Winning Home Buying Strategies from Industry Insiders

Winning Home Buying Strategies

Winning Home Buying Strategies and Secrets from Industry Insiders

Thinking about buying a home? Since it’s likely the single biggest investment you will ever make, being prepared will help you make a smarter purchase decision. Don’t make an offer until you read and understand these real estate insider tips.   Download PDF

Know your buying power

What is buying power? It is the combination of how much you can realistically pay for a home and your credit-worthiness. You’ll need money saved for the down payment — which is typically between 10% – 20% of the price — as well as cash for closing costs, such as transfer tax, PMI, title insurance, and legal fees. For ongoing mortgage and maintenance, your monthly obligation shouldn’t be more than 36% of your monthly gross income.

A good credit score is usually 720 or above. A loan professional can help you figure out your buying power and give you a clearer idea of if your score is in the ‘good’ range. Have them check your score for you so that you don’t inadvertently lower your score by checking it yourself. You want to clean up your credit as soon as you can, and definitely before you get a mortgage pre-approval.

Don’t try to time the market

Even within a city’s limits, there can be micro markets that are increasing or decreasing in value. A knowledgeable buyer’s agent can provide you with a buyer’s market analysis report, outlining which neighborhoods are still up and coming — with potential for increased property value — versus those that have peaked with inflated home prices.

There’s never a perfect time to buy a home, even if you’re in a hot market. It can take a while to know what you like, and you may need to see 10 or more houses before you decide. Another good reason to be patient: you might find a better deal. Look for expired listings, which may offer more price flexibility and accept a lower-than-list offer. Don’t bother with FSBO (for sale by owner) listings though — since they’re not represented by a professional, they are often overpriced.

Be ready to make a stand-out offer

If you love it, make the offer. Otherwise, that dream home may disappear faster than you think, and especially if you’re buying in a hot market. Have your buying agent contact the listing agent before you submit an offer so that they can decide what’s important to include in the offer. If you’re serious about putting in an offer, you want to increase the chances that it’s accepted.

Show that you’re serious about the purchase by creating a buyer’s offer packet. It should include your lender’s preapproval letter, a screenshot of your down payment money in your bank account, and comps that support the rationalization of the offer you are presenting.

Once you’re in the negotiation process, have the inspection conducted before it’s too late to back out of a deal. If there are any major structural issues, you may be able to make the seller repair them as a contingency to your offer. Minor issues that you can repair on your own may be points for negotiating a lower offer.

Work with a professional for insider exclusives

If you’re thinking about buying a home soon, or even in the near future, let me know the details. I may have just what you’re looking for in an exclusive listing not available to the general public – so get in touch today!

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Is It Smart to Buy A Fixer-Upper as Your First Home?

Contributed by William Giakoumatos
Buying your first home can be very exciting. Among all the decisions you’ll have to make when you seek that home is whether you want to buy one that’s ready to move into and live in as is, or one that needs a little work. Many people buy fixer-uppers because of the lower cost, but sometimes those kinds of homes can end up costing you a lot more in the long run. Here are some things to consider when you’re trying to decide whether it’s smart for you to buy a fixer-upper or not.

1. What can you get in your price range?
Many first-time homebuyers are on tight budgets. They don’t have a lot of money to spend, and they want to live in a good area. Overall, location is more important than the house, because the house can be changed. If you can’t get into a good area without buying a fixer-upper, it may be worth considering. Just be sure you’re really buying in a location you like and one that you want to remain in for a while so you can get the best deal and turn your house into a solid investment. Look at several houses, both fixer-uppers and finished, before deciding.

2. How handy are you, really?
There’s a big difference between painting a room and fixing that plumbing leak. When you’re considering a fixer-upper for your first home, make sure you’re honest about your skill level. Don’t buy into more than you can fix, or than you can afford to have fixed. By getting a good, thorough home inspection, you’ll have a better idea of what kinds of improvements really need to be made. That can help you make the right decision based on the work you’re able to do on the home.

3. How much savings do you have to use for repairs?
Repair budgets rarely get adjusted downward. Typically, it will cost more than you expect to repair a home. Even if you have plenty of savings, it’s a good idea to get some repair estimates before committing to buying. That way, you’ll have realistic numbers you can look at when you’re trying to decide if that home is the right one for you. Surprise expenses can still crop up, but there will be fewer of them to contend with.

