How To Buy A House

Choosing a Buyer's Agent

2010-01-26T19:16:00.000-08:00

When Choosing a Buyer's Agent, the first thing to do is to determine

a. How many homes has this agent helped to buy
b. What percentage of this agent's transactions are (or have been) as an agent of the buyer as opposed to the seller.
c. Has this agent had multiple transactions for the same buyers?
d. Has this agent saved her or his buyers money. Has this been documented?
e. does this agent know how to help you find a lender and/ or shop for a mortgage?
f. Does this agent have a list of ASHI (American Society of Home Inspectors) certified home inspectors?
g. Does this agent have a list of local real estate attorneys?
h. does this agent have any training and/or experience in negotiation?
i. Is the agent familiar with the current local market?
j. does this agent communicate well?
k. does this agent have recommendations/ testimonials from former clients?
l. Has this agent demonstrated a commitment to the profession?

Do I Really Need A Real Estate Agent? 20 (plus) Questions

2008-04-12T15:07:00.000-07:00

Not everyone needs a Real Estate Agent in every Home Buying situation. But remember: Buying a home is a complex process, even if you've done it before.

First of all, no two transactions are exactly alike and nearly every transaction has unexpected challenges.

So, here are some questions to ask yourself before you decide whether or not to use an Agent.

1. Do I have FULL access to ALL of the information I need to locate ALL of the properties that meet ALL of my criteria? How many agents and sellers will I have to deal with in order to access all of these properties?

2. Do I have the knowledge and experience to use the information that I obtain in order to choose the home that would best meet my needs?

3. Do I know the ever-changing market well enough to know what is realistic to expect in terms of price, condition, etc.?

4. Do I have the ability to put together a purchase offer in a timely manner which will best serve my interests in terms of cost and timing while limiting my exposure to future problems and still have appeal to the sellers?

5. Do I know exactly how much I can or cannot afford and where I can go to obtain a mortgage?

6. Do I know where to find a qualified inspector (or 2 or 3, if my first choice is not available when I need her or him?)

7. Do I know what is reasonable to expect to find or not find at a Home Inspection? Do I have an understanding of what issues are most important and where I have negotiating leverage and where I don't?

8. Do I have negotiation skills that I can use in various stages of the home buying process?

9. Do I have the ability to determine when and if I will need legal expertise to evaluate Title Commitments, Association By-Laws, Contracts, Counter-Offers and Addenda?

10. Do I know where to find a qualified and dependable local Real Estate Attorney if I need one?

11. Do I have the energy and resources to take care of the myriad tasks necessary to purchase a home and/ or to put together a qualified and dependable team of professionals to assist me?

12. Will I be able to do the above in a timely manner?

13. Will I know where, when and how to shop for a mortgage? Will I know how to compare one lender/ loan program to another? Will I know how and when to lock-in to a loan? Do I understand what my contractual obligations would be in terms of locking in? Do I know how to compare Apples to Apples? Do I know what the 3 main criteria are for choosing a lender/ loan program? Do I know the difference between Closing Costs and Junk Fees? Do I know how much they may be?

14. Do I know the difference between a contingency and a condition? Do I know what the mechanics for removing a contingency are? Do I know what a voidable contract is? Do I know how to write up an addendum. Do I know when (and when NOT) to ask an attorney for help?

15. Do I know how to determine if the Listing Agent or Seller is competent or not?
Will I know if and when I should ignore what the Seller or Seller's Agent is telling me?

16. Do I know what Earnest Money (EMD) is? Do I know how this relates to Downpayment? Do I know what an appropriate amount for each is in different situations and markets?

17. Will I be able to avoid the risk of losing my EMD or Downpayment?

18. Do I know how to deal with Title Companies and Title work? Do I know which companies are best (and worst?) Do I know what to expect in terms of Title fees? Do I even know what they do or who they are working for?

19. Do I understand the Closing process; who needs to be there, for how long, what documents I/ We will need to bring or to sign? What should I be looking or looking OUT for? What should I leave with?

20. Will I be able to sleep in my new house without worrying that someone may knock on my door some day (or night) and tell me it's not mine anymore?

And, now, a free Bonus Question: Why would I NOT use an agent? Especially if I don’t have to pay for her or his services?!!!?

Even In A Buyer's Market...

2008-03-20T06:30:00.000-07:00

Here’s something that I just passed on to my past clients, buying again:

It's tempting for a buyer to feel that the world is her or his oyster right now. Prices are falling, sellers are desperate and accomodating, interest rates are still very, very low. But don't get too confident or greedy.

