Archive for the 'Q&A' Category
Questions from the Home Buying Workshop
Last weekend I did a Home Buying Workshop at the Connecticut Convention Center in conjunction with the CT Home and Remodeling Show. It was a very interactive discussion, and attendees asked many interesting questions. Here are two questions we covered that will hopefully be relevant to a larger audience:
How do I find out about open houses?
There are a few places to check to find out about the open houses in the Greater Hartford area. The Hartford Courant’s Sunday real estate section is usually a good place to start. It’s easy, however, not everyone gets the Courant.
Online resources are the other main option. Agents should be updating the Multiple Listing Service (MLS) listing for their properties to note the open house. This pushes the data out to websites far and wide. As an example, the Raveis website has a section that lists all the known open houses for the coming weekend (no matter which broker is the listing agent). The Raveis houses actually show the listing agent’s name, while the competitor’s listings are more generic. Since not all agents know to update their MLS listings with information about the open house, you may be able to find out about more opportunities by searching each of the local broker’s websites individually.
Can I have multiple agents?
You officially “have an agent” when you sign a buyer contract. The contract specifies the time period and geographical area that you have hired them to help you with. If you have not signed a contract, then you do not legally have an agent.
With that disclaimer out of the way, can you have two agents at the same time? Yes, you can legally have two agents as long as there is no overlap in the geographical region. However, there are certain times when this makes sense and others when it really doesn’t.
If you are looking in two dramatically different areas, then you should have different agents. The specific question during the seminar was from a buyer looking in Simsbury and Clinton. Although I suppose it’s possible, it’s unlikely that you are going to find a single agent that is truly knowledgeable about two towns so far apart. It would be in your best interest to pick a Simsbury agent and a separate Clinton agent that are each active in the individual town markets. And you should make sure both agents understand your plan.
What doesn’t make sense to me is having two agents help you in a single town, even though it’s possible through careful structuring of the contracts. Buyers sometimes think that getting two agents to compete against each other will get them better service. But the incentives for the agents are to send you as many properties as possible (even if they doesn’t exactly meet your criteria) and then give you the hard sell so that you actually buy one of them. In effect, they’re working for the various sellers since they just want to get a deal done. If they don’t get you to buy with them, then they don’t get paid for all their effort, so they’re more likely pay attention to you sporadically when they are not working with their “real” clients.
That may be your idea of “better service,” but the idea behind hiring a buyer’s agent is to have someone in your corner, looking out for your best interests. Working with a single agent allows them to learn about your preferences and help you find a home that you will truly enjoy. They’ll be more likely to identify concerns with the properties you tour, making sure you have a good sense of both the positives and negatives of the home itself and how it compares to others on the market. And when you get to the negotiations, they’ll be far more comfortable negotiating aggressively because they’ll know that if you can’t reach an agreement on this home that you’re still serious about buying and will continue working with them to find other opportunities. A good buyer’s agent will work just as hard for you, but on a more consistent basis.
If you have things that you’re curious about, please feel free to send questions along via email. We’re always happy to help and there’s a good chance that someone else is wondering the same thing.
Q&A: Homeowner’s Insurance Basics
Today we’re talking about homeowner’s insurance with Victoria Mendyka of Liberty Mutual. In particular, we’re interested in learning more about how to evaluate insurance policies to make sure the coverage is appropriate for our individual properties.
Greater Hartford Real Estate Blog (GHREB): Most people don’t know a lot about homeowner’s insurance. They know that they need to have it, and that it is supposed to protect them if something bad happens at their home. Let’s start at the beginning – what do homeowner’s insurance policies actually cover?
Victoria Mendyka: Insurance policies are designed to include 6 different coverages, which you will see reflected on your homeowners insurance declaration page:
1. Dwelling, most simply explained as replacement cost for the main structure. Policies provide coverage if your dwelling is damaged by perils such as wind, hail, fire etc.
2. Other structures, defined as detached, fences, sheds, swimming pools etc.
3. Personal property, generally a default percentage of dwelling. Where as personal property is for all the belongings in your home – if you were to turn you house upside down and shake it, everything that falls out would be considered personal property. Your personal items are covered for weather related perils and also extended to theft and vandalism.
4. Loss of use, additional living expenses.
5. Liability, legal protection in the event that injury or damage occurs that you are held at fault for.
6. Medical payments, your ‘don’t sue me money’ to pay a guest medical bill.
Insurance does not cover against earthquakes and floods. You can purchase additional coverage for both, but would have to specially request that.
GHREB: Are all policies the same? And if not, what are the big things that homeowners should look for when trying to compare policies?
Vicki: All policies are not created equal! The first thing homeowners should look for is a financially stable company who can be sure to pay out even in the event of a catastrophic loss. They should also ask what would happen in the event of a total loss, where the stated dwelling value wasn’t enough? Most companies will cover a certain amount over, as a buffer for inflation or other discrepancies. I have come across anywhere from an additional 10-50% extra expanded coverage. It is also important to determine how personal property will be evaluated in a loss. A good policy will contain an endorsement where covered losses will be settled on a replacement cost basis without deduction for depreciation – meaning it won’t matter how old an item is.
