Tag Archive for buying a home

06 Jan 2014
Real Estate

Should I Hire Multiple Realtors?

Should I hire multiple real estate agents when buying a home?  We run into this question a lot.  Generally, the answer is, “No, you shouldn’t.”  Working with more than one agent usually does you more harm than good.  If you’re looking in two DRASTICALLY different areas, say Seattle and Tacoma, it may make sense to work with different agents from respective areas.  But if you’re mostly looking in the same general geographic area, there’s usually no real benefit.

But my dad said you should always work with as many agents as possible!  Many people think by using multiple agents, they’ll have access to more listings.  This may have been true decades ago, before the internet was invented.  But now a days, most listings are in the MLS and therefore online, so any agent you hire should have access to all available listings.

But if I don’t have to pay my agent for their time, how can it hurt to hire several?  Some people feel that pitting multiple professionals against each other will make them work harder.  It actually tends to be the opposite.  If everyone involved knows you might buy from someone else, they may just try to make a quick sale and sell you the first thing you see.

So if I can find listings online, why should I work with an agent at all?  An agent should be doing much more than showing you homes.  They should be educating you as to whether or not the home is a good investment, structurally sound, will have good resale value, etc, etc, etc.  This is a big decision and you need to align yourself with a professional that will have your best interest at heart.

So how do I know which real estate agent to work with?  You should talk to more than one professional.  Learn which questions to ask to ensure that the person you ultimately hire is the right one for the job.  Like any industry, there are awesome people in the real estate field and lame ones.  Make sure you pick the right one.

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

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10 Sep 2013
Real Estate

How Do I Choose a Real Estate Agent?

          

How do I choose a real estate agent?  There are many things to consider when choosing a real estate agent to represent you in a home purchase.  Just a few of your criteria should be financial, structural, area and market knowledge.  Many people think they can represent themselves when buying a home, but this can be a risky strategy especially for first time home buyers.

Isn’t my lender the one that needs a financial background?  Yes, of course your lender should have a strong grasp on the different loan programs available to first time home buyers.  However, your lender isn’t in the car with you every time you view a property.  So it is imperative for your real estate agent to also understand the intricacies of the loan your utilizing.  If they don’t confirm this info before showing you property, it’s time to find a new agent.

But it’s the home inspector that assess the structural integrity of the property, right?  For sure.  No matter how much your agent knows about construction, every first time home buyer should always hire a third party inspector to assess the property.  However, if your agent at least has a basic understanding of construction, they should be able to steer you away from the really poorly constructed properties, so you don’t keep wasting money on hiring an inspector.

What’s area knowledge mean?  It’s often helpful to hire an agent that has a familiarity with the demographic that you are considering purchasing in.  The more they know about the area, the more they’ll be able to guide you in the right direction.  I.E. good school districts, etc.

So what about market knowledge?  The real estate market is forever changing.  Is this a buyers market, or sellers market?  Can I negotiate this price?  Will I have competition for this home?  These questions will be best answered by a FULL TIME real estate agent.  For an agent to have a strong understanding of the market, they have to do a consistent level of business.  We understand that everyone knows a real estate agent, but please make sure the one you hire will be able to represent you to the level that you deserve!

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

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18 Oct 2011
Mortgage

FHA vs. Conventional Financing

Whether you are a First Time Homebuyer or have previously owned a home, an FHA loan may be the right choice to buy your single family residence, condominium or townhouse. FHA is a government backed program and stands for Federal Housing Administration. FHA offers great interest rates on 30 year fixed rate loans and Adjustable Rate Mortgages making owning a home much more affordable than many people might think. FHA allows buyers to secure great financing by charging borrowers an Up Front Mortgage Insurance Premium of 1% of the loan amount (which is tacked onto your loan balance and paid off over 30 years). There is also an annual Mortgage Insurance Premium which is broken down and paid on a monthly basis. That premium starts at 1.15% of the loan amount annually (and decreases as the down-payment increases). The minimum down-payment is 3.5% of the purchase price for the home.

Now for how a conventional loan works… Conventional loans are not backed by the government. They are also a great fit for many buyers whether first time homebuyer or not, buying a single family residence, condominium or townhouse. Conventional lending offers great fixed and ARM programs just as FHA financing does. Conventional lending does not have the backing/insurance of the government against a potential default of the loan. Therefore if a person is putting a down-payment of less than 20%(no mortgage insurance necessary over 20% down with conventional), there will be a different type of Mortgage Insurance secured. These mortgage Insurance programs come with a much wider array of structures. With Conventional, there is no mandatory up-front Mortgage Insurance Premium. There is an annual Mortgage Insurance Premium broken down and paid monthly. There are also programs available where the lender will pay these premiums for you in exchange for a higher interest rate on the loan, or even programs where the buyer can pay the premiums up front in full or partially. The minimum down-payment for conventional lending is 3%. However at a 3% down-payment, securing mortgage insurance can prove to be difficult and expensive. A popular down-payment amount for conventional lending begins at 5% where the mortgage insurance is more easily attainable and less expensive.

