Here’s what to kick to the curb and what to keep before you sell your home

If you’ve chosen your listing agent wisely, he or she will determine the most likely buyer for your home and then laser-focus the marketing materials to that pool of buyers.

Various studies of what different types of buyers are seeking in a home help the agent figure out which of your home’s features will attract them.

Now, there’s one more survey to add to the arsenal and it was published at builderonline.com.

Overall, if your home offers better energy efficiency than your competition, expect it to be popular with potential buyers. Other turn ons for buyers include floor plans that can be personalized and a home that is easy to maintain.

All of these features are more in-demand than a home with the latest technology, according to the survey.

Interior features that repel homebuyers

When asked what they dislike most about their current homes, the majority of homebuyers report that the outdated features drive them nuts. In fact, these are the most common features they are fleeing:

  • Linoleum floors
  • Popcorn ceilings
  • Wood paneling
  • Ceramic tile countertops in the kitchen
  • Shag carpet
  • Avocado green appliances

Yes, I’m sure you love that wallpaper you put up in 1988, but buyers will hate it. The same goes for the “gold” bathroom faucets or those with plastic faux crystal handles.

Features buyers love

Wood flooring is still the overwhelming favorite among buyers, with 65 percent of those surveyed showing a preference for it. Internet connectivity (ethernet and USB ports) came in second, with 44 percent of respondents.

Surprisingly, 56 percent said they were willing to give up square footage in a home if it meant having a larger yard. And, across all demographics, the most important exterior feature of a home is “distance from neighboring homes.”

Broken down by generations, here are the home feature preferences:

Millennials

  • Whirpool tub
  • Home theater
  • Wine refrigerator or cellar
  • Dining room
  • Darker, richer wall color

Gen Xers

If you have a larger home in the suburbs, members of this cohort may be your buyer. Gen X homebuyers are seeking:

  • A detached single-family house.
  • A home with lots of square footage (the average, according to study respondents, is 2,315 square feet).
  • A single-level home, or one with the master bedroom on ground level.
  • A home near trails or other amenities to help them keep fit.

Baby boomers

  • A home with 2,000 to 2,999 square feet of living space.
  • Planned community with amenities and a resort-like vibe
  • A community with a diverse age range, or “stroller-to-walker,” Tammy Barry, director of marketing for a marina resort master-planned community near Chicago tells newhomesource.com’s Camilla McLaughlin.
  • Boomers seek low-maintenance homes with large rooms and plenty of storage. 

Even homeowners on tight budgets can make minor changes to the home to attract more interest.

Small changes, such as changing out dated kitchen and bathroom faucets, buying new panels for the front of your appliances and replacing dated flooring with something attractive yet inexpensive can make a world of difference.

Retiring and thinking of downsizing your home?

When the last time you bought a home was far enough back that your mortgage is paid off, or nearly so, can we give you some advice? A lot has changed in the real estate industry since the 1980s, in both the selling and buying process.

First, you’re no longer looking for areas with good schools for the kids or a strong job market for Mom and Dad. So, your priorities have changed as well and you have far more freedom now to live where you want and how you want.

It’s liberating, isn’t it?

If you’re considering downsizing your home, read on.

Right now, half of the “most viewed” articles on AARP’s website deal with romance, sex and vacations. Retirees — or those contemplating retirement — don’t have a one-track mind though.

When they aren’t reading about hooking up, or the birds and the bees, they think about their finances. And downsizing a home isn’t just a way to save on home maintenance costs but also a way to free up all that equity you’ve built up to use during your retirement.

Whether you’ll be shopping for another, albeit smaller, single-family house or a condo, downsizing doesn’t really differ that much between the two. Since it’s a major life event, however, it’s a bit scary, “like having an empty nest after the children leave,” says gerontologist Karen Owen-Lee.

Be that as it may, baby boomers are a hardy bunch and it takes a lot to frighten them off what they truly want. In fact, of the 14 percent of Americans age 65 and older who say they plan on moving in the next five years, 67 percent say their priority is to move to a smaller home.

My best advice to you is to first consult with your accountant or financial adviser before taking any concrete steps toward that new future. Armed with his or her good advice you’re in a far better position to make this move, sans the emotions.

