Zillow Advice RSS: Guide,Home Buying,

Real Estate Buyer's Closing Costs

Fri, 28 Aug 2009 00:13:00 GMT

Closing on your home-purchase deal costs money -- about 3 to 5 percent of the purchase price, plus your down payment. You'll be taking the money you owe to the document signing meeting, and you won't see any of it again until next year's tax refund arrives to erase the sting of closing day.

Advance Tips for Saving Money

Negotiate closing costs with the seller and make sure your deal is in the purchase contract.
Comparison shop for lenders.
Usually a bank attorney is the closing agent.
Shop for your own homeowner's insurance policy so you can compare rates instead of letting the lender provide the policy for you.
Hire the same company to do a title search that the seller used when the house was listed for sale. This reduces the cost and means a more efficient process.
Some first-time home buyer programs help with the down payment and closing costs. Ask prospective lenders if you qualify for low down payment loans and whether a portion of your closing costs can be wrapped into the mortgage.
Don't schedule closing for a Monday. Your lender will have to put the mortgage money in escrow on Friday and you'll pay interest on it for three extra days.

Tips for Saving at Closing

You have the right under federal law to get, and by all means do so, an itemized list of fees at least one day prior to closing. This is provided on the HUD-1 Settlement Form. All fees that you and the seller must pay are itemized separately. Go over the list ahead of time.
Read the sales contract one more time. Make a list of closing costs you agreed to pay and check it against the HUD form.
Check the lender's preliminary good faith estimate against the final document. Question any changes and additional fees.
Shop for title insurance. Title Insurance and the associated fees make a up a big chunk of your closing costs. Shop around to find the best price. Make sure you are getting a guaranteed quote on all associated fees and charges.

Mortgage calculator: Calculate your closing costs

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List of Closing Costs and Fees

Fri, 28 Aug 2009 00:07:00 GMT

If you've ever gone through the mortgage process, you know about closing costs. Most likely you were given a list of costs associated with the mortgage and told to either bring the money to closing or roll the costs into your mortgage. But, if this is your first mortgage, you're still getting used to the concept of paying more money, beyond your down payment. Usually, closing costs are paid by the person purchasing the home, but with some mortgages (VA for example) the seller can pay closing costs. A little-known fact is that a big part of costs and fees actually go to third parties who process the mortgage, as well as local governments as taxes. The money doesn't go to the mortgage company.
Most people take closing costs and fees for granted and just pay what they are told. They don't question the mortgage or title company about the costs associated with a mortgage closing. That's too bad, because they should.
As an informed mortgage customer, you should make your mortgage banker walk you through each cost, and explain in detail what you are paying. The bottom line is that you don't want to be surprised at the last moment. Imagine getting a call from your mortgage banker the day of your closing with a message that your closing costs are $1,200 more than you thought. And the only explanation is that the title company made a mistake. Chances are you may have to reschedule your closing to get the money together for the difference, or have your mortgage adjusted to have the amount rolled in.
To avoid a situation like this, it's a good idea to know exactly what the costs and fees are, how they are calculated, and why you (or the seller) have to pay them. Here's a breakdown of the most common closing costs and fees with a rough estimate of average cost:

Appraisal (up to $450) - This is paid to the appraisal company to confirm the fair market value of the home.
Credit Report (up to $30) - A Tri-merge credit report is pulled to get your credit history and score. You cannot supply your consumer pulled report and the scores pulled form the internet from any place other than myfico.com are not real scores nor are they accurate.
Closing Fee or Escrow Fee (generally calculated a $2.00 per thousand of purchase price plus $250) - This is paid to the title company, escrow company or attorney for conducting the closing. The title company or escrow oversees the closing as an independent party in your home purchase. Some states require a real estate attorney be present at every closing
Title Company Title Search or Exam Fee (varies greatly) - This fee is paid to the title company for doing a thorough search of the property's records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.
Survey Fee (up to $400) - This fee goes to a survey company to verify all property lines and things like shared fences on the property. This is not required in all states.
Flood Determination or Life of Loan Coverage (up to $20) - This is paid to a third party to determine if the property is located in a flood zone. If the property is found to be located within a flood zone, you will need to buy flood insurance. The insurance, of course, is paid separately.
Courier Fee (up to $30) - This covers the cost of transporting documents to complete the loan transaction as quickly as possible.
Lender's Policy Title Insurance (Calulated from the purchase price off a rate table. Varies by company) - This is insurance to assure the lender that you own the home and the lender's mortgage is a valid lien. Similar to the title search, but sometimes a separate line item.
Owner's Policy Title Insurance (Calulated from the purchase price off a rate table. Varies by company) - This is an insurance policy protecting you in the event someone challenges your ownership of the home.
Natural Hazards Disclosure Report - Required by law in the state of California for the seller to give the buyer. Reports run between $90 to $150. May be required by other states
Homeowners' Insurance ($300 and up) - This covers possible damages to your home. Your first year's insurance is often paid at closing.
Buyer's Attorney Fee (not required in all states - $400 and up)
Lender's Attorney Fee (not required in all states - $150 and up)
Escrow Deposit for Property Taxes & Mortgage Insurance (varies widely) - Often you are asked to put down two months of property tax and mortgage insurance payments at closing.
Transfer Taxes (varies widely by state & municipality) - This is the tax paid when the title passes from seller to buyer.
Recording Fees (varies widely depending on municipality) - A fee charged by your local recording office, usually city or county, for the recording of public land records.
Processing Fee (up to $1,000) - This goes to your lender. It reimburses the cost to process the information on your loan application.
Underwriting Fee (up to $795) - This also goes to your lender, covering the cost of researching whether or not to approve you for the loan.
Loan Discount Points (often zero to two percent of loan amount) - "Points" are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan.
Pre-Paid Interest (varies depending on loan amount, interest rate and time of month you close on your loan) - This is money you pay at closing in order to get the interest paid up through the first of the month.
Property Tax (usually 6 months of county property tax)
Wood Destroying Pest Inspection and Allocation of Costs - If required by the lender or buyer, the inspection generally runs up to $125.00. Repairs can get expensive if eveidence of termites, dryrot or other wood damage is found. example: Fumigation of a typical 1500 square foot house could run around $2,000.
Home Owners Association Tranfer Fees - The Seller will pay for this transfer which will show that the dues are paid current, what the dues are, a copy of the association financial statements, minutes and notices. The buyer should review these documents to determine if the Association has enough reserves inplace to avert future special assesments, check to see if there are special assessments, legal action, or any other items that might be of concern. Also included will be Association by-laws, rules and regulations and CC & Rs. The fee for the transfer varies per association ,but generally around $200-$300.

Last, but not least, you probably will get your own home inspection that usually costs around $225 - $450 to verify the condition of a property and to check for home repairs that may be needed before closing.
Closing costs and fees are part of a mortgage, and knowing what they are and how much they should be is a good idea. This will put you in a position to challenge a cost or fee that seems exorbitant. Even if everything is correct, you have the right to ask, and your mortgage company has the duty to explain -- in detail -- each and every closing cost and fee.

