Better Homes and Gardens Real Estate Life

Category: Tips for Buyers & Sellers

  • Step 4. Shopping for a Home

    Looking at homes can be an exciting adventure.  Once you decide you’re purchasing a home, window shopping becomes a more serious venture. Completing the preapproval process with your lender before beginning the serious home search is so crucial because some homes that may be “dream homes” can be out of the realistic budget. A pre-approval letter helps narrow the home search into a reasonable price point, helping real estate agents provide a list of attainable homes in the desired area. Now that the loan process has begun and the agent attained it is time to shop for your home! Here are some tips to narrow the search even further to the ideal home.

    Know What You Want

    This may seem like an obvious statement, but dreaming of a home and purchasing a functional home in the correct price range is a different story. Make a list of your priorities and deal breakers in a home. For example, a buyer may need 4 bedrooms and 2 full bathrooms to accommodate family members, but cannot have the bedrooms on different floors due to smaller children in the household. This narrows the search for you and the agent. A large backyard may be desired, but a fenced backyard is a must which may lead a buyer to accept a smaller backyard. These specifics can make all the difference in a home search.

    Additional criteria may also come into play including specific neighborhoods desired, the safety of areas, the commute to and from work, school districts and future growth in an area. What may be a 20-minute commute today, could be a 45-minute commute in 10 years depending on area growth.

    The combination of this criteria can take the search from hundreds of homes down, to as low as 5-10 homes. This can lead to actual home viewings and the start of the final decisions.

    Begin on the Internet

    There are numerous websites to start the online home search. Some of the most popular are Realtor, Zillow and Trulia. These sites pull from real estate databases throughout the United States to populate area listings. Realtor is often the most up to date as its feed pulls from MLS databases. If you prefer mobile apps, Trulia, Homesnap, Zillow, Redfin and Dwellr are all popular mobile apps that can instantly pull the latest listings for the buyer on the road. This is a great option for buyers who are driving through neighborhoods who wish to attain instant information about a specific home.

    Pictures Are Not Worth a Thousand Words

    Pictures of a home online may be beautiful, but pictures can be doctored and photoshopped with ease in today’s technological-centric world. Pay attention to the description of the home for any keywords that suggest it may have issues. Also, if a home has been on the market for an extended period that is longer than normal for that specific area, there is likely a reason. Have the agent reach out and try to determine what the real issues are.

    Trust Your Agent

    Once the search is narrowed, lean on the agent for their expertise and area knowledge. A home may be beautiful, but could back up to a freeway or some other issue that only an experience agent can identify. These issues can affect the resale value and need to be identified before proceeding. Remember, this is why choosing an agent that is an area expert is a must.

    Attend Open Houses with Intention

    Search for Open Houses within your price point to view homes in person that are like the criteria desired. Viewing homes in person can change the desired criteria compared to what a buyer thinks will work mentally. Ask the agent to send notifications of upcoming Open Houses as well as check online and in social media.

    Arrive Early

    Arrive to Open Houses early to walk the neighborhood and even potentially meet some of the neighbors. Getting to know the neighborhood you potentially may live in can help in the decision process and eliminate homes as well. Envision yourself as part of that specific community.

  • Step 3. Finding the Ideal Agent

    During the home-buying process, you will collaborate with and speak with your real estate agent more than any other party. This person will be your right hand, support system and expert throughout the home search. Find an agent that fits your needs and they’ll work for you to find the ideal home in the proper price range. We want to help you understand the agent’s purpose in the buying process and what questions to ask potential agents.

    Typically, there are two agents involved in a real estate transaction. The agents are the buyer’s agent (represents the buying party) and the selling agent (represents the owners listing the property). These agents work on a commission basis, averaging a 3% commission for each agent, totaling 6%. This cost is normally paid by the sellers of the property. For example, a $150,000 property will be a $4,500 profit for each agent upon the closing of a property. Agents are paid when you close on your home.

    These agents should provide the highest quality customer service, as many agents depend upon referrals from buyers & sellers for future profit. Remember that having the right agent is an investment into the future home and financial wealth by choosing the right home. But how does a buyer choose the best agent for their situation? Here are some questions and tips to use while interviewing real estate agents for home purchases.

