For Buyers
Buying Your Dream Home
We enjoy helping customers find their dream home.
Buying a home may be your largest investment, but it’s also the investment you live in, spend time with your friends and family in, and go home to relax in. Sherry and Kevin take this search personally, as if we are looking for the home for our closest friends.
What are the schools like? What about parks and recreation? How about the distance commuting to work? Proximity to family, friends, or child care providers? The answers to all these questions lead us to the perfect home for our clients. Kevin and Sherry had over 11 million dollars in residential sales in 2005.
Below are a few articles for buyers. Please don't be afraid to give us a call if you have any questions.
- Must Haves and Wish Lists - Home Buyer's Guide
- Tips for Moving with Children
- Defining Your Ideal Home
- What’s the Role of a Title Company?
- Tips for the Relocating Partner
- Home Buying Process
- Get Your Offer Accepted with These Strategies
- Can You Afford That House?
- Old House? New House? Weighing Your Options
- Why a Final Inspection is Necessary
- Is Second Home Ownership in Your Future?
Must Haves and Wish Lists – Home Buyer’s Guide
Shopping for a home is an
exciting adventure and it’s easy to get lost in a sea of dazzling for-sale
homes and all of their fabulous amenities – which can cause you to temporarily
forget that a large backyard is your top priority. To keep yourself focused,
take time to identify and organize exactly what you’re looking for in a home by
creating thorough “must-have” and “wish” lists before you begin home shopping.
You may also want to make a third list that details your dislikes.
To get started
ask yourself these questions: Which items and features must your home have?
Which items and features would you like to have, but could live without? What
would your dream house include? And, what features or issue must you avoid?
For the
must-have list, try to focus on essentials and hard-to-change details, like a
home’s layout. If you must have a three-bedroom, two-bath house, put it on the
list. Ranking your must-haves in order of importance is also a good idea.
Hard-to-change,
must-have features can include the type of house, for example a two-story
colonial or sprawling rancher; the number of rooms and square footage; the
home’s proximity to shopping; or its overall condition. Your must-have list
can’t be too detailed because it aims to itemize the features that are most
important to you and your family.
Your wish list
is the flexible and fun list. Wish lists are good for cosmetic features that
would be great to have, but that can be changed. Hardwood floors can replace
old wall-to-wall carpeting. If the yard is large enough and has adequate open
space, a pool can be installed later. And landscaping can be a work in
progress. Since the wish list is secondary, there are no limits so be sure to
also include your dream amenities.
While
compiling your lists, don’t hesitate to confer with your real estate
professional, who is a great source for information about neighborhoods, homes
and other pertinent “must-have” information.
Once you’ve
determined your must-haves and optional features, create a checklist to take
with you during your home tours. Besides helping you stay focused, it will
provide an organized review of each house.
Your lists
will most likely change as you tour homes and see what the market really has to
offer. It’s also unlikely that one house will include all of your must-have
features. But, your efforts will be well worth it once you find the perfect
house that includes just enough must-haves and even a few wishes. Your perfect
home might not include that must-have basement, but its view may be a dream
come true.
Moving is an exciting time full of commotion that can be tough on everyone, including the kids. The impact the move will have on children usually is age-related. Babies, toddlers and young children tend to deal well with moving, while adolescents may resent and resist the move. Here are a few tips that may help all families on the move:
- Clearly explain why you’re moving. Children like to be in the loop and talking to them about the move, what it means and what it will entail can help limit move-related anxiety.
- Familiarize the children with the new location by providing them with exciting information about the area. Some useful tools include maps, news stories and pictures. Highlight some of the location’s points of interest that you think your children will appreciate, like an amusement park or nearby lake.
- Make sure everyone has packed and clearly labeled their most-used items and keep these items easily accessible. For a small child, this could include a few favorite toys or a security item.
Moving Babies and
Toddlers
Babies and toddlers typically are easy to move, but they also can become
confused or scared. Consider the following tips for them:
- Pack their rooms last and keep favorite toys and other must-haves close at hand.
