offer is
substantially below the asking price, a larger deposit--$5,000
or $10,000--might influence the seller. If you make a low
deposit with your offer, be sure to provide for an increased
deposit when the offer is accepted or upon removal of the
contingencies. |
A
professional home inspection, typically done at the buyer's
request after a purchase offer has been accepted, can ensure
that your prospective new home is safe and structurally
sound. If something needs fixing, the inspector will note
repair costs, which occasionally may help you negotiate
a lower purchase price. Or you can ask that the seller make
necessary repairs. If, on the other hand, the inspector
finds nothing wrong, you can come to the closing table feeling
confident and well-informed. Frequently, an inspection simply
confirms what you already believe: that you have seleted
a good home!
Inspections
can also help sellers. Timely repairs can increase a home's
value and enhance its marketability in a sluggish real estate
climate. Appraisals tend to nudge higher, too, when a home
is in good physical condition.
The
actual inspection typically takes 1-3 hours. We encourage
our clients to accompany the inspector as they evaluate
a property's condition. It is a great opportunity for buyers
to learn about their prospective new home and draw their
own conclusions if problems are pinpointed.
After
the inspection, the inspector's work continues at the office.
A 7-10 page written report is generally ready in two or
three days - sooner if you have a tight deadline. It itemizes
hundreds of structural and mechanical items and asseses
their condition. When defects are noted, detailed descriptions
are provided as are repair cost estimates.
The
inspection report then becomes a document underpinning the
property transfer. It serves the interests of all parties
- buyer, seller, Realtor, lender - by providing documentation
of the home's condition.
|
| While
it is impossible to predict what a particular house will be
worth at any point in the future, single family homes have
a track record of being excellent investments. If you want
to take the plunge, what should you look for in an investment
property? Location is the prime factor. A great location will
make a property easier to rent or sell later on for top dollar.
You also want to consider the cash flow situation. It is often
difficult to break even or show a profit from your rental
income for the first few years of owning a property. Assuming
the property will appreciate as you own it, you will want
to consider the potential amount of equity you will build
up each year. If you are planning to become a landlord, it
is a good idea to consult a Realtor and an accountant to help
make sure that your decision to purchase investment real estate
is an informed one. |
| If
you are buyer, you should be prepared with the proper components
to submit an offer. An offer is not simply the price. The
Realtor will act as the conveyor of information. There are
a few things to look out for in such negotiations: 1) include
a finance contingency, even if you have loan pre-approval,
2) insist on an engineer's, termite and radon inspection contingencies,
3) itemize the personal property you want included, such as
chandeliers or drapes, and 4) submit the closing date you
prefer. Buyers should be prepared to make their best offer
first, but if that offer is not acceptable to the seller,
they should expect to go through a round of counter-offers. |
| Many
subdivisions are governed by homeowners' association rules
which place restraints on what you may or may not do with
your property. Such restrictions may range from the types
of vehicles that may be parked in front of the property to
the color paint that can be used on the exterior of the building.
Many jurisdictions require that sellers provide a copy of
these rules or covenants to prospective buyers and allow them
time to study and approve them before finalizing the purchase
agreement. Most restrictions are intended to keep owners from
doing things that could depress property values, and are generally
enforceable in a court of law. Some buyers will find such
strict rules reassuring. But a rugged individualist who may
want to park a van in the driveway, paint the house a wild
color, or erect a high privacy fence should think twice about
buying in a highly restricted area. Whatever your feelings
about such regulations, be sure that you understand any homeowner
rules and can live happily with them before committing to
a purchase. |
| An
important part of being an informed buyer or seller in a real
estate transaction is understanding the purchase contract.
