Real Terrific

Advice to Home Buyers

 

Romance is the theme, as the owners of elegantly staged homes await the opportunity to sweep buyers off their feet; implying “paradise lives here.”  

Home staging is a growing business because of the higher price a staged home commands.  It’s great for sellers, but sometimes a lesson learned for buyers.  After the closings, buyers learn that the romance is over when they open the doors to the echo of an empty house, “helloo –looo—loo—oo” even though they paid thousands more for the disappearing fantasy.  ‘Well at least the paint is fresh’ they say to themselves in consolation.

Some sellers pay thousands to have their homes staged professionally in an effort to strike an emotion.  However, smarter buyers leave their emotions at home and see buying as the business transaction that it really is.  

 

Your home is most likely the biggest purchase of your life, and it will be a deciding factor of your financial future.  The resale value determines whether you can afford to trade up when you are ready, or if you will be stuck there because you have purchased an already-improved home and were not able to build your equity by improving the home yourself.   If you decide to refinance your mortgage down the road, your approval and interest rate will also be based on how much home equity you have.  (appraised value minus (-) mortgage liens equals (=) equity amount)

So what is the best way to buy a home without painting yourself into a corner?

 

Put virtual blinders on to the décor and focus on the structure and layout of the home, the tax assessed value, the number of bedrooms and bathrooms, the room sizes, the property taxes; the location; neighborhood appearance; its crime rate and school ratings; what the town has to offer, and of course the recent sale prices of comparable homes in the neighborhood.  

 

If there are two almost identical homes, except one is perfectly decorated, and the other has old wallpaper and spider webs; the painted house might sell for 25k to 30k more than the unpainted house.  However the buyer of the unpainted house could have a professional painter come in and paint the entire house for only $250 per room.  In as little as one week, this buyer gains 23k to 28k in home equity.  His mortgage is 23k to 28k lower than his neighbor’s with the identical house, and his monthly mortgage payment is $168.00 per month lower than his neighbor.  Over 30 years that $168.00 per month savings adds up to a whopping $60,480.00  Simply by picking up the phone and hiring a professional house painter himself, he saved enough money to put one of his kids through college! 

 

Professional home flippers buy fixer-uppers and do inexpensive cosmetic cover-ups that earn them an instant 50k to 150k on the average flip.  They usually use cheap materials, however most buyers don’t even notice because they are sold on the shiny new look and smell of the home; with no knowledge of the fact that it was considered a “tear down” just months before.   My advice to all home buyers:  “Business before pleasure!”  

When you purchase a novelty item, it can be a spontaneous and pleasurable treat.  However, when you purchase a home, you are actually negotiating your financial future.   If you catch yourself slipping out of business-mode and falling into idealistic-mode, give yourself a smack to reboot your better business sense!

 

What you find through your due diligence may also be used as a bargaining tool, as you negotiate the best price using your business sense and not your heart. 

 

When selecting a realtor, who will be your advocate in negotiations, be sure he/she is skilled in sales and negotiations.   As I mentioned on another page, it is not wise to use the seller’s agent as your own agent, for the same reasons you wouldn’t bet on a poker game if the other players could see your cards.  

 

After all is agreed upon, and both sides shake hands, then indulge in the expression of planning your home paradise.  When the paint dries, you will experience the same contentment as the more impulsive buyer, except you will have the gratification of a lower mortgage payment and more money in the bank, because you waited a week to celebrate.

 

Buyers should know what they want before going out—not to be easily persuaded by emotions triggered by home stagers or sales agents.  Because real estate agents focus on building a good rapport with clients, some are afraid to educate buyers against their will, at the risk of jeopardizing the relationship or sale.  I have lost many sales because of being honest, but it’s just not in my nature to prioritize commissions over peoples lives.

 

From my personal experience as a real estate professional and former branch manager of a mortgage company, I put together an easy checklist of basic things a buyer should evaluate.  Please feel free to contact me if you have any questions or would like further information. 

When you see 3 or more homes in a day, it is difficult to remember which homes had what features.  That is why I created this printable home buyers checklist:

 

Print my Home Evaluation Checklist from the link above and bring a few copies with you while going to home showings.  This will help you decide which home is right for you. 

 

The “Notes” section is a good place to note extras in the house that you might ask your agent to make part of the deal if you select that home, for example, lawn mower, deck/patio furnishings, window treatments, microwave, chandeliers, portable fireplace, etc.  You can make these items part of the contract agreement if you want to.

 

Additional Notes:

Take a drive through the neighborhood in the evening when everyone is typically home from work or school; is the neighborhood as quiet as daytime?  Is there ample parking for guests?

