First Time Home Buyer Steps Part 7

Inspection and modification:

You're cruising along quite nicely. You've found a REALTOR, lender, house and have it all negotiated and agreed to....you're holding on to a signed contract to buy your first home. Congratulations! Now you've got to make certain that puppy is a good buy (home inspection) and that you're well represented (attorney).

Nothing scares me more, in working with buyers, than the potential call 6 months or a year later to complain that the house I sold them is a lemon. I always recommend the single-best inspector around. Your REALTOR can and will give references out as well. Here's some things to inquire about when selecting a home inspector (whether referred or not):

• How long have you been practicing?
• Are you member of a professional association?
• What is your continuing education requirement?
• Can I attend the inspection?
• How long will it take?
• What will you/won't you inspect?
• What is the fee?
• What type of report do you give and how long will it take to be completed?

Any inspector worth his or her salt should answer all of these questions quickly and confidently. If you have any hesitation towards the individual or team you're considering, step back and question yourself, "Can I wage possibly the largest investment of my life on this person's 'expertise'"? If the answer is no, move on.

Assuming you select a good inspector and the home being purchased is not an 'as-is', short sale or any type of REO or bank owned property- you will have until the end of your attorney modification period to ask for items requiring attention to either be fixed or credited for monetarily. Remember, this only applies for items over $500 (in my contract)...there is some risk involved in buying a home and as NONE are perfect, it's unrealistic to think a seller can or will get it in perfect shape in order to close.

In my board of REALTORS contract the home inspection clause goes longer than the attorney modification clause (10 calender days to 7). It's always wise to get the home inspection done immediately so any potential issues are unearthed and resolution can be found.

People ALL THE TIME want to bypass the attorney. That's your choice, but never recommended by this guy. A REALTOR cannot practice law (unless he or she holds such qualifications to practice as an attorney). I always tell folks mulling over the idea of skipping legal representation, "I'm no dummy but the worst attorney around is going to run circles around me in any sort of legal-based confrontation. Spend a couple of bucks to make sure you're well-covered."

First-time Home Buyer Steps Part 6

Making an offer:

You've found your REALTOR, a great loan and lender and have been out shopping for homes; and now you've found it. The One. Your first house! Your REALTOR can and should do a market analysis on the home to give you a good feel for its current market value (just like he or she would do for a seller to determine the RIGHT price or it).

The next thing you need to do is make an offer on it. This will be in terms of filling out a contract to submit to the seller. The contracts are fairly in-depth and I'll probably go into them at a later date....know this: it is wise to go through every paragraph with your REALTOR. Make certain that you understand what you are signing and it is ALWAYS recommended that you have an attorney.

Once you have settled on an offer price and submitted the offer to the sellers, they have a finite amount of time in which to respond. My board's contract defaults to 3 days to hear back but that can be modified up or down. Sellers are out of town? You can make it 5 days. Property is very active and might sell quickly? Make it one day. Anyone who works with me knows there's no reason to wait in responding...."Get to the gettin'," is my favorite line when it comes to the contract. Even though there may be differing opinions on the price; sellers have a bottom line and buyers have a top dollar- negotiate it out....you'll either get it together or you won't.....but there's no sense in dilly-dallying.

After the initial inking of the contract, all negotiations will be done verbally until agreements have been made on all terms and price. At that point, the buyers will initial the adjustments and the sellers will do the same and sign the contract. Once the listing office (or whoever is holding) receives the earnest money, the deal is fully executed and the buyer has a finite time to conduct the inspection period while both sides are under attorney modification. To learn more about that- check out the next blog!

First-Time Buyer Steps Part 5

Home shopping:

When you go shopping, you're often picky. You squeeze, poke and prod your produce to make sure you're getting the right one. You won't buy jeans that make your butt look big, are too baggy or don't have the right boot cut. When you look at cars you know you want a certain gas mileage, color and options. But for some reason, when it comes to houses- people just want to look look look.

It's cool, I understand it. It's fun to see all the different houses, layouts, decorating, etc. That "fun" wears off quickly, however, on everyone. I find that it helps, significantly, to know what you want in a house. Do you need more than one full bathroom? Do you have a need for more than 3 bedrooms? Is a big backyard a priority with kids or pets? Do you need a "man cave" in a basement? There's a million questions you might have to fit your needs and your REALTOR can search for anything you need. For example: I know there are 45 homes on the market right now in my MLS fitting the needs of a minimum of 4 bedrooms, 2 bath, brick house on at least once acre with central air and a basement. If that was all your criteria- you'd be able to narrow down from there.