    How to Find a Quality Agent

    Lender Suggestions: At this point, you’ve found a lender.  Lenders interact with numerous agents over the years and can usually point buyers in the right direction towards professional agents that provide the best customer service and efficient documentation to the lender. Trust your lender’s opinion, especially if the lender is a local lender.

    Friends & Family: Know family and friends who have recently purchased in the area? Ask for suggestions! They can give a review of their experience buying a home with a specific agent and steer the buyer away for unsatisfactory agents as well.

    Drive the Area: See one agent’s signs all over the desired neighborhood. It is likely that this agent is an expert in the area and a great asset to purchasing in that specific neighborhood. Reach out and learn more about why so many neighbors turn to him or her for real estate sales.

    Don’t Limit Options: It can be easy to choose an agent and not shop others. This also can lead to an unsavory experience buying a home. Interview 2-3 potential agents at minimum to determine which agent provides the most confidence that a successful transaction will occur.

    Interview Questions

    • How Long Have You Been in Real Estate?
      • Experience is often a benefit. These agents have probably seen and worked through some of the oddest situations that can occur in the buying process and handle any hiccups with ease.
    • Ask About Their Headache Transactions
      • The reality of home buying is that sales do not always go as planned. Ask agents about these situations to determine how they handled the pressure and what tactics they used to resolve the problems.
    • On-Time Transactions
      • Ask how many of their transactions close on time. If there is a large number of transactions not closing on time, this should be a red flag in the interview process.
    • Is The Commission Price Negotiable?
      • As mentioned above, the average percentage agents take for a commission is 3%. If their commission rate is higher than 3%, ask them to explain why they feel their services are superior to other agents. A lower percentage can be a blessing, but also possibly a headache. An agent may not be as experienced or may attempt to force a quicker closing on a home that the buyer is not 100% in love with to receive the commission faster. This is why the interview process is so important; know the true intentions of the agent.

  • Step 2. Lender Choice & Pre-Approval in The Buying Process

    The choice has been made; you’re buying a home! Congrats! Now, comes the “fun part”. Starting the home buying process continues with one of the more confusing parts of process for new buyers: lender choice & pre-approval. It is a standard in the real estate process for buyers to have a pre-qualification letter from a certified lender before any offer is taken seriously, so attaining this documentation is a must for a quick process. This approval process will include the vetting of sensitive information such as W2s, employment verification and bank accounts. Working with a trusted lender can make this process more streamlined and stress-free. Here are some tips for choosing the best lender for every situation and attaining a pre-approval letter.

    The Formula for Success

    The best formula for success includes three steps in the process:

    Trust + Service + Loan Estimate = Best Loan Choice 

    Trust

    Lenders and loan officers will be working side by side with the buyer throughout the entire home buying process and will be handling sensitive personal information about your family and financial wealth. No one wants to give this information to someone they do not completely trust. A good adage to choosing the best lender is to find someone with the heart of a teacher; someone that will work to ensure best program is available to the buyer and answer all questions. This lender should be someone that cares about your financial situation and works to be a cheerleader throughout the entire process. Find a lender that cares about buyer success and can answer the following questions accurately and with ease:

    • Howwillthelendercommunicatewithyou? Ideally the response will include 2-3 forms of communication: email, portals and phone communication.
    • What are the general lender fees?Some lenders will tact unforeseen charges onto the loan. Be vigilant and ensure that the lender is being transparent about all fees.
    • How many of the lender’s transactions close on time? A delayed closing can hurt the buyer and seller.
    • Are loan officers paid by salary or commission? Often, commission-based lenders will often provide better service because their income depends on receiving a quick and accurate closing. Your successful closing is their successful closing.
    • Can they provide a Loan Estimate? This is an important question in the process and will be discussed more at the end of this commentary. 

    Service

    Customer service should be the highest priority to any lender before their bottom line. Choose a lender that is accessible and available for you needs. A lender should be able to meet with the you within 48-72 hours of a requested meeting as well as available via phone, text and even after hours. The lender should be straightforward with the buyer throughout the process, even when the information is something the buyer does not want to hear. The lender should be able to articulate the entire buying process with ease to the buyer and work with the buyer to choose the best loan options in addition to pre-approval assistance.

    Loan Estimate

    Coming full circle to trust factor above, receiving an accurate and competitive loan estimate is a must from lenders. A loan estimate helps you know exactly how much your monthly payment is estimated to be within a variety of home price ranges. This is critical to a successful home search. An inaccurate loan estimate can have buyers searching for homes that are unattainable, leading to heartbreak or stretching families financially.