4. Do you have friends and family who can help?
If your uncle is a contractor and you have a niece in the design business, your odds of doing well with a fixer-upper just got better. When you have people who are in skilled trades and can help you work on your home, you can save a lot of money in labor costs and protect your investment more easily. It’s not a requirement to have people like that in your family when you buy a house that needs work, but it can certainly help the process.

5. How long do you plan to live in the home?
Renovating a home takes time. If you don’t plan to live in your first home for a long time, you might not want to buy something that requires a lot of work. You don’t want to get into the middle of a renovation and decide that you need to move. It can be very difficult to sell a home that’s in the middle of renovations, and you’re likely to lose a lot of money in the process. Don’t buy a fixer-upper you aren’t really committed to keeping for years.

6. How is the market where you’re looking?
If it’s a buyer’s market in your location, you may be able to get a great home for a much lower price. With that in mind, you could get into a home that needs less work and still not have to break your budget. Markets that favor the seller are going to have higher home prices, so buying a fixer-upper to get into a better neighborhood could be the way to go. There’s nothing wrong with buying a house that needs some work, as long as you’ve done your homework and are prepared to handle the changes that need to be made.

7. Are the home’s issues cosmetic or something more?
Cosmetic issues are things that can be lived with, even if you’re not crazy about the way they look. If you have structural issues, though, you can’t just leave those alone and not worry about them. They have to be fixed. Finding out which the home has and how much it will cost to correct any structural problems is very important if you’re considering a fixer-upper for your
first home.

William Giakoumatos is the current vice president of American Custom Contractors. They are a commercial and residential contractor company in the Washington, D.C. Metro area. Servicing businesses and homeowners for more than 40 years, ACC prides themselves with the added value from their work.

This post was originally published on RISMedia’s blog, Housecall. Check the blog daily for winning real estate tips and trends for you and your clients.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2015. All rights reserved.

Know Before You Owe: More Homeowner Insights

By John Voket

I am always thrilled to hear when folks make the jump to homeownership. And it’s important for prospective homeowners to know about all the resources available to them to help the experience go as smoothly as possible, especially when it comes to financing.

In the first of this two-part report we clued potential homeowners in on the U.S. Consumer Finance Protection Bureau’s new (consumerfinance.gov) report that featured some revealing data – particularly that almost half of consumers do not shop around for a mortgage when purchasing a home.

Among the key findings were:

  • Almost half of consumers who take out a mortgage fail to shop prior to filling out an application for a mortgage.
  • While half of consumers shop around to see who advertises lower rates, fewer than one in four actually end up submitting a loan application to more than one lender or broker – NOT filling out applications with multiple lenders to see which one can offer them the best deal.
  • 70 percent of consumers report relying on their lender or mortgage broker a lot to get information about mortgages.
  • The survey found that among all borrowers – those who shopped and those who did not – 42 percent said having an established banking relationship with the lender is “very important.” Since most borrowers likely only have a few banking relationships, this likely inhibits shopping.
  • Consumers who are confident in their knowledge about the mortgage process are more likely to shop around prix viagra en pharmacie.
  • Consumers who are confident about their knowledge of available interest rates are almost twice as likely to shop as consumers who are unfamiliar with available interest rates. The survey found that 55 percent of shoppers said they were very familiar with mortgage rates, while 30 percent of shoppers said they were not at all familiar.

Following this report release, as part of its “Know before You Owe” mortgage initiative, the CFPB announced it was releasing “Owning a Home,” an interactive, online toolkit designed to help consumers as they shop for a mortgage.

Anyone in the process of – or anticipating buying a home in the near future can access this virtual toolkit by clicking here. 

 

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2015. All rights reserved.

Do You Know What Questions to Ask when Joining an HOA?

By John Voket

It's been awhile since I reported about homeowner associations or HOAs.

Neighborhood Link (neighborhoodlink.com) defines a HOA or Homeowner Association is a legal entity created to manage and maintain the common areas of a community. Typically these "common areas" consist of things like pools, clubhouses, landscaping, parks, streets and roads.

HOAs are typically set up by the original developer of the community with a set of rules called "Declaration of Covenants, Conditions, and Restrictions" otherwise known as "CC&Rs". One of the primary functions of the HOA is enforce and ensure that these "CC&Rs" are adhered to by the individual homeowners.

