The Chronicles of Real Estate
Sharing valuable reference to Buying, Selling, Renting & investing
in real estate through narrative, tips & experience
Buying In A Sellers Market
It’s real! You are ready to begin shopping for your new home and you have set some boundaries around your wants, needs, must haves and price you want to pay. And without a doubt you are looking for a deal. One of the first things you do is go online and find a handful of properties that meet your expectations and are ready to make a solid offer. You share this list of homes with your Realtor and she shares that all six are already in contract except one. New to the home buying experience you reply asking “what exactly does that mean and does it mean I cannot see them?” She explains that the sellers have accepted an offer and are moving towards closing on the home. They are no longer allowing any further showings.
You agree to view the one left available and also the two others your Realtor had suggested. At first glance, they aren’t what you expect to consider but you will give it a shot since there are not many others to view. The home you originally desired seems to hit all of your marks and you are ready to make a strong offer despite the five other families that were viewing the home simultaneously.
In going over the details of your offer with your Realtor, you remember that you want to get a great deal and decide to make an offer ten thousand under list price. Your offer also includes requesting the seller to pay closing costs. Your realtor submits your offer and now you are waiting for a quick response from the seller. Later that evening you receive an update that there have been multiple offers and the sellers have asked for all interested buyers to submit their highest and best offer within the next 48 hours and will respond within 24 hours after all offers received.
What! 72 hours has passed and you receive a call from your Realtor stating the sellers have accepted another offer. No problem! Moving on. This same scenario happens with the next three homes you submit offers on and you begin to wonder ”will I ever find a home that I actually like?” It is now time to have that “realistic” talk with your Realtor on exploring options that will secure your offer in a winning position to compete with the 7-20 other offers each home seems to have within the first week of listing day. You mention your experience with a neighbor, family and friends and they all have either heard or experienced a similar circumstance. “It’s a sellers Market” they say.
A seller's market is one which there are more buyers than the inventory listed for sale.
It is time for a new game plan. Your lease will be up soon. Although, you are considering offering list price, you notice homes are actually being sold for more. And even though you thought it was customary for the seller to pay closing costs, you have come to learn it is not and your competition is paying for their own closing costs.
It’s closing day! What a relief to finally receive the keys to your new home after viewing twenty-five properties and eleven offers. “I am so glad I modified my offer terms and positioned my Realtor to negotiate on my behalf for my new beautiful home.”
If you are considering buying now or in six months to one year, have a chat with your Realtor to gather current market knowledge and build sufficient expectations for buying your new home.
#buyers #homebuyingtips #sellersmarket #sellers
6 Tips You Should Know When Buying A Home With FHA
The time has come and you have saved some coins, increased your credit score, paid off credit card debt and are ready to buy your first home. Your trusted friend or co-worker has recommended the perfect real estate professional which shares with you that your first step is to speak to a lender. Everything is going well and you have deduced that an FHA (Federal Housing Administration) is the loan type you will be moving forward with. After sharing this exciting pre-approved news with your Realtor, it is time to start home shopping.
But wait … I want to share with you 6 tips you should know when buying a home with FHA. This by no means is an attempt to scare or shy you away but rather a strong effort to inform you of factors you may not otherwise know until they come up at a later time such as when you are reading your settlement statement and you find a fee that you were not aware of or an upfront cost you were not prepared for.
So, get out your Home Buying 101 notes and take a few things down.
1. Some FHA loans will need 45 day contracts written
Just to give a bit of background, this time period is after you have made an offer and the seller has accepted it, all the way to the infamous closing day. There can be several variables that assist in prolonging the process such as an incomplete or inaccurate application, delay in submitting necessary documentation, repairs needed and the underwriting processing time. You may ask “can an FHA loan be closed prior to 45 days?” Absolutely! If all parties are participating promptly and there are fewer delays in processing times, you may receive the keys to your new home sooner than expected.
For a speedier home buying experience, get a full pre-approval including all requested documentation to the lender up front and get started.
2. FHA Loan Appraisal is an Upfront Cost
In speaking with many of my first time home buying clients, most are unaware of the appraisal fee being an additional out of pocket cost let alone for it to be an upfront cost. In addition to the 3.5% down payment you have worked so hard to save, an appraisal fee is due within the very early part of the contract period. This cost can vary from $300 - $500 on average and depending on the square footage of the home.
** Warning ** If for some reason the appraisal is complete and you decide to find another home, another appraisal fee will be required.
Make sure you are comfortable with this home and get ready for the next steps.
3. Appraisal re-inspection? What!?
Yes yes my friends! FHA has appraisal re-inspections guidelines that every home must meet. In the event, the appraiser finds an item that is to be “red flagged,” once the report is returned the lender will notify you of the unsatisfactory items and they will need to be remedied following with an appraisal re-inspection.
** Note ** Please do not get this confused with your regular Home Inspection. This appraisal inspection is ordered by the lender usually after or around the same time as the home inspection but concerning the home’s value prior to lending purchase money for the home.
Now, the meat & potatoes. Does this appraisal re-inspection cost? You betcha! This cost may vary but $150 is what I am currently experiencing in 2019. This cost can be covered by either the buyer or seller. Honestly speaking, I have never had a seller agree to pay for it. Heck, they don’t even need to agree to the repairs. I have only seen this in one instance but all others agreed to comply with some if not all necessary repairs.
4. FHA Appraisal Guidelines
Missing handrails, chipped paint, mold-like substance indications, functioning heating & cooling, exposed electrical are just a few items that I have seen come up as items of concern. You can easily gather that safety from hazards are things to keep an eye out for. Check out updated FHA guidelines to get a full list of items to look for and/or repair when selling.
For Sellers and Future Sellers
By the way, an FHA appraisal remains with the property for six months.
Now let’s talk about . . .
5. P.M.I. (Private Mortgage Insurance)
When people ask me the difference between FHA and Conventional, this is one of them. Private Mortgage Insurance covers the mortgage in case the borrower defaults in repaying the mortgage. Typically, this can be removed when at least 20% of the loan has been paid. With FHA, the PMI remains for the life of the loan. Annual PMI can be 0.85% for the entire term or 30 years.
6. Mortgage Reserve Requirements
The lender may share with you a requirement to have a reserve amount. Reserves are savings balances needed after you close on your new home. This can total from one to two mortgage payments and is not included in your down payment or closing costs.
I hope you found this information helpful in preparing to make your next move. For more answers to your home buying questions and free resources check out tools throughout clicknadiarealtor.com