You've done your homework. You've picked the right REALTOR and lending needs to get you through the process. Know what you require in a house. It may be something as simple as 3 bedrooms and a 20 miles radius from your place of employment. It may be something totally off-the-wall it doesn't really matter. Knowing what you need to have will eliminate the showings for houses that don't meet those needs at all!

First-Time Buyer Step Part 4

Choosing the right REALTOR for you:

People often use the referrals of loved ones or choose a family member/ friend as their buyer's agent...sometimes a good choice, other times the worst choice possible. Sellers will more often than not, interview a couple of agents- or at very least interview one and make him/her/them earn the position.

However, when it comes to a buyer's agent, people are all too often content to call the agent on the sign of the house their interested in or just call an office and use whoever picks up the phone. Not great choices. Purchasing a home is a major investment and you really should build a great team around you to make certain you proceed with cautious, wise decisions.....choosing your REALTOR is no less important that the right lender, attorney, home inspector, etc. an will often prove to be the most important step in the process.

WHY? Like men, not all REALTORS are created equally. A lot of the things you should be on the lookout for are covered in our Code of Ethics which I blogged about in a muti-part series a few weeks back. Others are covered in our Century 21 Buyer Services Pledge:

• Consult with you to determine your particular real estate wants and needs. This includes providing information as to the advantages and disadvantages of the choices available to you, in order to help you make informed decisions.
• Maintain your confidentiality and represent your best interests throughout your buying process.
• Help you define your financial ability to purchase, explain alternative methods of purchasing and financing, and assist in arranging mortgage financing.
• Provide an action plan for locating the right property, at the right price and terms, in an acceptable time frame.
• Search using available methods to locate the property that will best meet your needs and wants. This may include properties listed with our office, offered through other real estate companies, as well as unlisted properties.
• Show properties that meet your specifications, in accordance with Fair Housing Regulations and ethical real estate practices.
• Disclose material facts known about the property, and other relevant information that is likely to affect your ability to obtain the right price and terms.
• Assist you in evaluating the market value of properties that are of interest to you, and suggest negotiating strategies to help you obtain the most advantageous price and terms.
• As your advocate, advise and assist you in completing your purchase agreement, and present your offer in a light most favorable to you.
• Refer you to other professionals (attorneys, accountants, inspectors, mortgage lenders, etc.) for information or assistance as appropriate.
• Upon acceptance of an offer between you and the seller, monitor all pre-closing activities throughout the process as permitted by law or local practice.
• Consult and communicate with you on a regular basis throughout your entire real estate purchase process.
• Recommend a home warranty to protect you.

Basically you want someone who is going to be in your corner all the way, probably someone who's completed at least a few- hopefully many transactions (though great new agents need to start somewhere too), someone that will communicate with you and is able to be found (not always "out of town"). Bottom line is- you need someone you have a rapport with and that you trust with hundreds of thousands of your dollars.

First-Time Buyer Steps Part 3

Shopping for a loan:

Blogging REALTOR say what?? Shopping for a loan? Come on man, I already picked a lender. Indeed you have (or are at least still weighing your options with multiple)...but really, it helps if you educate yourself. Know how many types of loans there are out there? Like a zillion!

Hey listen, I'm no mortgage expert. If I was, I'd be doing a mortgage & more type of blog. I'm an expert at marketing properties, negotiating, etc. That's why I surround myself with excellent professionals for those things. However, YOU are the one getting the mortgage. YOU are the one (presumably) making the monthly or bi-monthly payments on your house (did you know you can do that- you can). YOU are the one stuck re-financing if you didn't do it right....I'm here to help- but don't be afraid to get your hands a little dirty too.

There's a lot of loans out there and I'm not going to go into a TON of detail here about them (but I will link to proper authorities and came back for more details in the future)....

FHA Loans- helping buyers in one form or another since 1934

• Low down payments 3%
• Low closing costs
• More relaxed credit score needed

USDA Loans, including rural housing- GREAT loans for my market area. Check if a house qualifies right HERE. There are income restrictions- but this is a phenomenal loan program.

