Improving Markets Index Expands To 99 in September

Eye on Housing

The number of improving housing markets across the country rose to 99 in September, up from 80 metros that were listed as improving in August. The index now includes representatives from 33 states as well as the District of Columbia.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Markets added to the list in September include such geographically diverse locations as Tucson, Ariz.; Jacksonville, Fla.; Springfield, Ill.; Greenville, N.C.; and Bend, Ore.

More metros across the country are experiencing a sustained uptick in house prices, employment and new building activity as rising consumer confidence in local market conditions pushes more people to consider a new-home purchase. That said, overly tight lending conditions for builders and buyers continue to slow this process considerably.

The IMI is designed to track housing markets throughout the country that…

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What Types of Insurance Does A Home Owner Need?

Like all valuable possessions in your life, you want to make sure your home is insured. Insurance will be required to obtain a mortgage anyway, so get shopping for a new policy!

Different Types of Policies

1) Homeowner’s Insurance (Hazard Insurance)

Homeowner’s insurance provides fire, theft and liability coverage. Homeowners’ policies are required by lenders and often cover a surprising number of items, including property such as wedding rings, furniture and home office equipment. Talk to your insurance agent about what your policy will cover.

There are many factors that will determine the premium you will pay. The age of the house, the square footage, the number of claims on the property in the last five years, and proximity to a fire hydrant are just some of the questions your insurance agent will ask to determine the insurability of the property.

Most agents use a cost estimator to figure cost replacement estimates. This will ensure that your home is insured for the correct amount.

2) Title Insurance

Purchased with a one-time fee at closing, title insurance protects the insured in the event that title to the property is found to be invalid. There are two types of policies: “lenders” policies, which protect the lender up to the mortgage value of the property, and “owners” coverage, which protects owners up to the purchase price.

Mortgage lenders will require that you purchase a Lender’s Policy to protect their investment. The Owner’s Policy is not required, but a good idea.

3) Flood Insurance

Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents.

Your mortgage lender will order a Flood Certification to determine if flood insurance is needed.

There are other types of insurance policies available, depending on your location and specific needs.  For example, certain locations prone to experiencing hurricanes, can require Wind and Hail Insurance as well.

Anything to add?  Please comment here…

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Should You Pay for a Home Inspection?

Many home buyers debate the necessity of a home inspection before they buy.  “We’re already spending enough on the house. Besides, it looks good to me.”

But can you really afford not to?  There are so many hidden elements to a house – things that the average person would not even begin to consider.  Before you pass on the inspection, think through what it can actually do for you…

Below is an excerpt from my new eBook, Home In 10 Steps, outlining the benefits of having a professional inspection performed…

There are many components (structural, electrical, plumbing, etc.) to a house. You can see many – some you cannot. Unless you are experienced with construction and home building, I would highly recommend that you invest the money in a home inspection.

A good home inspector is trained to look for problems that may not be obvious to you. There could be a radon or mold issue lurking in the basement – not something you want to find out about 6 months after moving in!

All home inspections are different and can vary from state to state, as well as across counties and cities. Much depends on the home inspector and which association, if any, to which the home inspector belongs.

Here are the general home inspection checklist Items:

Structural Elements

Condition of walls, ceilings, floors, roof and foundation.

Exterior Evaluation

Siding, landscaping, grading, drainage, driveways, fences, sidewalks, fascia, trim, doors, windows, lights and exterior receptacles.

Roof and Attic

Framing, ventilation, type of roof construction, flashing and gutters. It does not include a guarantee of roof condition nor a roof certification.

Plumbing

Identification and condition of pipe materials used for potable, drain, waste and vent pipes. Toilets, showers, sinks, faucets and traps. It does not include a sewer inspection.

Mechanical Systems

Water heaters, furnaces, air conditioning, duct work, chimney, fireplace and sprinklers.

Electrical

Main panel, circuit breakers, types of wiring, grounding, exhaust fans, receptacles, ceiling fans and light fixtures.

Appliances

Dishwasher, range and oven, built-in microwaves, garbage disposal and smoke detectors.