Do not assume all homes can be expanded upon.  Each town has their own set of rules and regulations.  If you are buying a home with plans to add an addition, speak to the town zoning department before buying.  Also ask if there are any easements on the property.

If you are buying a home in a flood zone, do not always trust the seller’s word about the actual flooding history in the neighborhood.  Ask the town zoning department and ask the neighbors as well.  Or, send me an email and I will check the address for you.

To find out when the next proposed tax assessment will be, and to confirm the current annual taxes are accurate, call the town’s tax collector.

There are many ways to save money, but I recommend that you never buy a house without a title search.   I have seen a woman lose her life savings by buying a house in cash and after the closing learning that the house still had two mortgages on it.

Sure, as a real estate agent I could earn faster commissions by not bringing all these things to the buyer’s attention, but I prefer to have satisfied buyers and hope they send me referrals because of my sincerity.

 

A step-by-step guide to the process after finding your new home

Your offer is accepted!  How exciting!  However, when the excitement wears down, you might experience a bit of “buyers remorse.”  It is normal human behavior to experience a little doubt or a light case of fear after any large purchase.  Don’t worry unless there is a good reason for concern; it should pass.

The next step is the "attorney review." This is when both your attorney and the seller’s attorney open communication and negotiate all concerns.  Attorney review usually lasts 3 business days if there are no issues to work out, or longer if otherwise.  Attorney review ends when both attorneys virtually shake hands on everything, so if you have any concerns, do not wait to tell your attorney.  The seller is allowed to continue showing the property and accept other offers up until the time attorney review is over.  When attorney review ends, the property status changes from "accepted offer" to "under contract."  the seller may still show the property at this time, as a “plan b” just in case your contract falls through, but cannot accept any offers while under contract with you.

After attorney review you should (although it is not mandatory) have a general home inspection. Your contract of sale will stipulate how many days (after attorney review ends) you have to have all  inspections done by.   Make sure you use a good home inspector that is very thorough...preferably one that is recommended, because I have seen some inspectors be too brief and others dig deeper into the house.   Ask your mortgage agent if your lender will require a termite, radon, well water, or septic (if applicable) inspection report before closing.  Most lenders do require these reports and also a survey.  Ask your real estate agent to ask the seller’s agent if they have a survey that you can have a copy of; if it is not too old, you may be able to save up to $500. instead of having a new survey done.  (Some lenders want the survey to be 10 years old or less, and others might accept an older one.)


Bring a notebook as you tour the home with the inspector because he should give you ideas and suggestions that are noteworthy and you will not be able to remember everything he tells you because you will have a lot on your mind.  In some cases sellers will follow the inspector around with you.  Since you are the one paying the inspector, kindly ask the seller to please step aside and not interfere.  You want the inspector to feel comfortable enough to speak honestly and privately to you without worrying about offending the seller. 

After the inspection, you will receive a written report, 10 or more pages, on every detail of the home.  Be sure to give your attorney a copy of this report as soon as possible.
If there are any issues found that you do not want to foot the bill for because they were unexpected, you have the option to ask your attorney to request a credit from the seller so you can do the repairs yourself, or request that the repairs be done by the current owner before closing. 

Your sales contract will state how many days you are allowed after attorney review to negotiate repairs if need be, and what the dollar amount of estimated repairs would have to be in order to get out of the contract if need be.  Keep in mind that if you make demands the seller does not agree to, the seller can opt out of the contract and accept another offer from a different buyer. 

You may have put up a good faith deposit with your initial offer, and a 2nd deposit weeks later.   This money is held in the attorney escrow account and then typically applied to your closing costs at the closing table.  If the seller agreed to pay your closing costs, then any excess deposit monies will be refunded back to you or applied to the mortgage. If your sales contract is terminated because your mortgage does not get approved, or if the buyer and seller do not agree on who will pay for repairs, your deposit will most likely be returned to you (ask your attorney to be sure), however if you walk away from the purchase agreement after attorney review because you changed your mind for a non-valid reason, you will risk forfeiting your deposits.

Once the buyer and seller are both satisfied with the negotiations, the home appraisal needs to be done for the mortgage approval. 

The day before the closing, contact your attorney’s office and ask for a fax or email copy of the Settlement Statement, so you will be able to review it and understand where all of the money is going, and know what questions to ask before the actual closing. 


“Here’s to the smarter home buyer!”

 

Feel free to contact me for showings or just have question.      

Jane House-Shebroe

Any questions?  Email RealTerrific@aol.com

Call/Text 561-714-0931

 

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