One Boulder, Colorado real estate blog (taylorrealtygroup.net) recently posted a helpful punch list of questions to ask if you are buying a house or condo that is governed by a HOA.

According to the Boulder blog, those questions should include:
 

  • How much are the dues?
  • What is the history of the due increases?
  • Does it include building insurance or not?
  • What are the specifics of the insurance and what insurance will you be required to carry vs. the HOA carries it for you?
  • Are there HOA budget reserves for things like concrete repair, deck repair, staining/painting/etc? Also, look at maintenance contracts like landscaping, security, snow removal etc. Do they look reasonable to you? Is one of the HOA members also one of the contractors?
  • If you haven’t already—find out how much the transfer fees and capital reserve requirements are when you close and negotiate to have the seller pay for them (unless you have already agreed otherwise)
  • Find out how many units are owner occupied versus rented out. The HOA will know this. If it’s higher than about 10 percent rentals then the blog advises: don’t buy it.
  • Find out the current status of all the membership dues. How many units are in the HOA and of that, how many are past due. How much?
  • Get the minutes from the past years HOA meetings and read the to see what kind of stuff they talk about and this will tell you how picky they are and what type of violations spur actions against residents.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2015. All rights reserved.

Home Prices Rise in August

Home prices rose slightly at 0.2 percent in August, slower than the 0.6 percent rise in July, according to the S&P/Case-Shiller 20-city composite index released Tuesday.

However, data through August 2014, released this week in the S&P/Case-Shiller Home Price Indices, continue to show a deceleration in home price gains. The 10-City Composite gained 5.5 percent year-over-year and the 20-City 5.6 percent, both down from the 6.7 percent reported for July. The National Index gained 5.1 percent annually in August compared to 5.6 percent in July.

On a monthly basis, the National Index and Composite Indices showed a slight increase of 0.2 percent for the month of August. Detroit led the cities with the gain of 0.8 percent, followed by Dallas, Denver and Las Vegas at 0.5 percent. Gains in those cities were offset by a decline of 0.4 percent in San Francisco followed by declines of 0.1 percent in Charlotte and San Diego.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.1 percent annual gain in August 2014. The 10- and 20- City Composites posted year-over-year increases of 5.5 percent and 5.6 percent.

“The deceleration in home prices continues,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Sun Belt region reported its worst annual returns since 2012, led by weakness in all three California cities — Los Angeles, San Francisco and San Diego. Despite the weaker year-over-year numbers, home prices are still showing an overall increase, as the National Index increased for its eighth consecutive month.

“The large extent of slower increases is seen in the annual figures with all 20 cities; the two composites and the national index all revealing lower numbers than last month. The 10- and 20-City Composites gained 5.5 percent and 5.6 percent annually with prices nationally rising at a slower pace of 5.1 percent. Las Vegas continues to see a sharp deceleration in their annual home prices with a 10.1 percent annual return, down just below three percent from last month. Miami is now leading the cities with a 10.5 percent year-over-year return. San Francisco, which has shown double-digit annual gains since November 2012, posted an annual return of 9.0 percent in August.

“Despite softer price data, other housing data perked up. September figures for housing starts, permits and sales of existing homes were all up. New home sales and builders’ confidence were weaker. Continued labor market gains, low interest rates and slower increases in home prices should support further improvements in housing.

As of August 2014, average home prices for the MSAs within the 10-City and 20-City Composites are back to their autumn 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 16-17 percent. The recovery from the March 2012 lows is 28.8 percent and 29.5 percent for the 10-City and 20-City Composites.

All cities except Cleveland saw their annual gains decelerate. Las Vegas showed the most weakness in its year-over-year return; it went from 12.8 percent in July to 10.1 percent in August. As a result, Las Vegas lost its leadership position as it moved to second place behind Miami with a 10.5 percent year-over-year gain. San Francisco posted 9.0 percent in August, down from its double-digit return of 10.5 percent in July.

All cities except Boston and Detroit posted lower monthly returns in August compared their returns reported for July. San Francisco showed its largest decline since February 2012; it was the only city that showed a negative monthly return two months in a row from -0.3 percent in July to -0.4 percent in August.

More than 27 years of history for these data series are available, and can be accessed in full by going to www.homeprice.spdji.com.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2014. All rights reserved.

A Home Inspection Primer—Negotiating the Fixes

By John Voket

In our last segment, I began reviewing the sometimes complex process of performing and utilizing home inspections as an important component of a home buying transaction.