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About First-Time Home Buyer Tax Credit

Wed, 22 Jul 2009 18:13:00 GMT

If you are buying a home this year, it's important to know whether you qualify for the $8,000 tax credit for first-time home buyers.

Qualifications for $8,000 tax credit:

Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
Must be a first-time home buyer, which means you cannot have owned a home -- and used it as your primary residence -- for the past three years prior to purchase.
Home you purchase must be used as a primary residence. The home cannot be used as a vacation home or rental property.
Cannot purchase a home from a close relative such as your spouse, parent, grandparent, child or grandchild.
Must make less than $75,000 for a single taxpayer or less than $150,000, if filing jointly.

About the $8,000 tax credit:

Use as downpayment or closing costs -- Initially, the tax credit was designed as a refundable credit on buyers' tax return next year -- either up to $8,000 or 10% -- whichever came first. Now, a new HUD initiative allows qualifying first-time home buyers to receive these funds upfront to be used as a down payment or money towards closing, as announced by U.S. Housing and Urban Development Secretary Shaun Donovan. This has been referred to as a bridge loan.
FHA-approved lenders, only -- At this time, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit. Home buyers using FHA-approved lenders can apply the tax credit to their down payment.
Home buyers must pay the 3.5 percent -- While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA's required 3.5% down payment on their own.

For more information on the $8000 tax credit, review these Q&A's from the IRS.

See more Q&A on the First-time Home Buyer Tax Credit in Zillow Advice.

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You've Opened Escrow

Tue, 21 Jul 2009 23:35:00 GMT

Congratulations! You are on your way to owning your very own home! Follow these suggestions (and your realtor's advice) so that escrow and settlement will go as smoothly as possible.

You will be asked for a down payment on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.

During this period of purchasing your home, you are going to need an escrow or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes on during the escrow period. This deposit check may also be held by an attorney or in the broker's trust account. Make sure that there are sufficient funds in your account to cover this check.

The deposit check will be cashed. Assuming the sale goes through, this money will b e applied to the purchase price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.

The period that you are "in escrow" is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following: 1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
A requirement that the seller must provide marketable title.
With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership.

Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.

Secure homeowner's insurance. This will probably be required before you can close the sale. Due to such requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period of time. It would be in your best interest to apply for insurance as soon as possible after the contract is signed.

Contact local utility companies to schedule to have service turned on when you close escrow.

Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.

You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!

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Picking the Best Comps

Tue, 05 May 2009 00:07:00 GMT

Buyers never want to pay too much, and sellers don't want to leave money on the table. So, what to do? In the words of real estate professionals, you "pull some comps."

When you work with an agent, they will do the homework on pricing, and comps play the biggest role in setting a price. Once you have a list of recently sold homes that have something in common with the one you're looking at, your own knowledge of homes in the area is the best tool you have, whether you are buying a home or selling one.

Here are 4 tips for choosing the best comps from a list:

Location, Location, Location

Select comps as close to your address as possible. However, there are some exceptions to this rule. For example, a comp within a block or two of yours might not be a good comp because it sits higher on the hill, and has phenomenal views, or it's closer to a main arterial or freeway. Likewise, a house similar to yours could be a mile away, but still is part of the same market area since neighborhoods are not always carved out in neat, rectangular-shaped boundaries. This is a good comp, even though it's farther away.
Also, ideally, homes in developments should be compared against comps from the same development since these homes were all built together at a specific time, by the same builder/developer.

Select Recent Comps

Ideally, the most recently sold homes will have the strongest bearing on what your home will bring, but in slower markets, you might not have that luxury. Rule of thumb: Getting comps from the previous 3?4 months is ideal, but if not, then look back 6-8 months. In some cases, transactions that occurred two years ago are still considered comparable.

Price Per Square Foot

Price per square foot is a time-honored method of real estate valuation. However, it doesn't account for a choice location nor for condition of the property. Similar homes in the same area can vary widely in price if their interior finishes are not the same. One home may be finished with high-end interiors such as granite countertops, custom cabinetry, marble baths and hardwood floors while another may be finished with laminate, vinyl and stock cabinetry. You should also factor in how the property was measured and whether the square footage includes the garage or other detached buildings on the property. Lot size can also be a significant factor. While a few hundred square feet difference may not impact market value, a private wooded 3-acre lot will fetch much more than a similar house on a cookie-cutter half-acre for example. In such cases the dollars per-square foot figures can be very unrealistic. Most practioners today would discourage the use of the square footage method in pricing homes outside of new construction within the same development by the same builder.

Fuzzy Stuff

You have your data, you've compared the numbers, but here come the individual characteristics. These things are more difficult to quantify, but could boost or detract from a home's value. In order to be comparing apples to apples, you need to consider these "soft" features when pulling together your comp list. For example, consider:

Curb appeal -- The house sits on the "nice" side of the street; it's neatly landscaped and has sidewalks.
Condition of exterior -- Visually make notes of the condition of the roof, paint, chimney, driveway, fences, etc.
Nearby amenities -- Walking distance to cafes, shops, and restaurants.
Neighborhood -- Is the house well-kept but all others around it falling apart?
Traffic/noise -- Is it located on a busy street or near a noisy freeway?
Schools -- Is it in a good school district? Whether you have kids or not, owning a home in a top school district adds tremendous value to a home.

The work you do here will go a long way in determining the fair market value of a home.

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Home Buying One Step at a Time

Mon, 04 May 2009 23:56:00 GMT

Do you look forward to monthly mortgage payments, property taxes, insurance payments, landscaping chores, and home repairs? Do you also want the satisfaction of putting down roots, owning your own piece of the American dream, and decorating your dream castle?

If the answer is yes, then home ownership may be for you. If you've never owned before, the process can seem overwhelming. You can get there, one step at a time.

1. Decide whether renting or buying makes more sense for you.

2. Clean up your credit and get your financial house in order.

3. Educate yourself about mortgages and find out how much you can spend on a house.

4. Decide where you want to live.

5. Narrow down the type of house you want to buy.

6. Find out about real estate agents in your area and interview several.

7. Choose the right agent or broker.

8. Assemble the other players including loan officers, real estate attorney, inspector, and financial advisors.

9. Cruise the Internet for available housing.

10. See properties with your agent.

11. Write a purchase contract.

12. Negotiate the deal.

13. Have the property inspected.

14. Get attorney approval on the contract (where applicable).

15. Get the loan approved.

16. Close.

17. Live happily ever after in your new dream home!

Next article: Getting a Good Deal When Buying a House

Previous article: Avoiding Buyer's Regret

A Buyer's Guide to Making the Right Choice

Fri, 05 Dec 2008 18:05:00 GMT

Buying a home can be a frustrating venture. But it doesn't have to be.

If you follow these guidelines as well as others on the "Zillow Real Estate Guide" your search for the place you will call home can be a pleasant one.

To streamline your house hunting trip to locate the trophy home you must prepare for your hunt.

