Home Buyer Tips Archives - Page 2 of 12 - Real Estate News and Commentary

May 25, 2017

Home buyer multiple offer survival guide

The real estate market is getting increasingly competitive for home buyers. But it’s not true for all homes. Neighborhood homes that have been selling the quickest and for most money are the homes that fill the discerning home buyers’ need for a turn-key home. You can count on these homes attracting many home buyers, as well as multiple offers. These situations can be frustrating, but being prepared can possibly increase your chances of winning the multiple offer scenario. Many home buyers need not come up empty, confused, and frustrated when they encounter multiple offer situations. Here’s a home buyer multiple offer survival guide.

The Home buyer’s survival guide to multiple offers

When confronted with a multiple offer scenario, you must understand the seller is in the driver’s seat. This is a hard pill to swallow for many expecting it to be a buyer’s market. But for the homes that show the best and are priced the best, you should expect competition from other home buyers. Giving up the expectation that you’ll be able to negotiate a contract on your terms will help you in formulating a competitive offer.

Although you may not realize it, your emotions guide much about your home buying decisions. Formulating your offer for a multiple offer situation will be more sound if you stick to the facts. Focusing on the facts will help you stay focused on the larger picture of buying a home. Using data and facts can also help you be more persuasive when you present your offer to the seller.

Home buyer multiple offer survival guide on the housing market

Understanding the local market can be a major plus when putting your offer together. Housing trends can influence home buyer competition and price. However, understanding your limitations can help your home buying strategy too. You may be limited in the amount you are willing to spend, the type of mortgage for which you qualify, your closing date, and a number of other issues that may affect the terms of the contract. Don’t be discouraged if you think your limitations may lessen your offer’s attractiveness when it’s compared to others.

Certainly, don’t get caught up in media reports on real estate. The housing market is a hyper-local phenomenon. Regional markets are different and have different sales trends. Locally, even neighborhoods may differ significantly. Be prepared with local market information, as well as your limits.

Home buyer multiple offer survival guide on financing

The general consensus when competing with multiple offers is to put your best foot forward. Decide on the best price you feel comfortable paying for the home. Cash deals are difficult to compete against. However, you can beat a cash deal if your offer has a higher price and your lender has provided you a very strong approval letter. If you didn’t meet with your lender prior to looking at homes, make an effort to provide your lender with all necessary documents for them to provide you an approval letter that is only subject to underwriting and appraisal (or the equivalent). The stronger the lender letter, the more confidence the seller will have in you to complete the transaction without delays or hiccups.

Haven’t met with a lender yet? Start your own mortgage file with basic items the lender will need from you. Your lender will need recent pay stubs, W-2 statements, bank statements, 401k statement, and any other financial information you think you may need (which may include child support or disability income). Self employed individuals will need whatever documentation they can muster (including tax returns) to support their declared income. Being organized will facilitate the mortgage process.

Home buyer multiple offer survival guide on contingencies

Try to keep your contingencies to a minimum. There may be some contingencies you may be able to avoid, and some may be necessary. You must consider contingencies carefully and soberly, as they offer some protections if you can’t (or don’t want to) move forward with the purchase.

Home buyer multiple offer survival guide on home inspections

Although some agents suggest skipping the home inspection contingency in a multiple offer situation, I do not recommend that. Many homes have deferred maintenance that can lead to costly repairs. Even renovated homes that appear to be in good condition can have major issues which can go unnoticed. Instead of skipping the home inspection, try to have a short inspection period (have the inspection scheduled ahead of time). Some home buyers have an opportunity to conduct a pre-offer home inspection. This allows them to eliminate the contingency from their offer, as well as knowing the general condition of the home.

Home buyer multiple offer survival guide on finding homes

If you’re finding multiple offer situations too intense, try to find homes that have little or no home buyer competition. Ask your agent about finding homes that are not listed in the MLS. Some agents already seek out such homes. Alternatives could be For Sale By Owner, bank owned, auctions, and even farming specific neighborhoods for owners ready to sell. Your agent can also search through expired and withdrawn MLS listings to find homes.