Garage

Slab, walls, ceiling, vents, entry, firewall, garage door, openers, lights, receptacles, exterior, windows and roof.

Home Inspection Checklist Items Needing Service

Home inspection reports do not describe the condition of every component if it’s in excellent shape, but should note every item that is defective or needing service. The serious problems are:

• Health and safety issues

• Roofs with a short life expectancy

• Furnace / A/C malfunctions

• Foundation deficiencies

• Moisture / drainage issues

 If Repairs Are Needed

Before issuing a formal request to repair, consider the seller’s incentive to hire the least expensive contractor and to replace appliances with low-cost brands. If you can, hire your own contractors and supervise repairs.

Home inspectors are reluctant to disclose repair costs. Call a contractor to determine the scope and expense to fix minor problems yourself. No home is perfect. Every home will have issues on a home inspection. Even new homes.

Is there anything you can add to this?  Please comment here.

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How to Write An Offer in Any Market

When purchasing a house, your offer to the Seller is a critical step.  There are protocols to follow, and you want to make sure that you complete the process correctly.

The current market conditions can also dictate how you will write your offer.  Buyer’s markets are very different from seller’s markets.  The following tips show you how to structure your offer in either…

Buyer’s Market Offer

A buyers’ markets exist when there are a lot of homes on the market and very few buyers. If inventory, the number of homes on the market in your neighborhood, has been rising, it’s likely that the days on market (DOM) have been increasing as well. Couple that with declining sales figures over previous months, and home buyers are in a strong position to negotiate. Here is how you can write a buyer’s offer to your advantage.

1) Arm yourself with comparables (similar properties). Your agent can look up and print out comps of houses that have sold in the same neighborhood. Use the pricing information from the most recent sales when determining what you are going to offer.

2) Use contingencies. In a buyer’s market, write your offer contingent upon the property appraising at the agreed upon sales price and on obtaining your loan. Check with your attorney to find out if you can ask for a loan contingency that will protect you all the way to closing. Ask for a reasonable period to conduct inspections and to approve title, geological and pest reports.

3) Ask for Seller concessions and closing cost help. You can negotiate allowances for upgrades to the house, or simply have the seller agree to pay all or part of the closing costs (depending upon your loan program).

4) Renegotiate after a home inspection (more on inspections later). If the home inspection comes back with additional work or repairs needed – that you did not factor in your original offer – then go back to the seller, and renegotiate the deal.

5) Request extras, like a home warranty plan that covers the mechanicals in the house. In a buyer’s market, sellers realize that they will need to sweeten the deal to sell their house.

6) Ask for a shorter acceptance period. Give the sellers 24 hours to make a decision on your offer. There is no reason for you to wait around on slow-moving sellers in a buyer’s market.

Seller’s Market Offer

A seller’s market exists when there are a lot of buyers competing for a low inventory of active listings. With this scenario, houses can end up selling for more than the list price. But price isn’t always everything, and the following detail how to write an appealing offer to a seller.

1) Include a Pre Approval Letter with your offer. Sellers only want to deal with serious buyers, that can follow through. Show the seller you can with a mortgage pre approval. Your letter will give the seller confidence that the deal will go through.

2) Write a friendly offer. Do not make demands of the seller that are not customary for your area (i.e. asking them to pay for certain taxes typically paid by the buyer). You are likely to anger them, and cause them to pass on your offer.

3) Write your very best offer. You might get only one chance to make an impression on the seller, so don’t make a low ball offer hoping the seller will give you a counter offer. If the seller has received multiple offers, the low offers most often are not even considered.

4) Put down a healthy Earnest Money Deposit. A down payment of 3% vs. 1% or $5000 vs. $500 shows that you are serious about the house. Again, you want to convey to the seller that you mean business, and your offer should be taken seriously.

5) If it makes sense, try to waive contingencies and shorten your timeframe for having inspections done. This will help to move the deal along quicker – which will make the seller happy.

6) Write the seller a personal letter. If the seller has eight offers to consider, and yours has a handwritten letter from you on top – it will get more attention. Try appealing to the emotional side of the seller. Let them know why you fell in love with their house.

