Buyers

Their major responsibility is to protect your interest as a buyer and as their client. Their main roles are the following:

• Educates you about your market.
• Negotiates on your behalf
• Analyzes your wants and needs.
• Guides you to homes that fit your criteria.
• Coordinates the work of other needed professionals.
• Checks and double-checks paperwork and deadlines.
• Solves any problem that may arise.

According to HouseMaster, a major home inspection company with offices in more than 390 cities in the United States and Canada, 40 percent of previously-owned homes have atleast one damage. Kathleen Kuhn, CEO and president of HouseMaster says, “Virtually every ‘used’ home needs some repair or improvement.” “That’s to be expected. But with today’s high prices, you want to make sure that you are aware of any major problems in a house you are considering purchasing, and what it will take to remedy the situation.”

From over one million home inspections, they’ve concluded that these are the most serious home defects to look out for:

• 1. Cracked heater exchange
• 2. Failing air-conditioning compressor
• 3. Environmental hazards including radon, water contamination, asbestos, lead paint, and underground storage tanks
• 4. Moisture in the basement
• 5. Defective roofing and/or flashings
• 6. Insect infestation — termites or carpenter ants
• 7. Mixed plumbing
• 8. Aluminum wiring
• 9. Horizontal foundation cracks
• 10. Major house settlement
• 11. Undersized electrical system
• 12. Chimney settling or separation

As per Kuhn, most of these damage can be repaired. But, depending on the gravity of the problem, it might cost you a lot especially if the problem is part of a major system. This is something that needs to be thought of before buying a house.

Roof repairs or a new roof could cost you at least thousands of dollars. A new air conditioning compressor could cost up to $1,200. To repair a basement will cost about $5,000. If you are already in the negotiating process, your agent should advise you to present a provision for renegotiating or backing out of the contract in the event that the inspector finds serious problems.

“If the property inspectors find that little or no corrective work is required, you have little or nothing to negotiate,” say Eric Tyson and Ray Brown in their book, Homebuying for Dummies. “Suppose, however, that your inspectors discover the $200,000 house you want to buy needs $20,000 of corrective work for termite and dry-rot damage, foundation repairs, and a new roof. Big corrective work bills can be deal killers.”

If however you are really bent on buying the house despite the problems, they offer these advises:

• The sellers can leave enough money in escrow to cover the cost of repairs, with instructions for the escrow officer to pay the contractors as the work is completed.
• The lender can withhold part of the full loan amount in a passbook savings account until the work has been done.
• The sellers may give a credit for the work. Lenders may disapprove of this last alternative because there aren’t assurances that the repairs will be made.

Get a qualified inspector. Their service costs between $250 and $400. If you want to ensure his credibility, ask for referrals from groups like organizations like the American Society of Home Inspectors or the American Association of Home Inspectors. New members are certified before they could join the group. You can also ask referrals from friends who has had to go through the same experience. But don’t leave everything to the home inspector. Invest a few hours with them asking them to explain the problem (if there are), what to look out for, how to keep your house well-maintained.

As Kuhn of HouseMasters say, “A pre-purchase inspection is your best protection against buying a home based more on emotions, rather than as a sound investment.”

According to HouseMaster, a major home inspection company with offices in more than 390 cities in the United States and Canada, atleast fourty percent of homes in the market have at least one major flaw. Kathleen Kuhn, CEO and president of HouseMaster says, “Virtually every ‘used’ home needs some repair or improvement,” “That’s to be expected. But with today’s high prices, you want to make sure that you are aware of any major problems in a house you are considering purchasing, and what it will take to remedy the situation.”

Based on HomeMaster’s findings from more than one million home inspections, here’s a list of the most serious home defects to look out for:

• Aluminum wiring
• Cracked heater exchange
• Chimney settling or separation
• Defective roofing and/or flashings
• Environmental hazards including radon, water contamination, asbestos, lead paint, and underground storage tanks
• Horizontal foundation cracks
• Insect infestation — termites or carpenter ants
• Major house settlement
• Mixed plumbing
• Moisture in the basement
• Undersized electrical system

Most of these defects can be repaired, says Kuhn. But it might you cost you a lot depending on the gravity of the damage, especially if it involves major systems. This is one of the factors you housld consider in buying a house. For example, buying a new air conditioning compressor will cost you about $1,200. A basement with damaged plumbing can cost you about $5,000 to fix. If you decide to start negotiations with a house you want to buy, there should be a provision for backing out in case the home inspector finds too many or too much problem.

