Posts Tagged ‘Buyer’

Benefits and Drawbacks of Homeowners Associations

Wednesday, April 16th, 2014

Talk to 10 different people about homeowners associations (HOAs), and you’ll likely get 10 different opinions. Some people love living in a development with an HOA, while others find it too restrictive. Depending on your lifestyle and needs, it can be a great experience or one that feels too intrusive. Today about one in five Americans live in a house with home-owner or condo fees.

HOAs began in the mid-19th century but didn’t really gain in popularity until the early 1960s, as an outgrowth of the postwar housing boom and the growth of the middle class. Typically, an HOA is incorporated by the developer during the development and sales process, and gradually control and ownership are transferred to the home purchasers upon completion of the project. The original owner/developer quits membership in the association and has nothing more to do with it. Anyone purchasing a home in an existing housing development with an HOA must become a member. There is no other option. The overall purpose of the HOA is to represent the residents. Depending on how active these associations are, they can be quite effective in providing forums for common home-owner representation and needs.

HOAs Are Like Small Towns

A homeowners association governs the development like a small town. The HOA’s powers include imposing fines, organizing activities and providing certain services. It can also levy assessments and force home owners to pay them. Many HOAs have yearly dues, and a homeowners association can legally impose monetary fines to enforce its decisions. The groups usually appoint a board of directors, which may then elect an association president and other officers. Meetings are typically monthly but can be quarterly, depending on the size of the group.

If the HOA is larger, it will likely be broken down into committees. Committees are also appointed for various activities: maintenance, membership dues and neighborhood representation. An accounting committee or, in smaller HOAs, an individual is assigned to present the annual budget and monitor expenses and funds collected. During the foreclosure crisis, some HOA’s began to lose revenue as people living in homes facing foreclosure stopped paying their fees.

HOAs Can Promote Neighborhood Harmony and Uniformity

HOAs offer many benefits to the home owner. According to the bylaws of the association, it can collectively represent the group for whatever purposes assigned. For example, to maintain a certain degree of conformity, the association can stipulate which changes are permitted for the exterior of the buildings. Sometimes the HOA can determine acceptable noise levels. If there are common areas, such as gardens and pools, the members can appoint an internal management committee or elect to bring in an outside maintenance company. On snowy days, a snow-removal company may need to be called in, and this service will be paid for out of the association’s funds. For condos or groups with shared structures or parking lots, fees can go to upkeep.

HOAs Can Be Restrictive and a Financial Drain

If you want to change the color of your house or even add a new tree, you may run afoul of your local organization. Also, if your HOA decides to undertake a major capital improvement project and the governing group approves it, you may be left with no choice but to pay your share. If you fail to pay your dues or you go against the HOA rules, you could be assessed fees and late charges. If you disagree with some of the rules, it can be very hard to get them changed.

Overall, most people see an HOA as a positive. According to the Foundation for Community Association Research (FCAR), 70 percent of residents in common-interest communities say they are satisfied with their community-association experience. The FCAR’s research also found that 76 percent believe their own community-association rules “protect and enhance” property values.

 

Realtor.com


Should You Buy a Home That Has Been a Rental?

Wednesday, April 16th, 2014

Most homes on the market are owner-occupied, but that’s not always the case. In recent years, many home owners ended up renting out their homes when they could not sell but needed to move elsewhere. Now that the market is shifting, many of those accidental landlords are looking to sell. At first glance, buying a home that’s been rented out by the current owner may not appear different from buying any other home, but there are some potential issues to keep in mind.

1) Check the overall condition.
Some rental homes are in terrific shape: The renters have kept up with maintenance and have even made improvements such as fresh paint. In other cases, the rental hasn’t received much love. Because the home isn’t truly their own, some renters can be rough on a rental. Also, renters may not notice or report some of the maintenance issues that an owner would readily pick up on and address. A rented home may have additional wear and tear, especially if it has been used as a rental for many years and through multiple tenancies. Ask your insurance agent to check the history of past insurance claims on the property

2) How’s the neighborhood?
Factor in the neighborhood: Are the surrounding homes mostly rentals? Is the neighborhood mostly single-family homes or a mix of multi-rental units along with other homes? Owner-occupied neighborhoods can be better protected against possible market-value fluctuations. Also look at the appearance of other homes on the street. Do they have well-tended yards? How does the condition of the home you are looking at compare? If the home you are interested in compares poorly with others in the area, that may help you strike a better deal.