    At the end of the day, the lender any buyer deserves is one that is upfront, efficient and interested in a successful, on-time closing, not the rate of the loan. The lowest rate is not always the best loan option, so a trusted lender can assist buyers in weeding through the process of determining the best loan. Exceptional service from lenders can make the entire process a simple one for buyers.

  • Step 1. Goal Setting & Budgeting for Homebuyers

    The desire for homeownership connects people from all walks of life. It creates the feeling of security and permanence. It leads to wealth building. According to Eye on Housing, Americans focusing on financial security have 24% of their wealth located in their primary residence. This is more than any other asset, including stocks, bonds, 401ks and business interests.

    Buying a home will be one of the biggest decisions and largest purchases in your lifetime. Understanding the home buying process can assist you in purchasing a home that fits your needs, budget and life plans without the fear of financial loss. The first step in the homebuying process is prioritizing goals and budgeting for the ideal home in an attainable price bracket. Here are some of the starting points to consider when beginning the home buying process to improve personal wealth long-term.

    What Are My Goals?

    Homeownership can be a lucrative way to increase financial wealth, if it fits into your long-term goals. Owning a home is considered an investment that pays out over the years for most Americans that use these homes as a primary residence. Answering these questions about long-term personal goals can help clarify if buying a home is the right choice for wealth growth:

    • Job Status: Are you only planning to stay with your current job a few years? Is this a job you hope to keep long term? Is there opportunity for growth within the company within the department? Will a move be required for career advancement? These answers can help determine if buying a home will work in the long run for your wealth growth. Job stability is one of the most concerning factors for all Americans when purchasing, but is more prevalent with millennials, who as a group lag behind in homeownership compared to previous generations.
    • Home Occupancy Length: This is a concern for many millennials, who as mentioned above, may find job-hopping as a part of their early job career. Military members also must consider the longevity of duty stations when considering a home purchase. Currently 18% of military members purchase homes. This number is increasing and the military has some of the highest rates of homeownership among millennials.
    • Is This the Start of Your Portfolio? Have a long-term goal to start using homes as investments? There is no better time to start than now. Overall, home equity is on the rise and starting now can increase the chances of profit long-term.

    How Much Can I Afford?

    Many potential homeowners are confused and unsure of how much “home” they can afford on their income. Use these guidelines when considering a budget for a home.

    • Mortgage payments: Your mortgage should be 25% or less of gross income. Monthly payments consist of the mortgage cost, homeowner’s insurance, property taxes and mortgage insurance (if a conventional loan is used). Some buyers can qualify for as high as 32% of total gross income, but this often is not a safe bet for buyers who wish to purchase conservatively. Shopping homes with monthly payments that fall into the range of 25% of gross income monthly is the safest and more lucrative way to gain wealth.
    • Down Payments: When using a FHA or Conventional Loan, a down payment is required for purchase. The total percentage needed varies from 0% to 20% depending on the type of loan. What can you afford with your current savings?
    • Request Credit Reports: Not sure where your credit score stands? Request credit reports from the three most commonly used credit bureaus about six months prior to beginning your hard search from Equifax, Experian and TransUnion. This will assist in guiding your budget based on calculators to keep the search within the loan ballpark for buyers.

  • Steps to Buying a Home Series: Introduction

    Buying a home is the quintessential American Dream for many and the reality isn’t too far off the mark. Purchasing a home is one of the easiest ways for a family to attain wealth with minimal risk when the home is chosen strategically. The key is to understand the entire buying process and how each step can affect your investment returns. An informed buyer is a prepared buyer.

    What are the steps to purchasing a home? There is more to purchasing a home than scrolling and dreaming of homes on a website. It is taking informative steps, researching, interviewing lenders, agents, title agencies and more. It is understanding the market, finding desirable neighborhoods and feeling out the market demand.

    Looking at buying your first home? This 10-part blog series will provide tips and guidelines. Helping you understand the buying process, enjoy the experience and improve profitability of this purchase. We want to help prepare you on your journey to purchase your first home.

    Identify Your Goals. Understand the long-term wants for you and your family.

    • What are your goals?
    • How much can you afford?
    • What is the ideal home for my budget?