Eric Tyson and Ray Brown, authors of Homebuying for Dummies says, “If the property inspectors find that little or no corrective work is required, you have little or nothing to negotiate.” “Suppose, however, that your inspectors discover the $200,000 house you want to buy needs $20,000 of corrective work for termite and dry-rot damage, foundation repairs, and a new roof. Big corrective work bills can be deal killers.”

If however you really want to buy the house despite the needed repairs, there are several ways to proceed:

• Ask the seller to allot enough money in the escrow to cover for the expense for repairs nad instruct the payroll officers to pay the contractors when the work is done.
• The lender can withhold or part or all of the loan amount in a passbook savings account until the work is completed.
• The sellers may give a credit for the work. Lenders may disapprove of this last alternative because there aren’t assurances that the repairs will be made.

Hire a qualified home inspector. Their fee usually ranges from $250 and $400. Look for home inspectors who are affiliated with organizations like the American Society of Home Inspectors or the American Association of Home Inspectors. These groups require their members to meet professional qualifications, and adhere to specific business ethics. You can also ask referrals from friends.

When you make an appointment with the home inspector, make sure you’re home. The money and time you spend on this is a wise investment for the future. As he goes throught the inspection, ask him about potential problems to expect and what warning signs to lookout for. Learn how they work and how to properly maintain them. “A pre-purchase inspection is your best protection against buying a home based more on emotions, rather than as a sound investment,” says Kuhn of HouseMasters.

When you see a house that seems exactly what you’re looking for, you’ll feel the impusle to make an offer right away. A beautiful, airy and relaxing house can make buyers easily fall in love with it. But don’t allow your emotions to make you forget about what’s real.  Leslie Levine, author of “Will This Place Ever Feel Like Home?”  says, “Sometimes we want something so badly, we’re not willing to ask all the questions we should.”

A beautiful house may only mean a beautiful facade. A closer inspection is necessary to ensure that this is really the house you want. You may see a basketball hoop over the garage and assume the neighborhood is great for kids. But a closer inspection may show that it’s rusted and hasn’t seen a ball in a decade, and that other yards in the neighborhood have no jungle gyms or tire swings out back, Levine says.

• Visit the house at different times of day
  One of the features you may love about the house is its large windows. But it can be a big problem at night when you have a peeping neighbor. If the house is beside or across a school, you may think of it  as an advantage. Visit the house during school hours so you can find out if you can handle the hustle and bustle that the school brings. You could visit a house in the middle of the day and think it’s a quiet neighborhood but it could be noisy and busy during morning or evening rush hour.
• Go through recent newspaper archives
  You might find out that the neighborhood’s water supply has a high level of contaminant; or they’re thinking of putting a high voltage line through the house  you’re eyeing. Levine suggests,  “Make sure you’re getting information on what you can’t see.” It’s also a good idea to check with the county or city for proposed projects in the area.
• Talk to neighbors
  How many of the people around you are actually homeowners? It will be hard to tell at first if most are rental houses.
• Ask the neighbors if they have an association
  “Is there a newsletter for it? How often does the neighborhood get together? Do they have a block party every year?” According to Levine, “Even if you don’t plan to attend, the fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house. It’s a nice, safe way to celebrate something.”
• Ask the sellers
  The house may have had past problems that you need to know of. Even if they’ve been fixed, it’s still worth knowing so you won’t do anything that could damage it again. The house may have had water damage years ago because of an ice dam. Knowing this will allow you to prepare and take preventive measures. You might find a landscaping which might seem to be unlikely to you. But you might find out it was actually made to prevent basement flooding.
• Get a home inspection
  According to National Association of Exclusive Buyers Agents, all houses have defects. Some may be obvious and most of it can be fixed. Being aware of the damage or potential problems of the house allows you to prepare for future expense or help you negotiate for a lower price. You should also consider having your house inspected for lead, radon and wood-eating pests.
• Ask for records of past improvements
  If the house went through renovations or repainting. Ask if they could show you the receipts. If the whole project cost just $1,000, it means cheaper paint was used. Be prepared to repaint it soon. Getting these records isn’t always porrible but it’s worth the try.
• Don’t assume remodelling will be easy
  If you talk to the seller about your ideas for future improvements, they might tell you more details you need to know. For example, you might notice a shower in an unexpected place. You’ll probably discover that there’s a structural problem that would’ve cost the previous owners a lot if they put a shower where it’s supposed to be.
• Consider the view
  Levine says, “So many neighborhoods now have teardowns. So look at the two houses on either side of you. If this neighborhood has had some teardowns, one of those houses might be a candidate. And they may build some behemoth structure that affects your light or the way your house looks or your view.”
• Check the utility bills
  You may love the house for its high ceilings, walls of glass or perfectly beautiful green lawn. But it might cost a lot to maintain them. The previous owner may have paid a so much for heating or cooling.
• Consider the taxes
  It’s not enought that you look at the latest tax bill. Ask what the previous years tax bills were. In some areas, houses are re-appraised and taxed higher frequently. The house may seem like a good deal but with taxes that keep going up, you might want to reconsider. If you can’t get the information from the seller, you can also look for it in newspaper archives or ask your real estate agent about this. In some areas, the school’s funding come from property taxes. If this is the case, taxes will increase faster than in other areas.
• Check with city hall
  NAEBA suggests checking the zoning of the neighborhood. You might also want to check any potential easements, liens or other restrictions that has something to do with your property. The seller should be able to tell you this but it’s better to do your own research. You can also ask your real estate agent about this.
• Reconsider the bells and whistles
  Are you okay with a one-car garage? Are you comfortable with on-street parking?  You may consider a house with a pool as a perk but can you really afford one?
• Explore the surrounding area
  This is especially important if you’re new to the city or state. Make sure you’re not moving into an ugly part of town. I’m also certain you don’t want to move in a noisy area. Find out if the property is near an airport, fire station, police station, hospital or railroad track. You might also want to live away from agricultural or industrial areas as they are prone to air pollution.