The weapons you will want for your excursion to be a success:

Create a budget of your current house hold expenses and income.
Get pre-qualified for a mortgage.
Create a wish list of your family's needs.
Research the areas you plan on hunting. Make a radius map of your targeted area, and how far from the bullseye you are willing to hunt.
Hire a Licensed Professional "Realtor" or Builder guide. Do your research on your hunting guide through the local "Realtor" or Builder Associations. Check with the local "Better Business Bureau." Utilize a questionnaire and rating system to locate the best guide that meets your needs. Check with previous clients of the Agent or Builder. Present your wish list to your hunting guide.
Scope the homes from the outside before scheduling a tour of each home.
Don't hunt merely with emotions. Emotions will result in a cloudy hunt, be bright and do your due diligence.
With so many choices of homes on the market, do keep a hunting journal (walk-through checklist) of each trophy you see. This will help to alleviate return refresher hunts.
Utilize a rating program to narrow your hunt down to the trophy that best meets the families needs. Rate the homes separately as you tour. As each of you rate a home, decide on the 5-10 features that are most important to you, together. Combine the individuals ratings (if you are a couple), and rank each home accordingly. Discard the non trophy ratings and cross them off your hunting list. Narrow the list to the top three trophy's you would like to bag. Start with your top ranked trophy with two backup choices.
Load up your purchase agreement for the offer. Your hunting guide is your best protection from the elements. Include an inspection clause. Don't be surprised or disappointed if your target ducks your offer. Negotiation is part of house hunting. It never hurts to seek legal advice at this point.
Once your offer is accepted, do have the home inspected by a licensed inspector. Review the report with your guide.
Your guide will help you with the best steps to proceed to the closing to turn your house hunt into your trophy home.

Utilize a Moving Guide to streamline your final destination move.

Bottom line, do your homework as Mom always said!

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Home Inspection Guide

Wed, 03 Dec 2008 17:48:00 GMT

No matter how fully the seller discloses, there are many things the seller themselves may not be aware of. So disclosure forms are never a substitute for a due diligence inspection.

And just because you’re buying a newly built home doesn’t mean it will be perfect. You should still have your own professional home inspection performed. Be sure to clarify with the builder how defects will be corrected and who will pay for correction or repair.

How to Word the Requirement

Next to financing, the home inspection is probably the most important contingency in your purchase contract. No matter what the housing market is like in your area, most experts would strongly urge you not to waive the home inspection contingency.

Wording of the inspection contingency varies by state, so be clear what you wish to have happen and what is written in the contract before you sign it. The contract should specify, for example, whether you or the seller will pay for the inspection; cost varies, but is usually in the $200 to $400 range.

You will also want to spell out what will happen if the inspector finds problems that were not previously disclosed by the seller. For example, the clause might stipulate that you can decide which defects you want the seller to correct, or to renegotiate the price based on the estimated costs of such repairs. The inspection clause may also be written to let you cancel the offer outright, without letting the seller try to correct or repair the problems.

Bear in mind that the seller doesn’t have to make every repair and, in fact, may refuse to make any. If both parties want the sale to go through, however, it is in both your interests to discuss and negotiate how defects will be repaired and who will pay for them.

Finding a Good Inspector

Not every state has a certification program for the home inspection industry and requirements for certification vary widely. (The American Society of Home Inspectors offers a search to find ASHI certified inspectors in your area.)

Even if you live somewhere that certifies inspectors, finding a good one is often a matter of word of mouth. Most real estate agents will be able to recommend several (get at least three names), and you can also ask friends who had an inspection done recently.

What to look for when choosing a home inspector:
Experience is key. Inspectors learn something new on each job, so the longer they’ve been in business the better. Ask how many inspections do they do annually. Are they ASHI certified?

You should also try to find an inspector with a background in general contracting rather than a specialist in electrical or plumbing; he or she will be better able to inspect all areas of the home. But beware of contractors who do inspections “on the side.”

Find out what sort of report the inspector issues. You want an inspector who can explain things clearly and answer your questions as you walk around with him (and you do want to accompany the inspector on his or her rounds). But you also want one who provides a written report that gives you a clear description of the condition of each item or component (not just “good, fair, or poor”) and makes a recommendation about repairing anything seriously deficient.

Ask how long the inspection will take (2 to 4 hours, depending on the size of the house) and what will be included.

Find out if the inspector has Errors and Omissions Insurance, which will offer some protection if the inspector misses something significant.

What Will Be Inspected

You may need several types of inspections. The most common is the professional home inspection, followed by a termite or pest inspection. If the seller’s disclosure revealed an abandoned septic tank or other potential hazard, you’ll want a specialized inspection of that as well. And be sure the inspector tests for radon.

Radon Testing

Radon is a radioactive gas that comes from the natural (radioactive) breakdown of uranium in soil, rock, and water. You can breathe or ingest it into your body, and according to the Surgeon General it is the second leading cause of lung cancer.

Radon occurs all over the U.S.; it is present in every house. The question is whether the amount of radon present exceeds safe limits. The EPA says the only way to find out is to test for it.

Other Basic Tests

At minimum, a competent professional home inspector will look at the following:

Foundation: Is it structurally sound? Are there cracks or other evidence of shifting or moisture problems?
General construction: What is the quality of the home’s overall construction?
Exterior: Does the house need exterior repairs or maintenance?
Plumbing: What is the condition of the overall plumbing system? Are there signs of leaks or water pressure problems?
Electrical: Do any dangerous electrical situations or apparent code violations exist?
Heating and cooling systems: How old are the systems? Have they been properly maintained and are they adequate for the size of the house?
Interior: Are floors firm and level or squeaky and slanted? Do doors and windows open and close properly? Are locks in working order?
Kitchen: Do appliances function properly? Is the plumbing, including the dishwasher connection, in good repair (no leaks around faucets or under the sink)?
Baths: Is there any evidence of previous or current water leaks? Is the floor solid? Is the plumbing in good repair (no badly chipped enamel, for example)?
Attached structures: What is the condition of any attached structure, such as decks, garages, and sheds?
Roof: When was the roof last replaced? What is its condition and its estimated remaining life? What is the condition of the roofing structure as well as the shingles?

Look Now or Lose Later

The home inspection is the time to address all concerns and requests for repairs. If the seller agrees to repair or replace certain defects, you’re entitled to have those completed. However, if on the final walk-through before closing you notice something else, you’re out of luck unless it’s related to the appliances, heating and cooling equipment, or the electrical and plumbing systems, all of which must be conveyed in working order.

So during the home inspection be sure to pull up those area rugs and look at the floor underneath. Look behind the paintings on the wall. If a wood floor or wall is badly discolored, this is not something you want to discover on the morning of your scheduled close.

Don’t Be Penny-Wise and Pound Foolish

During an inspection of a house that otherwise looked in excellent shape, one home inspector found a crack in the heat exchanger in the central heating system. The cost of replacing the heat exchanger was no more than $500, which was money well spent. In the long run, the cost could have been much heavier: for one thing, the cracked heat exchanger could have cost the home buyers hundreds of dollars in utility bills. The more serious threat, of course, would have been carbon monoxide leaking into the house through the air ducts.