3) Is it occupied?
If there are tenants, tour while they aren’t home. While a tenant can be a source of information about a home, they may not want to move and may try to prevent the sale by complaining about the property. Look for signs of obvious damage, holes in the walls, stained or ripped carpeting, damaged flooring, leaky faucets, and mold. Be sure to check  out all rooms and the basement, garage, or attic. You can tell a lot about how the home has been maintained by looking at how the tenants are living in the property

4) Is it unoccupied?
If a home has been unoccupied for a while, find out for how long. Sometimes — although less common lately — these homes are listed at a reduced price. Unoccupied homes may have lacked attention and may need repairs or basic maintenance. If the home was unoccupied and the utilities have been turned off, that may prevent a prospective purchaser from doing a thorough home inspection. Depending on the area, sometimes utilities can be turned on temporarily, but it often requires putting the utilities in the prospective buyer’s name. Vacant homes can also have broken pipes, leaky roofs, mold or damage from pests, so a thorough inspection is vital.

Check the HVAC and get a home warranty. Being a rental sometimes the air conditioning filter was probably not changed, and that is the worst thing for the system. Your home inspection will alert you to any repairs the home may need before you move in, and it can give you bargaining power if there are potential issues.

 

Realtor.com


Mortgage rule changes are coming in 2014

Monday, December 16th, 2013

The world of mortgage lending has changed significantly since the housing bubble burst. Mortgage lenders have returned to traditional loan standards that require extensive documentation of income and assets for a loan approval

Government regulatory agencies also continue to react to the housing crisis, with more adjustments to mortgage requirements set to go into effect in 2014:

Qualified Mortgage Rules

Whether you’re thinking of buying a home or mulling over refinancing your mortgage, Jan. 10, 2014, could be an important date for you to remember. The Consumer Financial Protection Bureau is in the process of implementing regulations to meet goals set forth by the Dodd-Frank Act in Congress, which was meant to correct the errors that led to the housing crisis. The CFPB’s “Qualified Mortgage,” or QM, rules go into effect in January. Essentially, these rules require lenders to prove borrowers’ ability to repay a loan by meeting several guidelines, including a maximum debt-to-income ratio of 43 percent. While many lenders already limit borrowers to a similar maximum debt-to-income ratio, the new rules won’t allow for any compensating circumstances such as significant cash reserves or a large down payment to be considered in order to offset a higher debt ratio.

If you have credit problems or a high debt-to-income ratio, you may want to push through your loan application for a refinance or home purchase to make sure you close your loan before the new rules go into effect. However, many lenders are already using QM standards in order to make sure they’re in compliance with the regulation. Mortgages that don’t meet QM standards will have to be held by the lender rather than sold to Fannie Mae and Freddie Mac, so most lenders are careful to meet the new standards.

The 3 Percent Rule

The new QM requirements also limit fees for originating a loan to no more than 3 percent of the loan amount. If you’re financing a more costly home, such as a $400,000 home or more, the lender can easily keep fees under 3 percent, which in this case would be $12,000. However, if you’re refinancing a smaller loan balance or purchasing a less expensive home — for example, for $80,000 — the lender might find it more difficult to keep all fees under $2,400. Mortgage lenders are less likely to offer loans for smaller amounts since they won’t always recoup their costs and make enough profit to pay their staff. If you need a small loan, you may want to push to get it closed before Jan. 10, 2014.

Self-Employed Borrowers

One particular group of borrowers will most likely be impacted by the QM rules: self-employed borrowers. These borrowers already are heavily scrutinized and find it more difficult to obtain a mortgage because they must prove their income based on tax returns and profit-and-loss statements, rather than standard paystubs and W2 forms. The “ability-to-repay” feature of QM rules requires all borrowers to prove they have the cash flow to make payments on their mortgage. Self-employed borrowers often have fluctuating income and rely on cash reserves to pay bills in-between payments, but the emphasis on cash flow can make it harder for lenders to approve a loan even for someone with significant funds in the bank.