GHREB: How often should homeowners review their coverage to make sure it is still appropriate?
Vicki: Most homeowners should review their policies every few years. Number one they should make sure the replacement coverage is adequate. This coverage should be enough to rebuild your home from the ground to the roof, and anything attached to the structure. Most companies will either do a computer evaluation based on questions about the home, or some may be able to send out an inspector. You should touch base with your insurance agent if you make significant changes to the home that might increase the value. Finally, any big purchase such as jewelry, fine arts etc may require additional coverage, so you should run those things by your agent.
GHREB: Is there anything else we should think about when reviewing our insurance?
Vicki: Here’s a money saving tip for the day: look at your deductible. These days, home repairs cost much more than a few hundred bucks. So carrying a deductible of $1,000 or $2,500 would save significant premium in the annual payments, and would pay for itself in just a few years.
GHREB: This is all interesting and helpful information – thanks so much for your time, Vicki!
Victoria Mendyka is an insurance agent for Liberty Mutual, serving the Greater Hartford region. She can be reached at Victoria.Mendyka@libertymutual.com and www.libertymutual.com/lm/victoriamendyka.
Q&A: Planning for a Purchase
Today we’re starting a new segment here on the Greater Hartford Real Estate Blog, Q&A. Our first conversation is with our very own Kyle Bergquist, who is a financial advisor with Conifer Investments.
Greater Hartford Real Estate Blog (GHREB): With prices either stable or falling, there seems to be a fair number of young professionals looking to buy their first home. How would you recommend folks prepare for their purchase?
Kyle Bergquist: The single most important step is making sure you can actually afford the houses you look at, and will end up buying. I recommend going through a budgeting excercise to help you decide how much you are comfortable paying on a monthly basis for your mortgage and other home-related expenses. The monthly mortgage figure, combined with the mortgage type and rate, sets the price range as you begin your home search. Many people rely on their mortgage broker to tell them the maximum they are qualified for and then use that value in their search. I’m not sure how that would work out with today’s mortgage market, but until recently it would have resulted in you buying a house you couldn’t actually afford.
GHREB: What sorts of items do people need to consider in their budget?
Kyle: Start with your income and then begin subtracting out expenses. It’s easy to forget items, like auto insurance, that are paid infrequently. We use our fireplace in the winter so two expenses we have are firewood and annual chimney cleanings. They are once-a-year bills, and I’ve forgetten them before. Take a quick look through your checkbook and credit card statements to make sure all your current expenses are considered. Also think about expenses that only homeowners pay, for example water bills and garbage collection fees. Your agent should be able to rattle off the list of typical expenses for the towns in which you are looking. There are also some online budget worksheets (CNN Money, About.com) that can be used to structure your effort.
GHREB: We’ve talked about making sure the people can afford the homes they buy. What about the initial purchase?
Kyle: During the purchase process, buyers need to have money available for not only the down payment at closing, but also a number of other expenses as well. Some, like the first and second deposits that accompany an offer to the seller are actually early contributions to the down payment They go towards the purchase price and become equity in the property. Others, like the expenses associated with home inspection, mortgage commitment and appraisal are costs of buying real estate and will never be recovered. Finally, buyers typically have to prepay some of their expenses at the closing table. Property taxes and homeowner’s insurance are usually held in escrow at the request of the mortgage company. Costs paid by the seller that will benefit the buyer are equitably divided, so for example, the buyer ends up paying for all the heating oil in the tank.
You’ll want to talk with your agent to get a sense of the initial deposits that accompany offers in your area and typical home inspection costs. Your mortgage broker is the best person to ask about everything else. They can walk you through the other expenses that you’ll probably see at closing, like a preview of the Good Faith Estimate that they will provide after your offer is accepted. Some people also like to set aside some money for repairs and other work they want have done immdiately after the closing, so keep that in mind also.
GHREB: Anything else that you would recommend?
Kyle: I guess the only other point I want to make is that when you move into a home, there are going to be expenses that you might not expect. A lawnmower. A bed and nightstand for the guest bedroom. And lots of stuff to hang on the walls. Leave a little extra room in the budget for the incidentals and don’t be afraid to get creative until you can afford what you really want.
GHREB: Are you available to help folks out with their budgets?
Kyle: I’d be happy to sit down and talk with your clients.
GHREB: Terrific! And thank you for your time, Kyle.
Kyle Bergquist is a financial advisor at Conifer Investments, a boutique investment firm that specializes in folks with complex financial situations like multigenerational families and entrepreneurs. Kyle is also a licensed REALTOR and supports Amy’s residential real estate practice. He is a regular contributor to the Greater Hartford Real Estate Blog and can be reached at KyleB@AmyB-RE.com.