The Pantagraph Home Buyer's Guide

Tuesday, April 29, 2014

Home Buyer's The Pantagraph

GUIDE

2 Tuesday, April 29, 2014

The Pantagraph

Whether old or new, buyers make houses into homes

By LENORE SOBOTA

lsobota@pantagraph.com

BLOOMINGTON — Whether you buy a turn-key home or one that's in need of a little tender loving care, every owner will add bits and pieces to make their new house into their new home.

And, depending on which route you choose, your Realtor, banker and local government may be able to provide you with some help.

Either way, be sure you know what you are getting yourself into, and recognize there are resources available to help.

Lending institutions offer home equity loans and remodeling loans, and many communities offer other options for people who might not be able to afford a conventional loan.

Bloomington uses federal Community Development Block Grant funds to offer rehabilitation loans to quali-

fied owner/occupants of single family houses within the city's boundaries.

Applicants must meet federal guidelines that are based on household size and gross annual income, said Sharon Walker, Bloomington's code enforcement division manager.

For people who can afford to make monthly payments, a direct loan is available at zero percent to 3 percent interest.

Those who are on fixed or very limited incomes, which could include the elderly or disabled, may be able to get what is called a “deferred loan.” In such cases, a lien is placed against the property and payment is not due until the person dies or the property is sold.

If you're up for the challenger of a fixer-upper, remember “it's a labor of love,” said both Walker and Laura Walden of the Old House Society.

“Sometimes an old house is just a lifestyle,” Walden said. “You have to

love it.”

Habitat for Humanity's ReStore, 1402 W. Washington St., Bloomington, has new and used building materials, plumbing fixtures, cabinetry, appliances and even tools.

All are items donated to Habitat that are not needed for other Habitat projects, said Marcus Hayes, ReStore manager.

The ReStore in Bloomington is among more than 800 nationwide, with more opening regularly, Hayes said.

Hayes described his customers as “people who are being thrifty,” adding items are “priced to sell” and the inventory changes regularly.

“We may not have everything you need,” he said, but money saved at ReStore can be used to purchase other items elsewhere.

The Old House Society has a salvage warehouse at 214 E. Douglas St., Bloomington. The organization is

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“A lot of the things people think they can't get what we have,” said Walden, coordinator of the society's warehouse.

That includes 1,200 doors, baseboards, flooring and porch posts — “everything we can get out of the house,” he said.

“We have a knowledgeable staff,” he added. “We'll walk you through it.”

The society's website — www.oldhousesociety.org — includes a list of contractors and service providers in the “resources” section.

Hayes said ReStore staff members try to help people with basic information, such as how to install a ceiling fan, but “sometimes we hit a dead end in our expertise.”

Walker also reminds people to check whether contractors are licensed and registered.

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Tuesday, April 29, 2014

The Pantagraph

Land a High Appraisal

3

A

s many home buyers and sellers have found, an appraisal can make a world of difference in guiding a home’s final selling price.

Not an exact science, the act of appraising a property provides an objective opinion that can be based on market value. And although final values can differ from appraiser to appraiser, there are certain steps you can take to make sure your home’s price is in fighting shape when it hits the market.

Go Local

Not all appraisers are created equal – at least in terms of knowing your neighborhood. Appraisers who don’t know your area intimately can come back with an uninformed value.

And since the quality of your home’s

surroundings is a big factor within the appraisal process, finding a local appraiser who understands your location can be crucial in getting the most out of your asking price.

Be Respectful

Do not crowd your appraiser while he or she is making rounds through your home. Remember they are there to do their job, so try to avoid becoming a distraction.

Offer a few bits of information on improvements you have made to the home and positive changes that have occurred recently in your neighborhood, and then let them get to work.

Some appraisers connect a chatty homeowner with potential red flags on something they may be trying to hide about the house.

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Add Value

Well before you sell your home, consider making your improvements strategically and in line with what will get you the most bang for your buck.

Fix up your bathroom and kitchen, which are the top two rooms that can generate a positive return for your investment. The National Association

Realtors also identifies wood floors, landscaping and enclosed garages as drivers that can increase appraisals.

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4 Tuesday, April 29, 2014

I

Ensure a Successful Move

The Pantagraph

f all goes well with your plans to sell, you could be moving before you know it. But have you put in the proper planning? Have you coordinated moving trucks, utilities and an optimum closing date?

