Wow did you see the rates today? They are down to 5.125% for a 30 year fixed mortgage. That is absolutely fantastic. In addition, first time homebuyers can receive an $8,000 federal tax credit.
To give you some perspective, if you purchased a $200,000 house at 6.5% (still considered not bad), your principal and interest payment would be $1,264.14 plus taxes, mortgage insurance and homeowners insurance. If you can get that same loan at 5.125%, the payment would be $1,088.97 per month plus taxes, mortgage insurance and homeowners insurance.
That's a savings of $175.17 per month!!! This may allow you to buy a house for almost $30,000 more or another way to look at it is when the interest rates go up, you lose $30,000 of your purchasing power.
This is why if you are thinking of purchasing a home, now would be a good time to do it. Inventory is still good and the interest rates are fantastic. If the fed thinks that we are starting to get inflation however, they will take actions that will result in the rates going up. Rates can go up as much as one point in a day and it can be devasting to your budget.
If you would like to get set up on an Email Subscription to the Multiple Listing Service so you can see what is out there and what it looks like, just give me a call at 801-792-1257. I will find out what you think you may be looking for and get it set up so you can get the new listings each day as they come on the market.
Also, the Utah Housing Corp program is fantastic for first time homebuyers. If you qualify, you won't need a downpayment and we can have the sellers pay your closing costs. So you don't need very much money to buy a house now. For information on this program you need to call a loan officer with a bank that offers it - mortgage brokers are typically not approved for this program. One loan officer I have worked with on these programs is Rachel Thorell, Academy Mortgage at 801-502-9200. She will be able to tell you over the phone if you qualify for this program and what your payments would be when you purchased.
Call Patty Purdue at Utah Select Realty at 801-792-1257 with any real estate questions.
Thursday, July 9, 2009
Wednesday, July 8, 2009
APPRAISAL ISSUES
Now that the new rules have gone into effect for appraisals we are seeing a lot of problems with homes not appraising. The new rules, if you are not familiar with them, state that if the loan is a conventional loan that will be sold to Fannie Mae or Freddie Mac there can be no contact with the appraiser. The lender nor the real estate agent can pick the appraiser. So how the appraiser is chosen is through an Appraisal Mangement Company. The lender sends in the order for an appraisal to them and they then pick your appraiser.
The biggest problem with this is that some appraisers are appraising properties in areas that they are not familiar with. They are also choosing the appraisers by how much they charge. If an appraiser charges less, then the management company gets to keep more, therefore, making that appraiser more desireable to them. Not necessarily because they are a better appraiser, just simply because they charge less.
We have seen a lot of experienced appraisers simply leave the business. They were making $400-$450 per appraisal and now they are making half that amount since they have to give some of the fee to the management company. They also can not control their business flow any longer since they are on somewhat of a lottery system with management company. This is a shame because these were the guys that were able to appraise a unique property correctly. Just about anybody can appraise a property in a tract subdivision where all of the houses look the same and are about the same square footage, but when you get into a property that has let's say half an acre of land in an area that has mostly quarter acre lots, that takes a little more work.
So the moral of the story is that even if you think you can find a buyer for your home at your desired asking price because the upgrades are so fantastic. Be aware that the appraisal could blow up the whole transaction. It appears that lately the appraisers don't care that you have granite when the comps have formica. Or that you have real hardwood floors in beautiful condition while the other comps have worn carpet. To them flooring is flooring and countertops are countertops. They appear to be ignoring upgrades. What this means is that if a house down the street just like yours sold because it was not in the best condition, that sale may have set the price for your neighborhood even though it is not typical for your area.
So price your home to be 3%-5% below the neighboring homes and you will not only sell faster and probably for more money, but you will also be able to pass that almightly appraisal.
If you have any questions on the value of your home in the Salt Lake City area, don't hesitate to call me, Patty Purdue, at 801-792-1257.
The biggest problem with this is that some appraisers are appraising properties in areas that they are not familiar with. They are also choosing the appraisers by how much they charge. If an appraiser charges less, then the management company gets to keep more, therefore, making that appraiser more desireable to them. Not necessarily because they are a better appraiser, just simply because they charge less.
We have seen a lot of experienced appraisers simply leave the business. They were making $400-$450 per appraisal and now they are making half that amount since they have to give some of the fee to the management company. They also can not control their business flow any longer since they are on somewhat of a lottery system with management company. This is a shame because these were the guys that were able to appraise a unique property correctly. Just about anybody can appraise a property in a tract subdivision where all of the houses look the same and are about the same square footage, but when you get into a property that has let's say half an acre of land in an area that has mostly quarter acre lots, that takes a little more work.