The site helpinghomesellers.com offers a wealth of information regarding home inspections. In this segment, we’ll take a look at negotiating home inspection issues using the site as a guide.

According to the consumer information site, most contracts provide the opportunity to negotiate any repairs to the satisfaction of the buyers. This includes either doing some or all the repairs and/or compensating the buyers with cash.

Although a whole house inspection may turn up an expensive repair, sellers may be able to negotiate a cash settlement that is less expensive than what the repair would have cost. Offer money to the buyers so they can choose how the repair is completed.

Helpinghomesellers.com illustrates a classic example where a seller’s furnace died just prior to closing. The buyers understandably wanted a new furnace, and the cheapest one to be found was $1,900.

Without telling the buyer the amount, the agent, representing the seller, recommended that the seller offered to give the buyers $1,400, pointing out they could use this money towards installing any type of furnace they wanted.

Otherwise, the seller was obligated to just install a new one that worked. The buyers took the money and the seller saved $500.

Avoid repairing items that lend themselves to a subjective interpretation as to how well the repair was done. Say a garage roof needs some serious shingle repair and replacement.

After completion, what if the buyers don’t think the new shingles match the originals that well? Instead, helpinghomesellers.com says offer the buyers money so that they can repair this type of problem by themselves and you’ll save a whole lot of problems..

Money, unlike repair work, is not subject to interpretation. It sure beats sweating out the buyers’ approval, which is often done at the eleventh hour walk through.

A dollar settlement is almost always acceptable to buyers and it eliminates last minute problems.

Source: helpinghomesellers.com

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2014. All rights reserved.

The Mortgage Professor: Can you Afford that House?

By Jack Guttentag

(MCT)–The house purchase season is now in full swing, and many would-be purchasers are wondering whether or not they can afford the price quoted on the house they would like to buy. Alternatively, they may not have started their house shopping and may be wondering what price range they should be exploring.

The availability of mortgage financing is obviously a critical feature of the affordability equation, and it is quite different today than when I addressed the issue before the financial crisis. Interest rates are lower for borrowers with good credentials, which may increase the amounts they can afford to pay. But rates are not necessarily lower for borrowers with less-than-stellar credentials, and more borrowers today are unable to qualify at all. In particular, the income used to qualify would-be purchasers today is not the income they believe they have but the income that they can document, which can be much lower.

Mortgage affordability must be calculated three times using three different rules. I call these the income rule, the debt rule and the cash rule. The final affordability figure is the lowest of the three.

When affordability is measured on the back of an envelope, which real estate brokers often do, usually it is based on the income rule alone, ignoring the other two. This can result in error.

The income rule says that the borrower’s monthly housing expense, which is the sum of the mortgage payment, property taxes and homeowner insurance premium, cannot exceed a percentage of the borrower’s income specified by the lender. If this maximum is 28 percent, for example, and John Smith’s documentable income is $4,000, monthly housing expense cannot exceed $1,120. If taxes and insurance are $200, the maximum mortgage payment is $920. At 4.5 percent and 30 years, this payment will support a loan of $181,572. Assuming a 5 percent down payment, this implies a sale price of $191,128. This is the maximum sale price for Smith using the income rule.

The debt rule says that the borrower’s total housing expense, which is the sum of the monthly housing expense plus monthly payments on existing debt, cannot exceed a percentage of the borrower’s income specified by the lender. If this maximum is 36 percent, for example, the total housing expense for Smith cannot exceed $1,440. If taxes and insurance are $200 while existing debt service is $240, the maximum mortgage payment is $1,000. At 4.5 percent and 30 years, this payment will support a loan of $197,361. Assuming a 5 percent down payment, this implies a sale price of $207,749. This is the maximum sale price for Smith using the debt rule.

The required cash rule says that the borrower must have cash sufficient to meet the down payment requirement plus other settlement costs. If Smith has $15,000 and the sum of the down payment requirement and other settlement costs are 10 percent of sale price, then the maximum sale price using the cash rule is $150,000. Since this is the lowest of the three maximums, it is the affordability estimate for Smith.

When the income rule sets the limit on the maximum sale price, the borrower is said to be income-constrained. Affordability of an income-constrained borrower can be raised by an increase in the maximum monthly housing expense, or by access to additional income — by sending a spouse out to work, for example.