Even in a buyer’s market, the best places sell first, so be prepared to act relatively quickly once you make a decision. (I have a new buyer who went on a two week-vacation to decide what he wanted to do. When he got back yesterday, the unit he wanted was sold).

There are some great deals out there. Find a good Buyer's Specialist. Do your research. Get your financing in order and, when you've got everything lined up, Act.

S/He who hesitates loses; Even in a Buyer's Market.

Can we find a Win-Win Perspective?

2007-12-07T07:47:00.000-08:00

As I mentioned in my previous post, Joseph P. Kennedy, multi-millionaire and father of John F. and Robert F., used to say "Only a fool holds out for the top dollar." Considering his successes in business and in the stock market, maybe he was on to something. And maybe it says something about our current "housing crisis". Let's remember that "Crisis" is comprised of both "Danger" and "Opportunity". Granted, there is a glut of homes on the market fueled, largely, by the frantic and endless building of new homes everywhere (not to mention predatory lending and foreclosures). But, as others have pointed out, that means it's a Buyer's Market!

Two of our problems are the age old human qualities of greed and fear.

Sellers are in denial and are holding out for "top dollar".

Buyers are frightened, undestandably, or are waiting for the market to bottom out. I would paraphrase Kennedy in suggesting that "only a fool would wait until we hit rock bottom before buying. No one knows when we've hit bottom until the market has already turned around." I have also seen a number of buyers who don't seem to appreciate what the market has done for them. They seem to want an extra pound of flesh, regardless of how much the seller may have already lost. As I've been saying for a long time, it's a Buyer's Market. Don't let irrational fear hold you back but don't let greed convince you that you can make a "killing".

For Buyers and Sellers

2007-12-07T07:03:00.000-08:00

"Only a fool holds out for the top dollar."
Joseph Kennedy

Dreams Come True

2007-09-28T08:29:00.000-07:00

“Dreams come true; otherwise nature would not incite us to have them”
John Updike

If You Dream Of A Castle In The Clouds

2007-03-23T21:43:00.000-07:00

""If you dream of a castle in the clouds that's where it is supposed to be, now put a foundation under it."
Henry David Thoreau

Thinking Green When Buying a Home

2007-03-21T07:45:00.000-07:00

If you want to buy or build a home, you probably have a lot on your mind. “Where?” and “How big?” and “How much will it cost?” are three fundamental questions.

The environmental angle may seem secondary. But by “thinking green,” you may actually save time, money and stress, as well as ending up with a home that is more satisfying to you.

It’s a cliché that the three key words in real estate are “location, location, location.” But, when thinking green, those three key words become: “location, orientation and insulation.”

The location of your house can have a big impact on how much energy you use for transportation. Being close to work, schools, child care, and food will become only more important as gas prices increase. The best scenario for most people with children would be to have their schools or daycare on the way to work. Even better would be also having a place to buy basic groceries on the route, and being within easy walking distance to public transportation and parks.

Real estate ads rarely mention a house’s orientation or trees. The ideal is a home with many windows and deciduous trees on the south side (i.e., towards the sun). A southern orientation provides precious sunlight in winter, which is an advantage both in terms of energy efficiency and seasonal mood challenges. Deciduous trees provide shade in the summer, but allow the winter sun to reach a house.

Roof overhangs also matter. In my family’s home, the kitchen and living room both have south-facing windows. This works well because the sun is lower in the sky during winter months. Between the deciduous trees and the roof overhang, there is lots of sun when we want sun, and there is shade when we want shade. Having a few evergreens on the north side of a home can also help protect it from cold north winds.

People tend to buy the largest homes that they can afford. However, it takes more energy to heat and cool larger homes, as well as to maintain and furnish them. Larger homes also shed more rain water, which adds to the strain on the municipal storm water system. Two-story homes have an advantage in this regard over one-story homes with similar overall square footage. And, since the foundation and roof are two of the most expensive features of a home, a two-story home also costs less to build per square foot.

As with the home itself, it’s important to consider the energy efficiency of the lot that it sits on. Less lawn equals less energy, time and money to maintain.

In this time of high heating costs, most people realize that a well insulated home will save thousands of dollars in energy bills in just a few years. Fewer realize that a properly insulated and ventilated attic will actually prolong the life of the roof. That saves money, and will help keep roofing shingles out of landfills.