Potential Lower Loan Limits

The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, announced in October that plans to reduce the maximum loan limits for conventional conforming loans will be delayed until later in 2014. Typically, loan limits are adjusted on Jan. 1 of each year, but the agency decided to wait to see the impact of the introduction of QM rules before making changes. Currently, the limits are $417,000 in most housing markets and rise to $625,500 in high cost areas. If you need a mortgage near these limits, it would be wise to close your loan earlier in 2014 rather than later in case limits are lowered.

 

Realtor.com


Should You Buy a Home That Has Been a Rental?

Wednesday, September 11th, 2013

Most homes on the market are owner-occupied, but that’s not always the case. In recent years, many home owners ended up renting out their homes when they could not sell but needed to move elsewhere. Now that the market is shifting, many of those accidental landlords are looking to sell. At first glance, buying a home that’s been rented out by the current owner may not appear different from buying any other home, but there are some potential issues to keep in mind.

1) Check the overall condition.
Some rental homes are in terrific shape: The renters have kept up with maintenance and have even made improvements such as fresh paint. In other cases, the rental hasn’t received much love. Because the home isn’t truly their own, some renters can be rough on a rental. Also, renters may not notice or report some of the maintenance issues that an owner would readily pick up on and address. A rented home may have additional wear and tear, especially if it has been used as a rental for many years and through multiple tenancies. Ask your insurance agent to check the history of past insurance claims on the property.

2) How’s the neighborhood?
Factor in the neighborhood: Are the surrounding homes mostly rentals? Is the neighborhood mostly single-family homes or a mix of multi-rental units along with other homes? Owner-occupied neighborhoods can be better protected against possible market-value fluctuations. Also look at the appearance of other homes on the street. Do they have well-tended yards? How does the condition of the home you are looking at compare? If the home you are interested in compares poorly with others in the area, that may help you strike a better deal.

3) Is it occupied?
If there are tenants, tour while they aren’t home. While a tenant can be a source of information about a home, they may not want to move and may try to prevent the sale by complaining about the property. Look for signs of obvious damage, holes in the walls, stained or ripped carpeting, damaged flooring, leaky faucets, and mold. Be sure to check  out all rooms and the basement, garage, or attic. You can tell a lot about how the home has been maintained by looking at how the tenants are living in the property.

4) Is it unoccupied?
If a home has been unoccupied for a while, find out for how long. Sometimes — although less common lately — these homes are listed at a reduced price. Unoccupied homes may have lacked attention and may need repairs or basic maintenance. If the home was unoccupied and the utilities have been turned off, that may prevent a prospective purchaser from doing a thorough home inspection. Depending on the area, sometimes utilities can be turned on temporarily, but it often requires putting the utilities in the prospective buyer’s name. Vacant homes can also have broken pipes, leaky roofs, mold or damage from pests, so a thorough inspection is vital.

Check the HVAC and get a home warranty. Being a rental sometimes the air conditioning filter was probably not changed, and that is the worst thing for the system.

Your home inspection will alert you to any repairs the home may need before you move in, and it can give you bargaining power if there are potential issues.

 

Realtor.com


The Pros and Cons of Buying the Builders Model Home

Wednesday, August 7th, 2013

When you tour a new development, you are often shown the model home. The home has the all the gleaming finishes and perfect layout you desire. The model home is a marketing tool designed to show how beautiful your home can be — so why not buy the model itself? In many developments, the model is sold at a discount, because it isn’t as new as the other, freshly created homes.

Before you sign on the dotted line, there are some things to consider. While the home is new, it has seen a lot of foot traffic and use; it’s generally more “slightly used” than a completely new, untouched home. Another issue to consider: If the development is new, the model may not be available for immediate occupancy, because it is still being used to attract other home owners. It’s always important when moving into any new development to find out how many other owners are currently residing in your new neighborhood.

