1. FAILURE TO GET PRE-APPROVED IN WRITING FOR A HOME MORTGAGE.
Most home buyers need to obtain a home loan to purchase their house or condo. Smart buyers shop for a mortgage before searching for a home. They know if they have issues with their credit before they start to look. They have time to correct the mistakes on the credit report. They have time to reduce their debt. They have time to get their paperwork and finances in order.
Although it's fun to "shop" for a house or condo on the Internet -- where more than 90% percent of today's home buyers begin looking. The smartest home buyers get pre-approved in writing by an actual lender so they know the maximum mortgage amount available. They sit down with a local lender or call a local lender.
Be sure the lender gives you a pre-approval letter. Bring in all the documents required so there are no mistakes. You may be surprised but some deals fall apart because there is miscommunication between the mortgage person and the buyer. The mortgage person may not know all the facts. Not that the buyer lied to them, but the buyer didn't know it was an important detail. Like they were laid off for three months, or they paid rent in cash to their uncle, or they make $42,000 but the W-2's only show $32,000 because they took a lot of time off.
2. GET YOUR OWN BUYER'S AGENT.
The second major mistake some home buyers make is they forget they need their own buyer's agent. It's very easy for prospective buyers visiting weekend open houses to let the listing agent they meet prepare the purchase offer.
Whether that listing agent acts as a "dual agent" representing both the home seller and buyer (an inherent conflict of interest) or the listing agent represents only the seller (and nobody represents the buyer), such a situation is not in the home buyer's best interest.
To find a reputable buyer's agent, home buyers should ask friends, relatives and business associates for recommendations of local agents.
It costs home buyers nothing extra to have their own buyer's agent. If the home is listed for sale, the listing agent will split the sales commission with the buyer's agent. In the rare situation of a "for sale by owner" home, most FSBO (fizz-bo) sellers are only too happy to pay the buyer's agent half of a customary sales commission, usually 2-3 percent to get the home sold.
3. Refusing to Confide in a Trusted Advisor (your agent)
Buyers withhold information for a variety of reasons such as:
Fear of how they will be perceived
Irrational belief they have all the answers
Don't feel it is important enough
Lack confidence in their advisor
Experienced real estate agents like myself (Russ Ravary) handle such a multitude of transactions and personality mixes, there's little they haven't heard before. Your advisers are representing your best interests and have a fiduciary responsibility to do so. They can't help you if they don't know what you are doing behind their backs. Plus, they will likely have a better idea for you than you can think up. Be open, be honest. By letting them know your feelings will help them find you a home that you want at a price that you want.
If you have cold feet and have thoughts about backing out of the transaction, talk to your agent about those feelings. She can help walk you through the anxieties. Pros will help you to determine if you really need to cancel and, if so, try to get your earnest money back.
4. Not Understanding The Common Negotiating Methods Used At Offer Time
Some buyers have been told that the best way to get a good price is to low-ball the seller from the start in hopes that the seller will drop their price down fast in their counter offer. In reality this often does nothing more than upset the seller and will probably end up ruining the chance at an acceptable offer to both of the parties involved. Have good communication with your agent, and they will be able to inform you on the many proper ways to negotiate a deal and still get you the lowest price. A low ball offer is only good if it is a buyers market and you don't absolutely have to have "that home". A low ball offer does upset some sellers and they may refuse to negotiate at all. So be careful when you put one in if you really want the house.
5. Changing your Finances Prior to Closing
I have had people who bought new cars, or bought furniture, or quit their job before the closing. More debt meant debt ratios were out of wack, meant they were no longer qualified to buy a home.
Today's home buyers make the same mistake. Do not buy anything on credit and / or with a credit card once you have completed a loan application. Do NOT buy:
Automobiles
Washers, dryers, refrigerators
Lawnmowers or garden equipment
Expensive electronics or computers
Furniture for your new home
Slight alterations in your credit ratios could cause an underwriter to throw out your loan and deny it. If your loan contingency has expired or been removed, you could forfeit your earnest money deposit in addition to losing the home.