7) Offer to close quickly. Other than price, the most important thing to a seller is getting to closing as quickly as possible. Many sellers would prefer to close in 30 days or less. If that is physically possible for you, try to accommodate them.

 Have anything to add?  Please leave a comment here.

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How Do You Choose a Buyer’s Agent?

With so much good information available online, do I really need to hire a Realtor to help me buy a home?

Legally no. But I would highly recommend working with an agent. The advantages to working with a good agent far outweigh any reason not to.

What do Realtors Bring to the Table?

Experience – Agents will add their education and experience in pricing, contract negotiation, and local market conditions to your buying efforts. If you are inexperienced in any of these areas, you won’t want to go it alone.

Buffers – Agents will be your go-between, and shield you from the sometimes contentious side of a real estate transaction. They will deal with the seller and the seller’s agent for you.

Paperwork – Your agent will help you navigate the mounds of legal paperwork that are required when purchasing a house. I’ve personally hired them for this reason alone.

Buyer’s Agents and Listing Agents

Listing agents represent the seller in a transaction. They are being paid by the seller, and are working for the seller.

The buyer’s agent represents only the buyer in a transaction. They have a fiduciary responsibility to the buyer, and work the buyer’s best interest in mind.

Although most agents can handle both sides of the transaction, most of the time they represent one party in the deal. When looking for an agent to represent you, look for someone who specializes in working with first time home buyers.

 Interviewing an Agent

Smart buyers interview potential real estate agents before deciding on whom to hire. Just as you are sizing up the potential for a good fit, rest assured that the real estate agent will likely be interviewing you, too. Be wary of agents who don’t ask you questions and probe for your motivation. You wouldn’t work with just any agent off the street, and good agents are selective about their clients too.

Here are some important questions to ask when selecting your agent:

How long have you been in business?

Not every new agent is bad, and not every experienced agent is good. There are plenty of duds everywhere, regardless of their age or time in the business. But you want to make sure that your agent will have the knowledge (or access to) of the marketplace.

What is your average list-to-sales price ratio?

This will tell you a lot about your agent. A good buyer’s agent should be able to negotiate a sales price that is lower than list price for buyers. A competent listing agent should hold a track record for negotiating sales prices that are very close to list prices. Therefore, listing agents should have higher ratios closer to 100%. Buyer’s agent ratios should fall below 99%.

How well do you know the area/market I am interested in?

Real estate is a local business. There are nuances associated with different neighborhoods (HOA, local laws, market conditions, etc.) that only a local expert would know. Pick an agent who knows the area(s) you are considering.

What would be your purchase strategy for me?

How many homes will we need to view? How will you search for the homes to see? How will you handle multiple offers? These are just a few of the questions you’ll want to know the answers to when discussing a plan with a potential agent. Make sure the agent gives you solid answers that you feel comfortable with.

What will our Buyer/Broker arrangement be?

Buyer’s Agents will have you sign a Broker Agreement before representing you. The details of this agreement will spell who the agent works for, and how (and by whom) they will be paid.

Can you provide me with references?

All professionals should have references. Even a new agent can provide references from previous work. Think of yourself as an employer. You wouldn’t hire just anyone without checking them out first, right?

When should you stop interviewing agents? When you find the right one. Talk to several, until you feel comfortable. Make sure that you can work with this person – on a personal level- for the next several months, maybe longer!

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Questions To Ask Yourself Before You Buy

Thoughtfully Consider Your Purchase…

This may sound like a no brainer, but if you’ve never gone through the process of buying a home, you’ll find that there is much to think about. Buying a home can be one of the most exciting adventures of your life. Almost everyone has dreamed of that beautiful country house with the white picket fence, or the sleek high rise condo with the panoramic city views.

Whatever your preference, there are many factors to consider before you take this big step. You’ll want to ask yourself some questions to gauge your readiness.

Are you emotionally ready?

There are a lot of ups and downs throughout the buying process. You can feel amazing highs of excitement when you submit an offer on a house that seems so perfect. Only to feel absolute lows when your offer is not-so- politely rejected by the seller. The process can be long, and grinding. You’ll want to be sure that your mind and heart are prepared.