    Find the Right Lender. It often surprises people to learn that pre-qualification can take less than 15 minutes. We can make it happen in person, by video or by email. Even if you’re on the fence about if homeownership is right for you, you should meet with a loan officer and discuss options. Often, the issue is that people are not sure about their credit. But generally, if you’ve been working for the last two years and have decent credit, you can get into a home.. –Jamie Tapia, Alterra LA Area

    • Find a lender you trust, providing excellent service.
    • Get pre-qualified in a matter of minutes.
    • Receive a Loan Estimate, outlining the costs associated with your purchase.

     

    Agents, Home Choice & Offers

    • Find an agent with recommendations from friends, family and your lender.
    • Shop for the ideal home, considering budget, amenities and neighborhoods.
    • Discuss an offer with your agent. Consider all offer details. Be prepared to counter offer.

     

    Complete Home Inspections and Appraisal

    • Always perform a home inspection prior to purchase. Be prepared to spend $500.
    • Receive the home appraisal. This is the market value of the home and required by all lenders.

     

    Find Home Insurance

    • Find an insurance agent with recommendations from friends and family.
    • Research policies, ask questions about coverage situations and work with the lender and agent to see if additional coverage is needed (like flood, personal property, jewelry)

     

    Closing

    • The closing is the process of transferring ownership to the buyer. You’ll receive a Closing Disclosure (CD) a few days prior to closing. Read it closely.
    • At closing, you’ll sign all of the documents, transfer necessary funds and receive your keys. CONGRATS!

  • Must-Have Updates For A Big Impact

    Check out these tips from our network affiliates featured in the May 2018 issue of Before & After Magazine by Better Homes & Gardens Special Interest Publications®!

  • Tips For Buying a Home with Sherry Chris

  • 10 Tips for Finding Great Real Estate for Sale

    Finding your dream home can feel stressful, but there’s plenty of great real estate for sale to suit nearly every buyer. Breaking down the process of buying a new home into steps isn’t only helpful, but it will help it feel manageable. Below are 10 great tips to help you go from dreaming of owning a new home to actually holding the keys.

    Make a wish list and prioritize your needs

    Now is the time to think about what your perfect home looks like. Unless you have a bottomless bank account, you probably won’t be able to get everything you want. Perhaps you’ve always dreamed of having a fireplace, but when it comes down to it, what you really need is a home located near good schools.Taking time to make a wish list will help you prioritize needs over wants.

    Set a realistic budget

    Perhaps the most stressful part of buying a home is setting a budget, yet this doesn’t need to be a daunting task. Figure out how much house you can afford by examining your current salary and debts. A mortgage payment should never be more than a third of your income, while your debt should be less than 40 percent of your income.

    Hire a great real estate agent

    Unless you’re an orthodontist, you probably wouldn’t attempt to fit someone with a pair of braces, right? The same theory holds true for buying real estate. Great REALTORS® will demystify the process of finding your dream home, from working within your budget to putting in a bid. In addition, it’s their job to know the market and they can help you find your perfect home, even when there’s competition from other buyers in your area.

    Make a checklist

    You’ve prioritized your wish list, set a realistic budget, and hired a real estate agent. Time to sit back and relax, right? Wrong! Now’s the time to make a checklist of all the things you need to consider when finding your dream house. Your list should include the priorities from your wish list. For example, how close is the house to schools and grocery stores? Does the home have a fireplace? How much does the current owner pay annually in taxes? Preparing a list of questions before you purchase your new home will make sure you don’t have questions later.

    Location, location, location!

    Although it might seem obvious to carefully choose where you buy a home, you’d be surprised how many people cut corners. Is it a priority for you to find real estate close to schools? Or perhaps it’s a priority to be located off a busy street to avoid noise pollution. In short, a dream home isn’t ideal at all if it’s not located in the perfect place.

  • How to Know When a Home is Worth Buying

    To buy a home, or to not buy a home. It’s a common debate for many people. There’s no denying that renting is basically paying for someone else’s monthly mortgage without receiving any equity from the property, but that does not always mean that buying a home is the better option for each individual. Everyone’s situation is different, and home buying can be expensive. People’s lifestyles also change and their motives for wanting to buy a house are just as varied. Determining whether or not it’s worth buying a home has a lot to do with individual specifics. It’s highly recommended to speak with a real estate agent who can give you detailed real estate advice based on the information you provide. However, the general costs and rewards of home buying can be found right now to help steer you in the right direction.