So the moral of the story is that even if you think you can find a buyer for your home at your desired asking price because the upgrades are so fantastic. Be aware that the appraisal could blow up the whole transaction. It appears that lately the appraisers don't care that you have granite when the comps have formica. Or that you have real hardwood floors in beautiful condition while the other comps have worn carpet. To them flooring is flooring and countertops are countertops. They appear to be ignoring upgrades. What this means is that if a house down the street just like yours sold because it was not in the best condition, that sale may have set the price for your neighborhood even though it is not typical for your area.
So price your home to be 3%-5% below the neighboring homes and you will not only sell faster and probably for more money, but you will also be able to pass that almightly appraisal.
If you have any questions on the value of your home in the Salt Lake City area, don't hesitate to call me, Patty Purdue, at 801-792-1257.
Wednesday, May 13, 2009
HOW TO LOSE YOUR EARNEST MONEY
This is every buyer's nightmare. Putting down a substantial amount of Earnest Money on a home and then losing it. In some respects it is difficult to lose your Earnest Money, but if you and your agent are not paying attention it can happen. Here are some of the reasons that buyer's lose their Earnest Money.
1. They are not really pre-approved and they don't cancel the contract or ask for an extension by the Loan Denial/Appraisal Deadline in the contract. How this happens is that you tell your agent you are preapproved for your mortgage. You give the agent their name and number and the agent calls that loan officer and obtains a preapproval letter. Some agents don't quite know what to ask the loan officer so they figure that if they say you are good - then you are good.
But the reality is that if the loan officer has only been given verbal information to base this approval on, you are not preapproved. Everything may sound great, but then the loan officer orders the Verification of Employment that shows you have only been receiving overtime for 15 months and not the 24 months they require and quess what? You may no longer qualify for the loan. If this Verification of Employment comes in after that Loan Denial Deadline and you have to cancel, you will lose your Earnest Money Deposit. So it is very very important that you really really have your loan together prior to putting in an offer. If you don't, then make sure that you are paying attention to the dates in the contract. Can your loan officer get you through underwriting prior to that deadline. If your loan officer needs 3 weeks to get it through underwriting, then you either need to push out that deadline or find another loan officer. A lot of mortgage companies can underwrite in less than a week if you have all of your information into them.
Now you can ask for an extension of the Loan Denial/Appraisal Deadline from the seller if you get closer and you are still not done. But don't plan on them giving it to you. To the seller it looks like there is a problem. I can not tell you how many times buyer's agents have told me there is no problem they just need a little more time and bam - the loan is denied and they want the Earnest Money returned. So, in other words, if you ask for an extension you most likely will not receive it.
2. Missing the Due Diligence Deadline. This is not very common, but with our new Utah contract, all items must be resolved prior to that deadline. The old contract stated that you had until 5:00pm on the day of the Deadline to either submit your objections or cancel. But the new one says you have to resolve the issues or cancel by that 5:00pm date. So a lot of agents who aren't very active are missing this date.
To avoid a problem, you should have your objections to your inspection into the seller at least 3 days prior to that deadline. If the seller has not responded by the day of the deadline, you can ask for an extension, cancel the contract or purchase the house without those items fixed.
I highly recommend that you have your inspections done within the first week that you are under contract. You want to know as soon as possible if there is a major problem so you can go on and purchase a different home. This also gives you enough time to get professionals in to look at the items that the inspector has found and determine how much it would cost to fix them if the seller refuses.
Just remember that no house is perfect. There are always items that are found during an inspection. What you need to determine is what items you are willing to live with and what items you are not willing to live with. If you can't live with them and the seller won't fix them then make sure you cancel by 5:00pm on the Due Diligence Deadline because at 5:01pm on that day you no longer have a right to get back your Earnest Money Deposit.
3. The buyer goes out and charges a bunch of furniture right before closing. Some mortgage companies re-run the credit report between the closing (you signing the papers) and funding (the next day when they wire the money to the title company), if they find you have taken out additional credit, they will add that debt into your debt ratios. If you still qualify for the loan you are okay, but if you don't, they won't send the money to the title company and the sale falls through. Since this date is past the Loan Denial/Appraisal deadline, then you will lose your Earnest Money Deposit. So don't do anything with your job or credit between putting in the offer and getting the keys.
4. The loan officer orders the appraisal too late. Since a lot of loan officers have to pay for appraisals even if the deal fails, they are hesitant to order them unless they know the deal is a go. So some loan officers will wait until you are out of the first round of underwriting or until after you have had your home inspection. But if they wait too long it could come back to bite you. It would be great to say that all houses appraise for the purchase price, but that is not always the case. If you find out after your Loan Denial/Appraisal Deadline that the property hasn't appraised, the first thing you would do is go tothe seller and see if they will reduce the purchase price to the appraised value. If they won't or can't, then you would either need to bring in the difference between the purchase price and the appraised value in cash or cancel. If you cancel after the deadline then you will lose your Earnest Money Deposit.
