Questions to Ask Before Making An Offer On A Home

JUNE 19, 2017

By Michelle D. Formica, Manager, Marketing Services, The Long & Foster Companies.

If you’re in the market for a new home, there are several important questions you should ask before making an offer. In this two-part blog, we’ll share insights from a few of our agents and managers on key items to consider when buying a home, including several questions you may not otherwise think of.

What is the average cost of monthly utilities? According to Katherine Davis, manager of Annapolis Fine Homes, a Long & Foster | Christie’s office in Annapolis, Maryland, it is helpful to know the average cost of monthly utilities on the home you are considering purchasing. Make sure to calculate these expenses into your monthly budget.

How much money do I need to buy a home and when do I need it? “Initial deposits are required at the time of contract offer, an inspection fee is due at the time of service, an appraisal fee is collected by the lender at the time the buyer applies for a loan and closing costs are due at settlement,” said Davis. Knowing these amounts and due dates will help ensure a smooth process from contract to close.

Is the property a part of a community with a condominium association or a homeowners association (HOA)? If you purchase a property in a development with an HOA or condo association, you are required to join the association and pay its monthly or annual fees, explained Athena Petersen, a manager of Long & Foster’s Reston, Virginia, office. Before you buy, make sure to find out what the fees cover and when the payments are due, Davis recommends.

How much earnest money should I put down? Todd Delahanty, an agent in Long & Foster’s Arlington, Virginia, office, advised that the more earnest money you put down, the better, but 1-3 percent of the purchase price is common. Selina Delahanty, also an agent in Long & Foster’s Arlington office, further explained that earnest money, unlike a security deposit, is credited at closing, so you’ll still benefit from putting down that amount.

How much do I want this home? Todd and Selina Delahanty have all their potential buyers ask themselves this question before making an offer on a home: “Do you want the home or do you have to have it?” This is essential information for your agent to know in order to best recommend a competitive offer price and negotiation strategy.

Beyond price, what offer terms will the seller most favor? It is a seller’s market across the Mid-Atlantic, forcing buyers to compete against multiple offers. “To make your offer stand out in a competitive market, it is important to better understand what the seller wants – not necessarily in regards to price, but frequently about terms,” explained Todd Delahanty. For example, the seller might want to rent back the property from you or desire a specific closing date.

Flood Insurance - Critical to avoid relying on disaster relief

Flood Insurance Critical for a Vibrant Housing Market

RISMEDIA, Tuesday, May 02, 2017— Each year, the federal government spends billions of dollars on disaster relief to flood victims—all at taxpayer expense. While floods claim more lives and property than any other natural disaster, it's important to note that flood disasters have been declared in every state in the past five years alone. Floods are not only coastal issues, either—they can occur along rivers, lakes and creeks. In fact, 25 percent of flood losses come from outside "flood zones." If more properties were insured for flood damage, fewer owners would turn to taxpayers for disaster relief after the next major flood.

The National Flood Insurance Program (NFIP), which is up for renewal in 2017, provides an insurance market alternative to taxpayer-funded disaster relief. NFIP flood insurance is purchased by homeowners through private insurance companies, but is administered by the Federal Emergency Management Agency (FEMA), which sets rates and coverage terms. The NFIP averts billions of dollars in property damage each year because communities must adopt and enforce flood building codes and standards as a condition for joining the NFIP. Flood insurance is required for a federally related mortgage where there's a 26 percent chance of flooding over 30 years (i.e., a 1 percent annual risk).

From 1986-2005, the NFIP was self-sufficient, bringing in more premiums than it paid out. Then Hurricane Katrina struck, and the program has had to borrow $25 billion from taxpayers in order to cover several catastrophic loss years in a row. The program wasn't designed for losses of this magnitude and is now making minimum interest payments of $400 million per year at an average of 50 basis points. Terminating the program will not wipe away the debt; therefore, a major focus of reauthorization will involve pushing as much risk to the private market as possible.

When the NFIP was created, there was no private market, but now, several private flood insurance companies are writing first-dollar coverage in higher-risk flood zones. These private companies will charge rates that better align with the individual property risk, while the NFIP charges national average rates that are too high for some and too low for others. On the other hand, private companies will not be able to insure all 5 million NFIP properties, so they'll be more selective, which may lead to raising rates or dropping coverage after floods. Also, the NFIP considers this a "coverage lapse," so properties won't be eligible for a lower rate if they leave the program and a private market policy doesn't work out.