There are a couple of disadvantages to looking for homes not in the MLS. Although you may reducing the home buyer competition, you may encounter competition from real estate agents looking for listings. Additionally, finding a willing seller of home you desire may take some time.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

May 12, 2017

Real estate auction home buying and selling

As the housing market continues to grow, buying and selling homes through the real estate auction is becoming more popular. Contrary to popular belief, real estate auctions are not just for distressed properties. Being part of a real estate auction can be exciting, but it’s not for everyone. There are pros and cons for both the home buyer and seller.

A real estate auction is traditionally a “live” auction performed at a designated place where the bidders and auctioneer meet to conduct the auction. You must be present, or have a proxy present, to make your bid. You must register to bid at the auction, usually presenting proof of funds for your deposit. The pace of the live auction can be very quick, so you have to pay close attention to the action.

Another form of real estate auction that has blossomed out of the foreclosure crisis, is the online auction. The online real estate auction allows many homes to be auctioned simultaneously. The atmosphere and pace of an online auction is different from a live auction. Of course, buyers can make their bid from virtually anywhere, and the bidding can take place over days or weeks.

If you want to sell your home via real estate auction, the benefits include: decreasing your homes time on market; you know when the home will sell; the home sells “as-is;” home buyer contingencies are typically few or none. The National Association of Realtors (nar.realtor) auction information describes homes that are good prospects (What Properties are Suited for Auction?) , which include: homes with a lot of equity; unique homes; vacant homes; and homes that are difficult to appraise.

However, real estate auctions are not for all sellers. The downside to the auction is that your home may not sell, especially if you place a reserve (seller reserves the right to accept or reject highest bid) on the auction. There are also costs that typically include the auctioneer’s commission and advertising costs, which could be due even if the home does not sell.

If you’re a home buyer, a real estate auction offers benefits for you too. Real estate auctions offer another avenue to purchase homes other than those listed in the MLS. This can be attractive especially when there is limited inventory of homes for sale. Buyers guide the sale price through their bidding. Unless it’s a blind bid auction (where bids are not disclosed to other bidders), you can decide if you want to increase your bid based on others’ bids.

If you want to buy a home at auction, do your due diligence. Read the terms of sale, there may be a minimum bid, minimum deposit, and even a buyer’s premium (which can be as high as 5 percent of sale price) and other fees that may be due at closing. Check the auction schedule frequently because the date and time may change, or the auction can be cancelled. Understand the type of auction you’re bidding in, because you may not get the home even if you’re the highest bidder (especially online auctions). Inspecting the property may be a challenge as you may have limited access.

Hire a Realtor to help you buy a home at a real estate auction

Hire a Realtor to assist and guide you through the details of buying a home via real estate auction. Your agent can help you get the terms of sale and any due diligence material the auctioneer provides. Additionally, they can also provide comps for the property to help you decide on your bidding strategy. If you have the winning bid, your agent can help you with the details of getting you to settlement by assisting with contracts, financing, and other aspects of the sale.

From the National Association of Realtors auction section:

BENEFITS TO THE SELLER:
-Buyers come prepared to buy
-Quick disposal reduces long-term carrying costs, including taxes & maintenance
-Assurance that property will be sold at true market value
-Exposes the property to a large number of pre-qualified prospects
-Accelerates the sale
-Creates competition among buyers—auction price can exceed the price of a negotiated sale
-Requires potential buyers to pre-qualify for financing
-The seller knows exactly when the property will sell
-Eliminates numerous and unscheduled showings
-Takes the seller out of the negotiation process
-Ensures an aggressive marketing program that increases interest and visibility

BENEFITS TO THE BUYER:

Smart investments are made as properties are usually purchased at fair market value through competitive bidding
-The buyer knows the seller is committed to sell
-In multi-property auctions the buyer sees many offerings in the same place at the same time
-Buyers determine the purchase price
-Auctions eliminate long negotiation periods
-Auctions reduce time to purchase property
-Purchasing and closing dates are known
-Buyers know they are competing fairly and on the same terms as all other buyers
-Buyers receive comprehensive information on property via due diligence packet

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February 17, 2017November 23, 2021

Unpacking is part of the buying process

People don’t really give it much thought until they’ve already moved. Maybe that’s the reason for a lack of information and guidance about unpacking. I estimate that for every six articles about packing and moving, there’s probably one about unpacking. And like buying a home and moving; there should be more thought to unpacking because it’s the first activity that makes your new digs feel like home.