Then, you’ll need to consider whether you want to try to time the sale of your current home with the purchase of the new one. It’s a tricky process but we’re happy to walk you through it.

Consider the advantages and disadvantages

With the home paid off, you’re in a far better financial position than many retirees but you should still consider the costs of selling a home. You’ll pay real estate fees, perhaps concessions to the buyer and mortgage fees. These can add up to a big chunk of money.

The advantages to downsizing, however, may just offset those costs

First, if you don’t pay cash for the new home, you’ll have a mortgage payment. Since you’ll be buying a smaller home, however, your payments may be far lower than they were when you had a mortgage on the current home.

And, because the home will be smaller, you’ll save money on utility bills and, if you choose a condo, home maintenance chores may be picked up by the HOA.

But, before you can make a plan for the future, you’ll need to consider both sides of the issue, the good and the bad.

Yes, there are disadvantages

In a perfect universe there would be perfect timing in all that we do. Selling your current home would coincide with a hot sellers’ market which would magically morph into an equally fiery buyers’ market when you look for the new home.

Ah, that dratted universe – nothing is perfect

And, the late Steven Hawking agrees. “One of the basic rules of the universe is that nothing is perfect. Perfection simply doesn’t exist … without imperfection, neither you nor I would exist,”

The upside to this, however, is that one of the markets will prevail so you are ensured of saving money on at least one of your transactions.

Next, consider that condo living offers many advantages (low maintenance, amenities you might not find in a single family home community, etc.) but it has drawbacks as well. Chief among these are the HOA fees and any special assessments which may crop up in the future.

It’ll work with a good plan

My advice is to plan on selling your home as soon as possible. We are still in one of the best sellers’ markets we’ve seen in decades, but interest rates may hike again this year, locking many buyers out of the market.

To make the most money possible on the sale of your current home, get it on the market soon

Then, to really get the most bang for your home-buying buck, consider moving to a less expensive community. AARP’s Shelley Emling compared the “best places to retire” cities from both Forbes and USA Today and found that both lists had three cities in common:

  • Iowa City, Iowa
  • Madison, Wisconsin
  • Columbia, Missouri

Both publications’ rankings used a variety of criteria, but of the three, the city for retirees on a tight budget appears to be Iowa City.

There, you’ll pay no state income tax on your Social Security income and receive a tax break on what your pension brings in. The median home price there, by the way, is $204,000, according to Emling.

Downsizing, coupled with a move to a less expensive city or even a cheaper community right here in our hometown, may just mean all the difference, financially, during your retirement.

When considering downsizing, it’s important to consider not only the type of neighborhood and home in which you want to live, but the financial aspects of the move as well.

Again, I can’t stress enough how important it is for you to seek counsel from your financial planner or accountant before making any decisions. Then, call me and we’ll get started on the real estate part of your plan.

 

Don’t make these 5 common home staging mistakes

Although DIY home staging may seem an easy project, we see several common mistakes when homeowners make the attempt. Most go about the process as if it were just a matter of rearranging furniture or redecorating.

There’s a lot more to home staging than that, however. The most important aspect is of it is knowing who your most likely buyer will be and then appealing to his or her emotions.

Take a look at the five most common staging mistakes we see so you can avoid them if you plan on going the DIY route.

Mistake number 1: Not cleaning before you stage

There’s a difference between routine house cleaning and cleaning for staging. The latter is a deep clean and serves as the background for the staging. Professional housecleaners suggest that you move around the house, cleaning from the ceiling to the floor, so that you don’t miss any spots.

“Dust and wipe down the baseboards, clean the vents, bleach the grout in your shower, and polish the hardware in your kitchen and bathrooms,” suggests the experts at MHM Professional Staging in Orlando, Florida.

A deep clean also sends a subliminal message to potential buyers that the home is well-cared for and helps them imagine living in the space.

Mistake No. 2: Leaving the wrong furniture in place

Too much (or too big) furniture makes rooms appear cluttered.

“Trying to put too much furniture in one space makes it look smaller than it really is,” Joanna Gaines tells HGTV’s Judy Dutton.