- Try to stick to established routines like lunchtime and naptime.
- Once in the new house, young children may need to be reminded about which household appliances are dangerous and other safety precautions or rules they learned at the previous house.
Moving
Preschoolers and School-Age Children
Kids this age can
get excited about moving and may be eager to help. If you’re moving with
school-age children, consider the following tips:
- Let the children help pack their own rooms and once you’re in the new house, let them help decorate and arrange their new rooms.
- Locate the recreational facilities and children’s group activity centers. Once you’re in the new location, enrolling your children in group activities can help them quickly make new friends.
Moving
Adolescents
Adolescents are deeply involved in their social network. Child development
experts suggest these kids receive news of the move as soon as possible. They
will need more time to get used to idea and to say good-bye to their friends.
Some other tips to consider:
- Spend time together getting to know the new area by driving around and noticing what other kids are doing and wearing. Discuss how you can help your child “fit in.”
- If your child is a senior in high school, some child-development experts suggest letting the child stay behind to finish the school year. These experts emphasize that this decision only makes sense if your child’s living conditions will be appropriate and safe.
Moving is an exciting time when families tend to work together to make sure the adventure goes smoothly. Your real estate professional has helped many families move and is a great resource for more information about moving with children.
The property you buy will be much more than a house; it will be your home. The following questions can help you describe the things that are most important to you in your ideal home and neighborhood.
- How far along are you in the homefinding process (just thinking about the possibility of buying a home, or definitely committed to making a move)? How long have you been looking for a home?
- Why are you contemplating the purchase of a home at this time?
- What is your time frame? Is there a definite time by which you must be settled in your new home?
- Who will be included in the homefinding and buying decisions?
- Have you ever purchased a home before? If so, how many, and how recently?
- Thinking of previous homefinding experiences, what were the most positive features of those experiences? If you have never bought a home before, what are you looking forward to most in the experience?
- Were there any unpleasant features of your previous homefinding experiences that you hope to avoid this time? If you are buying your first home, are there any problems or concerns you are worried about?
- How do you plan to handle the financing of your new home? Are you aware of your financing options?
- What are your expectations of me as your real estate professional? What specific services and support do you expect?
What’s the Role of a Title Company?
Title companies provide title insurance services to buyers, sellers, lenders and developers, essentially anyone who has an interest in real estate. Services vary throughout the country, depending on local practices and laws. In many states, title companies handle escrow as well as perform and insure title searches. A title search involves searching public records to ascertain if the seller has the legal right to sell the property. In other states, attorneys conduct title searches.
Title companies conduct a chain of title, which is a review of the owner history of the property, checking for who purchased the property, who sold it, and when. They perform judgment searches to determine whether there are any general liens against the property, as well as tax searches to verify the present status of taxes.
Some title companies conduct on-site inspections to verify lot size, the location of improvements, and evidence of unrecorded easements.
They issue a “Commitment of Title Insurance” to lenders after completion of the title search and they receive instructions and documents for the closing. Title companies also prepare a final Settlement Statement.
If it acts as the escrow holder, the title company receives a buyer’s earnest money, which is deposited in an escrow account until the closing, or final settlement.
As a neutral third party agent of the principals—buyer, seller, lender, and borrower—the title company helps with the transfer of ownership by ensuring that the terms of the transaction are completed. This includes safeguarding all funds (including the buyer’s deposit) and documents. Once all the details have been settled, the escrow holder disburses the funds and documents to the appropriate parties.
Another important role of the title company is to issue title insurance. Although a title search is conducted, it’s nearly impossible to guarantee a title is clear of hidden defects, such as mistakes in interpretation of wills and other legal documents, impersonation of the real owner, forgery, missing heirs, falsification of records and confusion stemming from similar names. Title insurance guarantees the title as reported.