VA Loans- I probably should have spent Tuesday's post on this....oh well. If you're a Vet and desiring to purchase a home, this is something you may want to check into. It's a little tougher to get into with more paperwork, but it's good help for those that served.

There's a number of jumbo, adjustable rate, balloon and other types of loan programs (though I'm not sure how much they're being used nowadays) but many people will fall under a fixed-rate or conventional loan. It is still very much suggested that you find out everything you can about the loan to make sure it's the one that fits you best!

The next step is.....that's right, picking the right guy, gal or team to be you REALTOR(s):

First-Time Buyer Steps To Becoming a Home Owner Part 2

Know Your Rights

This should be titled, "Common Sense" or "The Way Things Should Be Everywhere for Everyone" or something like that. Unfortunately, some idiots out there like to take advantage of people or treats different peoples differently. Here are the guidelines as set forth by the Fair Housing Act that prohibits discrimination in housing because of: race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians; pregnant women and people securing custody of children under 18) and handicap.

In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:
Refuse to rent or sell housing

• Refuse to negotiate for housing


• Make housing unavailable


• Deny a dwelling


• Set different terms, conditions or privileges for sale or rental of a dwelling


• Provide different housing services or facilities


• Falsely deny that housing is available for inspection, sale, or rental


• For profit, persuade owners to sell or rent (blockbusting) or


• Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.

In Mortgage Lending: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:
Refuse to make a mortgage loan

• Refuse to provide information regarding loans


• Impose different terms or conditions on a loan


• Discriminate in appraising property


• Refuse to purchase a loan or


• Set different terms or conditions for purchasing a loan.

In Addition: It is illegal for anyone to:

• Threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right


• Advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap. This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the Fair Housing Act.

Religious or not, you're pretty safe if you follow the old Golden Rule and treats others how you would wish to be treated.

First-Time Buyer Steps To Becoming a Home Owner

So, you're ready to buy a house. I am developing this as a first time buyer's guide- but most of the principals apply to anyone in the market to purchase a home. I cannot imagine this going off in less than 10 parts- I could probably do 5, but they'd be long and you'd get bored and read someone else's less-boring blog. Without further ado:

First-Time Buyer Steps To Becoming a Home Owner Part 1

Get Pre-approved:

When one decides to purchase a home it's an awfully exciting time. It's VERY easy to jump right in and start looking at homes. It is, however, a poor decision. The first step one should take is acquiring a pre-qualification or pre-approval. WHY? Simple. You want to know where you stand as far as buying power. If you want a $200,000 house but your buying power really limits you to under $170,000 you need to know. From there you can either purchase what you can afford or wait and save till you can afford more. A real estate agent can and will refer you to lenders (probably multiple so you can make the best choice to meet your needs).

What is the difference? The difference between a pre-qualification and pre-approval is basically documentation and verification. See, to attain a pre-qualification you simply tell the lender of your income, debts, etc. and he or she can estimate numbers based on your words (so don't fib- it won't help anything). A pre-approval, however, takes documents such as (but not limited to) proof of two years of work history, pay-stubs or income tax forms, copies of bank statements for source of funds verification and copies of charge card statements and runs a credit check in order to estimate your ability to pay a certain amount per month That estimated monthly payment can be transferred to a certain loan limit and more often than not (at least in this area) is given as 'Congratulations Mr. X. Our Bank has pre-approved you for $150,000 [and so on]'

Once you're set on a price range that you CAN afford and knowledge of where your MOST COMFORTABLE payment range will be and are armed with a pre-approval, you can get out and look look look. But first you need to be aware of your rights and find a loan that works for you! More on this Wednesday!

Tax Assessments

I just received my Grundy County revised tax assessment letter in the mail and am betting that you have as well. If you haven't, you probably will soon. Generally this brings up one question from local townspeople, "What the heck? My assessments are up! My taxes are going to go up! How do I stop this???"

Well, if you must- you can file complaints with the board of review until 30 days after the date of publication of the assessment list (mine is 11/5/08)...so I have until early December.

BUT, it's a pretty easy formula to figure out if you're paying too little, too much or if it's just right (just ask Goldilocks). Multiply the assessed value times 3 and that is what they have your property's market value at. If it's above where you think it's feasible to sell your property at- you might have a legitimate beef. If it's below, you should count your blessings that you're being taxed less than you probably should be.