HUD-1 Statement

Wed, 03 Dec 2008 01:27:00 GMT

Also known as the "settlement sheet," it is an itemized listing of closing costs. The closing costs can include a commission, loan fees and points, and sums set aside for escrow payments, taxes and insurance. It is signed by both the buyer and the seller, who may share closing costs.

How to do Lease option - by Example

Tue, 02 Dec 2008 23:17:00 GMT

Here is an example of lease option or rent to own (lease purchase):

You have a home with 3 bedrooms and 2.5 baths in very good condition. It is worth $200,000. Your loan balance is $170,000 or whatever. The monthly PITI payment is $1290. The monthly rental for the similar houses in the same neighborhood is $1500/month or a little bit higher.

You market your house as lease option like this:

$210,000 - Sale price at the end of 12 month-lease
$10,500 - Option money or non-refundable deposit will be credited towards purchase price.
$1500 – monthly rental payment to you.

Your buyer’s offer is like this:
$205,000 - Sale price at the end of 12 month-lease
$8,000- Option money or non-refundable deposit will be credited towards purchase price.
$1400 – monthly rental payment to you.

You check the information provided by buyer’s application form and know that the buyer has enough income to qualify for a home at this price range, but the current credit scores for this buyer is not good. But, you think if the buyer pays you on time each month for the rent, you can help the buyer to improve the credit scores so at the end of 12 months the buyer will be able to get a loan for the house.

You believe that this is a good offer and accept the offer after your homework and checking-up. Then, what you need to do is to ask the buyer to sign two agreements with you – a lease agreement and a purchase agreement. Of cause, if you don’t think it isn’t a good deal, you can counter back.

Here are your results:
$8,000 cash in your bank account.
$100 monthly positive cash flow.

If the buyer is not going to buy the house at the end of 12 months, you get the $8,000 or what ever you agreed option money, and the positive cash flow for the rental.

Is it a much better deal than lease only? You bet. Even if you get a much lower down payment than $8,000, it may still better than lease only.

If the buyer closes the deal at the end of 12 months, you get what you wanted.

Cautions to you:

Never try to do lease option without a real estate attorney. Always have the buyer to go to your attorney’s office to sign the agreements.

1 reply

How to Back Down After Signing

Tue, 02 Dec 2008 23:16:00 GMT

Once the purchase contract is negotiated and both parties have signed, it’s legally binding. This is why the wise buyer wrote those emergency exits — the contingencies — into the offer. Because the only way the buyer can walk away from the deal now is if the contingencies can’t be met. Too many contingencies make sellers uncomfortable, your agent will advise you on their proper use in order for all parties to be protected and move forward to closing.

Typically, a buyer who wants to cancel a purchase agreement based on one of the contingencies it contained will give written notice to the seller prior to the deadline for removing the contingency. The buyer's agent could be the one delivering the news, or the buyer could do so directly.

For example:

You made the deal contingent on getting a 30-year, fixed rate mortgage for 80 percent of the sales price. But you weren’t pre-approved for a loan, and now realize you can’t get the loan. You can walk.
The inspector you hired just found rotten boards along the eaves of your dream house, an electrical panel that doesn’t meet code, and two leaky faucets. You can walk.
You had a third contingency — that your present house sells by a certain date but it’s still sitting there. You can walk.
You wake up in the middle of the night terrified that you’re about to lose your job. You must have been out of your mind when you signed a contract to buy a house! What if you can’t make the mortgage payments? What if tomorrow you find out you have a terminal illness?

You are suffering from buyer’s remorse. This is normal. You cannot walk. The cure lies ahead.

Buyer's Tip: You can’t just change your mind. The ways out of your deal depend on the escape hatches you put in the contract.

Next article: Handling a Bidding War as a Buyer

Previous article: Making Counteroffers to the Seller

How to Approach a FSBO Seller

Tue, 02 Dec 2008 22:48:00 GMT

The main thing to remember about For Sale By Owner (FSBO) homes is that the people selling them are just like any other seller — only more so!

All sellers want to make the most they can from the sale of their home

FSBO sellers figure they can save money by not paying a commission to an agent. Contrary to what many buyers believe, however, this doesn’t mean the FSBO seller wants to pass any of those savings on to you.

This is certainly the case with a seller who, for whatever reason, doesn’t have much equity in the home; he doesn’t feel he can afford to pay the agent’s commission, much less give you a break on the sale price.

In a hot “seller’s market,” when homes are selling at or above the listing price, the FSBO seller has even more incentive to pocket as much of the sale price as possible.

All sellers think their home is special and worth every penny of the asking price

FSBO sellers often set that price by looking at listing prices in the area, not at comparable actual sales prices. You will want to be armed with good comps when you enter negotiations.

If the housing market is slow in your area, even a FSBO seller should be willing to negotiate. With a set of comps in hand, you should feel comfortable making an offer that might be well below the asking price.

Do your due diligence

As a buyer you need to do all the same things you would if the house were being sold through a real estate agent:

You still need to know if the asking price is fair (get comps!).

You still want to inspect the property yourself and have a professional inspection done.

You still need to make an offer and negotiate a contract.

Potential Anomalies to Bear in Mind
Sellers who are not using a real estate agent may be doing so for reasons that can make for truly difficult dealings. Some sellers are so stubborn and unrealistic about pricing their property that they have passed from one agent to another until no agents will take the listing.

Or the seller may have been told that he needed to bring the home up to code, or to make sufficient repairs to bring it up to an acceptable standard to put on the market. Rather than go to this trouble and expense, the seller may have decided to sell the home himself.

With a FSBO you need to get answers to some additional questions:

How long has the home been for sale?

Was it listed with an agent or agents before the seller took over and, if so, for how long?

Why does the seller believe the house has not sold (especially if he’s been trying to sell the home for a year or longer)? If he’s blaming lazy real estate agents, you may want to look at the house with an eagle eye before making an offer.

FSBO and Your Agent
Say you’ve been surfing the FSBO sites online and have found one or two homes that look interesting, or you’ve seen some while driving around your desired neighborhood. If you’ve signed a contract with an agent, let your agent initiate contact with the seller and get all the usual information about the home. (If not, you can approach the seller yourself, of course.)

A qualified buyer is nothing to sneeze at, so in many cases, the FSBO seller will be willing to work through your agent. The agent would handle all the paperwork and ensure that the closing process moves along smoothly.

This arrangement — a “one person listing” — means the agent will be paid a small commission, or a flat fee (ranging from $500 to $1,500), if the sale goes through to the specific buyer (you) named by the agent. (Check with your agent to be sure this type of listing is allowed in your state.) Flat fees are not unusual in situations where buyer and seller have found each other independently of an agent, but where one or both parties want a real estate professional to handle some or most of the rest of the transaction.

Usually the agent will negotiate his or her fee with the seller. If the seller refuses to compensate your agent, however, and if you think this is the house for you, you can work out an agreement to pay the agent yourself. As a buyer’s agent, working for you and not the seller, the agent is obliged to do his or her best to get you a good price.