So those are the three main reasons that buyers lose their Earnest Money Deposit. A good agent is always aware of the deadlines and will follow up with all of the other cogs in the wheel on your behalf. I usually call the loan officer for my buyers every week to see what is needed and where the file is. If the loan officer needs something I will run out and get it from the buyer and drop it off. The goal is to get the underwriting done as fast as possible.
If you have any other questions regarding the Earnest Money Deposit, don't hesitate to call me at 801-792-1257.
1. They are not really pre-approved and they don't cancel the contract or ask for an extension by the Loan Denial/Appraisal Deadline in the contract. How this happens is that you tell your agent you are preapproved for your mortgage. You give the agent their name and number and the agent calls that loan officer and obtains a preapproval letter. Some agents don't quite know what to ask the loan officer so they figure that if they say you are good - then you are good.
But the reality is that if the loan officer has only been given verbal information to base this approval on, you are not preapproved. Everything may sound great, but then the loan officer orders the Verification of Employment that shows you have only been receiving overtime for 15 months and not the 24 months they require and quess what? You may no longer qualify for the loan. If this Verification of Employment comes in after that Loan Denial Deadline and you have to cancel, you will lose your Earnest Money Deposit. So it is very very important that you really really have your loan together prior to putting in an offer. If you don't, then make sure that you are paying attention to the dates in the contract. Can your loan officer get you through underwriting prior to that deadline. If your loan officer needs 3 weeks to get it through underwriting, then you either need to push out that deadline or find another loan officer. A lot of mortgage companies can underwrite in less than a week if you have all of your information into them.
Now you can ask for an extension of the Loan Denial/Appraisal Deadline from the seller if you get closer and you are still not done. But don't plan on them giving it to you. To the seller it looks like there is a problem. I can not tell you how many times buyer's agents have told me there is no problem they just need a little more time and bam - the loan is denied and they want the Earnest Money returned. So, in other words, if you ask for an extension you most likely will not receive it.
2. Missing the Due Diligence Deadline. This is not very common, but with our new Utah contract, all items must be resolved prior to that deadline. The old contract stated that you had until 5:00pm on the day of the Deadline to either submit your objections or cancel. But the new one says you have to resolve the issues or cancel by that 5:00pm date. So a lot of agents who aren't very active are missing this date.
To avoid a problem, you should have your objections to your inspection into the seller at least 3 days prior to that deadline. If the seller has not responded by the day of the deadline, you can ask for an extension, cancel the contract or purchase the house without those items fixed.
I highly recommend that you have your inspections done within the first week that you are under contract. You want to know as soon as possible if there is a major problem so you can go on and purchase a different home. This also gives you enough time to get professionals in to look at the items that the inspector has found and determine how much it would cost to fix them if the seller refuses.
Just remember that no house is perfect. There are always items that are found during an inspection. What you need to determine is what items you are willing to live with and what items you are not willing to live with. If you can't live with them and the seller won't fix them then make sure you cancel by 5:00pm on the Due Diligence Deadline because at 5:01pm on that day you no longer have a right to get back your Earnest Money Deposit.
3. The buyer goes out and charges a bunch of furniture right before closing. Some mortgage companies re-run the credit report between the closing (you signing the papers) and funding (the next day when they wire the money to the title company), if they find you have taken out additional credit, they will add that debt into your debt ratios. If you still qualify for the loan you are okay, but if you don't, they won't send the money to the title company and the sale falls through. Since this date is past the Loan Denial/Appraisal deadline, then you will lose your Earnest Money Deposit. So don't do anything with your job or credit between putting in the offer and getting the keys.
4. The loan officer orders the appraisal too late. Since a lot of loan officers have to pay for appraisals even if the deal fails, they are hesitant to order them unless they know the deal is a go. So some loan officers will wait until you are out of the first round of underwriting or until after you have had your home inspection. But if they wait too long it could come back to bite you. It would be great to say that all houses appraise for the purchase price, but that is not always the case. If you find out after your Loan Denial/Appraisal Deadline that the property hasn't appraised, the first thing you would do is go tothe seller and see if they will reduce the purchase price to the appraised value. If they won't or can't, then you would either need to bring in the difference between the purchase price and the appraised value in cash or cancel. If you cancel after the deadline then you will lose your Earnest Money Deposit.
So those are the three main reasons that buyers lose their Earnest Money Deposit. A good agent is always aware of the deadlines and will follow up with all of the other cogs in the wheel on your behalf. I usually call the loan officer for my buyers every week to see what is needed and where the file is. If the loan officer needs something I will run out and get it from the buyer and drop it off. The goal is to get the underwriting done as fast as possible.