Are you ready for the responsibility?

Owning a home comes with tremendous physical and financial responsibilities. There are no landlords to call when the air conditioning unit stops working. You are the landlord! It will be your elbow grease, or your money to pay for the repairman that keeps your house in working order.

Why do I want to buy in the first place?

Is your goal to have more living space? A yard perhaps? Do you want the tax benefits or mortgage interest deduction? Maybe you simply just want a place of your own. A home that you can take pride in owning.

However you answer these questions will determine what type of home will suit your needs. Spend some time thinking this through. Having a clear goal in mind – of what you want in a house – will help in your buying process. This will give you direction, and help you to avoid properties that don’t make sense.

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Top 5 Remodeling Projects That Add Value

Looking to add some value to your home? Who isn’t, right?

Remodeling Magazine issues an annual Cost vs. Value Report, which highlights 35 projects done around the home. The average price paid by consumers is compared with how much additional value that project adds to the home. Numbers can be viewed on a national basis, or regionally.

Here are the top 5 national projects based upon retained value:

1) Entry Door Replacement

Cost $1,238  Value $903 = 73%

2) Attic Bedroom

Cost $50,148  Value $36,346 = 72.5%

3) Kitchen Remodel

Cost $19,588  Value $14,120 = 72.1%

4) Garage Door Replacement

Cost $1,512  Value $1,087 = 71.9%

5) Deck Addition (wood)

Cost $10,350  Value $7,259 = 70.1%

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When Paying Your Mortgage, Faster is Better

Good Post here about paying down your mortgage faster. Even if your lender doesn’t offer bi-weekly payments, you can still make additional payments towards your principal – just by sending in extra with your normal monthly payment…

RE/MAX Rewards

It’s no secret that paying off your mortgage before the loan term is up can save you some big bucks. Putting a little extra money toward your principle each month can really add up, saving you thousands over the life of your repayment. Don’t believe me? Check out this chart from Zillow.com, which shows the difference between paying your mortgage bi-weekly vs. monthly:

That’s right, you’d shave FOUR YEARS worth of payments!! That’s a HUGE savings!!

I know that not everyone can make bi-weekly payments on their mortgage, but consider putting down any extra money you can – and the key phrase here is “if you can.” Here are some questions to ask yourself before deciding to put your cash toward a quicker mortgage repayment:

  1. Does your employer match any retirement funds you save?
  2. Do you have any debt other than your mortgage?
  3. Do you have at least 24…

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Want A Better Mortgage Loan Rate?

Good explanation here of the tax benefits for points paid in conjunction with a mortgage loan.

The Joy of Tax Law

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If you want a better loan rate than your mortgage lender is offering, you might be able to buy it down via points. Each point is one percent of the mortgage amount and points are offered on both original home loans and refinancings. And in both case, the points are tax deductible. However, the precise method of deducting them does differ.

On your first mortgage, you can deduct the points in full on your tax return for the year the points are paid. But with a refi loan, rather than deducting the full amount of refi points in the tax year in which you paid them, you must amortize them over the life of the loan.

So instead of deducting, for example, $1,500 in full refi points on a 15-year loan, you deduct $100 worth of points on each tax filing for 15 years — or until you pay it off…

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5 Steps To Win A Mortgage Loan

Good post here about the basics of preparing to take out a mortgage. Potential borrowers should think about these things before they begin their home buying process.

DynamicHan Group

 

A variety of factors can keep you from qualifying for a mortgage. The big ones include a low credit score, insufficient income for the size of the loan you want, insufficient down payment and excessive debt. All of these factors are within your control, however. Let’s take a look at your options for overcoming any liabilities you may have as a borrower.

1. Repair Your Credit and Increase Your Score

To lenders, your credit score represents the likelihood that you will make your mortgage payments in full and on time every month. Therefore, with most loans, the lower your credit score, the higher your interest rate will be to compensate for the increased risk of lending you money. If your credit score is below 620, you will be considered subprime and will have difficulty getting a loan at all, let alone one with favorable terms. On the other hand…

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