Asking for a home loan from a friend or family member is difficult; even if they are people close to you. The money involved is big and you probably see each other frequently or at least once a year. If they turn you down, you might feel uncomfortable with each other. But if you could show them how it could also work for their advantage, you’ll achieve a favorable result.

• Asking for the loan

  Thomas Fox, community outreach director at Cambridge Credit Counseling said borrowers should approach a private home loan the same way they would a mortgage from a bank. Before you come talk to a relative or friend asking for a loan, you should come up with a plan or proposal.

  “Borrowers should be realistic about what a practical repayment plan would be and not try to borrow more than they can repay. You have to treat it the same as any kind of loan and be realistic,” he says.

  When you have a contract for the loan, even if it is with your parents, they can sue you for missed payments.

• What private home loans have in common with traditional loans
  Private home loans or private mortgages are also called intrafamily mortgages. They are not very different from a loan you could get from a bank or credit union.
  • Both parties – lender and borrower, sign a promisory note or a mortgage note. This note contains the terms of your agreement.
  • The promisory note states the following: amount that was borrowed; the interest rate; frequency and date of payments.
  • There will be a deed of trust which gives the lender the right to foreclose the property when the borrower fails to pay according to the payment plan.
  • The lender holds a lien on the mortgaged property.

  This set-up is also for the protection of the borrower. The lender cannot ask for full payment abruptly or foreclose on the property because of personal reasons. Your friend or relative can’t just change the payment plan because they changed their mind and want the money back.

• How borrowers can benefit from private home loans
  • You can get better interest rates. You can negotiate with the lender interest rates that is more reachable for you. The lender can still benefit from this arrangement even if the interest rates you propose is less than what the banks apply.
  • You can propose a payment term that’s doable for you. It can be monthly, semi-weekly or any other. But even if your lender is generous, don’t take advantage. Live up to the terms you agreed on. 
  • Federal tax deductions that apply to institutional loans can also be applied to private home loans.
• How Lenders Benefit from private home loans
  • Even if the interest rates your proposed are less than what the bank applies, they can still get more compared to other investments like a savings account in the bank or other investment.
  • This will give your friend or family extra income. The promisory note gives them a sense of assurance that they can expect a certain amount from you based on what was agreed upon.
• What happens if you miss payments?

  Sometimes unexpected things happen that will cause us to miss payments. You might suddenly lose your job or accumulate medical costs that you didn’t financially plan for. Discuss this situation with your lender. This also applies to institutional loans. The loan can be modified like lowering or postponing the payments but for a longer loan term. But don’t avoid your lender’s calls. It might lead to more problems.

Buying a home is a big move. It leads to a series of things to think about. 

One of them is whether you want to live in a condo or a single unit family house? Each choice comes with their own set of advantages and disadvantages. Only you can determine what’s best for you.

Michelle and Kevin Millsom, 31 and 36, is a newlywed couple living in Boston. Choosing to live in a penthouse apartment was the best thing for them. They don’t have any children, both have high-powered financial careers, and they love the excitement that the city had to offer.

