Homeowner Advice

We encourage you to use the Homeowner's Advice blog to educate you on the benefits and challenges of home ownership. If you have any questions, please contact me directly!

Avoid These Common Seller’s Mistakes

May 12, 2016 by Team Ed Martin

Selling your house can be both exciting and emotional. You may be looking forward to a great change with a move to a new town or a larger house, but you are leaving a home full of treasured memories. Although you have strong attachments to your home, it’s important put aside sentimental feelings and make this sale one of your smartest business moves. It pays to do your homework upfront in order to sidestep the most common seller mistakes. Think carefully about each of these pitfalls to avoid frustration for you and your family, and save thousands of dollars.

Mistake #1 – Trying to Sell Your Home before It’s Physically Ready
Don’t rush when making necessary repairs and cosmetic upgrades before putting your home on the market. You will lose money if you don’t make repairs ahead of listing your house thereby letting prospective buyers see the home’s faults. You are nearly guaranteed that offers will be lower, and the buyers will want credit back for work that still needs to be done after your property is listed.

Mistake #2 – Hiding Your Home’s Flaws
Trying to cover up serious problems like foundation issues, water damage, or mold can come back to haunt you. Don’t try to keep your home’s history a secret from the buyers. They will likely be discovered during the home inspection, and you could lose the sale. Also, if hidden problems surface after the house is sold, you could be faced with a messy legal battle. Be upfront with both your listing agent and your buyers.

Mistake #3 – Selling Your Home Without a Professional Real Estate Agent
Statistics show that homes without representation remain on the market longer and end up selling at a lower price than those listed with a professional. Your agent will help you price your home, research comparable properties, market and show the property, deal with the buyers and their agent, and help you negotiate the mountain of documents that goes along with a house sale.

Mistake #4 – Setting an Unrealistic Price on Your Home
Even in markets where inventory is tight, sellers need to be careful about overpricing their home. Properties that are priced too high frequently end up selling for less than they would have if they had been priced appropriately from the start. Pricing a home to sell is an art. You must look at comparable sales in your immediate area, as well as market movement, demand, location, and your home’s condition. Sellers who are forced to lower their asking price after their home has been on the market for several weeks lose their competitive edge in final negotiations.

Mistake #5 – Marketing with Bad Photos
Over 90% of buyers begin their search online, so your photos make the first and lasting impression. Make sure you and your agent post excellent photos to show off your property and its best features. Too many homes are shown with poorly framed, crooked photos of cluttered rooms. No appeal there! This is an easy one to get right, so be sure to nail it.

Mistake #6 – Refusing to Negotiate
Although your home has a lot of sentimental value to you and your family, it must be regarded as a commodity once you put it on the market. Put your emotions aside and be ready for reasonable negotiations. You need to start with a fair and realistic price on your home, but you should also build in a little elbow room. Many buyers will offer an extremely low-ball price just to see what the response will be. Of course, they want to pay as little as possible, and they want to feel like they got a great property at a bargain price. You can keep the buyers happy by accepting a bit less than your asking price, while still making the profit you need. An experienced real estate agent is an invaluable asset for negotiating the tricky path of getting your price without scaring off the potential buyer.

Benefits of Owning a Home

May 11, 2016 by Team Ed Martin

The emotional and financial stakes are high when purchasing a home, but rewards can be, too. There are intangibles that are tough to measure, such as stability and pride of ownership. However, there are other substantial benefits that are important to consider. When considering purchasing a home, be sure to look for a house that can grow with your family. The financial benefits of home ownership increase over time.

You don’t own anything when you pay rent. However, every mortgage payment increases your degree of ownership in your home and your equity grows. Home ownership requires buyers to save for a down payment and then save each month by paying down a portion of the mortgage principal. To equal this savings, renters would have to invest an amount equal to a down payment plus the monthly savings. Most renters don’t do that.
Your costs tend to be more predictable and more stable than renting if they are based on a fixed-rate mortgage.
You can deduct mortgage interest and property taxes.
In the long term, buying is cheaper than renting because, over time, the interest portion of your mortgage will eventually be smaller than rent you would have been paying. So, instead of paying off your landlord’s building, you are paying off your own home.
You can borrow against your equity to pay for major purchases, such as college tuition or remodelling.
When you sell your home you may qualify for capital gains exclusion depending on your total financial picture, it’s best to reach out to your accountant for full details.
Your home is indeed your castle to do with as you like. Paint the walls any color you choose and bang nail holes where ever you wish.
You have greater privacy without any requirements imposed by a landlord.