“Try to stick with three large pieces at most per room to keep the house feeling big and open.”

Then, ensure that what’s left in each room advertises the room’s purpose. This means no baby changing table in the home office and ridding the master bedroom of the treadmill.

Mistake number 3: Neglecting to stage storage areas

While the home is on the market, its storage spaces should be highlighted. Remove bulky winter clothes and blanket from closets and cupboards, organize the pantry and store excess linens to make the linen cupboard appear roomy.

“Potential buyers will definitely want to know how much storage space your home has, so no closet will be safe for concealing messes. If you’re in a pinch, a last-ditch effort to hide a mess is under a bed,” according to Gaines.

Mistake No. 4: Ignoring the garage

A National Association of Home Builders (NAHB) study finds that more than half of the homebuyers they surveyed find a home with a garage “essential” or “desirable.”

A 2017 National Association of Realtors survey resulted in learning that more than 30 percent of homebuyers think the garage is the most important room in the home. Baby boomers, in fact, care more about the garage than the living room.

Get ideas for your garage at realtor.com

Mistake number 5: Assuming buyers won’t notice your lack of curb appeal

The exterior of your home can make or break your bottom line. It’s the home’s first impression and, believe me, if potential buyers don’t like what they see from the curb, they’ll drive on to the next home on their lists.

Start with the exterior walls. Sometimes powerwashing is all it takes to make them sparkle. If the home needs new paint, however, you can look forward to an average 43 percent return on your financial investment in the process, according to homegain.com.

Then, turn your attention to the landscaping. “Simple touches like making sure the lawn is freshly cut, power-washing the driveway, or putting a few freshly potted plants on the front porch can make a big impact,” says Gaines.

Staging your home, inside and out, is a wise move. But don’t make common mistakes that might negate all your hard work.

 

Should I sell my home as-is?

Ah, the need for speed in a real estate deal – we’re quite familiar with it. From clients who’ve taken a job out of town with an impatient employer to the need to sell a deceased family member’s home, “Should I sell my house as-is” is a common question.

There are also the clients who tell us they aren’t the best at maintenance and have, sadly, let the home go over the years and they now need to sell, with neither the time nor the money to make needed repairs.

Let’s take a look at some of the issues you should consider before trying to sell the house in as-is condition.

Price considerations

A recent study finds that most homebuyers – especially first-time buyers – want a home that they can move right into and hang up their toothbrush. And, they say they are willing to pay more for such a home.

Face it: many of the competing homes in your area will be closer to this condition than yours if you choose not to make improvements and/or repairs.

Unless your home is priced low enough to compensate the buyer for what he or she will need to spend to bring it to comparable condition, it will sit on the market.

So, if your budget can tolerate a very low listing price, you’ve passed the first challenge of trying to sell as-is.

Lenders have their preferences too

Should you find a buyer who is using a government-backed loan program, such as the VA or FHA, the lender will have a thing or two to say about your home’s condition.

Typically, it’s “fix it or we won’t loan the money to the buyer.” You can almost guarantee this for problems of a health or safety nature.

Considering that the VA grants almost a half-million mortgages a year and the FHA is the preferred program for first-time buyers, that’s a lot of people to exclude from the buyer pool

The FHA-approved appraiser will be the one to determine what needs to be fixed before the home qualifies for an FHA-program buyer. Repairs listed as essential on his or her report are the ones to be most concerned about.

Even a conventional lender may balk at making a loan for your home if the repairs needed include HVAC, roof or structural problems. Some will require that broken window glass be repaired and ask that any code violations in existence be remedied.

By the way, some home insurance companies are also asking for repairs before they will insure the home for the new owner.

Come up with a strategy

Again, it’s understandable that some fixes are just too expensive for some sellers to manage. For these, we can suggest the FHA 203(k) program in our marketing materials.

With this program, FHA will wrap the cost of the home and the cost of rehab in one loan, so the buyer has only one payment a month. There are other rehab mortgages out there as well.

You’ll also want to consider how you’ll deal with the very low offers you’ll receive. The mere mention of the words “as-is” act as a magnet to investors and flippers. Know the lowest price you’ll accept and remind yourself to keep your emotions in check and to not take lowball offers personally.