6. Failing To Know Research The Market Before Making Your Offer or FAILING TO INSIST ON A COMPARATIVE MARKET ANALYSIS (CMA) BEFORE MAKING A PURCHASE OFFER. Amazingly, many home buyers still follow the old rule: "Offer 5 percent below the asking price." That makes no sense.
Instead, smart home buyers ask their buyer's agent to prepare a written comparative market analysis (CMA) before making a purchase offer. This CMA is the same form the listing agent prepared for the home seller.
It shows recent sold prices of comparable nearby homes. Just because other homes are asking similar prices doesn't mean you are getting a good deal. It is what has sold recently that is the true measure of what a home is worth. That is how appraisals are done. Not by houses that are listed.
With the help of the buyer's agent, smart buyers then discuss the pros and cons of the homes on the CMA before arriving at a reasonable purchase offer price.Have your agent prepare all the area sales and comparables in your area and get a copy to look over before you make your offer. This will help ensure that you do not overpay what the home is really worth. In most cases, this is the same type of information that the seller saw when setting the price of their home ( and most likely ignored). Failing To Use Certified Home Inspection Company Buying your home often times the most important investment and financial transaction that you will ever make. A home inspection can save you hundreds or even thousands of dollars and unexpected problems down the road. In addition to the inspection, it is often a good idea to request some type of Home Warranty to cover the unexpected problems that may arise after you buy the house.
7. BUY A HOME WITH AN UNCHANGEABLE ISSUE.
A issue that will affect the future sale of the home and the price. In the current buyer's market in most communities, where there are more home sellers than qualified buyers, house and condo buyers can afford to take their time and be "picky." You need to be picky about the home you buy.
No home is perfect. Even brand-new houses and condos have their defects. Thankfully, most homes don't have major defects, such as being located next to a noisy railroad track or a freeway. Smart buyers think into the future and ask, "Will I have any trouble selling this home because of its problems?"
Serious defects are called "economic obsolescence" by appraisers. Examples include a bad floor plan, poor location (such as backing to a main street), outside factors ( such as cell phone towers, freeways, city dumps, commercial properties, high-voltage power lines), noisy street traffic, or lack of on site parking. Serious consideration should be given to these homes. There has to be a good price reduction in order to make it a good value.
8. Buying the Wrong House
The very first thing home buyers should do is make a list of priorities and define your home purchase wants and desires. Figure out what features and benefits are most important and which you can live without. Before you close escrow, review this list. It's easy to overlook a major factor that could come back to haunt you later. If you need four bedrooms for your three kids don't buy a three bedroom and try to "get by"
Know what you can afford for a house payment. Going house poor is going to have you end up in foreclosure. Buy within your means. Don't let your emotions cloud your judgement.
9.. NEGLECTING TO RE- Read and examine the Purchase agreement, it's clauses, conditions, and contingencies..
Today's smart home buyers include at least two purchase-offer contingencies: (a) a satisfactory lender's professional appraisal of the home for at least the purchase price, and (b) the buyer's approval of a professional inspection report to be obtained at the buyer's expense.
Depending on local custom, additional inspection contingencies might include termite or pest control, building-code compliance, energy efficiency, and radon.
A controversial contingency makes the home purchase contingent on the buyer's sale of his/her current residence. Many home sellers refuse to accept such a contingency. Others will accept it but with a 48-hour release clause if a better purchase offer from another buyer materializes
10.. Falling in love
If you think a house is ideal, don't let the seller or any of the seller's agents know. If the seller finds out you're in love with the house, the seller could hold out for a higher price.
A wise home buyer knows there's lots of houses -- and there's one out there that's the right house at the right price. If you can't afford it, move on and keep looking.
11. Overlooking an inferior floor plan for an attractive exterior.
It may have gorgeous curb appeal, but you don't live on the lawn. No matter how attractive the exterior, you need a livable home
12. Overlooking how the house will function for your family.
How do you really live? Do you really need a formal dining room and living room? Would you be happier with an eat-in kitchen and a great room and a den to use as a home office? The house only needs to fit one family -- yours.