Those are all crucial aspects to consider, for sure, but ones you can be on top of with a little due diligence and strategy.

Less is More

The second you put your home on the market, you are announcing your readiness to pack up your belongings. But are you truly ready? Just how long will it take you to organize and box your items?

Even before you enlist the help of a realtor to sell your home, start paring down your possessions. There is no need to transport what you don’t need to your new home.

Have a yard sale for extra moving

cash or make a donation to your local charitable organization. The less clutter the better when it comes time to load up the moving truck.

Closing Strategy

Price isn’t the only aspect of selling your home that you should negotiate.

Experts urge you to build in some overlap between the closing dates of your old and new homes.

This will afford you the ability to paint walls, install flooring or make any last-minute repairs before you move in to your new home. Talk to your Realtor and mortgage broker about ways to make sure you have plenty of time to do so.

The (Little) Big Things

In the excitement of moving, some aspects of a smooth transition can get lost in the shuffle.

Once you know your home is going to sell, start arranging for phone and utility hookups in your new home.

These companies generally need a few days or more to get you connected and ready for service. Even the perfect new home will be less than ideal with no running water or utilities.

Also arrange for the type of internet connection you want. If you’re moving from town into the country, reach out to your local phone or cable provider to find out your options or if your area is even equipped for highspeed connections.

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Tuesday, April 29, 2014

The Pantagraph

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6 Tuesday, April 29, 2014

The Pantagraph

Staging and pricing – two parts of a successful home sale

m

“It’s the same thing buyers are seeing,” he said. “That way, you’re not

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making a decision in your own little personal bubble.”

Custom home with a Must See Basement! ce

attempt a staging.

“Staging yourself typically is costprohibitive,” he said.

Getting good furnishings and furniture can be expensive.

But he recommends staging. “I don’t use it every time, but I recommend it every time,” he said. “It really highlights the house’s function and form.”

Staging is an important part of Baur’s advice for selling a home quickly. He suggests that a dwelling should be in the top third in a market and the bottom third in price.

The goal is to get several offers quickly, he said. Sellers should avoid the “castle syndrome” that makes them think their house is worth more because it’s home to them.

Baur advises people to find three or four similar properties that sold in the last 180 days and to base their price on those sales. They might bump their prices up a bit this spring because the market favors sellers, he said.

“It’s the best time to sell a house in the last seven years,” Baur said.

Wight said people should be able to justify their prices.

Potential sellers may want to check sites such as Zillow.com to get an estimate of what the asking price should be, Wight said.

“It tends to be low, but it gives you kind of like a ballpark (estimate),” he said.

People should look at about five houses in their area before they make a decision, Wight said.

pri

Staging and pricing are two key aspects of selling a house quickly, with the maximum amount of cash left for the buyer. Home staging can nudge a home’s price upward while making the sale faster.

But it’s not cheap.

Depending on a home’s size and location home staging firms may charge anywhere from $1,500 to $5,000.

“It’s definitely changing. Staged homes are becoming the standard,” said owner Linda Borghi of Dazzle Interiors & Home Staging in St. Louis.

"I’ve told some property owners that the only way I’ll take a listing is if they have it staged. We find that it’s very effective in making a property feel warmer,” said Ted Wight, an agent with Diehlmann Sotheby’s International Realty in Clayton, Mo. The trend toward staging began around 2005 or 2006 when all the unsold homes in the economic downturn forced sellers to add something extra to get the sale, said Liz Connolly of INhance It Home Staging. “There were so many homes on the market then, they were trying to make their homes shine,” she said.

Homeowners who want to do it themselves should start with a deep cleaning and a decluttering, Connolly said. They should depersonalize the décor, so people are able to imagine themselves living there, Connolly said.

But Nicholas Baur, owner of the Equity Missouri Real Estate brokerage, said it’s a mistake for an individual to

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Tuesday, April 29, 2014

C

What Are Closing Costs?

The Pantagraph

7

losing on a new home can be an exciting – and challenging – experience for buyers. Depending on how your bank does business, you may not know exactly how much your closing costs will be until the day you close.

And if you don’t have enough money saved up to cover your costs,

you could find yourself at the front end of a lengthy legal battle with the sellers, who at that point have likely invested money to fix your issues with inspection and moved all of their personal belongings out of the home.

But fear not. There is no reason to be unprepared for your home’s close.