Finally, despite the problems with the home, the one way you can help boost the price, even a small amount, is to ensure that it’s clean at all times.

If your home will be vacant, consider some inexpensive staging techniques to help buyers overcome the as-is aspect of the sale.

When a home is neat and tidy (both inside and out) it sends a subliminal message to potential buyers that someone does care about the home.

Getting ready to sell? Depersonalize and get rid of clutter first

Think back to a time when you, or someone you know, sold or traded in a car. There was some work to do before advertising it for sale or taking it to the car lot, right? It’s a rare car seller who’ll leave all the fast-food wrappers, empty plastic water bottles and crumbs left behind by the kids.

Why?

Because a clean car gives off an impression of being well-maintained.

It’s the same thing with houses. Sadly, cleaning and decluttering a car about to go on the market is a routine task, doing the same for homes isn’t.

Yet a home is worth hundreds of thousands of dollars more than a car.

First, get rid of the clutter

Scientific studies show that clutter causes anxiety in people who view it. Not a good state for a homebuyer to be in, and reason enough to get rid of excess “stuff” in the home.

If you have a lot of it, the process may seem overwhelming, but it doesn’t have to. Remember the old advice on how to eat an elephant (one bite at a time) and apply it to getting rid of the clutter in your home.

In this case, take it one room at a time. Try to do the entire home in one day and you’ll most likely get frustrated and lose the mojo needed to complete the job, according to professional organizer Nicole Anzia.

“It’s much better to spend a few hours — 2 or 3 — on one project or space. This way you’ll feel motivated to do more, not be burned out by the process,” she tells Apartmenttherapy.com’s Catrin Morris.

For those who burn out quickly, Anzia suggests doing one room at a time, “in 30-minute bursts … work for 30 minutes, take a half-hour break, then work for another 30.”

When tackling clutter, pay close attention to any collections you may have. Too many items in a room makes it appear cluttered and distracting to buyers.

Depersonalizing comes next

Actually, you may end up doing a lot of the “depersonalization” while you’re getting rid of clutter.

In a nutshell, depersonalizing a home involves removing anything of an overly-personal nature.

Think about model homes in new-home communities. These homes are carefully staged to appeal to the broadest number of buyers and they are decidedly depersonalized.

You want buyers to be able to imagine themselves living in the home, with their furniture and their belongings.

Some of what you should remove and store includes:

  • Excess family photos
  • Framed diplomas, degrees and awards
  • Extra toys
  • Magazines and professional journals
  • Craft items
  • Anything on the refrigerator doors
  • Anything that sits on the kitchen and bathroom counters that isn’t decorative
  • Mail
  • Paperwork
  • Anything of a religious or political nature
  • Sports memorabilia

Depersonalization doesn’t just include removing overly-personal items from the home. Consider repainting walls that are currently painted in a bright or odd color and getting rid of odors from cooking, pets, babies and smokers.

Don’t go overboard in depersonalizing the home, however. Leave some traces of your personal statement so that buyers get an idea of the lifestyle the home offers.

Look for these 3 red flags when shopping for a home

Call them “red flags,” or “warning signs” or even “whoa, don’t-buy-this-house” signs, but there are certain symptoms of a sick home that you need to be aware of before you fall in love with a sexy fireplace or a to-die-for backyard. Once you’re smitten, it may be too late.

Now, don’t get me wrong, most houses, even new ones, have something wrong. Even if it’s a problem as easy to fix as a drippy faucet, no home is perfect.

But what we’ll look at today are the biggies – those items that require emptying your bank account to repair. They don’t necessarily need to be considered deal breakers, but should prompt you to have the home inspected by the appropriate professional.

Don’t be crestfallen if you happen to find some of these because the good news is that you found them now, rather than later. Now, as in you can either demand the seller fix them or you can back out of the deal. If you were to learn of these later, after you’ve moved in, the onus would be on you and your bank account to fix them.

So, let’s take a look at a few of the big problems and some of the clues to look for.

“Pee-Yew”

Can you imagine taking a shower and being greeted by raw sewage bubbling up through the drain? Oh, yes, it can—and does—happen. It’s caused by a clogged sewer or septic line.

