Buying a Home: Contract to Closing presented by Ken Huebsch KensHomesales.com
Buying a Home - The Thought Process
Is this a good time to buy my home? YES! It is an excellent time to purchase your next home. Interest rates are at historical lows giving you more purchasing power. Due to increased cost of land development and home construction, prices are lower today than what they will be tomorrow. If you are looking to purchase a home, you may have an opportunity to purchase more home for the money if you act now. For example, if home values increase 5% over the next year, a $100,000 house will be $105,000, a $300,000 home will now be $315,000. Plus, interest rates could be higher which would increase your mortgage payments even more. It’s also a good time to sell. There are ample buyers to purchase homes that are priced correctly, staged appropriately, and properly marketed. I can help guide you through the home buying and home selling process.
What is a buyer’s agent and why do I need one? A buyer’s agent is a licensed Realtor whose loyalty and fiduciary responsibility is to the buyer. A buyer’s agent can more fully advise buyers in all areas of the home buying process including proper handling of contract negotiations. As your buyer’s agent I will: ·
Explain steps and costs in advance
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Guide you – so you’re prepared
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Conduct home searches for you
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Show you available homes
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Advise you about market conditions, pricing, and financing
· Represent you in negotiations with Sellers, Lenders, Appraisers, Inspectors, Insurers, etc. · Manage your transaction – Mortgage, Insurances, Inspections, Repairs, Warranties, dozens of other details ·
Accompany you at final inspection and closing
If you’re not a represented buyer, by law, a Realtor can’t advocate for you. Contact me and we will review Pennsylvania’s Consumer Notice which explains the ways a real estate agent can represent you. Should I get pre-approved for a mortgage?
It’s certainly a good idea. You can apply for either pre-qualification or a pre-approval. A pre-qualification is an informal opinion from a lender. A pre-approval is a more formal written approval for you stating that you qualify for up to a specific mortgage and interest rate. A pre-approval requires more data from you but offers the following benefits: · Sellers will look at you as a stronger buyer. If the seller has more than one offer, this could help yours be more attractive. · You have a definite picture of what you can reasonably afford. You won't waste your time inspecting homes you can't buy. I can help you find a reputable lender who will provide you with a pre-qualification or pre-approval Can I preview my credit and correct mistakes? ABSOLUTELY! It is surprising how many credit reports are wrong . . . over 40% by some estimates! You may avoid de-railing your transaction with a time-consuming credit hassle by reviewing the report up front. You can order a copy of your own credit report by calling the three major credit reporting agencies: Experian at (888) 397-3742, Equifax at (800) 685-1111 and Trans Union at (800) 888-4213. Or, you can call the Annual Credit Report Request Service at 1-877-322-8228 for a free credit report from all three of the above sources. Understanding a credit report can be very complicated. I can help you with this process by connecting you with a loan officer who is an expert in this area. How do I purchase home #2 if I have to sell home #1 first? Most of us cannot afford two mortgage payments; we need to sell our current home before completing the purchase of our next home. In a marketplace where there is a good supply of homes for sale, it’s probably best to market your home successfully first. Then you enter the marketplace as a stronger buyer. None the less, you may find your next home prior to marketing your current home. I can help you choose from several different options in this case so that you can still have your dream home and avoid a double payment situation. Should I have the home inspected? In most cases, a property is purchased in its present condition! Many buyers are surprised to find that if a problem arises after settlement, the problem is theirs. As a buyer, you should consider hiring a home inspector who is trained to look for defects. The most common types of home inspections are general house inspection, wood destroying pest and organisms (termite) inspection, radon inspection, on-site septic inspection, and on-site water inspection. When you are ready to make an offer on a home, I’ll explain the different types of inspections you may wish to have. I can recommend a home inspector if you’d like help finding someone.