Simple research on your bank’s fees can go a long way in readying you for a seamless closing experience.

Closing Costs Defined

The following list of terms and explanations are meant to give you a

by lender.

• Appraisal fee: Before your bank approves its loan to you, it will want to get an idea of what your new potential home is really worth. This fee, which is dependent upon market value and location, will cover the services of an independent, certified, licensed appraiser.

• Title charges: This fee is dedicated to the administrative costs of a title search, examination and issuance by a local or national abstract company. It may also cover the charges doled out by some settlement agents to pay for the preparation of legal papers, such as the mortgage, deed of trust and title.

clearer understanding of what goes into the closing costs calculation. They do not, however, cover the full extent of what your bank charges to process your mortgage loan. Contact your local mortgage specialist for a detailed list of their costs.

• Real estate broker commission: According to Realtor.org, most real estate brokers in the United States charge a 5 percent commission for their services. This percentage comes off the final selling price and is due on closing.

• Loan origination fees: This fee covers the lender’s cost and effort of obtaining financing and oversight of your mortgage loan. Percentages vary

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8 Tuesday, April 29, 2014

The Pantagraph

Housing even stronger in 2014

Realtors and economists are quietly optimistic 2014 will be a good year for the national real estate market, finally ending the roller coaster highs and lows of the last decade.

Home prices continued to climb through most of the country in February, (the most recent available) fueled in part with demand outstripping supply, according to the National Association of Realtors.

The median existing-home price for all housing types in February increased by 9 percent year over year, the real estate trade association said.

Lawrence Yun the chief economist for NAR, believes home sales should increase "modestly" for the rest of the year.

Prices fell slightly when comparing January sales to February sales, but Yun blamed severe winter weather for the slip existing-home sales.

“We had ongoing unusual weather disruptions across much of the country last month," Yun said in a prepared release.

Predicting an increase in job creation later this year, Yun believes this will translate into an increase in home sales.

"With an expected pickup in job creation, home

sales should trend up modestly over the course of the year," he said.

Daren Blomquist a vice president at RealtyTrac, sees some good signs for the coming year.

Banks foreclosed on roughly 29,000 properties nationwide in March, Blomquist said, citing a recent RealtyTrac U.S. Foreclosure Market Report.

This represents a five percent decrease from the February and overall, foreclosure activity is down 34 percent from a year ago to the lowest level since July 2007 — an 80-month low, he said.

"Overall, this a good sign for the housing market," he said.

Blomquist said the firm also believes the number of homeowners who are "seriously underwater" on their mortgages - owing more to the bank than their home is worth - is down significantly.

"It is going in the right direction," Blomquist said.

A tight inventory in some markets, he said, also helped to boost home sale prices.

Ellen Haberle an economist with national real estate brokerage firm Redfin, said the national market got off to a slow start this year, with preliminary data showing sales were down slightly in 19 housing

markets tracked by the company.

Home sales in Redfin’s 11 West Coast markets fell to a five-year low in the first two months of the year, Haberle said.

She said steep year-over-year home sale prices are likely to blame, noting double-digit increases in California and in the Phoenix market.

But she is confident the market will improve this year, expecting the overall inventory to expand.

"There is reason to be optimistic," she said. "New listings are up quite a bit. We think it should help boost sales (this year.)"

Svenja Gudell, director of economic research at Zillow.com, said last year saw some markets where the overall housing inventory was low exploding into bidding wars for some homes.

Calling it not sustainable for first-time homebuyers, Gudell believes the overall housing market will normalize over the next few months as more homes come on the market.

"2014 will be another good year for the real estate market," Gudell said.

Contact reporter Joe Ferguson at jferguson@azstarnet. com or 573-4346. Follow him on Twitter @JoeFerguson

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Tuesday, April 29, 2014

Quick tips for a good showing

The Pantagraph

Here are some tips that may help you have a successful property showing: Here are some tips that may help you have a successful property showing: • De-clutter. Don’t just get rid of old magazines and newspapers. Box up your personal items and decorations, as well as extra furniture and excess clothing – and store it off site.

Buyers want a home that feels spacious, and that goes for closets and garages, too.

• Wash the windows and screens.

Replace heavy curtains with sheer ones. Light sells houses.

• Clean everything. First impressions count. Hire a professional if you can afford it.

• Eliminate smells. Clean the carpets and drapes to eliminate food, smoke or pet odors. Open the win-

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dows if the weather allows. Use potpourri or candles if you need to.