Consider foul smells coming from the home’s drain a clue for further investigation. Likewise, if you notice these smells outdoors, near the home’s drain fields, if it is on a septic system.

Then, test the drains. Simply turn on the taps and watch the water drain. If it drains slowly, or you hear gurgling sounds from the drain (or from the toilet), call in a plumber.

Sewer fixes aren’t cheap. Tree-root-damaged lines can cost from $4,500 to $13,000 for a 100-foot sewer pipe, according to costhelper.com.

If it’s a septic system that has you concerned, it may need to be pumped. If, on the other hand, the system needs to be replaced, plan on spending from $2,720 to $7,934, according to homeadvisor.com.

“The basis or groundwork of anything” 

That’s the dictionary definition of “foundation.” For real estate purposes, and to keep it simple, it can be defined as “the thing a house sits on.”

A home’s foundation has three functions:

  1. Support the weight of the entire building.
  2. Help the home withstand natural disasters.
  3. Keep ground moisture from seeping into the structure.

“Most homeowners will pay around $4,004 to repair foundation issues. Major repairs involving hydraulic piers can cost $10,000 or more, and minor cracks cost as low as $500. The typical homeowner pays between $1,850 and $6,342,” according to the pros at homeadvisor.com.

Look for sloping or sagging floors (especially in more recently-built homes), cracks in the foundation, walls and floors, doors that don’t operate properly and gaps around window frames or exterior doors.

The experts at hdfoundationrepairs.com go into greater detail on each of these symptoms on their website.

Check the plumbing

Low water pressure is a lot more than an annoyance when trying to rinse the soap of your body in the shower. It may be a symptom of major plumbing problems.

Now, don’t get freaked out. Most of the causes of low water pressure are easy fixes, such as the water softener requires service, or a clog someplace in the lines or mineral deposits in the faucet aerator or showerhead or even sludge in the water heater.

Cracks or other damage to pipes, however, may result in a leak and that too would lower the water pressure. Look for evidence of leaks such as damp spots on the floors and walls, signs of mold or a hissing sound when the water is running.

Leak repair can be costly, especially if the leak is in a tough-to-reach spot.

If you suspect any problems in the home that the home inspection didn’t turn up, we urge you to bring in a specialist. A structural engineer can put your mind at ease about cracks in the foundation and a plumbing contractor can give you an idea of the state of the home’s pipes.

Discrimination in Mortgage Lending

There was a time in our country’s history when discrimination in lending was blatant and rampant. In the 1930s, for instance, Americans of color were routinely denied mortgages. Several methods were used, the worst of which was redlining (denial of a loan based on the applicant’s address).

Yes, we’ve come a long way in the nearly nine decades since then, but there is convincing evidence that discrimination in mortgage lending still exists.

To avoid becoming a victim, it’s important to understand what are considered discriminatory practices under the law.

Federal laws to protect Americans against discrimination

Two laws are of significance to the mortgage industry, the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act.

While the latter is aimed at the housing industry as a whole (and covers tenants as well), the former is specific to the lending industry. The ECOA’s anti-discrimination laws apply to anyone who provides mortgages as well as those who rent property, appraise property and broker real estate.

It prohibits those offering credit from discriminating against an applicant on the basis of:

  • Disability
  • Familial status
  • National origin
  • Race
  • Color
  • Gender
  • Religion
  • Age
  • Marital status
  • Whether an applicant receives public assistance

The Fair Housing Act covers all of the above instances of discrimination with the exception of the last three. It also exempts certain people from the law. For instance, a landlord who rents out units in a four-unit-or-less building, and he lives in the building, is exempt from the Fair Housing Act.

Protect yourself

Discrimination can be quite subtle, so it’s important to know what to look for. An example of this is explained in the results of a Journal of Urban Economics study from two years ago.

The researchers found that much of the lending discrimination that occurs today happens very early in the mortgage process. African Americans, for instance, find that they receive no response from lenders when they email them with questions 1.8 percent more often than white borrowers.

The researchers point out that the results of this are akin to having a credit score that is 71 points lower.