Should hidden defects surface at any time challenging an owner’s rights, the title company will defend the title, in court, if necessary, and cover the owner’s losses up to the full value of the policy.
Indeed, a title company can be crucial to the process of buying a home, so select a company that’s known for service. If you need a recommendation, talk to your real estate professional.
Tips for the Relocating Partner
A new career opportunity sometimes means that your family will need to relocate to another town. The decision to move is often arrived after careful consideration of various factors including the other partner’s career; the effect on the children’s educational and recreational activities; and financial issues. In addition, it often means leaving behind family and friends.
If you are the “trailing” partner, it may fall to you to get the new home up and running, the kids in schools, and possibly find a new position for yourself. This can be overwhelming. Here are some tips to help relieve the stress of relocation and turn your move into a successful endeavor.
Take your time.
As with all moves, there are so many things you need to do before making a house your home. From dealing with utility companies, to unpacking and decorating the home, to finding a new doctor, your to-do list will seem endless and you can easily become overwhelmed. Don’t try to accomplish everything at once. Make a list and divide it into three categories: immediate, secondary and down the road. Set your own timetable. Remember, you are the boss of this project, so the only person you have to please is yourself. Get out and meet people. More than likely, you won’t know many people in your new community. Your partner will have an opportunity to build relationships with coworkers. You, however, will have to find other ways to meet people. Besides introducing yourself to neighbors, find a place of worship, volunteer in a community organization, join a social club or gym, or just say hello to people. Ask your real estate professional to recommend organizations.
Reevaluate your career goals.
If you had to leave a job behind, check to see if your partner’s company offers any employment assistance for relocating partners. Many companies have formal and informal programs, offering as little as resume support to as much as arranging job interviews.
Your real estate professional can also be a great resource. He or she usually has some insight on the area’s job market and may be able to give you names of career counselors or leads to firms that are hiring. If you’ve desired making a career change, now is the perfect opportunity to do so. You may even want to consider an entrepreneurial career that you can take anywhere.
And, if you decide to stay at home, consider fulfilling some personal goals such as advancing your education, starting a new hobby or volunteering.
Most importantly, don’t push yourself by setting unrealistic goals. Moving is a process and it will take time for you to get acclimated to your new home and community. Make this move not only a golden opportunity for your partner, but for yourself as well.
Initial Consultation
- Determine your priorities and needs
- Review “agency” choices and select appropriate working relationship
- Discuss financing options
Obtaining Financing
- Find a mortgage company
- Consult with a loan officer
- Pre-qualification
- Complete loan application
- Obtain loan pre-approval
- Provide requested documentation
Finding the Right Home
- Sales professional to show you properties based on your criteria
- Evaluate each property with sales professional
- Choose the right home
Preparing an Offer
- Review comparable sales to determine offer price
- Review progress of loan pre-approval; decide on financing
- Decide on other terms (inspections, possession date, personal property, etc.)
- Prepare earnest money deposit
Reaching an Agreement with a Seller
- Present your offer
- Negotiation of terms and possible counteroffers
- Agreed-upon sales contract with seller
Completing the Settlement Process
- Deposit of earnest money
- Review seller’s property disclosures
- Schedule home inspection
- Review home inspection report with your lawyer
- Send requests to the seller's lawyer within 5 business days of contract date
- Receive seller's reply between days 6-10 of contract date
- Loan Processing
- Property appraisal
- Final loan approval
- Arrange for homeowners insurance
- Arrange for movers
- Final walk-through of property with sales professional
- Provide balance of down payment and closing costs
- Sign documents
- Receive keys from sales professional
- MOVE IN!