• No pets. Send your pets to a friend or neighbor’s if you can, or confine them to one room, ideally the basement.

• Maintenance. Worn carpet, torn screens, sticky doors and leaky faucets will turn off buyers in this market, especially in higher-priced homes. Realtor tip: Replace dated countertops with a neutral color. Basic formica will only run you a couple of hundred dollars and could make a big difference.

• Tidy up the yard. Rake, edge, trim, and add new mulch. Clean the gutters and spruce up the porch with fresh paint and a pot of flowers. Realtor tip: Pick up a pair of shutters from an architectural salvage store.

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• Basement boost. Make sure basement steps have fresh treads and the furnace is clean and accessible.

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• Add some luxury. A new shower curtain, fancy soaps and fluffy white towels make guests feel pampered when they enter the bathrooms. Put away your toothbrushes and toiletries.

• Set the scene. Set your tables for a fancy dinner. Stage other vignettes throughout the house – such as a picnic on the patio or a game in progress – to help buyers picture themselves living in the home.

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10 Tuesday, April 29, 2014

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The Mortgage Professor: Alternative ways to pay off your mortgage early A standard, fully amortizing mortgage pays off the balance over the term. With a 30-year term, this requires 360 monthly payments, while a 15-year term requires 180 payments. Many lenders, however, offer special loan repayment programs that promise to pay off the balance before term, without imposing much of an added burden on the borrower. Here are the most common of these schemes, as well as an alternative that borrowers can adopt on their own.

BIMONTHLY PAYMENT PLANS: On a bimonthly payment plan, the borrower’s monthly payment in split into two pieces of equal size, one due on the 15th of the month and the other on the first. While the borrower makes 24 payments a year instead of 12, they add to the same total. However, the lender credits the half-payment on the 15th to the balance on that day, which reduces the interest due on the first of the month.

While the reduction in interest shortens the period to payoff, the impact is small. On 30-year mortgages with rates of 6 percent or less, payoff occurs after 719 half-payments, shaving just one-half of a month off the term. On a 7 percent mortgage, payoff occurs after 718 half-payments, accelerating payoff by one month.

There isn’t anything wrong with the bimonthly mortgage, provided that paying twice a month is convenient and you don’t give up anything of value to get it. Readers have reported to me that loan officers touting the bimonthly have told them that the term would be reduced to 23 or 24 years, which is nonsense.

You can check this out yourself with a spreadsheet on my website called Extra Payments on Bimonthly

Payment Fixed-Rate Mortgages.

This spreadsheet also allows you to assess the impact of additional bimonthly payments, which some borrowers might find an attractive option. As an example, the borrower with a $200,000 mortgage at 4 percent who pays $477.42 twice a month gets to a zero balance just half a month early. But if the borrower rounds off the payment to $500, payoff occurs after 659 payments, or 30.5 months early.

BIWEEKLY PAYMENT PLANS: A biweekly mortgage is one on which the borrower makes a payment equal to half the monthly payment every two weeks. The payment amount on a biweekly is thus the same as that on a bimonthly. But since there are 26 biweekly periods in a year compared to 24 bimonthly periods, the biweekly produces the equivalent of one extra monthly payment every year.

This results in a significant shortening of the term. For example, the 4 percent, 30-year loan converted to a biweekly pays off in 310 months or 25 years, 10 months. The reduction in payoff period is due entirely to the extra payment every year. Payments are credited monthly, not biweekly, so there is no intra-monthly interest savings comparable to that on a bimonthly.

There have been biweekly plans in which payments are credited biweekly rather than monthly, but they have been overpriced, and their advantage is small. In the example directly above, the payoff period would be 25 years 7 months, or 3 months less than when payments are credited monthly.

Jack Guttentag is professor emeritus of finance at the Wharton School of the University of Pennsylvania. Comments and questions can be left at http://www.mtgprofessor.com.

Home selling 101: Who, what and when

Here’s a quick guide to the key players, their roles and when they get involved in the home selling process.

Agent: A listing agent represents the seller, while a buyer’s agent represents the purchaser.

Each is responsible to their client, though there are cases when a single agent represents both.

Buyer and listing agents share in the sales commission, though the fee is paid by the seller.

Mortgage lender: The buyer will find a lender to finance the purchase.

The lender typically controls much of the remaining process.