When the debt rule sets the limit on the maximum sale price, the borrower is said to be debt-constrained. The affordability of a debt-constrained borrower (but not that of a cash-constrained or income-constrained borrower) can be increased by repaying debt.

When the cash rule sets the limit on the maximum sale price, the borrower is said to be cash-constrained. Affordability of a cash-constrained borrower can be raised by a reduction in the down payment requirement, a reduction in settlement costs, or access to an additional source of cash — a parent, for example.

Jack Guttentag is professor emeritus of finance at the Wharton School of the University of Pennsylvania.

©2013 Jack Guttentag

Distributed by MCT Information Services.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2014. All rights reserved.

How to Buy a House with Less than 20 Percent Down

When many people start the process of buying a house they assume putting 20 percent down is required. However, this is not the case and many lenders and mortgage brokers offer options for borrowers looking for mortgages that have a small down payment. Don Frommeyer, CRMS, President of NAMB (The Association of Mortgage Professionals), shares his advice for potential homeowners searching for mortgages with less than 20 percent down payment.

“There are a couple of things you’ll want to make sure you have before researching mortgages, including solid credit standing and a steady income,” says Frommeyer. “The options are out there and exist to make sure that people have the ability to buy and invest in real estate, even in today’s competitive housing market and tight credit environment.”

Frommeyer suggests the following tips when buying a house with a low down payment:

– Maintain a Strong Credit Score: Credit score is one of the first things lenders look at when determining who is a qualified borrower. Make payments on time and keep in mind that even small mistakes may take some time to clear from credit scores.

– Look Beyond Your Local Banks: There are many options available outside of traditional bank mortgages. Mortgage brokers offer a wide range of mortgage loans with zero down payments; an example is VA Loans. Veterans of the military and qualified retired veterans are eligible to use this benefit for a 100 percent loan. They also offer FHA loans to qualified borrowers for as little as 3.5 percent down. And in rural areas, the U.S. Department of Agriculture offers low down payment options with financing to 100 percent. A good mortgage broker will have all of these options available and will have a variety of lenders that they can put these through to stay competitive in the market. And even conventional loans have the ability to do loans with 5 percent down payment.

– Document Income and Assets: Lenders look for a steady income and sufficient savings to ensure borrowers can meet monthly payments. Make sure to have all account statements ready to establish proof of funds; lenders look for savings accounts that indicate the borrower will be able to cover a few months of payments. In addition, hold jobs for at least two years or within the same industry to demonstrate longevity and stability.

– Be Prepared to Pay More Monthly: When you do loans with limited funds down, most will require some sort of mortgage insurance to complete the loan. Conventional loans require Private Mortgage Insurance on loan to values above 80 percent. FHA loans have Mortgage Insurance on all of their loans and the VA only has a funding fee.

– Explore Options: Frommeyer suggests going to at least two lenders to be able to compare good-faith estimates. This allows you to look at two completely different options and this will help talking to more than one source when looking for a mortgage. Compare the fees, estimates, closing costs, etc. thoroughly before selecting any loan.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2014. All rights reserved.

I Can Haz Real Estate?

I Can Haz Real Estate?

An Millennial’s guide to the home buying process in Stuart, Florida.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

How to Buy a House – As Told by Real Estate Memes

Five Top Home Buyer Credit Score Facts


Home Buyer Credit Score Facts

With mortgage rates low and prices just about perfect for buying, Iʼve had a lot of  discussions lately with first-time home buyers about what it takes to get a loan these days at a good rate. Naturally, a good credit score is important. (Typically, weʼre seeing the best rates for buyers with scores above 740.) You may not be ready to buy soon, but if youʼre thinking about it in the next couple of years, now is a great time to work on your credit score. If youʼre not familiar with how credit scores work, hereʼs what typically goes into them:

• Your past payment history = 35%. The more paid on time, the better.

• Amount you owe = 30%. The less you owe relative to your total available

credit, the better.

• How long youʼve had credit = 15%. Longer is better.

• How much new credit = 10%. Lots of new credit lowers your score.

• Kind of credit = 10%. Itʼs better to have different sources of credit.

Of course, credit score is only one part of the picture. Having a down payment of

20% or more can also influence your shot at the best rate.

If you ever have any questions about the path to home ownership or the ins and

outs of financing, please feel free to get in touch.

 

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.