Get Your Offer Accepted with These Strategies
When you're in vying for a hot property, the competition can be fierce. You need to make your offer stand out from your competitors' offers. To increase the likelihood that a seller accepts your offer, consider adopting one or more of these strategies:
Price. Obviously, price tends to be the primary consideration for sellers. In a hot market, when buyers outnumber inventory, offers often come in at full price or above. When you're competing for a home, to get an edge, think about adding a clause stating that you will beat the highest offer by "x" dollars up to "x" amount. Cash offers can be more attractive to sellers as well. Although sellers will receive their money at closing whether buyers pay with cash or take out a loan, cash offers don't require lender approval. And loan approval is never a certainty--it may delay closing.
Financing. It's not enough to be pre-qualified. Pre-qualification only tells how much you can afford. Pre-approval goes a step further. Your lender will thoroughly evaluate your application--including verifying employment information and financial disposition--then clear you for a loan of a determined amount. Having your loan pre-approved gives you a sizeable advantage by putting you on equal footing with cash buyers.
Good Faith Deposit. Buyers offering a larger-than-customary amount of "earnest money," a deposit that accompanies an offer, may get a seller's attention. By committing more money up front, buyers demonstrate greater sincerity and motivation to close the transaction. Your real estate professional can guide you as to the appropriate sum for your specific transaction.
Contingencies. Consider minimizing contingencies, those clauses that allow buyers to back out of a contract if certain conditions are not met. For example, it's common for buyers to make the purchase contingent upon their securing satisfactory financing. Obviously, offers with the fewest conditions tend to be more attractive to sellers. From a contingency standpoint, first-time buyers are often better prospects for a seller's home than move-up buyers. Here's why: Very often, buyers' offers are contingent upon the sale of their present home. Even if a move-up buyer has an offer in hand, that buyer's offer may be contingent on another contingency, and so on down the line. If one transaction derails, they all might.
Relationship. Help the seller get to know and identify with you by looking for ways to connect. For instance, it may be through a shared appreciation of a certain style of architecture. Let's say that you're fortunate enough to find yourself competing for an original Frank Lloyd Wright-designed home. After hearing about your visit to Taliesin West, Wright's desert home, and your collection of Wright-inspired furniture, the seller might be persuaded that you should be the next custodian of this national treasure. Of course, the connection could be something more conventional such as a shared love of gardening. You'll want to persuade the seller that his prize roses will be well tended.
Naturally, sellers would like to receive top dollar for their home, but remember, they also want an easy, trouble-free transaction. Thus, as a rule, the fewer the contingencies and the greater the commitment, the more attractive your offer may look.
According to the Federal Housing Administration (FHA), depending on the current debt ratio, most people can typically afford to pay 29 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is $4,167. Twenty-nine percent of that is $1,208.
Although this provides you a starting point for budgeting for homeownership, don't forget the other housing expenses you'll incur when determining if you can afford the house you want to buy.
Utilities The most obvious of additional housing expenses are utilities--gas, electricity and water. But don't forget about telephone, trash collection, and cable or satellite bills.
Taxes As a property owner, you are responsible for property taxes. The rate will vary from city-to-city. To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can help you refine these figures.
Maintenance With homeownership comes upkeep. You'll want to set aside a small amount each month to pay for those "rainy day" repairs such as painting, plumbing, and carpet cleaning. The amount you budget will depend on the age of the home, as older homes tend to require more repairs because the appliances are older and may not be under warranty. Don't forget about seasonal maintenance, including lawn care, window cleaning, pest inspections, and gutter cleaning. And if you live in a home long enough, there are inevitable repairs--the roof, furnace, and appliance replacement.
Insurance To protect yourself financially, in case something happens to your property or its contents, you'll need homeowners insurance. Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred dollars to thousands of dollars. And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance. In addition, if you want broader or higher coverage for your collections or high-ticket items such as computers, jewelry, and artwork, you may want to purchase an endorsement/rider to your homeowners policy.
Remodeling/Upgrades Whether you buy an older home or have one newly-built, there are going to be improvements you want to make. So, you need to consider remodeling and upgrading costs as well when determining your housing budget.
Consider: the average cost to remodel a 25+ year-old bathroom in 2004 was $9,861, according to Remodeling Magazine's annual Cost vs. Value Report. This includes materials, labor and subcontracting fees.