Should I buy a home warranty when I purchase a home? There are reasons to purchase a home warranty, and there are circumstances where a home warranty may be less important. What I can tell you is that 75% of home buyers use their home warranty within the first year. The initial term of a home warranty is one year. Thereafter, renewals can be purchased. Some sellers provide home warranties as part of the sale. Under those circumstances the home warranty is included in the sale. I can help you determine if a home warranty is a good investment for you. How do I go about making an offer? You may want to make your offer subject to certain terms or contingencies, including securing financing, the sale of your current home, or inspections. I can help you understand your options and responsibilities. As a skilled negotiator, I am able to represent your best interests when speaking to the seller’s agent. When should I get homeowner’s insurance? It’s important to begin looking for homeowner’s insurance as soon as the agreement of sale has been accepted. Not all insurance companies insure all types of properties. For example, some carriers won’t insure a property with a flat roof, others do. If you wait too long to find insurance and run into any difficulties, you may not be able to get insurance in time and this may negatively impact your ability to close. What is title insurance and why do I need it? Imagine one of these nightmares: · An ex-spouse of the 3rd prior owner claims a continuing interest in your home because he/she did not sign off on the deed 10 years ago. · A Lender to the 2nd prior owner asserts a claim that their loan was not paid off when the property was sold 6 years ago and they want their money. A title insurance provider seeks to discover these "defects" by searching public records about the property. They also provide you with insurance - if they missed something, they step up to handle your defense and cover your costs. Also, your lender will require that you provide title insurance from a reputable company at settlement. I can recommend a title insurance provider for you. Understanding the seller’s list price? Many factors influence the price that a seller expects to get for their home. While only you can decide how much you feel comfortable offering for a property, I can gather critical information for you regarding the factors that impact how much you should consider paying for the home. These factors include:
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How long the home has been on the market
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If the price has been reduced
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The prices for other comparable homes in the area
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If there are multiple offers being communicated
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Other items that might be included in the sale - furniture, hot tub, etc.
· The number of homes that are on the market and the amount of time it’s taking them to sell ·
Whether the seller is offering buyer incentives
What are closing costs? Closing costs are fees and expenses paid in conjunction with the purchase of your home. The amount of your closing costs will depend on your transaction and your lender. If you obtain a mortgage, the lender will collect a credit and appraisal fee and may charge you loan origination fees and document preparation fees. Should you use a low down payment, the lender may require you to pay for mortgage insurance. Your lender will require title insurance. Title insurance is based upon the sales price of the home. Your settlement company will collect notary and recording fees. If you haven’t paid your homeowner’s insurance premium prior to the closing, this will be an expense at closing. Transfer taxes can range depending on the municipality in which you are purchasing. In most of South Central and Southeastern Pennsylvania, the transfer tax is 2% of the sale price. Typically, the buyer pays half of this tax. Real estate taxes are typically pro-rated, reimbursing the seller for the taxes they have pre-paid. Depending upon the mortgage program, you may be required to start an escrow account with the lender for future taxes. In some cases, sellers have agreed to pay part or most of their buyer’s closing costs. I can help you understand these costs and can provide suggestions to reduce your closing costs. In addition to my suggestions, you will be receiving closing cost estimates when you submit your offer to buy and when you apply for your mortgage. This is all done so that you know what to expect at the closing. What happens at the closing? The terms “real estate settlement” and “closing” mean the same. It is the meeting where the seller conveys the ownership of the property to the buyer. A settlement officer, either a title company representative or the buyer’s attorney, will conduct the closing. Many papers need to be reviewed, signed, notarized and witnessed. Among the documents you will be asked to sign is the mortgage, the mortgage note, other lender documents, buyer’s affidavit, utility cards, etc. Once you’ve paid your down payment and closing costs and the seller has signed the deed, you will become the official owner of your new home. I’ll walk you through what to expect at settlement and answer any questions you may have.
First Steps in Buying a Home
This is the most important step when preparing to buy a home! First – Get Qualified May I suggest you contact a mortgage lender. I highly recommend Chris Blouch, with GMH Mortgage @ 717 813-9668. I have been working with Chris for over 7 years, and he has proven to have great rates, but more importantly a trust-worthy attitude. You can be qualified over the phone in 5 minutes and approved within 24 hours with a written mortgage commitment. You then can act as a “cash buyer”. A short conversation with our lender will give you your exact price range parameters. He can explain the mortgage programs available to you, and give a very precise estimate as to closing costs and down payments that would be applicable to the price range. This will also give you the exact down payment amount needed to purchase your home. Second – Check the Inventory Having determined what your price range is, I can advise you of available properties within that price range. At our first meeting we can review the MLS listing information for all of the qualifying properties. At that time you can decide which properties are desirable for you. If you do not know the area, please drive the area and decide if that particular area is appealing to you. Third – Make a Selection Once the price and area have been determined we are then confidently able to look at properties and make your selection. This 3-step program has been shown to work time and time again with great success and makes the selection process a pleasurable experience. Following this process will allow you to more easily understand the various steps involved in purchasing real estate , and the ability to drive a hard bargain. I am looking forward to working with you.