Before you sit down with an agent to make a written offer
to purchase a home or receive an offer on your home, you should
take a look at the real estate forms used in your area. In
some areas the Realtors use standard contracts which have
been approved by the local Board of Realtors and in other
areas they use agreements drawn up by lawyers which contain
a significant number of clauses. You should get a copy of
the paperwork you will be signing so that you can read it
at your leisure and absorb the information. Don't hesitate
to ask questions about anything that you don't understand;
and if any of the standard clauses do not fit your particular
situation, you can discuss the wording that you would like
to have changed. The key here is to familiarize yourself with
the paperwork before you have found your new dream house or
buyers for your home. |
| There's
a lot of talk about home loan pre-qualification by mortgage
brokers and real estate agents. There is a difference between
loan pre-qualification and pre-approval. Pre-qualification,
which in today's marketplace is usually done by mortgage brokers,
means working with the buyer to determine how much they can
afford and which loans are the most likely to be available
to them. Loan pre-qualification can save a buyer time and
money, and can even be a bargaining tool with a seller, however,
it is not the same as loan "pre-approval". The mortgage broker
can often get the buyer a pre-qualification letter. Pre-approval
means that the lender has definitely committed to lending
the buyer money once the house itself is approved. Since it
is a much stronger pledge, it is a much more valuable negotiating
tool. Only a lender can give pre-approval, but your Realtor
may be able to push through pre-approval from underwriters
with as little as a phone call. So when you hear someone talking
about "pre-approval" make sure that it is lender pre-approval,
and know that your Realtor can help. |
| You
have found the perfect home, but finding the perfect financing
has become elusive. After you completed the application process,
your lender has turned you down, and you are upset. Can anything
be done to turn around this setback? It depends on why you
were turned down. If your income is too low to satisfy one
mortgage company, there might be another company with more
liberal qualifying guidelines. If you have had credit problems,
some lenders may be more willing than others to help you clear
them up in a manner that satisfies their underwriters. If
your loan runs into problems, sit down with the loan officer
and your Realtor to investigate the possibility of using a
different lender. The first company may be able to "assign"
the package to a competitor, enabling you to use your same
credit report and appraisal. You will need the cooperation
of your sellers too. |
| It
takes time for real estate agents to build a business. Since
a lot of our success depends on referrals from satisfied buyers
or sellers, we work hard to exceed your expectations for service.
If a Realtor has done a superb job of selling your house or
finding you a new one, the best way to say "thank you" is
to give that person's name (and phone number!) to anyone you
know who is considering a move. You are not only doing the
agent a favor, you are also directing your friends to a competent,
knowledgeable and experienced salesperson. Buying a house
or condo can be a little scary if you don't have a strong
professional guiding you through the process. Realtors try
extra hard to please referrals of friends or pleased customers.
We are in the business for the long term and prosper by giving
consistently high quality service. |
A
question which is often asked about real estate sales is
which home loan fees are deductible for income tax purposes.
It is good to know the answer to this question before you
sign on the dotted line. It may influence which loan you
will choose. Loan fees for certain services are not itemized
on your fee statement, but are grouped together into a single
category. The most obvious deductible fee is the loan fee
paid to acquire a mortgage for a principal residence. The
IRS recently ruled that the buyer could deduct the fee in
the first year, even if the seller paid it! Other deductions
include pro-rated property taxes and mortgage interest.
On these items, the buyer may only deduct their share.
Most
of the other closing costs are not deductible, however,
you may add them to your home's adjusted cost basis when
calculating appreciation. Among these costs are appraisal,
attorney, and inspection fees, as well as title, recording
and notary fees. Fire insurance fees are neither deductible
nor do they figure into the cost basis. If you are not sure
which fees are deductible, consult a professional tax advisor.
|
When
you view homes to purchase, examine:
-
Carpentry work - check windows for ease of opening and
closing,
check floors for squeaky or soft spots.
-
Basement floors and walls for any cracks and damp spots.
-
Insulation and ventilation in attics, crawl spaces, and
garages.
-
Mechanical and plumbing systems for proper working condition.
-
Drainage on property to determine that water flows away
from the house.
-
Crawl space for dryness.
In the written offer, request a "whole house inspection" by
a qualified home inspector. Make a request for necessary repairs
in writing. Consider a home warranty contract for your new
home. This can offer you valuable protection against unexpected
repairs. Be sure to carefully review the available coverage.
|
The
people who do title searches have an extremely important
job. They must ensure that the sellers really own the property
being sold and that all liens against the property are being
paid off as a result of the sale. If the seller has had
financial difficulties, for instance, and didn't pay his
bills, there may be judgments that must be satisfied on
or before the closing. Someone in addition to the party
who signed the sales agreement may have an interest in the
property. If so, it will be necessary for that person to
sign the sales agreement and the deed that transfers ownership
to the new buyer. The preliminary title report will also
show any easements that run with the property. In addition,
the Title Company will go back many years, examining what
is called the "chain of title".
If you
learn that the property you are buying has title problems,
don't panic. Most of them are resolved easily and in plenty
of time to avoid delays in the closing.
|
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