If you have any other questions regarding the Earnest Money Deposit, don't hesitate to call me at 801-792-1257.
Monday, May 11, 2009
MONEY NEEDED TO BUY A HOME
A lot of buyers come to me for a Strategy Session before buying a home. During that session, they also learn how much is needed in their bank accounts right now if they find the house that they love.
Most people think of the money needed as being the downpayment for the loan, but if they are using a no down payment program like a Utah Housing Loan, they still need to have some money before putting in an offer.
When you find the house you love, you will complete a Purchase Agreement. Part of this agreement is that you will be giving an Earnest Money Deposit. This deposit is held by your agent's brokerage in case that you default on the contract. If you default on the contract, then the money is given to the sellers as liquidated damages. If you don't default on the contract, it is a credit to you at closing for either your downpayment or the closing costs. If the seller is paying your closing costs and you are using a 100% loan, then the money is refunded to you at closing.
So the first thing that you need is at least $500 in your checking account for the Earnest Money Deposit.
Now that you are under contract, you will want to have a home inspection done. I would never recommend anyone buying a home without a professional home inspection. We frequently hear people say that their brother or uncle is in the construction business and that they will come and look it over. The reality is that they are not systematic about it and they don't come with the tools to check everything like a real home inspecter does. A real home inspecter will check every single plug, he runs the dishwasher, he looks in the attic at the trusses and insulation, he goes on the roof and on and on. He then provides a complete written report for you.
So I recommend that you have a home inspection done and depending on the size of the house, that will run between $260 and $350. Well worth the price. If it saves you from buying something that looks good cosmetically, but is really a disaster waiting to happen it will be the best money you ever spent.
Then you need to factor in any moving costs. Do you need to rent a truck? Do you need to buy pizza for the 15 friends that are helping you move? Do you need to buy boxes? Do you need to pay someone to clean your place that you are leaving? These costs vary so much with people that I'll let you put your own price tag on these, but you do need to factor them in.
Now remember, that mortgage payments are paid in arrears, meaning that you have to live there first and then pay for it. So if you close on May 15th, you will pay the interest from May 15th to the end of May at closing. Then you have to live there through June before owing a mortgage payment July 1st. So you will be able to recoup some of these expenses by not having a housing payment in the month of June. That's usually what people use to buy curtains and rugs etc.
But what you need now to put in an offer is your Earnest Money Deposit of at least $500 and $260 to $350 for your home inspection.
If you have any questions on this post, please feel free to call me at 801-792-1257.
Most people think of the money needed as being the downpayment for the loan, but if they are using a no down payment program like a Utah Housing Loan, they still need to have some money before putting in an offer.
When you find the house you love, you will complete a Purchase Agreement. Part of this agreement is that you will be giving an Earnest Money Deposit. This deposit is held by your agent's brokerage in case that you default on the contract. If you default on the contract, then the money is given to the sellers as liquidated damages. If you don't default on the contract, it is a credit to you at closing for either your downpayment or the closing costs. If the seller is paying your closing costs and you are using a 100% loan, then the money is refunded to you at closing.
So the first thing that you need is at least $500 in your checking account for the Earnest Money Deposit.
Now that you are under contract, you will want to have a home inspection done. I would never recommend anyone buying a home without a professional home inspection. We frequently hear people say that their brother or uncle is in the construction business and that they will come and look it over. The reality is that they are not systematic about it and they don't come with the tools to check everything like a real home inspecter does. A real home inspecter will check every single plug, he runs the dishwasher, he looks in the attic at the trusses and insulation, he goes on the roof and on and on. He then provides a complete written report for you.
So I recommend that you have a home inspection done and depending on the size of the house, that will run between $260 and $350. Well worth the price. If it saves you from buying something that looks good cosmetically, but is really a disaster waiting to happen it will be the best money you ever spent.
Then you need to factor in any moving costs. Do you need to rent a truck? Do you need to buy pizza for the 15 friends that are helping you move? Do you need to buy boxes? Do you need to pay someone to clean your place that you are leaving? These costs vary so much with people that I'll let you put your own price tag on these, but you do need to factor them in.
Now remember, that mortgage payments are paid in arrears, meaning that you have to live there first and then pay for it. So if you close on May 15th, you will pay the interest from May 15th to the end of May at closing. Then you have to live there through June before owing a mortgage payment July 1st. So you will be able to recoup some of these expenses by not having a housing payment in the month of June. That's usually what people use to buy curtains and rugs etc.