13. Not getting what you want because you're impatient.
This is a big decision. You need time. Impatient decisions can lead to mistakes. Take your time, think about your decision. Re look at your favorite houses. Re look at the one you love. You would be surprised at how many times people get frustrated with the buying process and just buy any house because they are tired of looking. Take your time.
For more buyer and sellers tips go to my website www.russravary.com and you can also search for Michigan homes for sale with out leaving your name, email, or phone number
Showing posts with label buying a home. Show all posts
Showing posts with label buying a home. Show all posts
Sunday, July 22, 2007
Thursday, July 5, 2007
Appraisals
When to order an appraisal
You have completed the loan application, put in a purchase offer. When do you order an appraisal? You order an appraisal after the home inspection. You don't want to order and pay for an appraisal until the house passes inspection. If the house fails inspection you don't order the appraisal until you have a signed addendum stating the the seller will do the repairs, give you a lower price, or you accept the house as is. Then you order the appraisal
Appraisals are performed for the benefit of the lender. They are trying to justify the loan amount based on the appraised value. The appraiser will have a copy of the Purchase agreement. (contract). The typical cost of an appraisal is $275 - $350 and is normally paid to the lender upfront by the borrower. Appraisers charge more for rental properties, FHA appraisals, and multi family properties. Commercial appraisals start at $1500 and go up to $5000
An appraisal is subjective. One appraiser may come up with one value and another may come up with a totally different value. An appraisal is not what the house should sell for, it is a educated estimate of value using different value approachs.The most common way an appraisal is done is that the subject house ( the house being bought) is compared to 3-5 homes that are similar in style, size, and location that have sold in the last 6 months. So your appraisal is based on homes that have sold recently that are like yours and near yours!
STYLE By style I mean they compare ranches with ranches. They will not compare a ranch to a colonial. ( or 2 story)
SIZE, AGE By size I mean they compare square footage, number of bedrooms, bath rooms, age, garage, ammenities. Your home may be 1200 sq ft 2 bedroom,1.5 bath, built in 1999, with a 2 car garage. One of the ones that sold may be 1200 sq ft, 3 bedroom, 2 bath, built in 1952, with a 1 car garage. The appraiser has a general formula that he uses to give value to a 3 bedroom versus a 2 bedroom, A home built in 1999 is worth more than one built in 1952 so more value is given to the 1999 home. This gets very complex. What the lender is looking for from the appraiser is that he is not giving some ridiculous value to say the garage or the age. Remember very little value is given to updates. Bigger value would be given to an addition or a garage.
Location If it is in the city lenders like to see the comparable sold homes that the appraiser is using to be within a half a mile. Without crossing main roads or railroad tracks. This common sense, because if you cross a main road the houses can be totally different. The lender wants the appraiser to use the houses closest to the subject property. So if a similar house sold on the same street the appraiser is supposed to use it.That is how many times appraisals are different. Appraisers may be using different comparables (sold houses) and may be using a little different adjustments for the value of a three bedroom home versus a two bedroom home. It gets even more difficult when homes are not selling, or there are very few comparables close by. They sometimes have to go further away and futher back in time. Up to a year ago.
Appraisals are reviewed by the bank. Sometimes the bank has a review department in house or they pay another appraiser to review the appraisal. So there are checks and balances in the system.
What happens is your house does not appraise for the sales price ? Most houses do but every once in a great while one won't.Either the appraiser appraised it for less than the sales price or sometimes the bank rejects the value of the appraisal and will come back with a lower value of the house. What the means to you the buyer is that the sales price must be reduced or you have to bring more money to the table. For example you bought a home for $200,000 and you are borrowing 100%. The bank or the appraiser says it is only worth $190,000. The bank is only going to loan $190,000. You either have to go back to the seller and renegotiate the price or you have to come up with $10,000.