Related Links

Use an Agent or Go It Alone?

Players On the Buyer's Team

How to Value a House

1 reply

How can a Buyer's Agent help me sell my home?

Tue, 02 Dec 2008 21:26:00 GMT

A Buyer's Agent is different for different parts of the country and a Buyer's Agent can be very helpful to the Seller or Buyer.

A Buyer's Agent represents the Buyer exclusively in a sale. They can provide Market Analysis information, sources for the buyer to discover things about the home and provide advice on buying a home. It is a Buyer's Agent's job to know the market, preview homes for sale through the MLS and FSBO. This allows a good agent to intuitively know what a buyer is looking for and what is going to be the best deal for their money.

A good Buyer's Agent will counsel buyers in the process of buying a home and get the pre-approval before they begin looking.

As a Seller, this means that when a Buyer comes to you, they are educated on the home buying process, serious about buying and pre-approved by a reputable lender. This means less people "just looking" and more people putting in an educated, ready offer on your home.

As a FSBO, working with a Buyer's agent usually requires you to pay a commission, but it is half of what you pay if you are listing a home and that agent can help you with paperwork and making sure the transaction will go smoothly and close quickly.

If a Buyer is working with a Buyer's Agent, they will only be working through 1 agent who will make sure they are well informed, educated and working with reputable people who will all work together to make sure you get a fair price on your home based on what the market is saying and get you to closing as quickly and smoothly as possible.

A good Buyer's Agent is truly not interested in listing your home in Alabama as they can not represent the buyer as an exclusive agent if they have your home listed and prefer not to have the listing in order to represent their buyer properly.

So don't lock out the agent as a FSBO Seller, welcome them, but make sure they are a Buyer's Agent and you have your paperwork signed. In our office, we have to have a "one time listing agreement" signed with the Seller before we even show the property. This states that we can only sell your home to this one exclusive buyer that we have during a certain particular time frame. It is very specific to that buyer.

As a Seller considering using an agent, having a Buyer's Agent come and show your home to a buyer will allow you to see how well that company operates based on how the agent is with you and their buyer. It allows you the opportunity to see if this person represents their company in an ethical and proffessional manner.

Buyer's Agents are a good way to get a home sold on both sides of the deal.

1 reply

Home Rental Guide

Mon, 01 Dec 2008 22:07:00 GMT

How to choose a compatible roommate

Finding a compatible roommate isn’t as easy as you think. Not that many people are open about how they drink every night and how many friends they have over all the time. Therefore, the first thing you may want to consider is creating a detailed checklist of qualities you desire in your potential candidate.

For example, a non-smoker, someone who doesn’t need to drink to have a good time, and who likes to cook. Right off the bat, you can assure yourself that 50% of the population will not reply to your ad. Second, write a detailed classified ad describing your home, personality and needs. If you are a vegetarian, you don’t want to have a pig roast every weekend, therefore, you better make it clear from the beginning that you are sensitive to particular foods. Third, you must interview your candidates carefully. Take time during the interview, get some coffee or get a beer. You really can get a feel of someone during any of those two events. If they are at a bar with you and start ordering shots of tequila, that might be a sign of someone who loves the nightlife. Depending on your tastes, this may not be a good roommate. Lastly, trust your instincts. If the moment your candidate walks in you get a bad “vibe”, that’s an immediate no. Don’t be sympathetic to anyone’s problems, you're not looking to baby sit, you're looking for a roommate.

Questions to ask before you sign a lease

Grab your notepad and a pen because these are the questions which you should ask before you sign a lease agreement.

1) How much is the security deposit? This may seem obvious but you would be surprised how many people look surprised when they are asked for a security deposit.

2) Does the home allow pets? You might think that everyone loves dogs like you, but guess what, pets destroy homes!

3) Are there any rules that have the “do’s and don’ts”? Again, if you have the rules, you can definitely make a wiser decision.

4) Who should you call if something breaks down? Some properties have property managers while others the owner takes care of things. This will be the most important question because you can bet your wallet that something will break.

5) Is the lawn maintenance handled? It is such a plus if you don’t have to worry about the exterior, it’s just one less thing to worry about.

6) Is there an end of lease cleaning fee? This one is so important. You can save yourself a lot of money if you keep the place as clean as possible and before the lease ends getting the carpets cleaned as well. If they send their own clean up crew, you're looking at several hundred dollars wasted.

These are just 6 questions which I feel can significantly help you before signing a lease. They might seem basic, but you need to get answers to these questions to make your lease the best experience.

Renting leverage

With thousands of homes for sale sitting stale, the only alternative for home owners is to try to rent it out until the market recovers. The only issue some of sellers are having is that the rent they are able to charge is less than the monthly mortgage payments. However, some money is better than none. How much leverage does a renter have? I have negotiated on an apartment listed for $1,600 a month down to $1,250. Depending on the situation and how desperate the owner is, you can find your rental for the right price.

Renters are victims of foreclosure too

As we already know, this housing slump is affecting everyone in different ways. Whether it is a homeowner going into foreclosure, mortgage brokers out of work, or home values dropping drastically, everyone is sharing the pain. Unfortunately, even renters, who obviously don’t own a home and who pay their landlord on time, are the most recent victims.

There have been many situations recently that involve renters being kicked out of the home or condo they are renting because the property is going into foreclosure. Many times tenants don’t even know the property they are renting is in foreclosure until someone hands them a notice of foreclosure or they find out from someone other than the landlord. It is an unfair situation, as there is very little protection for tenants. They end up losing their deposit and have to find a new place in an undisclosed amount of time.

Even if the tenants decide they want to buy the property being foreclosed, the banks tell them to make a bid after they have moved out. Some states in the Northeast have begun introducing legislation to protect renters from being evicted, but what are the hardest-hit areas like California, Arizona, Nevada, and Florida doing about it? If you are looking for a place to rent, visit www.homekeysrentals.net, where you can search through thousands of rental listings in Florida for free.

Finding the RIGHT tenant

No matter how much research you do, or how sure you are of someone, there is no “perfect” way to pick a tenant. However, there are many things you can look for to having a successful tenant. The two most important aspects of a tenant are paying the rent on time, and caring for the property.

The best way to find out if the prospective tenant is going pay their rent on time is to run a credit check. Spend the twenty dollars because it would amaze you how you how many people tell you they are great when in reality they are a nightmare. The other aspect was the tenant taking care of your home. The best way to find out is to get references from previous landlords. This wont be 100% effective but it does provide more information than their word. These are two simple steps you can take to find the right tenant.

Where to find serious renters

Where your property is located will really dictate on what type of person you will get to rent your home. If you live around a college campus, you simply need to put a sign in front of your house and you will get all the leads you need. These types of renters are usually very serious and actually “qualified”. If you don’t have the luxury of living in a “hot” area, you might try using craigslist as an advertising means. From my experience, these types of renters aren’t as serious or qualified as people who call from the signs.