Pro: The model has the top-of-the-line finishes. Generally the builder will use the most desirable options to outfit the model home, including upgrades that would cost extra in other homes.

Con: The finishes may not work with your decor. If you buy a new, unfinished home, you may be able to choose some of the finishes yourself. Also, while the home is technically new, it is also slightly used. You have no way of knowing how many people have tromped through, flicking on light switches, turning on taps, and metaphorically kicking the tires on the home.

Pro: It’s beautifully decorated. The model home has generally been staged and styled by an interior designer for maximum appeal.

Con: It’s not decorated to your taste. If you don’t like the style of the model home, you may end up spending money redecorating to make the home align with your personal preferences. Also, if you have your own furniture, you may not want to pay for new furnishings. Make sure that the carpet and flooring aren’t too worn. If you notice any wear and tear, build those allowances into your offer.

Pro: The home has been landscaped to provide a more appealing look.

Con: Because the landscaping may be designed for low maintenance and lower water bills, it may not have the lush green lawn you desire. Also consider the location of the home: The model is often in the front of a development, while other homes may offer more privacy.

Pro: The appliances are often included and are generally top-of-the-line.

Con: If the home has been a model home for some time, the appliances may be a year or two old and could be outside the warranty. Ask the builder about warranties on all appliances included in the sale. Because the heating and cooling systems may have been working overtime for months, you may want to get a home warranty to cover any potential issues.

Work with a buyer’s agent who can help you negotiate so that you get the best deal possible. Even though you are buying a new home, make sure it has a through inspection. The model home is often where builders test out new ideas, and you want to be sure that the construction is solid and that no corners were cut.

 

Realtor.com


Five Reasons Pending Sales Fall Through

Thursday, June 13th, 2013

Buying a home can be a very emotional experience, even when it appears to going smoothly. When something goes wrong, it can be stressful. Your agent will likely prepare you for the possibility that a pending sale won’t go through, but when it happens to you, it can be heartbreaking. Help prepare yourself by learning a few reasons that pending sales fall apart.

1. You change your mind. Cold feet or, as it’s often dubbed, “buyer’s remorse,” happens surprisingly often: fear of commitment, fear of being overextended, fear that the house is not “the one.” Sometimes instincts are correct, but often people let the natural anxiety of home buying wrap around the home itself. The best way to prevent this is to prepare yourself before the process starts. Be practical about your needs, and be honest about whether a house meets them. Don’t allow yourself to be pressured into a home that doesn’t feel right. Limit your discussions about the house to your agent, family and close friends. More input and advice, even the most well-intentioned, can cause confusion.

2. You are unable to obtain financing. Sometimes a mortgage loan falls apart.  That’s why it’s important to be prequalified for loans, to avoid last-minute heartbreak. The rejection by a mortgage lender can be based on a poor credit score or negative items on a credit report. A buyer in need of a loan can correct errors on a credit report, but this generally takes a bit of time. Buyers need to be wary about taking out large loans for cars, furniture or appliances, as well as making major purchases on credit cards. These actions could compromise your loan if the lender runs a supplemental credit check.  A buyer can also offer to make a larger down payment, thus reducing the mortgage balance. If you are careful during the loan process, then you should be well on your way to financing your new house.

3. The home failed inspection. Hiring a professionally licensed home inspector can aid in detecting plumbing and electrical issues, roofing and drainage problems, or faulty heating systems. Repairs can often be negotiated into a contract so that either the buyer receives a credit or the seller agrees to make the necessary repair before the closing. Sometimes, however, your inspector can turn up something that is too large to repair, such as a structural issue.

4. You haven’t sold the home you already own yet. If you haven’t sold your house yet, and if your contract with the home owner is contingent upon selling, you may not be able to go through with the purchase. Most people cannot afford to pay two mortgages at the same time. Some buyers are able to take out a bridge loan, a form of short-term financing, to bridge the gap. New home buyers who have not yet put their old house on the market can save money with a home-equity line of credit. In this type of financial agreement, a lender extends a loan for a certain period, during which the collateral is the borrower’s equity in their own house. These two solutions can help you avoid the prospect of losing out on the home you want.