I look forward to helping you with your First Steps!
Make Your Offer Stand Out 2011-01-26
Real estate consumers are realizing that there has rarely been a better time to buy a home. In fact, historically low mortgage rates coupled with lower home prices have even sparked bidding competition in markets around the country. A good home in a solid location may attract ample attention only hours after being listed. Home buyers can make their offers stand out from the rest through one or more of the following strategies: Price. Obviously, price tends to be the primary consideration for sellers. 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. 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. That's because first-time buyers' offers are not contingent upon the sale of a 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. Considerations for Short-sale and Foreclosure Transactions – Bank-owned properties represent a significant portion of today's housing inventory. Competition can be most keen for these homes as their prices can run 10% to 20% below current market value. Banks conduct extensive research to set these prices and generally base them on current market value less the cost of required repairs. Make your offer based on your own check of comparable sales and other due diligence. Banks won't get offended by a low offer, yet a realistic offer will more likely keep you in the running.
Remember, patience is essential when buying bank-owned property as the process can take up to six months and longer. Work with me to buy your dream home or investment property. My skill and expertise will help you make sound real estate decisions today or any other time. Contact me at http://www.KensHomesales.com Ken Huebsch 717 514-1793, or Ken@KensHomesales.com
Home Purchase Negotiation Here are ten important questions you should ask and why you should ask them. Property Specific: 1. HOW LONG HAS THE PROPERTY BEEN ON THE MARKET? Why: The length of time a property has been on the market may indicate the seller's willingness to negotiate. 2. HAVE THERE BEEN ANY PRICE REDUCTIONS DURING THE LISTING PERIOD? Why: The amount of any price reduction, as it relates to the overall purchase price, may indicate the seller's desire to attract an offer. 3. HAVE THERE BEEN ANY OTHER OFFERS ON THE PROPERTY? Why: It will be helpful to know what offers have been turned down and for what reasons. 4. WHAT IS THE MOTIVATION OF THE SELLER? Why: Motivation is a key element in any negotiation. As an example, if the seller has already purchased a new property, your ability to close quickly may be an attractive element of the negotiation. 5. WHAT PERSONAL ITEMS ARE INCLUDED IN THE SALE? Why: Anything the seller is willing to leave behind that you won't need to buy when you move in has real value. Consider those items in your offer. Neighborhood Specific: 1. WHAT IS THE PRICE RANGE OF SOLD PROPERTIES IN THE AREA? Why: This information is important since it will indicate the top and bottom of that specific market. 2. WHAT IS THE AVERAGE TIME ON THE MARKET FOR PROPERTIES IN THIS AREA? Why: Short market times may indicate a seller's market. If this is the case, you may face competition from other buyers. 3. WHAT IS THE LIST-TO-SALE PRICE RATIO IN THIS AREA? Why: This information will indicate sellers’ past willingness to negotiate and by how much. 4. WHAT IS THE AVERAGE PRICE PER SQUARE FOOT OF RECENTLY SOLD PROPERTIES? Why: This approach to establish value works best where there are similar homes, lot sizes and improvements. 5. WHAT OTHER FACTORS ABOUT THE PROPERTY and/or NEIGHBORHOOD COULD AFFECT VALUE? Why: Review the Seller's Disclosure Statement very carefully.
Final Recommendation: If you will be financing the property, get pre-approved for a mortgage prior to making your offer. This will show the seller your commitment and ability to perform. Pre-approval can be extremely important in a sellers' market.
To contact me for more information on this subject, call Ken Huebsch @ 717 514-1793 or email: Ken@KensHomesales.com