Interior considerations include looking for the presence of lead paint (outlawed as of 1978), radon, asbestos, mold and toxic outgassing. Hire a home inspector certified by the American Society of Home Inspectors to check out a house you are considering buying or the one you are building. If your real estate agent or builder resists this, add them to your list of environmental hazards and find a new one.

As with most things in life, no house is perfect. But “thinking green” can save you money which can then be used to fix some of the flaws. Buy a smaller, more energy-efficient house located where you will use less gas, and use some of the money you save to replace an ugly carpet with cork or bamboo flooring grown in a sustainable way. Use the rest of your savings to tear out that old furnace and replace it with a high efficiency model. A house’s imperfections may actually be opportunities to make your home more earth-friendly!

Versions of this article were originally published in the newsletter of the Sierra Club-Huron Valley Group, www.michigan.sierraclub.org/huron and in Home News.

Here are a few resources that might help you “think green” about your next home:

http://www.notsobighouse.com/
http://www.energystar.gov/
www.ecohome.org

Your Engineered Home by Rex Roberts can be found online and is particularly helpful in relation to southern exposure and roof overhang. http://www.greenspacehomes.ca/drupal/node/66

"The Chief Benefit of the House"

2007-03-20T18:39:00.000-07:00

"If I were to name the chief benefit of the house, I should say: the house shelters day-dreaming, the house protects the dreamer, the house allows one to dream in peace. "
Gaston Bachelard

"I dream, therefore I exist."
J. August Strindberg

"No money is better spent than what is laid out for domestic satisfaction."
Samuel Johnson

2007-03-20T13:50:00.000-07:00

Taking Advantage of a Buyer’s Market

OK. You’ve heard the news. It’s a Buyer’s Market. That, of course, is good for buyers, but what if you’ve got a home to sell before you get onto the buyer’s side of the equation? Do you try to wait out the "slump" before you sell?

The ideal scenario is to sell in a Seller’s Market and buy in a Buyer’s Market. But, considering the fact that it is usually a gradual shift from one market to another, it’s rare that anyone gets to experience that (unless you’re like my in-laws who moved from Seattle to Michigan at just the right time).

If you’re going to stay in the same area, it doesn’t make much sense to wait until it’s a Seller’s Market again. First of all, no one really knows how long it will take to get there. But, even if we knew it was only going to be a few months, what about buying your next place? In a Seller’s Market you’re going to pay more.

LET’S GET REAL, HERE

So, if it doesn’t make sense to wait and you don’t want to be carrying two mortgages indefinitely, what do you do? How about sharing the wealth? If you know that you can get a "steal" on a beautiful home that you’ve been eyeing for years, or, if your family is quickly outgrowing your current home, why wait until you can’t afford to buy?

A big part of the problem is that, during a Seller’s Market, homeowners forget that the "home appreciation ride" is a roller coaster and not a space flight. What goes up must come down. If your neighbors bought their homes at the same time you did and sold them for 50% more than they paid for them, you probably expected to sell for 50% more also. It’s a natural expectation. Get over it. The roller coaster just passed a big peak.

The good news is, with some careful planning, a couple of good real estate agents (one for selling and one for buying) and a little bit of luck, you can more than make up for the loss on the selling side with a better home at a good price. The trick is, don’t get greedy.

SHARE THE WEALTH

Here’s an example: You bought a home for $150,000 five years ago. Two years ago, you re-financed and it appraised at $230,000. Meanwhile, your family has grown and your house has shrunk. Your making a little more money and there's a real nice house up the hill with a fourth bedroom and indoor plumbing and the roof doesn’t leak. It had been listed for $369,900 and it was worth every penny but, now it’s down to $309,000!

The wrinkle is you have another neighbor who has been trying to sell her house for 6 months. It’s got the same floor plan as yours and the same single pane windows. She’s asking $230,000, the same amount that yours appraised at two-years ago. You had figured that it should be worth closer to $250,000 by now, just like yours. It should have sold in a heartbeat. If she winds up selling for $210,000, you’d have to do the same. You would "lose" $40,000! But, wait a minute. You were indulging in wishful thinking. You forgot about the roller coaster; an understandable, human thing to do; but a mistake, nonetheless.

THE GLASS IS HALF FULL

Again, there is a bright side. If you sell your house for $210,000 (a $60,000 profit!) and buy the house up the hill for $300,000 (a $70,000 savings) you’ve just gotten a bigger, better house with a good roof and indoor plumbing while saving $20,000 more than you "lost" on the selling side. If it was still a Seller’s Market, you would pay more on the buying side than you would gain on the selling. So don’t rule out buying that new dream house!