5. Your appraisal comes in too low. The lender will generally loan up to the appraised value of the home, so if the appraisal comes in lower than the potential mortgage, the buyer cannot purchase. At this point it’s time to negotiate. Either the seller needs to reduce the price to the appraisal value or the buyer must come up with the difference in cash.

All of these scenarios demonstrate why it’s important to maintain close contact with your agent throughout the process. The agent has weathered many sales and has probably saved more than a few from disaster. It’s much easier to go through this exciting and emotional life transition with a knowledgeable real estate professional at your side.

Realtor.com


Top 3 Myths About Foreclosures

Tuesday, March 12th, 2013

With an abundance of foreclosed homes and short sales on the market, it is tempting to believe all the pros and cons you hear about buying a bank-owned property. Below are the top 3 myths about buying a foreclosure.

Foreclosures sell at massive discounts, compared to other homes.
Reality check: while foreclosures might be discounted massively from what the former owner paid or owed, their discounts are much more modest when compared to their value on today’s market and the prices of similar homes.

When you buy a foreclosure, you should lowball the bank – they are desperate to get these homes off their books.
Stories in the press abound about the large numbers of foreclosed homes the banks have on their books. We’ve all heard the adage that banks have no interest in owning these properties. But the real deal is that they’re simply not desperate enough to give these places away. Also, the banks mostly service the defaulted loans – they don’t own them. Various groups of investors do, and they hold the banks accountable to selling the bank-owned property at as high a price as possible, helping them cut their losses. Many banks won’t even consider lowball offers, and many bank-owned properties actually sell for above the asking price. Before a bank will take a lowball offer, they will almost always reduce the list price first, and see if that attracts a higher offer than the lowball one they have in hand.

Foreclosures need a huge amount of work.
Ninety-two percent of consumers surveyed stated that if they bought a foreclosure, they would be willing to make home improvements after they closed the deal, with 65 percent being willing to invest 20 percent or less of the purchase price. Although stories of foreclosures missing plumbing and every electrical fixture are very memorable, many foreclosed homes need only the (relatively inexpensive) cosmetics that many new homeowners want to customize no matter what kind of home they’re buying: paint, carpet, etc.”

Realtor.com


Five Key Areas to Pay Attention to When Buying a Home

Monday, September 24th, 2012

Looking for a new home can be exciting and frustrating. You can help alleviate the frustration by paying close attention to five key areas of the homes you’re considering buying; it may save you money in the long run.

Don Walker is an inspector and owner of Ace Home Inspections. He says there are five areas in homes that he frequently reports problems with. They are electrical, foundation, plumbing, the attic, and landscaping.

Electrical
Walker says sometimes homeowners assume with newer homes that all will work just fine but that’s often not the case. “I [inspected] a brand new house — four years old but the electrical was all done incorrectly,” says Walker.

Having a complete home inspection will help to rule out any problems and point out any areas of concern. However, even as you’re browsing homes, buyers can start to make note of the key areas that Walker mentioned, such as the foundation.

Foundation
Walker says a four-year-old home he inspected recently was already showing trouble signs which could result in a costly repair project. “It was a model home. What [the homeowners] did was plant trees for shade to make it look really nice, but they planted the wrong trees and they’re going to crack the foundation and it’s going to cut the property value down by $50,000,” says Walker.

Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. “As you walk through the house, 21 feet in and 30 feet deep, there’s just too much root invasion and it’s going to ruin their tile,” explains Walker.

He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, “which means the foundation is moving.”

However, just because you see cracks doesn’t mean there is a foundation problem. “Most people don’t understand that there are natural cracks in a house. That’s why when we do an inspection report we have to look at it and say ‘Okay, this is a typical crack and this one is an untypical crack,'” says Walker. He says some cracks may lead to other problems while others won’t.

Plumbing
Walker says another big area of concern is the plumbing. It’s an area that you can’t always spot as easily but it can create expensive repairs if plumbing issues go either undetected or are not properly fixed. “Mold forms underneath sinks when people have a leak and they fix the pipe but they don’t take care of the mold,” says Walker.