But what you need now to put in an offer is your Earnest Money Deposit of at least $500 and $260 to $350 for your home inspection.
If you have any questions on this post, please feel free to call me at 801-792-1257.
FOR SALE BY OWNER
One of the great big questions once you decide to sell your home is if you need a Realtor to help you or if you can do it yourself and keep the money you would have paid in real estate commissions.
The short of the answer is of course you can. If you really want to and have the knowledge base to get it completed you can sell your home yourself despite what some Realtors will tell you. If you have all of the proper paperwork and have done this before there is absolutely no reason that you can't sell your own home.
But and this is a big BUT, you do have to know what you are doing or else you could really mess yourself up. What I see alot with For Sale By Owners is that they go under contract with people that aren't really ready to buy for whatever reason. These people have not been through underwriting on their mortgages and the deal falls apart because they don't really qualify for the price point they are looking in. I have been talking to several For Sale By Owners and one of them has had three transactions fall apart and the other has had four. Now that is an awlful lot of time off the market plus the aggravation that you thought you had the house sold but you didn't.
Agents are great at keeping transactions together and trying to prevent going under contract with unqualified buyers, but the best thing that a Realtor brings to the table is the ability to get you on the local Multiple Listing Service. The local MLS provides the listings within a couple of clicks of the computer to all of the local real estate people. This then gets your home exposed to Realtors who may have the buyer for your home. The MLS has become one of the most powerful tools to sell homes. According to the National Association of Realtors, 84% of all homes sold are sold because of the MLS.
The reason that this makes sense is to look at the path a buyer takes when purchasing a home. First they start with the computer and the paper. When they start calling on properties in the paper, some will be by Realtors and some will be For Sale By Owners. As the buyer starts talking to Realtors they realize that they can save several steps in the process by simply having the Realtor find them the property instead of them having to scan through dozens of ads on the computer and the paper each and every day and determine which ones they have already called on and which ones are new. With a Realtor, they only receive the new ones and ones with price changes each day in their email. Very simple and very clean. Buyers like saving time.
So once a buyer has connected with a Realtor that they like, they usually will be kept busy looking at properties with them and you, the For Sale By Owner, are off the radar. There are so many properties they are being shown they don't even entertain driving through neighborhoods anymore to look for available houses.
That brings about the second problem. Exposure. I keep lists of For Sale By Owners since my clients usually consider them hidden properties. Meaning that they are difficult to find. I have had people looking for a long time and never came across the For Sale By Owner property that I am showing them. A lot of buyers like to work with me because I have properties that no one else has. This takes a lot of research and time. Something that most buyers lack. If they could devote themselves full time to the effort and keep accurate records by phone number that they have already called like I do, then they would find more of these properties, but they don't. So you, the For Sale By Owner, stays hidden to them.
So if you decide that you want to sell your home yourself and that you can get enough exposure, then here are some tips for you.
1. I know that some Realtors only want to bug you about listing, but be as nice as possible. They may have a client. I call For Sale By Owners to get information on the homes to see if I have a buyer for them. Sometimes they are rude to me. I'm not interested in listing their home, I only want information about it. Consequently, I will not show these homes. Everyone wants to have a nice transaction, everyone wants to work with someone that if it should get difficult the seller will at least be civil and help get things resolved. Rude people are not at the top of my list to work with. Buyers feel the same way.
2. Offer at least a 3% commission to a buyers agent who brings a buyer. You will still save the 3% listing side of the transaction and you will get a professional to take the whole transaction through to closing. This is well worth your money. Besides, you have not been able to attract a buyer on your own so far, so take the savings you can get and get your house sold. Agents put their clients under contract with a Buyer/Broker Agreement that states if the seller does not pay the 3% commission then they will have to pay it. Most buyers will pass on the house if they have to pay the commission.
3. Have a copy and know your paperwork before you get a buyer interested. I have worked with some buyers who had tried to buy a For Sale By Owner but got spooked when the seller didn't know what was needed. They, of course, didn't know either and it got messy so they walked away. Dont' let that happen to you. If you would like a copy of the new Purchase Contract and the Disclosures, let me know and I'll email them over to you. Be prepared to sell.
4. Know upfront how much you want for an Earnest Money Deposit. If you get wishy washy, the buyer will try to get it as low as possible. Remember that this deposit is your liquidated damages in case they walk away from the deal for a reason not allowed in the contract.
5. Know what you want and need for possession. If you need a week to move out after closing you should put that in the contract. Buyers can be stunned when they pull up to the house after it has recorded in their name and the sellers have not moved out yet. Tensions can get tough and the reality is that you don't own the home anymore.
6. Biggest item of all! Everything must be in writing. Frequently when dealing directly with the seller, buyers will ask for things like having you leave the patio set or that the buyer will do something. For these things to be enforceable, they have to be in writing. So add an addendum to the contract that states those items.