“We enjoy everything the city has to offer—the restaurants, theatre, outdoor concerts. We walk everywhere and find the easy access to the airport to be a plus since we travel frequently for work,” said Kevin. “When we have children, we may think about a house in the suburbs, but for now this is where we want to be.”

They wanted to be at the heart of the city. So they bought a penthouse apartment overlooking Boston’s famous esplanade and Charles River.

Sounds to good to be true? As with all things, it also comes with its own share of disadvantages. They live in a two-bedroom/two-bath condo that costs way more than a home three times the size of their condo. And it’s just 20 minutes away. They share the building with fourteen other tenants which means that decision-making  with regards to the building need to be consulted with them. They also need to pay $300 per month for a parking spot for a car which they seldom use because of the convenience of their location. To most people the cost may sound unreasonable. But to Kevin and Michelle, who appreciate the convenience and the good location, the cost is all worth it.

Condo living is not for everyone. Adriana Forte, 62, chose to live in a “condex,” (a two-family home with a shared wall) in the Boston suburb of Arlington. After her divorce she chose to live in a condex thinking that taking care of a home will be too much to handle. However it turned out to be a wrong decision. “It’s difficult to live with neighbors so close,” Forte said. “First there was the noise. My neighbors are night people, and every night they are just getting geared up when I’m trying to sleep. Then I found myself handling 100 percent of the finances and maintenance of the duplex—without compensation. I may as well be living in my own house!”

She missed out on a lot of things that a single-family house can offer – fresh air and private outdoor space. Forte loves maintaining a home and a garden.

Consider these things to help you decide what is most important to you.

• Location – Where do you want to live? Are both the condo and house in the same area?
• Privacy – Are you comfortable about living closely with neighbors? How much do you value your privacy?
• Responsibility – Do you want to have full control over decision-makings for your home? Or do you want to share that responsibility with other neighbors?
• Maintenance – Do you enjoy taking of your home and garden? Or are you the type who is just not into plants?
• Budget – How much can you afford? A condo might be more reachable right now.

Life is dynamic. People change and situations change. Whatever you decide now, can still be changed to suit your current lifestyle and preferences.  

Their major responsibility is to protect your interest as a buyer and as their client. Their main roles are the following:

• Educates you about your market.
• Negotiates on your behalf
• Analyzes your wants and needs.
• Guides you to homes that fit your criteria.
• Coordinates the work of other needed professionals.
• Checks and double-checks paperwork and deadlines.
• Solves any problem that may arise.

Buyers are now in a better position when it comes to buying a house. Gone are the days when real estate is a hot market and you need to make an upfront offer as soon as a property is put up for sale.

Competition has mellowed down in most areas. This gives buyers an opportunity to be able to deliberate on what is available and take advantage of the best deals. How do you determine the climate of your market? According to economists, real estate is directly related to employment. So if there is a rise in employment, you can say that the value of your property is also looking up. In the Midwest real estate is not doing as good as auto manufacturing. Prices are low and is not expected to rise anytime soon. It might take a while until the market rebounds.

Things buyers can keep in mind to get the best deal in the market:

• Do your homework and negotiate fairly.

  In a changing market, the biggest problem is human nature. Market value can drop or stagnate. But sellers often refuse to believe this. To them, the price of their home is based on how dear it is to their heart regardless of its actual market value. On the other hand, buyers take advantage of a market slump and make unrealistically low offers. Before you make an offer, research and think about important things like the features of the home that you want to be in the home, the size of the home and the going rate of properties in the area.

• Research on comparable sales.

  Find out how much the last one in the area sold. According to Beverly Durham of ReMax Gold Coast Realty in Camarillo, Calif., “See what’s going on out there.’’ Don’t insult the seller by making a very low offer. You’ll drive them away. Your goal is to make them consider your offer.

• Why is the seller putting it up for sale?

  Find out as much as you can about this. Is it because of retirement, job-related, divorce, they need to relocate, or they simply want to sell to the highest bidder.  This information is crucial. If a buyer knows this, they can either negotiate better or decide to look elsewhere.

• Check the MLS (Multiple Listing Service).

  They usually state what the seller owes. Or your agent can provide this information for you.With this information, you could negotiate accordingly.

• Timing.

  According to Durham, “After 45 to 60 days the seller is usually absolutely sick of keeping their house spotless and sick of people walking through.’’ After this period the seller will be anxiouse to sell their house.

• Go for newer or well-maintained houses.

  It will cost you time, effort and money to fix damages.