The Truth about Blogs

Real Estate blogs have become a very popular way to increase traffic to your website. In a recent article in Realtor magazine, a woman was profiled who was able to bring 3,000 visitors a day to her website because her blog shows up first on Google. Blogs differ because they can either be personal or informative and can be about almost anything. Are individual (realtors) writing blogs to inform people about real estate? Are they writing because they want the whole world to know that they like ketchup on their hamburgers? Are they writing because they just want Google to rank them higher on search results?

In 2004 blogs were informative and relevant to topics. In 2008, people just write them because they get traffic from search engines. If you’re looking to rent a home, or buy a home, why would reading this blog help you? It simply wouldn’t help.

Skills required for property manager

You must have an understanding of the real estate market if you would like to become a property manager. A manager has a long list of responsibilities. They must possess some knowledge of building components, such as electrical, plumbing, heating and air systems. They must maintain tenant relations in a manner that enhances the residents’ good will while representing the owner’s interests.

In order to ensure safety they must be aware of building and health codes and regulations for local, state, and national jurisdictions. Most importantly, they must understand and observe applicable laws, including federal laws relating to fair housing and theAmericans with Disabilities act. If you are looking to become a property manager, do your research and you might be succesful. Good Luck.

Renting towards a sale

Many of my customers are really feeling the effects of the recession. South Florida, which was led by heavy speculators who were looking to flip pre-constructed apartments, has led to double listings. You might be thinking, what is a double listing? It refers to a listing that is for sale or rent. You can put in the remarks section of a for sale listing that you are also willing to lease, however, people who are looking to rent aren’t searching the database of for sale listings to find a rental. Therefore, sellers are forced to place their property for rent also, giving them in essence, two listings. The problem that I have seen arise from this has been getting the home rented and then blowing your chances to sell the home to a potential buyer because you have a tenant in your home for a year. This can be avoided if you establish a good relationship with your tenant and sign a shorter or more flexible lease with them.

Crash Pad

Everyday you hear or read different strategies to successfully rent your house or apartment. I received an email today advertising “crash pads” where Airplane Captains or stewardess’ can crash over night. This is not new because I have heard about this before, but now it seems to be more popular especially during these tough times.

Depending on your proximity to the airport, you may want to consider this creative approach to offset your costs. Even if you don't live near the airport, you can still advertise your place as a crash pad and maybe throw something in, like a free cab ride to and from the airport. If the airline employee enjoys his or her stay, then your place may become their favorite crash pad everytime they are in town.

Competing against a few thousand

Driving around the downtown Miami area is still very impressive with the amount of apartment buildings. What scares me more than seeing these almost vacant buildings is seeing the ones that are currently being built. There are not that many differences between any of these apartments. Besides the view, or the floor they are on, these condos are all pretty much exactly the same. Therefore, if you are looking to get a tenant you must highlight any differences you may have that makes your condo stand out from your competition. Whether it is the quality of the windows, the floor, the proximity to landmarks, or extra amentities like a gym or pool, any little difference might be the deciding factor in getting someone to rent your apartment. I would also recommend placing the property for sale at the same time because you never know what might happen.

Work smarter, not harder

Looking for a place to rent among hundreds that are listed can be quite the challenge. To begin with, most people start their search on line. In my opinion, this is the best way to start. Newspapers don’t have the photos, and the appearance of the property is the most important aspect of any listing. Once you have identified the area you want to live you can begin to search for your rental. Whether it is two, three or four bedrooms, there are plenty of properties to pick from.

Once you have narrowed the number of properties you like, I would recommend getting the addresses and driving by them to make sure you are content with the property. Sometimes you might like the property based on the pictures but when you drive by you notice things which are not depicted on the listing that just won’t do. Whether it is a restaurant, lack of parking or even a train, do the initial drive by before you call the listing agent to make the appointment. Once you have short listed your properties arrange a time to see the properties and you will see that all your work prior to making the appointment paid off.

Just bring your tooth brush
In many rental listings there tends to be an extreme stretching of the truth. For example, “All you need is a tooth brush”, this in one of my personal favorites. This basically means that the property is in excellent condition and ready to be lived in as soon as possible.

However, when you go see the property you realize that you have a lot of work ahead of you. You may need to paint the place, replace the carpet, change the light bulbs, fix the washer/dryer etc. This may not be worth it if it has to come out of your pocket, because after all it's not your property. The list can go on and on but I think you get the idea. Don’t ever make a decision or provide any money without viewing the property first. Most likely, you will need a lot more than a toothbrush.

Remarks on listings

Currently, on a significant number of properties for sale, you see remarks describing extreme distress. For example, you commonly see “seller motivated” or “bring all offers”. You don’t see this type of remark on rentals at all. I don’t think I have ever seen an advertisement for a rental stating “landlord motivated” or “bring your best rent price”. Obviously the rental market isn’t hurting as much as residential sales, but none the less, the remarks should be describing the property. If the seller is motivated, why don’t they just reduce the price to the point where they don’t have to write such remarks? In the rental market they just place the property for rent at a reasonable price. Realtors might want to start thinking like this because they are wasting their time and their customer’s time with such ridiculous remarks.

Be careful with scams

As the internet has become the most popular outlet to post your apartment for rent, it has also led to an increasing number of scams. With websites like “Craigslist” which allow consumers to contact consumers directly, the probability of getting scammed has become more prevalent. Be very careful when filling out a rental application which asks for your social security number, credit card info, or any other information which may put you at considerable risk. I am not saying that everyone is out there to scam you, but I am saying that you need to be very careful when providing your personal information.

Rental Walk Through

When you first visit your new rental property, make sure that you do a thorough walk through. Inspect the property very carefully. If there is any damage, you not only want to get it fixed, but you also need to make sure that you are not blamed for it later. Address all the problems in the lease, either by agreeing to live with it, or by having the landlord fix the problem by a set date. Check all the common walls you may be sharing with adjoining apartments. The more walls in common, the greater the chance of noise. You want to make sure that you will be happy with noise level. Lastly, ask about the amenities. Are there enclosed parking spaces, storage, laundry facilities, pool, tennis, gym and other services? Do your homework and you will be a happy tenant.

Your landlord is not your enemy

Most tenants seem to feel that their landlord is their enemy when in reality it is quite the opposite. As a tenant you should take advantage of your landlord and establish a good relationship with them. The landlord is responsible for more than just collecting the monthly rent. They landlord has to make sure the trash is removed, the fire alarms work, the appliances work and that the unit is serviced with pest control. If there is ever any other problem, don’t be afraid to call your landlord and ask them. Landlords are humans and most likely will be more than happy to assist you. Don’t forget, be nice to your landlord and they will most likely be nice to you.

First, last and security deposit – moving expenses for renters

If you are planning on renting a property, you better have some cash saved up for the first month. The initial hit of renting could be quite steep. Usually 3 big charges come to mind: First month’s rent, last month’s rent (for the landlord to cover himself for the end of the contract), and a security deposit (for the landlord to make sure the property stays in the same condition it was rented out). There is literally no way to get out of this. The only possible avenue would be if the landlord and future tenant have a strong relationship and a lot of trust, then would some of those conditions not apply. But for 98% of the transactions, a future tenant will have to come up with some pretty significant money. Other move-in expenses would be a condominium or home owners association approval. There is always a fee for those, which would generally include a background check of the tenant and an application process.