VA Appraisals: If you are getting either of these government mortgages, the appraiser will not only look at valuation but will also look at the condition. If defects are noted, they may require that they be fixed prior to closing. Since the borrower has such a low downpayment, Lenders want to make sure that Borrowers are not hit with any up-front maintenance expenses. The Seller is not obligated to make the repairs; consequently, they will have to be negotiated.
Appraisals are not a guarantee of value. Most lenders will have a disclaimer to that effect. Remember, the appraiser has a copy of your fully negotiated contract BEFORE establishing the appraisal value. It is more of a confirmation of value.
Russ Ravary
You have completed the loan application, put in a purchase offer. When do you order an appraisal? You order an appraisal after the home inspection. You don't want to order and pay for an appraisal until the house passes inspection. If the house fails inspection you don't order the appraisal until you have a signed addendum stating the the seller will do the repairs, give you a lower price, or you accept the house as is. Then you order the appraisal
Appraisals are performed for the benefit of the lender. They are trying to justify the loan amount based on the appraised value. The appraiser will have a copy of the Purchase agreement. (contract). The typical cost of an appraisal is $275 - $350 and is normally paid to the lender upfront by the borrower. Appraisers charge more for rental properties, FHA appraisals, and multi family properties. Commercial appraisals start at $1500 and go up to $5000
An appraisal is subjective. One appraiser may come up with one value and another may come up with a totally different value. An appraisal is not what the house should sell for, it is a educated estimate of value using different value approachs.The most common way an appraisal is done is that the subject house ( the house being bought) is compared to 3-5 homes that are similar in style, size, and location that have sold in the last 6 months. So your appraisal is based on homes that have sold recently that are like yours and near yours!
STYLE By style I mean they compare ranches with ranches. They will not compare a ranch to a colonial. ( or 2 story)
SIZE, AGE By size I mean they compare square footage, number of bedrooms, bath rooms, age, garage, ammenities. Your home may be 1200 sq ft 2 bedroom,1.5 bath, built in 1999, with a 2 car garage. One of the ones that sold may be 1200 sq ft, 3 bedroom, 2 bath, built in 1952, with a 1 car garage. The appraiser has a general formula that he uses to give value to a 3 bedroom versus a 2 bedroom, A home built in 1999 is worth more than one built in 1952 so more value is given to the 1999 home. This gets very complex. What the lender is looking for from the appraiser is that he is not giving some ridiculous value to say the garage or the age. Remember very little value is given to updates. Bigger value would be given to an addition or a garage.
Location If it is in the city lenders like to see the comparable sold homes that the appraiser is using to be within a half a mile. Without crossing main roads or railroad tracks. This common sense, because if you cross a main road the houses can be totally different. The lender wants the appraiser to use the houses closest to the subject property. So if a similar house sold on the same street the appraiser is supposed to use it.That is how many times appraisals are different. Appraisers may be using different comparables (sold houses) and may be using a little different adjustments for the value of a three bedroom home versus a two bedroom home. It gets even more difficult when homes are not selling, or there are very few comparables close by. They sometimes have to go further away and futher back in time. Up to a year ago.
Appraisals are reviewed by the bank. Sometimes the bank has a review department in house or they pay another appraiser to review the appraisal. So there are checks and balances in the system.
What happens is your house does not appraise for the sales price ? Most houses do but every once in a great while one won't.Either the appraiser appraised it for less than the sales price or sometimes the bank rejects the value of the appraisal and will come back with a lower value of the house. What the means to you the buyer is that the sales price must be reduced or you have to bring more money to the table. For example you bought a home for $200,000 and you are borrowing 100%. The bank or the appraiser says it is only worth $190,000. The bank is only going to loan $190,000. You either have to go back to the seller and renegotiate the price or you have to come up with $10,000.
VA Appraisals: If you are getting either of these government mortgages, the appraiser will not only look at valuation but will also look at the condition. If defects are noted, they may require that they be fixed prior to closing. Since the borrower has such a low downpayment, Lenders want to make sure that Borrowers are not hit with any up-front maintenance expenses. The Seller is not obligated to make the repairs; consequently, they will have to be negotiated.