When REALTORS® arrive in D.C. for NAR's Legislative Meetings & Trade Expo, they'll encourage federal lawmakers to renew and strengthen the long-term viability of the federal flood insurance program, as well as maintain funding to update and improve the accuracy of flood maps. The NFIP program must be reauthorized every five years, and NAR urges Congress to reauthorize the program before it expires at the end of September 2017. REALTORS® also support the creation of a vibrant private flood insurance market to provide a variety of products to property owners looking to meet their individual flood insurance needs. NAR supports the Flood Insurance Market Parity and Modernization Act, which unanimously passed the House of Representatives but was not considered by the Senate, as a solid first step in the development of private market options for property owners.

Sarah Young is the director of Real Estate Services for the National Association of REALTORS®.
 
This column is brought to you by the NAR Real Estate Services group.

For more information, please visit www.nar.realtor.

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Take the Plunge and Buy a Beach Home Using Social Media

How Social Media Can Help You Buy a Home

By Maria Patterson

Home sales are ticking upward with the National Association of REALTORS®’ Pending Home Sales Index now 1.8 percent higher than this time last year. As home prices and interest rates continue to rise, now is the time to seriously consider taking the plunge into buying a home.

But many would-be homeowners are intimidated by the process of buying a home and remain on the sidelines, to their own disadvantage. How can you streamline this often overwhelming process? With the help of social media.

Utilized these days for way more than sharing personal updates and photos, social media can actually play a key role in making big decisions, like buying a home. Use social media in the following ways before and during your home search:

1. Connect with agents on Facebook. Just about every real estate agent worth his or her salt has a Facebook business page. Search for agents in the towns you’re considering and send a friend request or private message. Start following their feed and you’ll get a good idea of their overall real estate savvy, in addition to a sneak peek at their new listings. You’ll also get a feel for who they are as people, which is important, because good chemistry with your agent leads to a better outcome in terms of finding your dream home.

2. Check out LinkedIn profiles. Once you’ve narrowed down the field of potential agents you might want to work with, look them up on LinkedIn. Here, you’ll be able to learn about the company they currently work for, as well as their career history. You’ll see what networks they’re a part of (networking is key to helping you find the right home), what awards or achievements they’ve received, what skills they excel in, and recommendations from others.

3. Use Twitter for housing and interest rate updates. Twitter is a great way to get quick news updates on what matters most to you right now: interest rates, home values, market trends, and more. Follow a few credible financial and real estate news organizations and become an educated home shopper.

4. Put hashtags to work. Use hashtag searches on Instagram, including the names of neighborhoods and towns you’re interested in. This will give you a view of the communities you’re considering, the restaurants, the culture, the overall lifestyle, and more. If you want to see some actual listings in the towns you’re interested in, add the term ‘real estate’ into your search.

5. Tour homes and towns on YouTube. Nothing gives you a better view of a town or listing than a video. Lots of agents post listing videos, so be sure to check them out.

6. Get organized with Pinterest. Pinterest can serve as your digital scrapbook of the neighborhoods, homes, interior designs and home features you’re interested in. Your Pinterest page can evolve further once you’ve purchased your home, serving as a gateway to décor and home improvement ideas.

When it comes to buying a home, social media will not only help you get informed, but it will also go a long way toward helping you make the right connections. So start friending, following and posting and find the home that’s right for you faster.

Contact our office today for more tips on using social media to help you buy a home.

Copyright© 2017 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission.

First Time Home Buyers - 9 Grant Programs to help with financing

9 Grants and Programs for First-Time Homebuyers

RISMEDIA, Friday, April 28, 2017— (TNS)—Buying a home for the first time can be daunting. In addition to mountains of paperwork and new financial terms to sort through, you'll face costs and fees that can quickly add up.

In short, purchasing a home isn't a financial step to take lightly. Perhaps that's why 74 percent of millennials say that saving for a down payment still represents the most significant hurdle to achieving the American dream, according to a 2016 survey.

Fortunately, many grants and programs exist to help first-time homebuyers. Here are nine:

FHA Loan
With this option, the Federal Housing Administration, or FHA, insures the mortgage. The FHA is an agency that operates within the U.S. Department of Housing and Urban Development, or HUD.

Since the FHA insures the loan, lenders receive a layer of protection and won't experience a loss if you default on the mortgage.

FHA loans typically come with competitive interest rates, smaller down payment requirements and lower closing costs than conventional loans.

If you have a credit score of 580 or higher, you could be eligible for a mortgage with a down payment as low as 3.5 percent of the purchase price.

USDA Loan
While not very well known, the homebuyer assistance program of U.S. Department of Agriculture, or USDA, focuses on residences in certain rural areas—and no, you don't need to purchase or run a farm to be eligible.

Through this setup, the USDA guarantees the loan. There may be no down payment required, and the loan payments are fixed.