If there is a lot of furniture, then movers would also form part of the equation. Plus maybe painting the place or acquiring new stuff, the list could be endless. In other words, if you are looking to save some money by renting a place instead of purchasing one, you still have to be prepared for that first month. Once you get through it then sailing should be a breeze and you should be able to save some significant money if the proper deal was found. Not to mention the fact that the last month of the renting period is already paid and if the property was kept in good condition, the full or partial amount of that security deposit will be given back. It almost feels like found money, a welcome gift to everybody I should say.

Renting a house – take care of it as if it were yours

Too many times I see inconsiderate tenants that pretty much destroy properties. What a nightmare that could be for a landlord. Everybody knows that is one of the downfalls of putting your place up for rent; but people, let’s try to be reasonable and treat these properties with the respect they deserve. I have personal experience from all angles on this issue. As a tenant, I always tried to treat that house as if it was my very own. Not only will that make your living experience better on that place, but it will assure that you will get the full security deposit back. On the other hand I have also been a landlord and you just have to pray that a good tenant comes your way. Someone that will not turn your place upside down and hopefully someone that will pay on time. A background check, referrals and simple gut intuition will help a landlord get the right tenant.

As a real estate agent I always try to educate my future tenants on the fact that these properties will be their living space and they should be kept in immaculate condition. I just hope everybody does the same so that the landlord – tenant relationships could improve overall in the near future. Wouldn’t that be a dream? Considerate tenants paying rent on time, treating properties like it they were their own; and also landlords that are willing to fix any problem that might come up during the leasing period. A perfect world is not so difficult if people just learn to treat things with a little bit more care and no so much thinking in terms of bottom line numbers.

The advantages of renting

The first and most obvious advantage is that you have “fixed” costs. Besides the occasional power bill varying, you have no other expenses. The owner is in charge of fixing the appliances, painting the exterior, taxes, and insurance. Although you are not gaining equity when you rent a home, the advantage of renting is that you are not losing equity either. Lastly, there are no upfront costs when renting, you simply just move in and move out.

Flip Flop Real Estate

Four years ago it was easier to buy a home than it was to rent one. When someone rents a home there is usually a required security deposit as well as first and last months rent. If you take a $1,200 home, you are looking at $3,400 initial investment, assuming there was a $1,000 security deposit. However, in 2004-6, individuals were able to receive 100% loans, and to top it off, some didn’t even have to verify income. It is these individuals, along with speculators who are getting crushed with the current bust. All you see now are people looking for rentals…..How times have changed.

1 reply

Home Inspections are they Important?

Mon, 01 Dec 2008 21:51:00 GMT

Should a buyer get a home inspection for a home they are buying? Should a seller order a home inspection prior to putting the property on the market? There are advantages for both.

Simply put, a home inspection is a visual examination of both the physical structure and major systems of the entire home including: walls, ceilings, floors, decks, exterior covering, the roof, foundation, insulation and ventilation, plumbing, electrical, heating and air conditioning. It is not an appraisal to validate the value of a home, nor a pass/fail exam. A third-party inspector will give a report on the physical condition and suggest repairs.

Buyers
For buyers, a home inspection clause in the written offer that makes the purchase contingent upon the findings can provide peace of mind. If a serious problem is found, it allows room to renegotiate the purchase price or "opt-out" of buying the home altogether. However, this is usually uncommon. Typically, the seller will already have told the buyer about any major problems.

More often, inspections reveal less serious defects that aren't enough to warrant backing out of the transition. However, knowing about these minor problems can prevent major disasters down the road. In addition, if specified in the inspection clause, the cost of the repairs can be at the seller's expense.

Another advantage to having a home inspection is it offers buyers an opportunity to become familiar with their new home and learn about maintenance to help in its upkeep. Although not required, it's recommended that buyers be present during the inspection. This allows them to observe the inspection; ask questions about the condition of the home; and receive an objective opinion.

Sellers
For sellers, conducting a home inspection (or pre-inspection) before listing their homes puts the control back into their hands.

When the buyer inspection finds problems, it can impede negotiations and cost the seller more in repairs. By having a pre-inspection, the seller can help eliminate any surprise findings after an offer has been made. The seller can make repairs before placing the home on the market and possibly even increase the value of the home.

A pre-inspection can also serve as a great marketing tool. Sellers are required by law to disclose any known defects in the home. Having a pre-inspection report available for buyers tells them that the seller has nothing to hide. It also gives them a clearer picture of the condition of the home.

If there are major problems found during the pre-inspection, it gives the seller an opportunity to disclose the condition up-front, making it less likely for the buyer to pull out of the deal or try to renegotiate the price.

Knowing the true condition of a home can bring peace of mind to buyers and sellers; and be one less hurdle in the home buying and selling process. Ask your real estate sales professional for a list of certified independent home inspectors in your area.

1 reply

Home Inspection Information

Mon, 01 Dec 2008 21:48:00 GMT

What is a home inspection?

This is an inspection of the visible conditions of the property.
The home inspection is an inspection of the foundation, electric, site elements, siding, roofing, basement, crawl space, attic, plumbing, walls, ceilings and floors, heating, cooling, built-in appliances, chimney, fireplace structure, structural damage, bathrooms, water heater. A home inspection should be an unbiased inspection of the visible condition of the property. The inspector should show the immediate concerns, maintenance items and give design life ranges. Also, the inspector should give you an education of the home and show you how mechanical systems operate and where the shut off switches for important items are located.

What a home inspection is not?

The home inspection is not a pass/fail test. Home inspectors should not give cost estimates, since they're not licensed contractors. They should not tell you to purchase or not to purchase a home. Home inspectors are not responsible for hidden items.

How long does a home inspection take?

The home inspection should take between 2-3 hours. Larger homes will take more time.

Questions to ask your home inspector:

1- How long has the company been in the home inspection business?
2- How many inspections have they performed?
3- Is the company a member of the Better Business Bureau?
4.-Does the company offer any guarantees and offer E&O insurance?
5.-What level of experience do the inspectors have?
6.-Can I accompany the inspector on the inspection?
7.-Will you provide me with a professional inspection report on site?
8.-Will the report reflect the ages of all the major elements?
9.-Does the home inspector bring a ladder, moisture detectors, and other equipment?
10.-Will the inspector enter the attic to look for insulation/ventilation or framing issues?

Insurance requirements for home inspectors:

One of the most important credentials to look for in selecting a home inspection company is their insurance coverage. Errors and Omissions Insurance is like malpractice insurance to cover inspector negligence. In NY State, there is no insurance requirement for home inspections. Inspectors only need to carry general liability.

Licensing of Home Inspectors in NY Long Island:

NYS requires licensing as of 2006. PE's and RA's that work for a home inspection firm do not need the NYS license. If they're the owner of the company,then they need a license number. Do you know a new home inspector can obtain a NYS license with observing only a few inspections?

How much for a home inspection on Long Island?