Unlike packing for a move and decluttering, unpacking seems to get left out of the home buying process. Many believe that you instinctively come home after settlement (or signing a lease) and just unload all the boxes and just begin living as you did in your previous home. But the reality is that unpacking can be just as, if not more, overwhelming than the move itself. And this applies to whether you’ve hired a moving company or concierge service to unpack for you, or you do it on your own.

That’s correct, you can hire someone to unpack for you. However, just like packing house, it can get expensive. Of course, charges vary. However, if this is the way you decide to go – get multiple estimates from insured and bonded companies. Once the service unpacks for you, consider taking the time to review where they stored items. This will save you time later when you need to find something in a hurry.

Unpacking a house on your own may seem overwhelming (even with the help of friends), but don’t give in to procrastination. Extreme procrastination can lead you to living out of moving boxes for a prolonged period. Instead, make a simple unpacking plan and prioritize. Although the chore of unpacking seems to be the physical aspect of unloading boxes; there can be an emotional drain of deciding where to best place and store items.

When packing your previous home, you most likely packed each room and labeled each moving box for their destination room. And although unpacking each room in sequence may seem logical, you most likely won’t get it all done in one day. The result can leave you frantically digging through boxes searching for items you use on a daily basis.

To avoid this trap, consider unpacking essential items first. Having the essentials put away first will help you feel as if there is continuity. You will find it easier going about your daily routine without disruption – even if you don’t unpack all the boxes. Of course, it helps if you’ve marked the boxes containing essential items when you packed. However, if you didn’t, that’s ok too.

If you’ve unpacked the essentials first, you’ll notice that you’ve become aware of the available storage spaces. As a result, you’ve set the tone for each room, and the entire unpacking process becomes easier. You’ll be able to go through your room priority list quicker and get through storing items where they belong with less deliberation and angst.

When unpacking essentials, focus on the kitchen and bathrooms first. Chances are that you will need to use these rooms throughout the day as you unpack. Then go through your priority list of rooms, unpacking the essentials.

Once the essentials are put away, you may feel at ease and in control. You can then unpack rooms in sequence or as prioritized. You may also decide to go through the remaining boxes at a leisurely pace.

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September 2, 2010October 5, 2019

Home renovations reservations

by Dan Krell © 2010

If you’re like the typical home buyer, you’d prefer to purchase a new home. However, most new homes are too big and too expensive. Buying an older home that has been renovated or updated may be a viable alternative. However, renovations and updates can vary in scale and quality; having a sharp eye and a thorough home inspection can assist you in revealing workmanship issues.

If you are considering purchasing a home that has been renovated or updated, the first question you should ask the seller is, “who completed the work?” Additionally, you should ask if there are warranties and if the warranties are transferrable. Many home renovations are completed by reputable, licensed contractors or builders who are familiar with the permitting process as well as building code requirements and sometimes offer a limited warranty.

However, the quality of the renovation/update is often reduced by some contractors who cut corners to save time and money; component installation is frequently the culprit of these problems and may be due to installer inexperience and/or carelessness. Poor workmanship can make the most expensive material look cheap. All identified issues should be pointed out to the seller to be repaired or replaced.

Although you should hire a licensed home inspector to conduct a thorough home inspection, you can sometimes identify quality issues in a renovated/updated home without much effort. The most common workmanship problems noticed by laypeople in a renovated/updated home are in the kitchen, bathrooms, and flooring; identified quality issues may be an indication of other underlying problems.