So if you would like to sell your home yourself, you can definately do it, but if you want to get the exposure that an agent can provide you without the high fees, let me know. I have a flat fee MLS Advertising Plan that may work for you. It can get you on the MLS without having to pay a listing fee. Call me at 801-792-1257 for more information.
posted by: Patty Purdue with Utah Select Realty
your guide through the real estate jungle
The short of the answer is of course you can. If you really want to and have the knowledge base to get it completed you can sell your home yourself despite what some Realtors will tell you. If you have all of the proper paperwork and have done this before there is absolutely no reason that you can't sell your own home.
But and this is a big BUT, you do have to know what you are doing or else you could really mess yourself up. What I see alot with For Sale By Owners is that they go under contract with people that aren't really ready to buy for whatever reason. These people have not been through underwriting on their mortgages and the deal falls apart because they don't really qualify for the price point they are looking in. I have been talking to several For Sale By Owners and one of them has had three transactions fall apart and the other has had four. Now that is an awlful lot of time off the market plus the aggravation that you thought you had the house sold but you didn't.
Agents are great at keeping transactions together and trying to prevent going under contract with unqualified buyers, but the best thing that a Realtor brings to the table is the ability to get you on the local Multiple Listing Service. The local MLS provides the listings within a couple of clicks of the computer to all of the local real estate people. This then gets your home exposed to Realtors who may have the buyer for your home. The MLS has become one of the most powerful tools to sell homes. According to the National Association of Realtors, 84% of all homes sold are sold because of the MLS.
The reason that this makes sense is to look at the path a buyer takes when purchasing a home. First they start with the computer and the paper. When they start calling on properties in the paper, some will be by Realtors and some will be For Sale By Owners. As the buyer starts talking to Realtors they realize that they can save several steps in the process by simply having the Realtor find them the property instead of them having to scan through dozens of ads on the computer and the paper each and every day and determine which ones they have already called on and which ones are new. With a Realtor, they only receive the new ones and ones with price changes each day in their email. Very simple and very clean. Buyers like saving time.
So once a buyer has connected with a Realtor that they like, they usually will be kept busy looking at properties with them and you, the For Sale By Owner, are off the radar. There are so many properties they are being shown they don't even entertain driving through neighborhoods anymore to look for available houses.
That brings about the second problem. Exposure. I keep lists of For Sale By Owners since my clients usually consider them hidden properties. Meaning that they are difficult to find. I have had people looking for a long time and never came across the For Sale By Owner property that I am showing them. A lot of buyers like to work with me because I have properties that no one else has. This takes a lot of research and time. Something that most buyers lack. If they could devote themselves full time to the effort and keep accurate records by phone number that they have already called like I do, then they would find more of these properties, but they don't. So you, the For Sale By Owner, stays hidden to them.
So if you decide that you want to sell your home yourself and that you can get enough exposure, then here are some tips for you.
1. I know that some Realtors only want to bug you about listing, but be as nice as possible. They may have a client. I call For Sale By Owners to get information on the homes to see if I have a buyer for them. Sometimes they are rude to me. I'm not interested in listing their home, I only want information about it. Consequently, I will not show these homes. Everyone wants to have a nice transaction, everyone wants to work with someone that if it should get difficult the seller will at least be civil and help get things resolved. Rude people are not at the top of my list to work with. Buyers feel the same way.
2. Offer at least a 3% commission to a buyers agent who brings a buyer. You will still save the 3% listing side of the transaction and you will get a professional to take the whole transaction through to closing. This is well worth your money. Besides, you have not been able to attract a buyer on your own so far, so take the savings you can get and get your house sold. Agents put their clients under contract with a Buyer/Broker Agreement that states if the seller does not pay the 3% commission then they will have to pay it. Most buyers will pass on the house if they have to pay the commission.
3. Have a copy and know your paperwork before you get a buyer interested. I have worked with some buyers who had tried to buy a For Sale By Owner but got spooked when the seller didn't know what was needed. They, of course, didn't know either and it got messy so they walked away. Dont' let that happen to you. If you would like a copy of the new Purchase Contract and the Disclosures, let me know and I'll email them over to you. Be prepared to sell.
4. Know upfront how much you want for an Earnest Money Deposit. If you get wishy washy, the buyer will try to get it as low as possible. Remember that this deposit is your liquidated damages in case they walk away from the deal for a reason not allowed in the contract.
5. Know what you want and need for possession. If you need a week to move out after closing you should put that in the contract. Buyers can be stunned when they pull up to the house after it has recorded in their name and the sellers have not moved out yet. Tensions can get tough and the reality is that you don't own the home anymore.