Home inspectors that have experience charge between $550-$650 for a standard home inspection under 2500 sq feet. Most home inspectors that do not carry insurance, have no office staff and may have limited experience charge $350-$450 on average. You get what you pay for.

1 reply

Home Inspection

Mon, 01 Dec 2008 21:43:00 GMT

An examination of the structure and mechanical systems by a professional to determine a home's safety, defects, and potential repairs.

Inspections provide buyers, sellers, property owners, and agents with important information essential to evaluating a property's condition. A professional evaluation of the following components including a computerized inspection report will help in making an informed decision.

• EXTERIOR - Wall coverings & trim
• INTERIOR - Ceilings, walls, fireplaces
• STRUCTURE - Foundation, sub-structure
• ROOFING - Coverings & flashings
• ELECTRICAL - Service panel, branch circuits
• HEATING & A/C - Controls & distribution
• PLUMBING - Main PSI, vent, traps & drains
• INSULATION - Attic, vapor barriers
• ADDITIONAL SERVICES - Pool and Spa inspections

A professional home inspection can help
reduce the risks and stress associated
with a real estate transaction.

Related Links
Home Inspection Guide
Home Inspection Checklist

1 reply

Home Inspection Checklist

Mon, 01 Dec 2008 21:43:00 GMT
If you find a house that seems like it has possibilities, do your own initial inspection, inside and out, before making an offer. Your intention now is to be alert for obvious deficiencies. Assuming you’re not looking for a fixer-upper, too many of these may be a reason to eliminate this house from further consideration.

Note: This is not meant to replace a professional home inspection. If you end up making an offer on this house, you will want a licensed home inspector to go over it with a magnifying glass.

Your Initial Inspection
Foundation: Look at the base of the walls and the ceilings in each room. Are there obvious cracks or apparent shifts in the foundation? Do the same around the outside. Are there any trees encroaching on the foundation?

Lot: Does the drainage appear to be away from the house? Any obvious soggy areas?

Roof: What is the overall condition? When was it last replaced? Are there any trees encroaching on it?

Exterior: Does the house look like it will need repairs or repainting soon? Are gutters and downspouts firmly attached? Are there loose boards? Dangling wires?

Attic: How does the interior of the roof structure look? Any signs of leaks?

Interior evidence of leaks: Check ceilings and around windows in each room.

Basement: Is there dampness? Adequate insulation? (If there’s a crawlspace instead of a basement, you might want to leave this for the professional home inspection.)

Electrical: Do the switches work? Are there any obvious malfunctions?

Plumbing: Any unusual noises or malfunctions?

Appliances: If these are included, what is the age and condition of the stove, dishwasher, refrigerator?

Heating/cooling system: Does it seem to do the job? How old is the furnace?

Related Links

Home Inspection Guide

Contingencies Are the Buyer's Friend

Making an Offer on a House

1 reply

Home Buying 101

Mon, 01 Dec 2008 21:07:00 GMT

Buying a home is a process somewhat similar to buying a new car -- it’s a lofty investment that requires a large capital, tons of negotiating power and a willingness to be okay with possibly losing money in the short term. If you’re one of those people about to embark on their first home buying experience, consider the items below to help you make the smooth out the process.

Make the home a long term investment. The longer you remain in the home, the more equity and/or value it will generate. Selling it too soon ultimately ends up at a loss if you add up the multiple fees and costs that go into buying a home.

Check your credit beforehand. Look over your report. Is there something unusual that might cause a lender to think twice? Remove anything that could cause you to be turned down or better yet, consider obtaining a mortgage pre-approval.

Work within your means. Living in a Miami Beach condo is a dream shared by many and realized by few. Look for a property that you like but that you know you’ll be able to pay off along with all the other bills that often come with it, (i.e., utilities, telephone, cable) and your other monthly expenses.

A 20% down payment is not final. You may have to do additional legwork and have spotless credit but there are private lenders who will approve a mortgage at five percent or less of the home’s asking price which should make the whole thing much more affordable for you.

Check out the local schools. You may not care for a school if you don’t have kids but living near one of them means your home will build more value than one that doesn’t. Come the day you decide to sell your home, not only can you can set a higher selling price, your chances of finding willing buyers is substantially increased.

A real estate agent saves you time and money. The entire purchasing process can be confusing what with will all the legalities, fees and paperwork. Real estate agents are trained to assist buyers and can explain to you all the pertinent information in plain English.

Strongly consider paying the closing interest. Paying this interest equals a lower monthly home mortgage payment which makes sense if the home will become your permanent residence.

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HOME BUYERS-How To Avoid Costly Mistakes

Mon, 01 Dec 2008 21:05:00 GMT

There are some simple steps that homebuyers often miss when looking for their new home. Taking the time to consider these steps can save you thousands of dollars, but more importantly, can smooth the process of buying a new home, saving time and money, as well as alleviating stressful situations in advance.

1. Begin by being up front and honest with your real estate agent and lender about your credit history. Your credit, whether good or bad, affects everything from your down payment to your interest rates. Your real estate agent or a professional mortgage consultant can often advise you as to how you can get credit problems cleared up or completely eliminated from your credit report before you apply for financing or make an offer on a new home.

2. Getting pre-qualified for a loan by a professional lender before you begin your search for a new home will allow you to know in advance exactly what kind, and how much, mortgage you can afford. This makes it possible for you to make an offer on your new home with confidence that enough funding is available.

3. If the seller does not offer a home warranty on the house you want, ask your real estate agent to make it a part of the written offer that you make. A home warranty can save you thousands of dollars in repairs, and can often be obtained for a very nominal annual fee. A standard warranty covers the electrical, plumbing, heating and air conditioning systems as well as major home appliances.

4. Ask your real estate agent for a market analysis of the home, in comparison to similar homes in the neighborhood or throughout the city, before you make an offer. A home is not just a place where you live, it is also an investment. Take the time to view several homes before you make an offer so you know exactly what is on the market. Be certain you are making a wise investment.

5. Make your offer contingent upon a home inspection and ask the seller to make the required repairs. Hire a professional to inspect every aspect of the home thoroughly. This can save you thousands of dollars in costly repairs and many headaches in the future. A good inspection can also allow you to negotiate for any repairs prior to closing. If the seller is not willing to make the necessary repairs, remind them that the lender will also require the home to be in good condition before they make a loan for the purchase.

6. Take into account your present homeowner or renter status. If you already own a home and must sell it before you buy a new one, it is best to get a real estate agent to do a complete market analysis on your present home. This allows you to know how much you can sell your current home for before you make an offer on a new one. If you are leasing or renting, the lease's expiration date will give you a timetable for your new purchase. Review this with your real estate agent well in advance of when you want to move.

7. Choose your agent wisely. Working with a full-time professional real estate agent is a must. Ask questions of your agent. Find out how knowledgeable he or she is about houses currently for sale in your price range and also of houses that have recently sold. Can your agent recommend a good lender that has the reputation of excellent customer service and low rates? Does your agent ask questions of you to have a full understanding of what you are looking for and to help you get the most home for the money?

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