Appraisals are not a guarantee of value. Most lenders will have a disclaimer to that effect. Remember, the appraiser has a copy of your fully negotiated contract BEFORE establishing the appraisal value. It is more of a confirmation of value.
Russ Ravary
Saturday, May 19, 2007
Ready to look for homes
KNOW WHAT YOU CAN AFFORD. Lenders can usually approve you for more than you can actually afford. You need to sit down and figure out what payment you can afford and live with before you meet with a lender.
*Choose a lender and get pre-approved - take in your w-2s, your asset statements, your paystubs. Have your lender go over your credit score, ask questions about your credit report. Even if you have imperfect credit I have tips on how to raise your credit score. *Go over your mortgage options. Ask your lender about the different type of loans, one may be better suited for you than another. You may not like risk and want a fixed loan whereas some people would rather have a lower payment and take the risk of the rate going up. Ask about FHA Loans, biweekly programs, ARM loans, no money down loans, and buying points. *Sit down or call Russ Ravary and tell him what you are looking for in a home, what cities, what specifications. *Have Russ Ravary your realtor send you emails of all homes that meet your needs and in your price range. *Set up a time so Russ can take you out and show you homes that meet your needs and price. *Shop close to your price limit.
WHAT ARE YOUR NEEDS
What city do you want to live in? What subdivision? Do you want to be close to the expressways or downtown? How far is it from work, from family, from friends?
What size of home do you want? How many Square feet?
How many of Bedrooms , How many of bathrooms, kitchen, basement, library, study, great room, family room, formal dining room, study, master bedroom, closet space.
Fenced or open yard, pool, or community pool, how many car garage.? Is privacy important to you. Do you want mature trees?What style of house? Tudor, colonial, ranch, cape cod? How many stories? Don't want to walk stairs? Need a first floor laundry? Want all the bedrooms on the same floor? How old of a home would you like? Do you want the character of an old home or do you want a home less than 5 years old? What type of floor plan do you want? An open layout or do you like the quaint rooms of a victorian home? What type of street or neighborhood do you want? With lots of kids, a cul de sac, at the back of the sub, close to the bus stop?
What condition of home do you want? Are you a handyman and want a fixer upper? Or do you want to just move in and do nothing? How much updating do you want to do? How much money do you want to spend fixing it up to your specifications? How much money do you have in reserves?
What will you have to do immediately when you buy this home? What will make this house livable to you? What will be the total cost to do this?
THINGS TO CONSIDER
Schools , school district, meap scores. Do they meet your requirements? How close are neighborhod parks and recreation areas. Is there place of worship close by that you want to attend?
Commute time to work, and family and friends is important. Take a ride during rush hour and during off times. Visit the house at dark, and different times during the day. Stand outside and listen and look. By visiting the house during different times of the day you learn about the neighborhood.
Does the lot give value to the house, or is it a negative. Compare that to other values in the neighbor hood. Is it in a flood zone? What are the taxes? What is the Mileage rate? , What are the utility & electric bills?
What is the cost of homeowners insurance? Is the city you are buying in more expensive because of crime rates? Does a home warranty come with it?
What are the ages of major items roof, a/c, furnace, windows? Read the sellers disclosure carefully and ask questions you do not have answers to.
Always remember when and if you sell , how will others view your home . So think twice about homes with only 2 bedrooms, with small square footage, on or close to main roads, with no basement or garage. Think now about resale when you are buying. It will make you a smarter buyer.
What stays with the house? What goes?
There is no perfect home. You most likely will never find a home that has absolutely everything that you want and need. What you need to do is to make a list of what you want. What you must have and what you would like to have. My job is to help you find the home that suits you best at a good value. A home that you want, that you love, and that meets as many of your expectations as possible. We do find homes that have everything some people want, sometimes we even find homes that are beyond the expectation of what you want. I want to help you find a home that you will love to live in, have a place that great memories will come from, and that you can spend years with family and friends enjoying life. That is what is important.
Finally have Russ Ravary go over all the solds in the area and compare what you are buying to what has sold in the sub, in the area, and in the city. Be a smart buyer!