6. Biggest item of all! Everything must be in writing. Frequently when dealing directly with the seller, buyers will ask for things like having you leave the patio set or that the buyer will do something. For these things to be enforceable, they have to be in writing. So add an addendum to the contract that states those items.
So if you would like to sell your home yourself, you can definately do it, but if you want to get the exposure that an agent can provide you without the high fees, let me know. I have a flat fee MLS Advertising Plan that may work for you. It can get you on the MLS without having to pay a listing fee. Call me at 801-792-1257 for more information.
posted by: Patty Purdue with Utah Select Realty
your guide through the real estate jungle
LOAN INTEREST RATES
Wow have you seen the interest rates today? I can not remember them ever being lower and hopefully they will stay that way for a little while. I have seen the rates go this low and then pop back up again the same day or within a day or two.
Today, America First Credit Union's website states their 30 year mortgage rate is 4.875%. Bankrate.com shows that Wells Fargo is offering 4.75%. Unbelievable.
To give you an idea of what this means to a buyer, if you were to borrow $200,000 at 6.0% (which is where we were hovering for quite a while), your principal and interest payment would be $1,199.10. If you were to borrow that same $200,000 at 4.875%, your principal and interest payment would be $1,058.42. That's a savings of $140.68 per month.
Now if you take that $140.68 per month and assume that you are not going to pay off your mortgage early, then you would spend an extra $50,644.80 for the same house!
Now do you see how valuable the lower interest rate is? But besides that, if you are in the market to purchase a home, you would be able to buy more home for the same payment. So you would be able to raise your purchase price and possibly get a better home for the same monthly payment.
Between the lower interest rate and the first time home buyer $8,000 tax credit, we are starting to see the really great homes below $300,000 sell and sell quickly. So if you are thinking of buying, then now is really the time to do it. I know it sounds cliche, but the reality is that interest rates will not stay this low, the minute that the markets start coming back they will float back up again. Every time that the interest rates float up, you lose purchasing power. So instead of looking for a $200,000 house, the higher interest rate may mean you can only buy in the $180,000 range. There could be a big difference between the neighborhoods you have to buy in and the size and condition of the house.
I personally think that prices of homes are going to remain pretty steady. I don't think we are going to see further price reductions in the below $300,000 range, but the biggest risk to buyers is not the price of the house, but the interest rate that they are going to be paying. You can at least take control of that aspect of purchasing a new home by purchasing when the interest rates are low.
If you know anyone who is thinking of buying, let me know. I can set them up on an Email Subscription to the Multiple Listing Service. With this service, the client tells us what they are looking for and where. Then as new listings come on the market they are sent to their email. Now they can see addresses, tours, descriptions and all the pertinent data about the homes. This is a great service even if they don't feel they are going to purchase for a while. I have had some clients on this service for 6 months to a year before they decided to buy. These buyers were well versed in what homes looked like in certain areas and were able to make better decisions since they were keeping track of the market themselves.
If you have any questions, please don't hesitate to call me at 801-792-1257.
posted by: Patty Purdue with Utah Select Realty.
your guide through the real estate jungle
Today, America First Credit Union's website states their 30 year mortgage rate is 4.875%. Bankrate.com shows that Wells Fargo is offering 4.75%. Unbelievable.
To give you an idea of what this means to a buyer, if you were to borrow $200,000 at 6.0% (which is where we were hovering for quite a while), your principal and interest payment would be $1,199.10. If you were to borrow that same $200,000 at 4.875%, your principal and interest payment would be $1,058.42. That's a savings of $140.68 per month.
Now if you take that $140.68 per month and assume that you are not going to pay off your mortgage early, then you would spend an extra $50,644.80 for the same house!
Now do you see how valuable the lower interest rate is? But besides that, if you are in the market to purchase a home, you would be able to buy more home for the same payment. So you would be able to raise your purchase price and possibly get a better home for the same monthly payment.
Between the lower interest rate and the first time home buyer $8,000 tax credit, we are starting to see the really great homes below $300,000 sell and sell quickly. So if you are thinking of buying, then now is really the time to do it. I know it sounds cliche, but the reality is that interest rates will not stay this low, the minute that the markets start coming back they will float back up again. Every time that the interest rates float up, you lose purchasing power. So instead of looking for a $200,000 house, the higher interest rate may mean you can only buy in the $180,000 range. There could be a big difference between the neighborhoods you have to buy in and the size and condition of the house.
I personally think that prices of homes are going to remain pretty steady. I don't think we are going to see further price reductions in the below $300,000 range, but the biggest risk to buyers is not the price of the house, but the interest rate that they are going to be paying. You can at least take control of that aspect of purchasing a new home by purchasing when the interest rates are low.