Other subtle forms of mortgage discrimination include a lender who tries to discourage an applicant from applying for a loan, and a lender who won’t give a reason for loan rejection.

Protect yourself by shopping for a loan among several different lenders. Only when you compare offerings will discrimination become obvious.

How to deal with discrimination

If you feel you’ve become a victim of mortgage discrimination, speak with the lender first. If the lender offers an unsatisfactory explanation of what happened, take additional steps.

First, notify your state’s attorney general’s office. Then, file official complaints with the U.S. Department of Housing and Urban Development and the Consumer Financial Protection Bureau.

Knowledge: The antidote for homebuyer panic

“Buying a home is one of the biggest investments you’ll ever make,” is one of the first “tips” you’ll receive when surfing the internet for information about the process.

The statement is ubiquitous, it’s also an understatement and so self-evident that it’s become a cliché.

Most important, though, is that it’s a statement that induces panic.

Don’t let the words get to you. Yes, you’re making a major financial investment when you buy a home, but you’re also buying a HOME. This is a place to live, to build memories and to surround yourself with the things and people you love.

The keys to dealing with homebuying panic include:

  • Gaining knowledge about the process
  • Adequate preparation
  • Following the steps, in order

All of these steps begin with the assistance of one person: your real estate agent.

Knowledge: a brilliant cure for anxiety

I see you shaking your head – yes, suggesting that you choose your real estate agent carefully seems a bit self-serving. That doesn’t make it any less pertinent though, right?

We’re hardwired to fear, or feel threatened by, what we don’t understand. Without getting too technical, there’s a small part of our brain, the amygdala, that tells us when to be afraid, according to some scientists. Short of surgically removing this small, almond shaped structure, the only way to deal with fear is to face it, head on.

“Stress-hardy people focus their energy on those events that they have influence over, rather than situations beyond their control,” according to experts at the University of Minnesota.

And, while there are several aspects of a real estate transaction over which you have no control, there are many more over which you do.

Educate yourself about the buying or selling process by boning up on mortgages, on how to choose your real estate agent and on the processes that will follow and feel your anxiety melt away.

Then, take a preparation and call me in the morning

Even the most experienced professional real estate agent experiences the quickened heartbeat and clammy hands when buying or selling property. The difference between you and them, however, is their experience. They know what to expect, when, so the process is far less foreign.

Being prepared, not only with knowledge, but with practical steps to success, is worth its weight in gold in a real estate transaction. Once accomplished, the typical concerns of a novice fall by the wayside.

Planning is everything

If you won’t be paying cash for a home, you’ll need a mortgage, so the lending process is a good place to start your prep.

To ease your fears, you’ll need to know exactly what will be required to get the money you need for the least amount of effort and at the best price. This means fixing issues with your credit, raising your credit score and saving cash for the down payment and closing costs.

Learn all you can about the mortgage process. Freddiemac.com offers a brilliant walk-through of the process and who is involved in it.

Then, it’s time to get loan preapproval. Remember, the preapproval is an offer from a lender, not a commitment, so don’t just see one lender, but several. Compare the annual percentage rates offered and the terms.

Now that you know how much you can spend on a home, determine where you can afford to live and get crystal clear on what you want in a home. Yes, make a list and then check it, add to it, delete from it, but for heaven’s sake, share it with your real estate agent.

And, choosing that agent is the next step. Surprisingly, most real estate consumers choose the first agent they speak with, according to the National Association of Realtors.

You, on the other hand, won’t make that mistake. You will be spending a lot of time with your agent, so it’s important to ensure that you choose the right one.

    • First, the agent must be an ace communicator. Does he or she return calls, emails and texts in a timely manner? Is her knowledge freely given? Does he communicate in easy-to-understand terms?
    • The agent you choose should also be a good listener. As you speak with agents, pay attention to whether or not they are truly listening carefully to your priorities. The last thing you want is an agent who doesn’t listen and insists on showing you homes that don’t fit what you want.
    • Next, the agent should be experienced in the areas of town in which you’ll be house hunting. Agents who are more active in your chosen neighborhoods tend to be familiar with the market trends, schools and proposed developments nearby that could impact a home’s value in the future.
    • Finally, how’s the chemistry? “Finding the right agent takes balancing credentials and chemistry,” according to the experts at CNN Money. As mentioned earlier, you’ll be spending a significant amount of time with your agent. Don’t add to your stress by choosing one you don’t enjoy spending time with.