    Maintenance Costs

    When you buy a home, you are taking on the responsibility of maintenance costs. They’re inevitable for all homeowners, but they can be significant depending on the specific property. Before buying a home, maintenance costs and unexpected repairs must be considered. It’s recommended to hold back 1% of the home’s value annually for maintenance and appliance replacement, but that does not cover unexpected repairs.

    Property Taxes

    Property taxes can be a significant expense. The actual amount can fluctuate, and this must be considered before buying a home. There are a variety of factors to determine the amount of property taxes, such as the area, state, and local budget cuts, renovations, as well as many other things.

    House Insurance

    Many mortgage loan lenders require homeowners to have house insurance. Unlike rental insurance, which covers possessions, homeowners’ insurance covers both possessions and the cost of the property. Although it’s an extra expense, it’s beneficial to have even if it is not required. As for the cost of home insurance, it depends on the specifics, but you can get an estimate by dividing the home’s value by 1000, and then multiplying that by 3.5 (HomeGuides).

    Tax Deductibility

    A benefit that comes when you buy a home is the tax deductibility of mortgage interest. This number is hard to estimate from a general standpoint because it greatly depends on your specific financial situation. However, owning a home can provide you more savings than if you were to rent, simply because of the tax deductible.

    Home’s Value Appreciating

    The appreciation of a home’s value is generally high. However, this can change rather quickly depending on the housing market, as well as many other factors. ABC News estimates home prices will appreciate around 3%, according to the historical average. The thing that many people forget is that as a home’s value increases, the cost of maintenance and insurance does as well, due to inflation.

     

    In terms of liquid money, home ownership won’t bring you much of that. However, buying a home does have the potential to bring you a high return on investment. More importantly, your monthly bills go towards something you own. When renting, you’re essentially paying someone else’s mortgage without receiving any ownership. Many additional factors also need to be considered when determining if buying a home is worth it, such as whether you want to buy a home as an investment property, plan on flipping the house, or want to retire in it. The first step is to answer the inevitable question, “Can I afford a home?” and these general guidelines can help you determine that.

  • How to Start a Successful Home Search

    A new home is a chance to bring fresh energy into your life. Searching for your next home can be an exciting journey, especially with the Better Homes and Gardens® Real Estate app and website that combine the convenience of technology with professional insight into your desired neighborhood or community. Read on to find out how the home search process just got easier. 

    Budget and paperwork 

    The website and app will show you great homes within your budget, but first you need to determine your budget. A home is a major investment and budget is a concern that should be openly addressed. A financial advisor can help you see the numbers clearly and plan accordingly. Pick a realistic number and stick to it so your real estate agent can show you homes that fit within your budget. Do not miss out on the opportunity to own your dream home because you were declined for a mortgage loan. The best way to avoid this scenario is to get pre-approved once you have determined your budget.  

    Wants and needs 

    When starting your home search, prioritize your wants and needs. While pine herringbone floors or a designer patio can feel like an emotional need, the truth is life would be manageable without them. Kick off your search by choosing your desired property type, then move on to the number of bedrooms and bathrooms. You have a range of square footage and lot sizes at your fingertips. All you have to do is select the features that appeal the most to you. Decide what matters to you, and change your mind if needed. 

    Taps and clicks  

    Our latest technology can help with your successful home search. Better Homes and Gardens® Real Estate has a mobile app to help you narrow your search and get easy access to local affiliated agents. This convenient experience allows you to find and save homes with the characteristics you want; search by the number of bedrooms, desired neighborhood and so much more, from anywhere in the world! To locate your dream home faster, a global positioning system allows you to draw a customized search area directly on the map, enabling you to explore homes as well as see traffic information as a means to preview your commute. To further narrow your options, you also have access to data on school districts and neighborhoods.  

    Personal touch 

    The app is a stellar way to personalize your home search. Not only do you have many homes at your fingertips, you have unlimited access to local affiliated agents. Armed with your preferences and budget, agents can jump into the home-buying process seamlessly when you are ready.  This saves you time and gives your new agent an opportunity to research listings before you even meet and deliver exactly what you want. You can even jump from device to device anywhere in the world.  

    Plan to use the Better Homes and Gardens® Real Estate app and website to make your house hunting journey a success.  

    https://www.youtube.com/watch?v=pc1apqE4nhA