  Even in a tight market, it’s okay to ask the seller to add the closing costs to the price of the house. It’s better to pay 20% downpayment and roll the closing costs into the loan than pay 15% downpayment and pay upfront for the closing costs.

• Be reasonable

  when you ask for extras.You can also ask for new kitchen appliances or washer and dryer. Durham said you can even ask the seller to pay for the first year of homeowner association dues. But don’t ask them for things that involve workmanship. Durham said, “Don’t ask them to paint.’’“They won’t do it the way you want. They’ll do a lousy job.’’

  When you consider buying a home, think about staying there for atleast five years. Remember your goal as a buyer is to get the home that you want; not to outsmart the seller.

Are you looking to finance a new home? Or are you finding the best mortgage rate to refinance your home?

The first step is to shop around. But what does that really mean? Research and prepare. Take time to think and analyze different mortgage plans. You could save a lot by doing this. Take this for example: on a 30-year mortgage for a $300,000 house, a homeowner would pay approximately $1,520 each month at a 4.5 percent rate. But if the homeowner chooses a slightly higher rate of 5.10 percent, it would increase the monthly mortgage payments to $1,633, which would make a difference of $40,680 in 30 years. (Figures were calculated on a 20 percent down payment.)

The best thing you should do is retrieve your credit scores. If lenders retreive them multiple times, it can lower your score. 

If you’re looking for a lender, look into their track record. Ask family and friends about them and when you’ve narrowed down your options to two or three lenders, compare their rates.

Before you compare rates, establish a budget. Think about how much maximum you can afford to pay every month.

The lender should be able to give you a comparison of loan terms with conventional methods of financingso you can make an informed decision. Don’t just jump into a plan with low rates. Make sure you understand all the costs with it.  Rate lock is a contract with the lender that ensures the interest rate will not change. But you will need to get the loan within a certain period of time; usually 60 days. If the rate increases, you will not be affected. Using a mortgage calculator , compute the monthly payment at different interest rates. If you find a rate that is lower than your limit, lock in to that rate.

When you see rates that are lower than your limit, act fast. Don’t miss out on good deals and offers.Some lenders offer a “float down.” This means that even if you’re already locked in on a low rate, you can get even lower rates. Specific contracts may vary depending on lenders.

When you look for a lender, don’t just consider one. Look into other lenders as well. Different lenders offer different products. Understand the products. Some products for example have low rates for new homebuyers but not for those who want to refinance.

It’s a good idea to try different institutions from a direct lender, credit union or a community bank. Once you’ve made up your mind on a lender, ask what other fees are added to the loan. You might choose a plan with a low rate but have a lot of additonal charges. Before closing the deal, make sure you know the total amount of the loan.

Once this is settled, decide when you want to close the deal. Discuss your intended date with the lender. Ask about the charges for loan lock periods. Lock in for the best rate and the right amount of time.

People have different goals and principles when it comes to investments. But here are vital tips that every investor needs to know to ensure success.

• Compare property rates.
  The best way to assess the value of a property is to find out the sale value of other properties in the vicinity. This is also how you determine the rental fee. Rental fees should be reasonable. Otherwise, potential tenants will think about purchasing a property instead.
• Keep tax laws in mind
  Bear in mind that tax laws could change over the years. When investing, make sure that they won’t be affected even if tax laws will change.
• Focus on a market you’re familiar with
  Determine a market you’re good at – be it condominiums, apartments, starter homes, low-cost houses, fixer-uppers or foreclosures and start with that product.
• Know the costs involved
  You should be knowledgeable about the costs and expenses like financial statements, operating expenses, loan payments, taxes, cash flow, vacancy costs. You must have a clear understanding of these things before you commit to an investment.
• Find out where the tenants came from
  If the rent went up just recently, the tenants are probably thinking about moving. If they have a short-term contract with, there is a chance that they are living there to get buyers. Don’t forget to get their security deposit.
• Study the taxes involved
  Taxes play a very important role in investments. Oftentimes, they spell the difference between a positive and negative cash flow. You might want to seek help from a tax advisor. You should find out how you can use the tax situation to your advantage.
• Learn about insurance coverage
  If the seller’s coverage is lower than the current replacement value, you might incur higher insurance cost. 
• Verify the cost of utilities
  Ask local utility companies of the current charges especially if utilities are included in the rental fee.
• Find a good accountant
  One of the things that make a succesful real estate investment is taxation. Find an account who is good with tax codes and reliable.
• Inspect the property
  Carefully inspect the property before buying it. You might need to hire experts to assess the property.