Once you’ve chosen your agent, get all the answers you need to relax into the process. Curious about what forms you’ll need to sign and their function? Ask your agent for blank copies so you can familiarize yourself with them. Wondering what happens when you make an offer? Ask your agent to walk you through the process.

Typical homebuyer concerns that you CAN deal with

What if I can’t make my payments?

This is why we suggest that you see a lender first. You’ll be given an estimate of the maximum loan amount for which you qualify. If monthly finances are a concern, plan on buying a home well below that amount.

What if I overpay for a home?

This simply will not happen if you hire the right real estate agent. To ease your mind, ask your agent (if he or she doesn’t offer) to run a comparative market analysis on any home for which you plan to make an offer. Knowing the home’s market value will help you structure your offer.

What if there are problems not uncovered during the home inspection?

Even with the most extensive due diligence, problems with a home may not be revealed. Keep in mind that, although a professional home inspection is a must, you don’t have to stop there. You are free to hire a roofer, plumber, electrician, general contractor, engineer and any other inspector you please to produce additional reports.

Throughout the homebuying process, keep checking your home buying plan, take the steps in order and tell your internal threat detector to chill. You’ve got this.

 

Don’t make these 6 mistakes when applying for a mortgage

There’s a road you will head down when you first decide that it’s time to buy a home. Before taking even the first step, you’ll encounter a fork in that road. Sadly, most first-time homebuyers take the wrong fork and end up disappointed.

Not having a clue about your credit

 Do you know what’s lurking in your credit reports?

It’s bad enough that nearly 80 percent of credit reports contain errors, but did you know that nearly a quarter of them contain mistakes so bad they result in a denial of credit?

Don’t be among those rejected—order copies of your credit reports and go over them, looking for errors. You are entitled to free copies of your credit report from each of the three major credit bureaus every 12 months. Get yours at AnnualCreditReport.com.

If you find errors, file a dispute and clear up the problems before applying for a mortgage. The Federal Trade commission offers additional information on how to obtain your free credit report and how to dispute errors you may find in your report.

Shopping without knowing how much you can spend

 That fork in the road we spoke about earlier? Sometimes it takes homebuyers online, looking at homes for sale and, sometimes, to open houses or new-home communities.

Big mistake.

Homebuyers, especial first-timers, tend to overestimate how much they’ll be able to borrow. If you’re among them, and you look at homes, you’ll most likely be viewing those that are out of your price range and, after that, those that you can buy will pale in comparison.

Don’t set yourself up for disappointment – see a lender before looking at homes for sale.

Take the next logical step after repairing your credit—start shopping for a lender, not a home (at least not at this point).

Not shopping strategically for a loan

 It amazes us how casually many people treat the sale and purchase of an investment as large as a home.

A National Association of Realtors’ survey finds that most real estate consumers hire the first real estate agent they meet.

And, the Consumer Financial Protection Bureau clams that half of borrowers use this same cavalier attitude when choosing a lender.

Until you obtain a mortgage, quoted terms aren’t set in stone, so shopping for the best terms will save you money on your closing costs and, quite possibly, your monthly house payment.

So, use the same care in finding a lender and comparing loan products as you would if you were considering buying a big-screen TV.

A good place to choose lenders to compare is Bankrate.com. Remember, you want to compare the APR, and the stated rate is not necessarily what you’ll be offered. This is why you must apply for preapproval to determine your budget.

Not being honest

 Remember “liar loans?” It wasn’t that long ago that lenders were approving mortgages for just about anyone with a heartbeat.

Think of those loans as dinosaurs, because they no longer exist. Lending standards have tightened considerably since then and lenders are bound by statute to ensure that the borrower can afford to make payments on the loan.

This means that you are required to provide documentation that proves the income you state on your application. So, be honest on all parts of the loan application.

Switching jobs after loan approval

A common requirement for loan approval is your employment situation. Most want to see at least two years with your current employer (or in your current field), or two years in business if you are self-employed.