Even the cost for paint, light fixtures, window treatments, flooring and decorative cabinet knobs can begin to add up. However, having a home improvement fund will help lighten the load.
By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.
Old House? New House? Weighing Your Options
Maybe it has something to do with a childhood home we fondly remember. Many of us long for old homes built with solid construction, quality craftsmanship and beautiful details. We wax poetic and wistfully recall the hand carvings, plaster walls and eyebrow dormers of homes we've known. On the other hand, how do the old homes we admire compare with newly minted models--and what should we consider before deciding which to buy?
Location. Typically, old homes sit on generous plots of land in or near town. The neighborhoods are established and usually more central to schools and shopping. Mature trees and plantings provide shade and beautify the property and neighborhood streets. New homes are generally found in new developments outside of town and homeowners who buy into an early can expect to contend with dust and construction sights and sounds as the remaining phases are being built. Landscaping may be skimpy or nonexistent, but a buyer has the opportunity to design the decor from scratch.
Layout. New homes tend to have a more spacious functional layout with higher ceilings, bigger windows, family kitchens, walk-in closets, and family rooms. Some even have media rooms and come pre-wired for cable and computers. On the other hand, older homes were designed for a more formal lifestyle, which is reflected in the formal dining and living areas and many cozy rooms, including small bedrooms, closets and bathrooms.
Energy efficiency. Those eight-over-eight single pane wood windows add character to an old home, but even with storm windows, they're not nearly as energy efficient as modern dual-glazed or thermal windows. While most old homes lacked insulation in outside walls and attics, homes built today insulate against high heating and cooling costs. Although the bigger windows, higher ceilings and larger rooms, common in new homes, can also cause high utility bills.
Maintenance. With older homes, upkeep could be more expensive because of older appliances, plumbing and electrical systems--not to mention the roof--may need to be replaced. A turn of the century home may have outdated knob-and-tube wiring, and even a recently built home may have an inadequate fuse box-style panel that falls short of the energy demands of 21st century families. But new homes generally come with warranties that will cover the cost for most major problems.
Price. Older homes are usually less expensive per square foot. In addition the tax structure is more predictable because the neighborhood is already established with amenities that newer neighborhoods are still in the process of gaining, such as schools, police and fire services, and infrastructures (roads, sidewalks, etc.). However, with restoration costs a possibility for older homes, your dollars may very well be spent on the back-end rather than upfront.
If the charm and beauty of an old home wins your heart, hire an inspector to evaluate the home for lead paint, insect and water damage, lead and/or galvanized pipes, outdated wiring, foundation problems and energy efficiency, including windows as well as heating/cooling systems and insulation. After you get the all-clear, you have one last consideration: Does the home fit your lifestyle or would the conveniences of a newer model suit you better? Only you and your family have the answer.
Why a Final Inspection is Necessary
In the sales contract, the sellers of your new home agreed to leave all the light fixtures, custom blinds, and refrigerator. When you walk in the home on moving day, to your surprise, all of those things are gone. In addition, the locks on the back door are broken; there is a huge stain on the living room carpet, and the garage opener doesn't work.
Although this may be extreme, it could happen, which is why it is important to have a final inspection of the home you are purchasing before the closing. A pre-closing inspection gives you, one last opportunity to verify that you are getting all that was promised in the sales contract. Although buyers still have legal recourse if they discover--even after closing--that the condition of the home is not as it should be. The best time to identify problems is before closing when the seller will be motivated to correct any deficiencies in order to close the transaction.
Typically, a buyer takes possession of a property one to three months after signing the sales agreement. But, a lot can happen before the actual move-in. Appliances and fixtures can break down, and walls, carpets and doors can be damaged during the seller's move-out. Sometimes the seller will simply have forgotten that he or she has agreed to leave the refrigerator or window coverings with the house. Whatever the reason, problems identified before the closing have the best chance of being remedied.