If you know anyone who is thinking of buying, let me know. I can set them up on an Email Subscription to the Multiple Listing Service. With this service, the client tells us what they are looking for and where. Then as new listings come on the market they are sent to their email. Now they can see addresses, tours, descriptions and all the pertinent data about the homes. This is a great service even if they don't feel they are going to purchase for a while. I have had some clients on this service for 6 months to a year before they decided to buy. These buyers were well versed in what homes looked like in certain areas and were able to make better decisions since they were keeping track of the market themselves.
If you have any questions, please don't hesitate to call me at 801-792-1257.
posted by: Patty Purdue with Utah Select Realty.
your guide through the real estate jungle
Saturday, May 9, 2009
BUYING A HOME - WHAT YOU NEED TO KNOW
When people find the perfect home they usually get very excited. But then a little nervous and they realize they have to negotiate the biggest purchase of their life.
Different people handle these things differently. There is the "They should be lucky that I'm putting in a offer" crowd who low balls everything and feels that they are in control. And then there is the "oh I really want it and will pay them what they want" crowd who gives away the piggy bank to get their offer accepted.
The best way to handle this is to go right in the middle and to have your information before putting in that offer. Some of the information that you will want your agent to obtain for you is:
1. What does the Comparative Market Analysis say this home is worth? And how old are those sales. Are they really reflecting the current market?
2. Are those comparables in the same neighborhood or are they in close by neighborhoods, but not really the same?
3. What are homes not comparable, meaning maybe a different style of home, going for right down the street?
4. How much does the seller owe on the property?
5. How long have they been for sale?
6. Where are they moving to?
7. Has the seller already purchased another property or do we need to give them extra time to find their next home?
8. Since I am already preapproved for my mortgage - defined as through the underwriting process - can I negotiate better terms?
9. What do you think the seller's biggest trigger point is, money or time. If we close quick will they take less?
10. What items are they going to leave with the property and what is the value to the buyer for those items?
11. How much does the buyer want the house?
The reality is if you want to live in the same neighborhood as your family or friends and feel that you will be staying the home for a long period of time, it doesn't really matter much if you pay a few thousand dollars more to get the home you want in the neighborhood you want. However, you don't want to obviously pay more than the house is worth to do that.
With this information, you and your agent will be able to put together a logical offer for the property. Logical offers are more likely to get accepted. Accepted on the first try is good. Sometimes people wear out when offers and counteroffers go back and forth. The sellers may begin to feel that you are a pain in the butt and simply don't accept something that they normally would have becaue they feel you are the type of buyer that will then nick pick the inspection and create more problems down the road. Some sellers can and will wait for what they feel is a reasonable buyer.
If you have any questions on how to put together an offer, please feel free to call me, Patty Purdue at 801-792-1257.
Different people handle these things differently. There is the "They should be lucky that I'm putting in a offer" crowd who low balls everything and feels that they are in control. And then there is the "oh I really want it and will pay them what they want" crowd who gives away the piggy bank to get their offer accepted.
The best way to handle this is to go right in the middle and to have your information before putting in that offer. Some of the information that you will want your agent to obtain for you is:
1. What does the Comparative Market Analysis say this home is worth? And how old are those sales. Are they really reflecting the current market?
2. Are those comparables in the same neighborhood or are they in close by neighborhoods, but not really the same?
3. What are homes not comparable, meaning maybe a different style of home, going for right down the street?
4. How much does the seller owe on the property?
5. How long have they been for sale?
6. Where are they moving to?
7. Has the seller already purchased another property or do we need to give them extra time to find their next home?
8. Since I am already preapproved for my mortgage - defined as through the underwriting process - can I negotiate better terms?
9. What do you think the seller's biggest trigger point is, money or time. If we close quick will they take less?
10. What items are they going to leave with the property and what is the value to the buyer for those items?
11. How much does the buyer want the house?
The reality is if you want to live in the same neighborhood as your family or friends and feel that you will be staying the home for a long period of time, it doesn't really matter much if you pay a few thousand dollars more to get the home you want in the neighborhood you want. However, you don't want to obviously pay more than the house is worth to do that.
With this information, you and your agent will be able to put together a logical offer for the property. Logical offers are more likely to get accepted. Accepted on the first try is good. Sometimes people wear out when offers and counteroffers go back and forth. The sellers may begin to feel that you are a pain in the butt and simply don't accept something that they normally would have becaue they feel you are the type of buyer that will then nick pick the inspection and create more problems down the road. Some sellers can and will wait for what they feel is a reasonable buyer.
If you have any questions on how to put together an offer, please feel free to call me, Patty Purdue at 801-792-1257.
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