Here are a few key points in determining whether FHA or Conventional is best for you… FHA financing is generally more lenient on credit ratings, income history and debt to income ratios. It is generally easier to navigate through the FHA underwriting process. If a borrower has a marginal credit rating, a relatively high debt to income ratio or an unstable work history an FHA loan will most likely be the best option for them over a conventional loan. On the positive side for conventional lending, if a borrower has a good credit rating, a stable employment history and a relatively low debt to income ratio there will often be some Mortgage Insurances choices for them that will be beneficial over the FHA’s Mortgage Insurance program.

While the above information gives you some idea of the differences, comparing FHA financing against Conventional financing is something that should be seriously considered on a case by case basis. There are many factors that need to be taken into consideration in determining which type of financing will best suit your needs/goals as a homebuyer. If you would like to learn more about financing options, please go to our Calendar page and reserve a spot in one of our FREE First Time Home Buyer seminars.

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15 Sep 2011
Real Estate

Is Buying a Short-Sale Really Worth It?

The general consensus within the current buyer pool seems to be that purchasing short-sales are the best way to get a good deal.  A lot of this seems to stem from the fact that people like the idea that they can buy a property for two-thirds or maybe even half of what it may have sold for several years ago.  However, how much a property has dropped in price may not always be a very good indicator of how good a deal is.  A better indicator is how much below CURRENT market value a property is priced.  It is true that some short-sales are priced below fair market value and can be very good deals…as long as you’re prepared to weather the storm that comes with them.

Short-sales are called such, because the homeowner owes more on the house, than the house is actually worth.  So even though technically they are the owner on title, they still have to get bank approval in order to sell the house at a loss, because usually in the end it is the bank that takes that loss.  The bank does reserve the right in many situations to attach an unsecured deficiency judgment to the homeowners credit report, and does so in many cases.  This is important for the buyer to know, because if the homeowner/seller isn’t aware of this risk upfront, it could kill the deal in the eleventh hour.  Once they get to closing and are presented with a document from the bank stating that the bank reserves the right to pursue the homeowner for this deficiency, the homeowner may decide to refuse to sign the closing docs.  Which ultimately means the buyer does not get the house.

Some of the other items that could arise during a short-sale are unpaid utilities, unpaid Home Owners Dues (for condos), negotiation fees, repairs and timelines.  Unpaid utilities and HOD’s, can usually be assessed up front.  A call to the city and the homeowners association will usually reveal whether or not both items are paid current.  Negotiation fees should also be stated up front.  This is the fee that is paid to the negotiator representing the homeowner.  Granted, on the surface it may seem odd that the buyer would have to pay this.  However, typically for a homeowner to be approved for a short-sale in the first place, they have to prove that they can no longer make their payment because they are insolvent.  The bank will generally not pay for it as it is paying for the representative that is negotiating against them.  So the fee is typically passed on to the buyer.  In some instances you may ask for the homeowner to give a seller credit, which in turn can be used to pay for the negotiation fee.  However, lenders will typically not allow a buyer to receive more than 3% of the purchase price in the form of seller concessions.  So if you were planning on using that 3% towards your closing costs, there may not be enough left over to cover the negotiation fee.

Repairs and timelines can often be the items that are harder to account for on the front end, before actually getting into contract.  From a buyers perspective, it is usually a good idea to plan on not being able to ask for any repairs on inspection.  As I stated before, the seller is insolvent and typically cannot afford to make any repairs.  They also don’t stand to take any money away from the table, so they don’t really have much of a vested interest in making repairs to the property.  The bank is not actually party to the contract, so they also will not make any repairs to the property as they have no authority to do so.  This may not be an issue for you, as long as you’re aware of it going into the situation.  The other item that can be hard to pin down is when is the transaction actually going to close.  It often can take the bank 3-6 months to approve a property for short-sale.  Once they do approve the transaction they usually want to see it close within 30 days.  So if considering a short-sale, it is beneficial to be in a month to month rental situation so that you can move at a moments notice.

These are only some of the things to be aware of when purchasing a short-sale.  All of these situations may not occur simultaneously, however one or two of them often coincide together.  If you’re thinking about buying a short-sale, or just buying in general, go to our Calendar page and sign up for one of our FREE seminars.

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