It is important to not make any changes to your employment situation during the period of time between loan application and closing on your new home.

Changing your financial picture

Yes, it’s tempting to start purchasing furniture and appliances as the closing date draws near. But, don’t do it.

The lender will run one final credit check, just before closing, to ensure that nothing in your financial picture has changed. If you purchase items on credit or open new credit accounts, your score may go down.

Also, the new debt you’ve taken on may change your debt-to-income ratio and you’ll be denied the loan and the closing will be cancelled or postponed.

For many real estate consumers, the entire mortgage process is foreign and, quite frankly, dull. But, it involves your money—and lots of it—so learn as much as you can and you should sail through the process.

Real estate lingo defined: What is due diligence?

After a long, grueling search, including several overheated bidding wars, Jim and Claire found the California home of their dreams. They were ecstatic when their offer was accepted and the transaction sailed to an effortless close.

As summer settled in, it was time to crank up the air-conditioner. Curiously, they couldn’t find the thermostat for it. Sure, there was a thermostat for the heater and, isn’t the cooling system typically attached to it?

After searching the entire home, they came up empty. The HVAC system was missing the AC side of the equation—there was no air-conditioning system in the home, despite the MLS listing claiming otherwise.

Who gets the blame?

It’s easy to assume that the listing agent and/or her broker were to blame for this. After all, the box on the MLS listing, right there next to “central air conditioning,” was checked.

Perhaps the homeowners should’ve caught the MLS mistake and brought it to their agent’s attention? If so, perhaps they’re to blame.

In the end, after mediation, the buyers were found to be at fault.

Why?

They didn’t perform adequate “due diligence”

Huh?

Caveat Emptor

You’ve most likely heard the Latin term for “let the buyer beware.” But, did you know that it’s part of a longer statement that admonishes buyers to “beware, for he ought not to be ignorant of the nature of the property which he is buying from another party?”

According to FindLaw.com, there is an assumption, under law, that a buyer of any product will inspect it completely before consummating the purchase.

“This does not, however, give sellers the green light to actively engage in fraudulent transactions,” according to findlaw.com, but it does put a lot of responsibility on buyers’ shoulders.

And, in this case, the mediator found no evidence that the sellers acted fraudulently.

The due diligence period

This time period extends from the minute the seller accepts the offer to when the last contract contingency is removed.

Homebuyers are, therefore, given ample time to perform due diligence. They are even afforded the opportunity to request additional time, if needed.

During this period, the buyer will have the home inspected, shop for insurance and examine HOA documents (if applicable), the lender will work on the buyer’s loan and have the home appraised and the title company will investigate the home’s title.

The buyer, who receives copies of inspection reports, appraisal information and the title search, is well-armed with information during the due diligence period. Savvy buyers will personally inspect the home as well, which Jim and Claire did, twice.

Before the last contingency is removed, the buyer has the opportunity to negotiate with the seller for repairs or the money to have the work performed by someone else. If this doesn’t occur, and the contingency is removed, the buyers are agreeing to take the home as-is.

And, it’s expected that they know what they’re getting into.

Jim and Claire lost their case at mediation, and here’s why:

There was no evidence that the seller exhibited fraudulent behavior. His property disclosure noted that there was no central air conditioning. The buyers either didn’t read the disclosure or ignored what was stated.

The home inspector noted the lack of central air conditioning. Why any homebuyer wouldn’t thoroughly read home inspection results is mind-boggling, but apparently, Jim and Claire didn’t.

The buyers personally inspected the home on two separate occasions and performed an additional final walk-through before closing. While it would be too late to seek remedy after the final walk-through, the prior two inspections fall under the umbrella of performing due diligence.

Don’t let it happen to you

It can happen to even the most experienced homebuyer. It’s easy to be so excited by the fact that you finally found THE home that you either don’t notice or overlook its flaws.

While Jim and Claire’s own real estate agent should have noticed a feature that the couple told her they wanted, in the end it all came down to their negligence.

Buying real estate, even for personal use, is a financial investment. Treat it as such by forcing yourself to leave the emotions aside and approach the purchase with all the seriousness it requires.