Good luck on house hunting. Give me a call if you are looking in the metro Detroit area!
Live today as if there is no tomorrow.
Russ Ravary
*Choose a lender and get pre-approved - take in your w-2s, your asset statements, your paystubs. Have your lender go over your credit score, ask questions about your credit report. Even if you have imperfect credit I have tips on how to raise your credit score. *Go over your mortgage options. Ask your lender about the different type of loans, one may be better suited for you than another. You may not like risk and want a fixed loan whereas some people would rather have a lower payment and take the risk of the rate going up. Ask about FHA Loans, biweekly programs, ARM loans, no money down loans, and buying points. *Sit down or call Russ Ravary and tell him what you are looking for in a home, what cities, what specifications. *Have Russ Ravary your realtor send you emails of all homes that meet your needs and in your price range. *Set up a time so Russ can take you out and show you homes that meet your needs and price. *Shop close to your price limit.
WHAT ARE YOUR NEEDS
What city do you want to live in? What subdivision? Do you want to be close to the expressways or downtown? How far is it from work, from family, from friends?
What size of home do you want? How many Square feet?
How many of Bedrooms , How many of bathrooms, kitchen, basement, library, study, great room, family room, formal dining room, study, master bedroom, closet space.
Fenced or open yard, pool, or community pool, how many car garage.? Is privacy important to you. Do you want mature trees?What style of house? Tudor, colonial, ranch, cape cod? How many stories? Don't want to walk stairs? Need a first floor laundry? Want all the bedrooms on the same floor? How old of a home would you like? Do you want the character of an old home or do you want a home less than 5 years old? What type of floor plan do you want? An open layout or do you like the quaint rooms of a victorian home? What type of street or neighborhood do you want? With lots of kids, a cul de sac, at the back of the sub, close to the bus stop?
What condition of home do you want? Are you a handyman and want a fixer upper? Or do you want to just move in and do nothing? How much updating do you want to do? How much money do you want to spend fixing it up to your specifications? How much money do you have in reserves?
What will you have to do immediately when you buy this home? What will make this house livable to you? What will be the total cost to do this?
THINGS TO CONSIDER
Schools , school district, meap scores. Do they meet your requirements? How close are neighborhod parks and recreation areas. Is there place of worship close by that you want to attend?
Commute time to work, and family and friends is important. Take a ride during rush hour and during off times. Visit the house at dark, and different times during the day. Stand outside and listen and look. By visiting the house during different times of the day you learn about the neighborhood.
Does the lot give value to the house, or is it a negative. Compare that to other values in the neighbor hood. Is it in a flood zone? What are the taxes? What is the Mileage rate? , What are the utility & electric bills?
What is the cost of homeowners insurance? Is the city you are buying in more expensive because of crime rates? Does a home warranty come with it?
What are the ages of major items roof, a/c, furnace, windows? Read the sellers disclosure carefully and ask questions you do not have answers to.
Always remember when and if you sell , how will others view your home . So think twice about homes with only 2 bedrooms, with small square footage, on or close to main roads, with no basement or garage. Think now about resale when you are buying. It will make you a smarter buyer.
What stays with the house? What goes?
There is no perfect home. You most likely will never find a home that has absolutely everything that you want and need. What you need to do is to make a list of what you want. What you must have and what you would like to have. My job is to help you find the home that suits you best at a good value. A home that you want, that you love, and that meets as many of your expectations as possible. We do find homes that have everything some people want, sometimes we even find homes that are beyond the expectation of what you want. I want to help you find a home that you will love to live in, have a place that great memories will come from, and that you can spend years with family and friends enjoying life. That is what is important.
Finally have Russ Ravary go over all the solds in the area and compare what you are buying to what has sold in the sub, in the area, and in the city. Be a smart buyer!
Good luck on house hunting. Give me a call if you are looking in the metro Detroit area!
Live today as if there is no tomorrow.
Russ Ravary
Subscribe to:
Posts (Atom)