If possible, schedule the inspection right before the closing, such as the day before. Ask your real estate professional to attend the inspection with you. What should you be inspecting? Using a copy of the sales contract as a checklist, first make sure that all items that should be in place (appliances, built-in furniture, window coverings, fixtures, etc.) are there.
Test each appliance to make sure they work properly. Bring along an electrical clock or radio to test each electrical outlet. Test all electrical switches and the garage door opener, if there is one. Run the garbage disposal and turn on every water faucet, checking under the sinks for leaks. Flush the toilets. Inspect the floors, carpets, walls and doors for recent damage.
If you discover that something is damaged or missing, make a note of it and inform your real estate professional immediately. In most cases, the seller is usually able to take care of small problems immediately, either by making a needed repair or offering compensation to handle it. And, if there are major problems, the seller can even sign a statement acknowledging the deficiency and agree to correct it. Although pre-closing inspections take time and may be inconvenient, they are important and well worth the buyer's time.
Is Second Home Ownership in Your Future?
According to the National Association of REALTORS® (NAR), a record 2.82 million second homes were sold in 2004. Given attractive interest rates, a strong housing market, and the increasingly mobile lifestyle of North Americans, it comes as no surprise that the resort and second home market is enjoying steady growth.
For some, purchasing a second home is a financial strategy to help them grow and protect their wealth -- and certainly vacation getaways may provide rental income opportunities to help savvy boomers offset the expenses of second home ownership. Others may be motivated to buy a second home because it can be used as a "family retreat," to be later transformed into a residence after retirement, and then handed down as a family legacy.
Here are some interesting statistics from the NAR 2005 Profile of Second-Home Buyers:
- The typical vacation-home buyer is 55 years old with a total household income of $71,000. Investment-property homebuyers have a median age of 47 years with a typical household income of $85,700.
- 33 percent of vacation homebuyers wanted a second home close to their job or school; while 24 percent wanted the home close to their primary residence.
- Nearly one out of five second homes will become primary residences after retirement.
Because technology affords the freedom of telecommuting and "working where you play," the decision to own a second home or resort property has been made easier than ever before.
If purchasing a second-home is in your future, whether as an investment or for personal use, now is the time to get the information you need to make an informed decision. A qualified real estate professional can help guide you through financial considerations, assist you in finding the right community and even refer you to a resort property specialist for the destination of your dreams. Your real estate professional may even be able to get you the information and advice you need to use the equity in your current home to finance the down payment on a second home.
If you are planning to use your second-home as a vacation retreat, make sure you consider your needs. Are you looking for a secluded location in the woods or somewhere with an active community? Natural beauty is great, but don't forget about cultural and social resources, as well as first-rate golf, tennis and other popular sports facilities when scouting locations.
And what about location? For example, buyers from the Northeast are the biggest feeder market for second homes in the South. Many San Franciscans retreat to Lake Tahoe, while Bostonians gravitate to Cape Cod. However, there may be many great locations not more than two to three hours away from your home. You will likely get more enjoyment out of a property you can get to quickly and frequently. Since you know the area, chances are you'll make a better real estate investment closer to home.
If your second home is mostly for investment purposes, ask your real estate professional about property management options, which can be a crucial financial factor, as well as important to peace-of-mind.
Location is also a factor for those buying a second home as investment property, especially if appreciation or rental value is your goal. According to the NAR survey, the median distance between the primary residence and the investment property is 18 miles; and 44 percent are in the suburbs.
There are also tax implications to consider with your investment. If you rent your home for 15 days or more in a year, you may have to declare the rental income. However, your expenses may be deductible. You'll want to confer with your tax advisor to learn how your purchase will affect you financially.
How you use a second home is up to you, but make sure you look at each property with an eye toward tomorrow, because the vacation homes likely to appreciate the most are the ones that Baby Boomers can play in today and retire in tomorrow.