First Time Home Buyers

May 11, 2016 by Team Ed Martin

Buying a first home can be challenging and a little intimidating. Should you grab the first house that you can afford, or is it better to just keep renting? Although there is a steep learning curve if you hope to become a homeowner for the first time, some smart planning can make the process easier and get the most out of the purchase.

How’s your credit?
This is a good place to start. Your credit score is one of the most important factors in qualifying for a mortgage loan, so get a sense of where you stand. You can get a free credit report from each of the three credit bureaus at AnnualCreditReport.com. Check them over for mistakes, unpaid accounts or collection accounts. Be aware of the amount of credit you are actually using relative to your available credit limit. Repairing damaged credit can take time, so start this process at least six months before you start home shopping.

What are your assets and liabilities?
You need to have a good idea of what is coming in and what is going out every month in your household budget. Tracking income and spending for a couple months is a good idea. Lenders will want to know about the regularity of your cash flow. If you are self-employed or work on commission, they may want to see a solid two years of earning history when considering your loan.

Organize your documents
Lenders typically want to see two recent pay stubs, the previous two years’ W-2s, tax returns and the past two months of your bank statements.

How much can you qualify for?
You need to know how much you can afford to spend. There is no fixed debt-to-income ratio required, but you should not plan on spending more than 28 percent of your gross monthly income on housing. Lenders will consider how much other debt you have and how long you’ve been at your current job, in addition to your monthly income.

How much can you afford?
Figure out how much you will need for a down payment and your monthly mortgage payment. You also need to look at the home’s total cost. Be aware of closing costs, property taxes, home insurance costs and how much you plan to spend to maintain or improve the property.

Find a real estate agent
A professional agent can help you find properties in your price range and market area as well as protect you from the problems you may encounter during your search. Your agent will help you find a home, make an offer, negotiate price, get a loan and work through all the associated paperwork. Count on your agent’s expertise as a valuable asset as you make your first home purchase.

You’ve bought your new home -- now what?
Congratulations on becoming a new homeowner! There are still a couple of good tips to keep in mind as your new place becomes your home. First, keep saving. An emergency fund for unexpected, yet inevitable, major expenses arise, such as broken hot water heater or air conditioning system. Also, keep up regular maintenance. Making home repairs while they are small is easier to manage and less expensive.

Home Buying Tips

May 11, 2016 by Team Ed Martin

Buying a home may be the largest single purchase of your life and the process can be daunting. Organize your plans and expectations in the following order to simplify and smooth your way into home ownership.

Set Your Priorities
Whether you are a first timer or a repeat homebuyer, this is an emotional and financial decision. The best negotiators are the most informed. What can you afford? What is your credit rating? Do you have a down payment? Do you know the neighborhoods you prefer? What are the recent sold prices of the homes there?

Hire a Real Estate Agent
The process isn’t easy, and you will be glad to have experienced, professional advice to help your find properties, as well as guide you through with the maze of forms, financing, inspection and negotiating. Find an agent who you like and who knows the community well.

Arrange Financing
Most buyers need to finance the home purchase. Consult with a lender to find out the different types of mortgages and how you quality. Find out how much you can afford to borrow and get pre-approved. This is a crucial step before beginning your home search.

House Hunting
Looking at properties can be fun, frustrating and challenging. Where to live? What style of home? Old or new? Ready-to-go or a fixer-upper? Searching websites will bring up thousands of homes for sale. As you educate yourself on the market, your agent will help you narrow your priorities and make an informed decision about your final choices.

Make an Offer
This is another area where your agent is invaluable in negotiating for you. Decide whether or not you will go with the asking price. The offer will include conditions, or contingencies, necessary for the sale. These are items that must be satisfied within a set time frame for the sale to go through. A home inspection also should be scheduled.

Close the Deal
Closing or settlement or escrow are all terms for finalizing the sales transaction. The buyer and seller sign numerous documents and the closing agent disburses the money. The title company is responsible for having the deed and other documents recorded at the county office.

The Keys, Please
The home is yours. Your contract states when you can take possession of your new home. Ask your agent if you will get the keys at closing or after the deed is recorded. Along with the keys, you should receive garage door openers and security alarm codes if those are included. Then you are ready for the moving van, unpacking boxes and hanging pictures!

Moving In

May 11, 2016 by Team Ed Martin

When closing is finally complete and the keys to your new home are in your hand, there are a number of things you will want to do to make your move as smooth as possible. If your schedule allows, plan on a day or more to get your new place ready before the boxes actually come through the door. Then move through the following checklist.

Change the Locks
You really don’t know who has keys to your new home, so changing the locks gives you assurance that you are the only one with access. New deadbolts are the smartest choice, and installation is not expensive.