When looking at a renovated/updated kitchen, check the cabinets and appliances. The cabinets should be securely fastened to the wall; loose or inappropriately secured cabinets indicate a potential problem that could cause the cabinets to come crashing down at a later time. Refrigerator doors should open freely and should not be obstructed by cabinets or walls. The stove should have an anti-tip device installed; this is a safety device that can prevent a hot stove from falling on a child or an unsuspecting adult. The dishwasher should not feel loose and should be secured to the counter; an unsecured dishwasher can “walk” while operating and have the potential to pull plumbing components apart.

If plumbing is not installed properly, leaks can develop and obviously create future problems. Toilets should be firmly secured to the floor; a loose toilet can break the wax seal and result in a leak. Checking the water flow from the faucets may reveal plumbing problems; poorly connected pipes can sometimes be revealed by feeling the pipes under the sink for drips while the faucet is running.

Renovated/updated homes often have new flooring. Poor workmanship can be easily spotted if tiled or wood floors are not flat, even, and square to the walls. The carpet should feel taut; loose carpet is a trip hazard. Although problems in the subfloor cannot be easily detected, red flags should be raised if there are cracked tiles or uneven floors.

Remember that your keen eye is not a substitute for a thorough home inspection; a licensed home inspector should inspect all systems within the home (including plumbing, electrical, HVAC, etc). However, any issues you uncover while viewing a home will not only help you decide on purchasing, but can also assist you in determining your offer.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 30, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

August 26, 2010October 5, 2019

How would you choose your real estate agent?

by Dan Krell © 2010

Buying and selling a home can be one of the most expensive and complex transactions you may undertake in your lifetime. So if you plan to hire a real estate agent to assist you, conventional wisdom dictates that you should interview several. However The National Association of Realtors 2009 Profile of Home Buyers and Sellers (NAR 2009) tells a different story. The profile reveals that the majority of home buyers and sellers surveyed (66% of buyers and 64% of sellers) indicated they hired the agent they first encountered.

Although the logic may seem counter intuitive, the means by which home buyers and sellers encounter their agents may provide an explanation. Both home buyers and sellers reported that the top means of finding their real estate agent was through a referral from a friend or family member. Of those surveyed, 44% of home buyers and 40% of home sellers indicated they relied on someone else’s judgment for their choice of real estate agent; first time home buyers were most reliant on their friends’ and family members’ referrals.

Repeat business was the second most frequent way indicated in choosing a real estate agent; meaning that the home buyer and/or seller hired the agent that assisted them in the past. Oh, the internet was also indicated as a way of finding a real estate agent; however it was not one of the top means. However, more home buyers (10%) indicated they found their agent on the internet compared to sellers (3%).

Regardless of how you find your real estate agent, it is probably a good idea to find out more about them before they list or sell your home. A conversation about their experience, knowledge, and expertise is probably a good way to start. Additionally, knowledge about the local market is extremely important these days as market trends have become hyper-local. Two recent conversations with home owners revealed the importance of understanding hyper-local real estate trends; both discussed how the agent they wanted to hire did not have an understanding of the hyper-local impact which resulted in under-pricing or over-pricing their homes.

Because of the increase in number of transactions requiring specialized knowledge (such as short sales, 1031 exchanges, etc), it is probably a good idea to find out if the agent has the experience (or certification) if your purchase or sale falls in this category.

Although choosing an agent should transcend the “big name” myth, some people still get caught up in the name game. It has been many years since residential real estate has been proprietary, brokers now cooperate with each other to sell homes. Home buyers typically search for homes by characteristics, rather than searching for homes sold by individual brokers. Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire.

If you are considering hiring a real estate team to handle your sale, make sure there is one agent you can call as your point of contact. Questioning the point of contact about their experience and knowledge is also a good idea.

Asking friends and family for referrals as well as calling the agent you previously worked with is a good way to find a real estate agent. However, vetting out potential issues can be achieved by asking the right questions before you hire them.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 23, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.