He says things like caulking the sink can help prevent mold. “That’s my number one thing I always find — bad sinks,” says Walker.

He says that when you look at the sink, look behind it and most of the time you will discover a little crack. “What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it’s in a perfect position to create mold,” says Walker. The dampness, humidity, and lack of light can turn that area beneath the sink into a mold-breeding ground.

Attic
“You can tell everything about the house by the attic,” says Walker. He says other areas of the home can be covered up if a repair had occurred. For instance, if there was a leak and it damaged a wall, with the right contractors and repairs it can be made to look like new and, hopefully, function like new. But Walker says the attic is sort of the eyes to the soul of the home. “In the attic you can tell where all the damage has been,” says Walker.

“If you’re in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced,” says Walker. He adds, “You can tell if the roof is good because you can look right at the wood.”

Landscaping
“There should not be moisture or plants next to your house,” says Walker. He says there should be a 12 inch barrier between the landscape and the house. Walker says otherwise you run the risk of having the foundation crack and affect the home. What happens is, as the landscape that is too close to the home is watered, the foundation and soil expand. Then, when no watering occurs, the foundation dries up and shrinks and this can cause it to crack.

Remember, knowledge is power, so learning about the home before you close the deal on it will keep you from making a mistake that may cost you extra out-of-pocket money later.

Realtor.com Blog


Seven Helpful Tips For New Homeowners

Wednesday, May 16th, 2012

You’ve done it. You’ve signed the papers, received the keys and the house is yours. Now what? There are still many things to keep in mind. Below is a list of seven skills that every new homeowners should know.

We recently came across an article about some necessary skills every homeowner should know and it got us thinking…what skills should we put on such a list for all those clients who we just helped become homeowners. Well here is what we came up with.

  1. Keep all warranty, assembly, and operating information for each appliance or item in your house neatly filed, this way when something goes down you know where to go to find a solution.
  2. To locate a stud, knuckle the wall starting in a corner to compare a hollow sound to a firm sound, and then use some simple math to guide you to others as most studs are at 16 inch intervals.
  3. Unclogging a drain typically will mean using a plumbing snake to pull the gunk out. Nowadays you don’t even need a plumbing wrench to separate the pipes under your sinks to find debris. Of course ensure water is off and you have plenty of towels and buckets ready, or you could use some drainage chemicals to create a small hole in the gunk and save the heavy lifting for later.
  4. Know where your breaker box is and ensure each is labeled with a permanent marker. To find corresponding plug each switch controls have a friend plug a lamp in to sockets one by one. You will use this information one day.
  5. Know where your main water and electrical shutoffs are, either by referring to your inspection or asking the employees when they come out to read your meters.
  6. Have a list of vendors who perform every job that could possibly come up readily accessible so at any time you need help you can get it.
  7. Every once and awhile your house will need routine maintenance like an oil change for a car…things like A/C units, older appliances, etc…If you always wait for it to break first it will cost you in the long run.

Realtor.com


What To Look For When Doing A Personal Inspection Of A Home

Monday, April 16th, 2012

When you buy a home you will likely hire a professional to do an inspection but as you are narrowing down your choices you can do your own informal inspection, weeding out houses that have obvious issues. Here are a few tips on what to look for:

As you near the point of making an offer on your target property, you’ll want to include the following in your personal inspection of the property:

– Check the foundation for cracks.
– Does the house show any obvious water damage?
– Examine ceilings, window areas and walls.
– Check for damaged plaster and wallpaper.
– Do you detect dampness or mold?
– Examine the attic for water leaks and structural integrity.
– Check electrical, heating and plumbing.
– Test the air conditioner and thermostat.
– Look at the major appliances included in the sale.
– Check for building quality and drafts.
– Does water drain away from the house, or toward?
– Are trees to near the foundation?
– Check additional structures, such as a garage or shed.

Covering your bases prior to making your initial offer, will help you make a solid decision as you move through the process. Further, if you make your offer contingent upon inspections, you’ll have time to hire a professional to ensure that the home you are buying is in the condition that you are willing to pay for it.

Realtor.com




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