Archive for the 'Buying' Category
Preparing for Your 2009 Real Estate Transaction
I know the spring real estate market seems a world away for many in Connecticut and the Greater Hartford region. But I just finished up my business plan for 2009 and thought it might be helpful to provide some tips for Buyers and Sellers that are planning a real estate transaction in upcoming year. It never hurts to get an early start and planning ahead will typically put you in a better position, no matter what your goals may be.
Sellers
1. Have a real estate agent stop by your home and have them do a walk through of your property. They’ll be able to give you recommendations on projects and the priority of projects you can undertake in the early weeks and months of the year to prepare your home for sale. This may include painting, decluttering, furniture placement, landscaping suggestions, etc.
2. Start touring open houses of homes in your town and neighborhood that are of the same style and vintage. This will help you get a better understanding of pricing in your market based on the condition and amenities available.
3. Start minimizing. Clean out your closets, organize your basement and attic, donate items (clothing, books, etc.) that you find you don’t use.
4. Interview a few agents at least a month before you’re ready to sell. This will give you time to select your business partner in the transaction and implement their last minute ideas before you put your home on the market.
Buyers
1. Talk with at least one mortgage broker or mortgage banker. Talking to more is usually better because you’ll find one you’re comfortable with. They’ll run your credit and give you suggestions on how to improve it, if necessary. They’ll also let you know how much you’re pre-approved for, based on your current income, assets, and liabilities. Based on this, you can determine what type of monthly payment you’d like to have and they can give you the price range you should be shopping in, based on that monthly payment. Often you’ll be qualified for more than you actually want to spend, so it’s important to find the price range where you’d feel comfortable making the monthly payments.
2. Start saving. The larger the down payment you have, the stronger buyer you’ll be. In almost all cases, you’ll need to put down at least 3% of the purchase price, so if you don’t have this type of cash lying around, you’ll need to start socking it away. You’ll also need cash for closing costs (if you can’t get the seller to give you a closing cost credit), and those typically run between 2-3% of the purchase price. So, more money to save for your purchase. If you are lucky enough to be able to put 20% down, you can avoid the dreaded PMI.
3. Start visiting open houses in various towns. This will help you get a better understanding of how much space you might need, what you’ll be able to afford, and if you can handle a home that might need work or one that needs to be in move-in condition.
4. Interview a few real estate agents to find one you’d like to work with. Treat the interviews like you’re hiring an employee. The agent will be working on your behalf on one of the most important purchases you’ll ever make, so it’s important to hire the right person for your needs.
Following these simple steps will help make preparing your home for sale a more manageable process. As a buyer, you’ll be in a good position to react quickly once you do find the home that meets your needs and price range.
Negotiating Your Relocation Package- Buy Side
Last week I wrote about various benefits you may get in a corporate relocation package when you need to sell a house. Today we’ll cover benefits you may receive if you’re buying a home in your new location.
In all cases, you’ll work with a real estate agent to find your new home. If you know of a specific agent that you’d like to work with, tell your relocation company that agent’s name and their brokerage firm and that you want to work with them specifically. Otherwise you will be assigned to whatever agent is next on the relocation call list at whatever brokerage firm is next on the list.
Your new employer may provide a lump sum amount to cover your (and your family members) airfare to the new location, lodging during your visit, rental car and gas costs, and meal costs. Or they may have you submit an expense report with receipts for your trip costs, which will be reimbursed after your visit.
Once you’ve found a home, closing costs may be covered. This benefit may include all or some of the following; mortgage application fee, appraisal fee, home inspection fee, closing attorney fee, first year of homeowner’s insurance, tax escrows, and adjustments for water, oil, and condo fees (if applicable). These benefits may be good up to 18 months after you move. So if you do decide to rent for the first year in your new location, you typically have another 6 months or so to find a house and close so that you can still take advantage of your closing benefits.
The mortgage application fee, appraisal fee, and home inspection fee are typically provided only on the first home you find. If for some reason the transaction does not go through (most commonly related to an unsatisfactory home inspection or appraisal issue), you are usually expected to pick up these fees for the next house you decide to purchase.
Coverage of your moving expenses for one move may be provided. The relocation company will give you information on the moving company that will be responsible for moving your belongings. Typically, if you decide to rent for the first year and then buy at a later time period, you’ll be responsible for your moving costs when you actually buy because the relocation company will have moved your belongings to your rental.
If you are unable to find the right home immediately, your new employer may provide a temporary housing allowance for a furnished rental. This benefit comes in two forms. Potentially you’d be given a lump sum amount in which you’d choose the hotel where you stay. Or you’d be provided accommodations for a specified number of days at a certain location selected by the relocation company. Three popular temporary housing locations that relocation companies use in the Hartford area are Hartford 21 and 55 on the Park in Downtown Hartford , and the Homewood Suites in Farmington near the UConn Health Center. This benefit is simply to give you more time to find a home to purchase.
Remember, each of these options may or may not be offered to you by your new employer. Your relocation package is something that you may be able to negotiate. If you find there is a benefit that you’d like that isn’t being offered, ask for it. If you don’t ask, you may be leaving money on the table.
Please, Put Your Offer in Writing
I don’t know what’s going on lately, but in the past few months I’ve gotten several calls from real estate agents that have clients interested in my listings and they’d like me to present verbal offers to my sellers. Verbal offers are not standard practice when selling real estate in Hartford County.
The Greater Hartford Association of Realtors has a standard purchase and sale contract that is used to write and present offers on properties. The written contract outlines a purchase price, escrow deposits amounts, a mortgage commitment date, a closing date, inspections that may be performed, and a variety of other items relevant to the sale. The contract is typically supported with a mortgage pre-approval letter from a bank or lender and a photocopy of the first deposit check that the buyer provided to accompany an accepted offer. All of these items support the fact that the buyer has some level of seriousness when pursuing the property.
If your agent calls me and says that they want to submit a verbal offer on your behalf, you’re sending the message that you are not a serious buyer. You’re not interested enough in the property to sit down with your agent for an hour to work with them on writing up a contract.
With a verbal offer my sellers won’t necessarily know your name, where you live, that you’ve been pre-approved by a bank for a mortgage, that your puchase isn’t contingent on the sale of another home and a host of other important considerations. I will always advise my sellers to never respond to your offer until it is in writing. Why should they show their negotiating position if you’re not even willing to sit down with your agent and take the time to write the offer?
I’ve also been on the other side of the table where I’m representing a buyer and they want me to present an initial offer verbally. I coach them that this is not acceptable if they are truly interested in the property. We need to show that they are a serious, qualified buyer. Yes, the initial offer price might be low, but the seller wants to know that they can get a mortgage, along with all of the other factors to consider in the offer. It also protects my buyer so that if another buyer enters the picture, my buyer at least has a chance at getting the property if they choose to pursue it further.
If you’ve found a home that you like, take the time to sit down with your agent and write up an offer. You might learn something about the process and you’ll put yourself in a position to at least be taken somewhat seriously by the seller.