Applicants with a credit score of 620 or higher typically receive streamlined processing, but there are income limitations, which can fluctuate based on region.

VA Loan
The U.S. Department of Veterans Affairs, or VA, helps service members, veterans and surviving spouses purchase homes. The VA guarantees part of the loan, which makes it possible for lenders to offer some special features.

VA loans offer competitive interest rates and require no down payment. You may not be required to pay for private mortgage insurance, and there isn't a minimum credit score needed to be eligible.

If it becomes difficult at some point to make payments on the mortgage, the VA can negotiate with the lender on your behalf.

Good Neighbor Next Door
The Good Neighbor Next Door program is sponsored by HUD and focuses on providing housing aid for law enforcement officers, firefighters and emergency medical technicians and pre-kindergarten through 12th grade teachers.

Through this program, you could receive a discount of 50 percent off a home's listed price in specific regions known as "revitalization areas."

Using the HUDHomes website, you can search for properties that are available in your state. As part of the program, you'll need to commit to living in the home for 36 months.

Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are government-sponsored entities [GSEs]. They work with local lenders to offer mortgage options that benefit low- and moderate-income families.

With the backing of Fannie Mae and Freddie Mac, lenders can offer competitive interest rates and down payment amounts as low as 3 percent of the purchase price.

First-time homebuyers could also be eligible for home financing education programs with the HomePath Ready Buyer program through Fannie Mae.

Energy Efficient Mortgage
This type of loan's purpose is to help you add improvements to your home that will make it more environmentally friendly. The federal government supports Energy Efficient Mortgage loans by insuring them through FHA or VA programs.

The key advantage to this grant is that it allows you to create an energy-efficient home without the need to make a larger down payment. The amount is rolled into your primary loan.

Some improvements you can make include installing double-paned windows, new insulation and a modern heating and cooling system.

Federal Housing Administration 203(k)
If you want to purchase a fixer-upper, the 203(k) rehabilitation program may be a solid fit.

This type of loan, backed by the FHA, takes into consideration the value of the residence after improvements have been made. It lets you borrow the funds you'll need to carry out the project and includes them in your main mortgage.

Native American Direct Loan
Since 1992, the Native American Veteran Direct Loan program has helped Native American veterans and their spouses purchase homes on federal trust lands. The VA serves as the lender.

If you're eligible, you won't be required to make a down payment or pay for private mortgage insurance.

This first-time homebuyer grant also offers low closing costs and a 30-year fixed-rate mortgage.

Local First-Time Homebuyer Grants and Programs
In addition to the grants and programs provided by the federal government, many states and cities offer help for first-time homebuyers.

Before purchasing a home, check your state or city's website for information on housing aid available in your area.

You might also consider contacting a real estate agent or local HUD-approved housing counseling agency to learn more about grants and programs that could fit your situation.

©2017 Bankrate.com
Distributed by Tribune Content Agency, LLC

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Is Trump's tax plan good for homeowners? Nope, says NAR

Is Trump's tax plan good for homeowners? Nope, says NAR

A few of the targeted tax incentives currently in place that help people achieve the dream of homeownership — besides the mortgage interest deduction — include:

• State and local tax deductions, which “make homeownership more affordable,” according to Brown
• 1031 like-kind exchanges, which “help investors keep inventory on the market and money flowing to local communities”

Preparing Your Home for Sale -- Tips to Get it Sold

5 Tips to Prepare Your Home for Sale

By: G. M. Filisko

Published: February 10, 2010

Working to get your home ship-shape for showings will increase its value and shorten your sales time.

Many buyers today want move-in-ready homes and will quickly eliminate an otherwise great home by focusing on a few visible flaws. Unless your home shines, you may endure showing after showing and open house after open house — and end up with a lower sales price. Before the first prospect walks through your door, consider some smart options for casting your home in its best light.

1.  Have a Home Inspection

Be proactive by arranging for a pre-sale home inspection. For $250 to $400, an inspector will warn you about troubles that could make potential buyers balk. Make repairs before putting your home on the market. In some states, you may have to disclose what the inspection turns up.

2.  Get Replacement Estimates

If your home inspection uncovers necessary repairs you can’t fund, get estimates for the work. The figures will help buyers determine if they can afford the home and the repairs. Also hunt down warranties, guarantees, and user manuals for your furnace, washer and dryer, dishwasher, and any other items you expect to remain with the house.

3.  Make Minor Repairs

Not every repair costs a bundle. Fix as many small problems — sticky doors, torn screens, cracked caulking, dripping faucets — as you can. These may seem trivial, but they’ll give buyers the impression your house isn’t well maintained.