Title company: Typically both buyers and sellers purchase title insurance. This service, which lenders require before approving a mort-

gage, guarantees the title to the property is free and clear — meaning there are no outstanding loans or contractor liens against the home.

Real estate attorney: Generally employed by the title company to double check their work.

Appraiser: Once an offer to purchase is accepted, the buyer’s bank orders an appraisal to make sure the property is worth the amount of the mortgage. The lender chooses the appraiser, and the buyer generally pays the cost.

Home inspector: Though generally not required by lenders, bankers recommend that prospective homeowners hire an independent inspector to check the property for potential defects and hazards.

Make Your House Into a Home!

Unique...Beautiful...Functional • Interior Design & Space Planning • Wall & Flooring Recommendations •Accessories • Lighting • Furniture

Gridley & Fairbury 815-867-0694 www.prairieland-designs.com

Tuesday, April 29, 2014

T

Factor in the Children

The Pantagraph 11

he biggest factors in many home-buying decisions can, in fact, be the smallest members of the family. Children are monumental influencers in the real-estate market, even if they aren’t born yet.

Factors such as school systems, safety and proximity to family can all play major roles in determining where a family puts down its roots.

Families may also decide to trade in one lifestyle for another to help improve the quality of life for their children.

Moving from in town to a rural area, for example, can be a way to slow life down a bit and involve children in nature.

Trading in country life for city life can have its benefits, too, with more opportunities for various activities. Regardless of your moving situation, it will most likely be strongly influenced by your children.

School System

School boundaries are a major factor in home-buying decisions, according to a 2013 study by realtor.com. Of those surveyed, about 60 percent of home buyers would go over budget by nearly 20 percent to obtain a home in their desired school district. Ninety percent of those polled stated that school boundaries were important or somewhat important in guiding their decisions.

Safety

Neighborhood safety is another defining factor for many new home buyers —

and not just safety from crime and known gang-affiliated territory. Parents want to be close to good hospitals and their pediatricians in the case of emergencies. You can generally find out where the nearby healthcare facilities and hospitals are located by asking your real-estate agent or doing a little research on your prospective new community.

Location

Considering a cross-country move away from your child’s grandparents, relatives and friends? Then you know how tough the decision can be.

Your TrusTed resource for over 30 Years. ed larsen (309) 275-3545 edlarsensells@msn.com vickie larsen (309) 310-5910 vlarsen28@msn.com www.edlarsensells.com Coming May 6 Prudential Snyder Real Estate ©2014 BHH Affiliates, LLC. An independently owned and operated franchisee of BHH Affiliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of HomeServices of America, Inc.® Equal Housing Opportunity.

The happiness of your child is probably one of the driving forces telling you to stay. But many parents make such decisions for a higher-paying job or more exciting career

opportunities.

Consider all factors before making the leap, including the long-term effects that moving may have on your family.

12 Tuesday, April 29, 2014

The Pantagraph

Protecting you like no other team in Bloomington-Normal!

J.P. Finley & Company is the Number One Team in the Bloomington-Normal market when it comes to making real estate EASY! We rise above the others with 60 years of combined service and knowledge with the necessary skills to find the best home for you and your family at the best possible price.

To show you our commitment, if you purchase a home with J.P. Finley & Company during the month of May, we will pay for a single family home warranty valued at $435* from American Home Shield. Let us offer you additional peace of mind as you settle into your new home.

Call J.P. Finley & Company today to schedule your FREE Buyer Needs Analysis with no worries and no obligation!

309-585-0500 www.JPFinley.com Austin Beyer SaleS Partner

Reshma Shah SaleS Partner

Offer is not intended to solicit clients already in a Buyer’s Representation Agreement with another agent. J.P. Finley & Company cooperates fully with other agents.

Information believed to be accurate but not warranted. Each office independently owned and operated.

J.P. Finley Broker, aSP™, Gri™, aBr™

Brad Ropp JohnSton BuilderS

Roxanne Huxford SaleS Partner

Kathy Jensen rePa, unlicenSed

VOUCHER FOR FREE HOME WARRANTY Single Family Core Coverage Plan for Buyer - American Home Shield Not to exceed $435.00 Valid only with

2203 Eastland Drive, Bloomington, IL 61704 *Some restrictions may apply. Offer valid on accepted purchase agreements in May 2014. Offer not valid with other offers or previous purchases. Offer may expire without notice.