Archive for Real Estate

What’s Earnest Money for?

What is earnest money for?  Earnest money does a couple things for first time home buyers.  One, it’s a show of good faith to the seller that you have the financial capacity to purchase the property.  Two, and more importantly it’s a remedy for default in case you decide to illegally breach the sales contract.

So it’s like a deposit?  Yup, that’s another way to think about it.  If a first time home buyer breaches the contract, the seller is going to be very inconvenienced by having to go back on the market and find another buyer.  They may also be out a fair amount of money, so they just want to confirm that the buyer is serious about purchasing their home.

How much does earnest money have to be?
  It really depends, but a general rule of thumb is somewhere between 1-3% of the purchase price.  For instance, somewhere between $2,000-6,000 for a $200,000 dollar home.  Again, this is just an example as the amount can vary in each specific money in the windsituation.

That’s a lot of money!  We realize that this can be a large amount, especially for first time home buyers just starting out.  Please keep in mind that like a deposit this money is credited towards the final purchase.  So as long as you DO NOT breach contract and move forward to closing (which most buyers do) the earnest money will be credited towards your down payment amount.

But what if I decide I don’t want the house?  There are also several protections in the contract that give you outs in certain instances, but we’ll save this for another blog.  Before writing an offer and making a decision about earnest money, be sure to consult with your licensed real estate broker.

Don’t make the biggest decision of your life without getting educated!
  If you’d like to learn more about earnest money or the home buyer process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

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What if I Don’t Close on Time?

What if I don’t close on time?  Closing your home purchase on time is crucial!  Many lenders think if a first time home buyer misses their close date it’s not really a big deal.  “Just get an extension”, they might say.  But it’s not this easy, so make sure you ask your lender up front how long it will take them to process your file, and hold them to it.

How does it affect me?  Much of first time home buyers lives will revolve around their closing date.  You’ll give your landlord notice that your vacating, you’ll schedule movers, you’ll potentially have new furniture delivered.  If you miss your close date it will probably throw a monkey wrench into your entire life, not to mention you not having a place to live for a while!

Does the seller care?  The seller’s life will also revolve around the close date.  They’ll be scheduling similar situations, so they want to stay on schedule as much as you do.  They also may be buying a new place, and they usually Senior man showing a for sale signcan’t close on their purchase until you close on purchasing their existing home.  So the seller is very concerned with you closing on time.

Sounds like just a bit of inconvenience.  The biggest thing for first time home buyers to be aware of, is if you miss your close date the seller DOES NOT have to give you extra time to secure your loan.  In today’s current housing market, many buyers are placing back up offers on homes that are already under contract with other buyers.  If you miss your close date it gives the seller a way to EXIT the contract and potentially sell to another buyer!

Don’t make the biggest financial decision of your life without getting educated!
  If you’d like to learn more about the closing timeline or the home buying process in general, please go to our Calendar/Reservations page and register for one of our First Time Home Buyer/Down Payment Assistance workshops.

 

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What if I Can’t Afford What I Want?

What if I can’t afford what I want?  As prices continue to rise, we hear this more and more from our first time home buyers.  You may want a certain number of bedrooms and bathrooms, but your price range may make it tough to accomplish this in the neighborhood you want to be in.

So what are my alternatives?  The first and maybe easiest way to accomplish this it to look at other property types.  For instance, if you are looking for a single family home but feel like they’re out of your price range, you could start looking at townhouses or condos.Two lawn chairs

But I’ve always wanted a yard.  We realize for some first time home buyers, a single family home is all they’re willing to consider.  The next possibility is moving outside your specific geographic area to see if outlying areas are more affordable.

But we have to stay in our existing school district!  Sometimes first time home buyers are absolutely NOT willing to look outside a specific area due to school zoning or other reasons.  A third option is considering a property that needs some cosmetic updates.

As long as I get the number of bedrooms/bathrooms I want.  It may even make sense to look at a home with LESS bedrooms and baths, as long as it has the potential to add these things later.  Many of our first time home buyers are considering starting families but don’t have them yet.  So a strategy could be looking at homes with unfinished basements, where you could add bedrooms and baths later.  The point is, when buying your first home it may make sense to think outside the box.

Don’t make the biggest financial decision of your life without getting educated!  If you’d like to learn more about the home buying process, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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First Time Home Buyer Market in Seattle

How’s the first time home buyer market doing in Seattle?  Competition is still STIFF.  Low inventory levels are still leading to multiple offer situations and even some bidding wars.  Months of inventory (essentially supply vs. demand) is at about 1 month for entry level housing in North Seattle.  Many other first time home buyer demographics are seeing similar trends, which means its a seller’s market in many places around the Greater Seattle area.

So when will it get better for first time home buyers?  In When Will We See More Listings?, we described a potential timeline for more listings coming on the market in the near future.  We’re still speculating that this may come to fruition in late spring/early summer of this year.  If this is the case, first time home buyers should have more to choose from in the next 4-6 months or so.

So should first time home buyers wait until there are more choices? 
In our past blog we also described some pros/cons for waiting.  There are numerous variables to consider such as appreciation levels, interest rates, life circumstances, etc.  It really just depends on your specific situation, so you should gather information based on YOUR goals, not necessarily what the media is covering in general.

Don’t make the biggest decision of your life without getting educated! 
If you’d like to learn more about first time home buyer inventory levels in your specific area, or about the home buying process in general, please go to our Calendar/Reservations page and sign up for one our FREE First Time Home Buyer workshops.

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First Time Home Buyers Should NEVER Buy at an Open House‏!

Why shouldn’t first time home buyers buy at an open house?  Open houses can be traps for first time home buyers.  You can OVER PAY.  You can end up with NO REPRESENTATION.  And you can end up with BUYER’S REMORSE.

Why would you over pay at an open house?  Especially in today’s market, open houses can be feeding frenzies for first time home buyers.  They are generally crawling with buyers, so even if no one else is interested in the house you may have the perception that it will be a bidding war and therefore end up offering more than necessary to get the house.

How do I make sure I have representation?  We’ve written past blogs about Who the Listing Agent Represents. Dual agency (working with the listing agent) is something you want to avoid like the PLAGUE, especially considering first time home buyers generally don’t have to pay for their OWN representation.

How do open houses increase buyer’s remorse?  Again, if there is a lot of activity at the open house, you may get emotional and make a snap decision.  This may lead to buyer’s remorse as you may have decided not to buy the house under different circumstances.

So how do I get inside the house?  All first time home buyers should hire a professional real estate agent.  This will ensure that they have their own representation and a professional looking out for their best interest.  Your real estate agent will schedule PRIVATE showings so you can view the home without the unnecessary duress of an open house.

Don’t make the biggest financial decision of your life without getting educated!  If you like to find out more about hiring a real estate agent or the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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