Locate the Mains
Find the location of your new home’s breaker box. You don’t want to put this off until an incident leaves you fumbling in the dark looking for a flashlight that is still packed away. If the breakers aren’t labelled, get this done to save guesswork later. Finally, find the main water valve to your new home.

Pest Proof
Setting off a bug bomb or having an exterminator spray before you move in is a good plan. Even if you don’t see any crawly things, they are likely there, and you don’t want to share your new place with them.

Deep Clean
It will never be as easy to clean your new house again as when it is empty. Wipe out cabinets and add shelf paper if you like. Dust baseboards and windowsills. Have the carpet steam cleaned. Run a phantom load through the dishwasher and washing machine. Wipe out the refrigerator, freezer, and oven.

After the Movers Leave
Inspect everything after the boxes and furniture have been moved into your new home. Unpack the essentials first, including towels, bed linens, toiletries, and a enough clothes for the next few days. Find the coffee maker and the pet supplies, A few bumps and scrapes are likely during unpacking, so unpack a few basic first aid items. Make the beds. Other things for your “open first” box: toilet paper, trash bags, paper towels, kitchen basics and scissors. Once all those are done, you can move onto everything else from organizing closets to hanging pictures.

Let Everyone Know
You have a new address, and you need to share it. Fill out change of address information with the post office, credit card companies, banks, insurance company, and magazine subscriptions. If you have moved to a new state, your automobile registration, driver’s license, and voter registration will need to be updated.

Foreclosures & Short Sales

May 11, 2016 by Team Ed Martin

A foreclosed property is one where the owner has been unable to meet monthly mortgages payments and the property is now owned by the bank. A foreclosed home is also referred to as an REO, or a Real Estate Owned property.

Although some REOs may be vacant or need repairs, they frequently look just like other homes on the market. Typically, they are sold in as-is condition, but they are often in move-in condition which may make they appealing to many buyers. Be aware, however, that the buying process of an REO is not exactly the same as other home purchases. Working with an agent skilled in the REO transaction will be a huge help answering questions and streamlining an REO purchase experience.

Banks are always motivated to get these properties off their books, and they usually hire a real estate agent to list it for sale. That means you can expect to find REOs listed alongside homes being sold traditionally in the same neighborhood.

Pros to Buying a Foreclosed Property

You can often expect to pay below-market price for the property.
You can secure financing for your purchase with a traditional mortgage the same as you would a “normal” home purchase.
You can do inspections, purchase title insurance and make your mortgage arrangements before completing the purchase.

Cons to Buying a Foreclosed Property

You will find that many banks will only sell these properties “as-is”, meaning you will be responsible for paying for necessary repairs.
Banks rarely negotiate the price they’ve set on foreclosed properties. They’ve researched the market and have set a price that they find reasonable and are very unlikely to go lower. However, since most REO properties are priced below other homes for sale in the same neighborhood, this isn’t necessarily a bad thing for you as the buyer.
The purchase process frequently takes longer than a traditional home purchase.

The Difference between a Foreclosure and a Short Sale

As explained above, an REO is a foreclosed property that is now owned by a bank. A short sale is a transaction that happens when an owner owes more on the mortgage than the home is currently worth and the bank agrees to a sale less than the mortgage balance in order to avoid a foreclosure. These properties belong to the current home owners, not to the bank. The number of short sales has increased in recent years so you are likely to run into properties like this during your home search. Like REOs, short sales can be complicated, so you will want to work with an agent experienced and trained in negotiating these transactions.

Short sales look like other listings, but they likely have a lower asking price than other comparable properties. The term “short sale” is a contradiction because the sales process can take longer than a traditional purchase. However, because more and more short sales are appearing on the market, lenders are streamlining their procedures making it less time consuming. Data shows the amount of time necessary to close a short sale has decreased in recent years.

Possible Short Sale Challenges

Second mortgages: It is possible that a second lender might not agree to the same terms that have been set by the seller and the primary lender.
Mortgage Insurance: The mortgage insurance company is another entity that must agree to the short sale
Other liens on the property: A lien is a claim by a third party on a property for money owed. Liens must be addressed before the home can be sold whether or not the transaction is a short sale.
Government-backed loans: If the seller’s loan was an FHA or other government-backed loan, it can cause delays and challenges because the government must approve the sale arrangements.
HOA’s: Home Owners Associations may have transfer fees, document costs and unpaid dues. All of these must be addressed and a lender may or may not agree to pay these expenses.

You need patience and persistence in closing a short sale. A couple smart tips for short sales include hiring an agent experienced in this area and getting prequalified for your mortgage. Have a home inspection done, but be aware that you will likely be responsible for all repair costs, so weigh that against the reduced price of the property. You also need to know who is paying the agent’s commission and if you have to make up any differences there.