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Being Prepared
Buying a home is probably the biggest investment you will make, with long-term financial ramifications. It calls for many informed decisions and for good advice from a real estate professional. When buying a home, you can learn from the knowledge and skill of a Real Estate Agent.
What can Real Estate Agents do to help you buy the right home for you?
They will help you determine how much home you can afford. Often, they can suggest additional ways to accrue the down payment and explain alternative financing methods. They can also introduce you to a mortgage counselor and arrange to have you “pre-approved” which can improve your negotiating position and enable you to achieve your home-buying objectives faster and with less stress.
Providing client level services, they can work for you as a buyer’s agent and help negotiate the best price and terms for you. Or they can serve as a seller’s sub-agent (or disclosed dual agent), acting as a liaison between you and the seller to present offers and counteroffers until an agreement is reached.
They will help you work out a realistic idea of the home best suited to your needs – size, style, features, location, accessibility to schools, transportation, shopping, and other personal preferences.
They have access to a listing of all available homes in the multi-list system, can evaluate them in terms of your needs and affordability, and will not waste your time showing you unsuitable homes.
They can often suggest simple, imaginative changes that could make a home more suitable for you and improve its utility and value.
They can supply information on real estate values, taxes, utility costs, municipal services and facilities, and may be aware of proposed zoning changes that could affect your decision to buy.
Although the law does not normally require an attorney to review documents or oversee real estate closings, they can provide you with a list of law practitioners to choose from if you would like to use the services of an attorney.
They can help familiarize you with the closing process and they will obtain closing figures in advance of closing for your review.
They can provide you with a list of qualified home inspectors, pest inspectors, surveyors, and help to coordinate inspection appointments.
Make a Plan and Get Pre-Qualified
Every important decision needs to be clearly thought out. Developing a home buying plan can help you focus on the important factors and organize the entire process. You may even want to use a binder with sections on house hunting, home financing, service providers, etc. Loan pre-qualifying helps you determine the home price you can afford and presents you as a genuine prospect to the seller. A lender typically uses the 28% formula (your monthly mortgage can’t exceed 28% of your monthly income) in approving your loan. Planning your actions and getting pre-qualified will keep you out of the panic mode and allow you to take advantage of opportunities. A thorough plan will save both time and money!
Fixed vs. Adjustable-Rate Mortgages
Adjustable-rate mortgages have an initial fixed rate, which is followed by a period of adjustment intervals during which the rate adjusts based on the performance of several key indexes. Typically, the initial fixed rate on an ARM is slightly lower than the comparable rate of a fixed rate mortgage.
Fixed rate mortgages allow buyers to take out a long-term loan without having to worry about changing interest rates or monthly payments. Most fixed rate loans are offered in either 15- or 30-year terms.
Most buyers will be well served by a fixed rate loan, but each situation is unique. While ARM loans have become less popular in recent years, they can still be a viable option for some buyers – especially those who plan on selling again in the short term.
Whichever loan you choose; make sure that you scrutinize all the closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures (your Real Estate Agent has publications to assist you). Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.
Home Protection Plans
To protect both you as a buyer, as well as the seller, it is a good idea to purchase a home protection plan. What exactly is it? A home warranty, or home protection plan, is a service contract, normally for one year, which protects homeowners against the cost of unexpected repairs or replacement of their major systems and appliances that break down due to normal wear and tear. A negotiable contract between the buyers and sellers which does not overlap or replace homeowner’s insurance policy, this type of warranty can save the new homeowner lots of headaches, as well as put seller’s fears to rest. The warranty covers mechanical breakdowns, while insurance typically repairs the related damage. For example: if a hot water heater burst and destroyed a wall in your home, the warranty would repair the water heater and your insurance would pay to fix the wall!
Preparing Your Home to Sell
Unless prospective buyers are looking for a “fixer-upper” (which translates to a lower selling price), you will want to assess the condition of your property and address issues and damages that can affect the appeal of your home and the sales value.
Take a good look around to determine where your current home needs improvements and updates. Some of the updates and fixes will be mainly cosmetic and you may be able to perform them by yourself such as fresh paint, sprucing up the lawn, updating lighting, replacing hardware such as the doorknobs.
Other issues and problems are more significant and may require item replacement and/or the hiring of a contractor or professional. These would include things like problems with the heating, plumbing, ventilation, and air-conditioning (HVAC system), mold, water damage, rotten wood or problems with the roof or the water heater.
Any or all of these can make a significant difference with the impression that your home makes with prospective buyers and can have a direct impact on if they will be interested in making an offer for your home.
Making an Offer
When it comes time to make your offer, you should know there is more to it than the price that you plan to bid. There are a few particulars that you should be aware of that can help you put forward the best offer in this hyper competitive market.
Escalation clause: Chances are that you may be in a multiple offer situation. If that is the case, , it helps to have an escalation clause built into your offer. The way this works is you will submit your initial bid, but if any bid comes in above yours, you are prepared to l go $X higher up to a cap amount that will be your highest offer.
Consider dropping contingencies: Another way to make your offer stronger is to drop some of the conditions. These can include things such as the appraisal contingency, but it is very important to discuss this with your agent to understand the impact and ramifications of doing so, as lenders can’t loan you more than a percentage of the appraised value of the home.
Other things that you could also consider would be a eliminating the home inspection contingency or being more flexible on the closing date. Again, these are all things that need to be discussed with your realtor to make sure that you understand the impact of what this may have on your transaction.
Add a personal touch: Homeowners take great pride in their home and want to see that it will go to someone that cares for it as much as they did. To make your offer stand out from the rest, it is often times helpful to write a letter to the owners explaining home much that you like their home and how it is the best choice for your family.
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Doylestown
550 North Main Street
Doylestown, PA 18901
Office : (215) 348-1700
Sheila Kent
REALTOR® ABR SRES
RS332450
Primary: (267) 218-2495