4.  Clear the Clutter

Clear your kitchen counters of just about everything. Clean your closets by packing up little-used items like out-of-season clothes and old toys. Install closet organizers to maximize space. Put at least one-third of your furniture in storage, especially large pieces, such as entertainment centers and big televisions. Pack up family photos, knickknacks, and wall hangings to depersonalize your home. Store the items you’ve packed offsite or in boxes neatly arranged in your garage or basement.

5.  Do a Thorough Cleaning

A clean house makes a strong first impression that your home has been well cared for. If you can afford it, consider hiring a cleaning service.

If not, wash windows and leave them open to air out your rooms. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Wash light fixtures and baseboards, mop and wax floors, and give your stove and refrigerator a thorough once-over.

Pay attention to details, too. Wash fingerprints from light switch plates, clean inside the cabinets, and polish doorknobs. Don’t forget to clean your garage, too.

Related:

• 7 Tips for Staging Your Home

• How to Keep Things Cleaner Longer

G.M. Filisko is an attorney and award-winning writer who has found happiness in a Chicago brownstone with the best curb appeal on the block. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Pricing Your Home - Understanding Comparables

How to Use Comparable Sales to Price Your Home

By: Carl Vogel

Published: August 5, 2010

Before you put your home up for sale, understand how the right comparable sales help you and your agent find the perfect price.

How much can you sell your home for? Probably about as much as the neighbors got, as long as the neighbors sold their house in recent memory and their home was just like your home.

Knowing how much homes similar to yours, called comparable sales (or in real estate lingo, comps), sold for gives you the best idea of the current estimated value of your home. The trick is finding sales that closely match yours.

What makes a good comparable sale?

Your best comparable sale is the same model as your house in the same subdivision—and it closed escrow last week. If you can’t find that, here are other factors that count:

Location: The closer to your house the better, but don’t just use any comparable sale within a mile radius. A good comparable sale is a house in your neighborhood, your subdivision, on the same type of street as your house, and in your school district.

Home type: Try to find comparable sales that are like your home in style, construction material, square footage, number of bedrooms and baths, basement (having one and whether it’s finished), finishes, and yard size.

Amenities and upgrades: Is the kitchen new? Does the comparable sale house have full A/C? Is there crown molding, a deck, or a pool? Does your community have the same amenities (pool, workout room, walking trails, etc.) and homeowners association fees?

Date of sale: You may want to use a comparable sale from two years ago when the market was high, but that won’t fly. Most buyers use government-guaranteed mortgages, and those lending programs say comparable sales can be no older than 90 days.

Sales sweeteners: Did the comparable-sale sellers give the buyers downpayment assistance, closing costs, or a free television? You have to reduce the value of any comparable sale to account for any deal sweeteners.

Agents can help adjust price based on insider insights

Even if you live in a subdivision, your home will always be different from your neighbors'. Evaluating those differences—like the fact that your home has one more bedroom than the comparables or a basement office—is one of the ways real estate agents add value.

An active agent has been inside a lot of homes in your neighborhood and knows all sorts of details about comparable sales. She has read the comments the selling agent put into the MLS, seen the ugly wallpaper, and heard what other REALTORS®, lenders, closing agents, and appraisers said about the comparable sale.

More ways to pick a home listing price

If you’re still having trouble picking out a listing price for your home, look at the current competition. Ask your real estate agent to be honest about your home and the other homes on the market (and then listen to her without taking the criticism personally).

Next, put your comparable sales into two piles: more expensive and less expensive. What makes your home more valuable than the cheaper comparable sales and less valuable than the pricier comparable sales?

Are foreclosures and short sales comparables?

If one or more of your comparable sales was a foreclosed home or a short sale (a home that sold for less money than the owners owed on the mortgage), ask your real estate agent how to treat those comps.

A foreclosed home is usually in poor condition because owners who can’t pay their mortgage can’t afford to pay for upkeep. Your home is in great shape, so the foreclosure should be priced lower than your home.

Short sales are typically in good condition, although they are still distressed sales. The owners usually have to sell because they’re divorcing, or their employer is moving them to Kansas.

How much short sales are discounted from their market value varies among local markets. The average short-sale home in Omaha in recent years was discounted by 8.5%, according to a University of Nebraska at Omaha study. In suburban Washington, D.C., sellers typically discount short-sale homes by 3% to 5% to get them quickly sold, real estate agents report. In other markets, sellers price short sales the same as other homes in the neighborhood.

So you have to rely on your real estate agent's knowledge of the local market to use a short sale as a comparable sale.

Carl Vogel, a freelance writer and former editor of The Neighborhood Works magazine, lives in a home in Chicago that is not typical of those nearby, so he appreciates a savvy comp.