Real Estate Broker in San Antonio, Home Sales in San Antonio, Casas en venta, corredor de bienes raices, Realtor, Realtor en Espanol
Success Realty
Successfully Serving Your Real Estate Needs!
Contact Details
P.O. Box 90353 San Antonio, TX 78209
Phone: 210-475-9900 Mobile: 210-317-7528 Email Albert

"I don't know anything about real estate. Can you explain it to me?"


What Every Buyer Should Know:

Getting Started

You wouldn't plan a major vacation without first determining your needs, looking at a budget, and then checking the marketplace. Homebuyers should follow a similar process to get the best possible home and the most attractive financing.

Knowledge and experience are the keys to successful real estate transactions. REALTOR.com® contains an enormous amount of valuable information, and such data -- combined with the expertise, experience and training of local REALTORS® -- can be the essential keys to your success.

One of the keys to making the homebuying process easier and more understandable is planning. In doing so, you'll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the homebuying process.


Who Represents You?

One of the hot topics facing the world of real estate right now is the issue of agency. Some would have you believe that it really doesn't affect you, the buyer, and that nothing much has changed. But they are wrong.

The topic of agency is important to you because it answers the most basic and fundamental question that can be asked of any real estate professional: Who do you represent in this transaction?

Until that question is answered, you may be left with the impression that all agents who work with buyers actually represent those buyers, and that you have somebody going to bat for you in this transaction. Well, the issue of agency is important because without it, we can never be sure who represents who.

Here's the scenario:

You meet a really nice agent at an open house named Bonnie. Even though Bonnie's house is not right for you, she tells you she has others to show you that fit your needs exactly. You spend an hour or so with Bonnie looking at a half dozen homes and talking about your needs and your wants. During the course of the conversation, you volunteer that you have $100,000 cash to spend and that you will not go over $100,000 purchase price no matter what. Then you find the perfect house. Asking price is $100,000 but you decide to offer $92,500 based on recent sales in the area. During negotiations, the seller asks Bonnie directly how much cash you have and how high will you go? What does Bonnie say?

Here's the answer: Unless you have signed a "Buyer Agency Agreement" with Bonnie making her your buyer agent, she is most likely acting as a sub-agent to the listing broker who represents the seller. If that is the case, she has a fiduciary obligation to the seller to disclose to him any information she has that might "promote or protect his interest" in the transaction. Guess what? Bonnie has that information.

The Seller, now having knowledge of your financial position, counters at a full $100,000. He knows you can afford it and that this price falls within your desired range. He also knows that you have seen a number of other homes and that his is the one you want.

Regardless of what eventually happens in this scenario, it can hardly be called an even playing field. So, how can you protect yourself from a possible disclosure required of a seller's agent?

1. Make sure that the agent you are working with has agreed, in writing, to represent you as a "Buyer's Agent." This will mean signing a buyer brokerage agreement in which you promise to work only with that particular agent for a specific period of time, often 90 days. It also means that you promise not to buy from anybody else, even FSBOs, without involving your buyer's agent. In almost every case, the commission will still come from the seller, but your agent must present the offer.

2. Never say anything to anybody unless you would be willing to have that information repeated into a seller's ear. Assume that everybody, and I mean everybody, is working for a seller unless you have specifically hired them to work for you. And even then, be discreet. During the second world war, the military promoted a phrase designed to stop idle gossip: Loose lips sink ships! You would do well to adopt that philosophy in your home-buying as well.

How Much Can You Afford?

As you think about applying for a home loan, you need to consider your personal finances. How much you earn versus how much you owe will likely determine how much a lender will allow you to borrow.

First, determine your gross monthly income. This will include any regular and recurring income that you can document. Unfortunately, if you can't document the income or it doesn't show up on your tax return, then you can't use it to qualify for a loan. However, you can use unearned sources of income such as alimony or lottery payoffs. And if you own income-producing assets such as real estate or stocks, the income from those can be estimated and used in this calculation. If you have questions about your specific situation, any good loan officer can review the rules.

Next, calculate your monthly debt load. This includes all monthly debt obligations like credit cards, installment loans, car loans, personal debts or any other ongoing monthly obligation like alimony or child support. If it is revolving debt like a credit card, use the minimum monthly payment for this calculation. If it is installment debt, use the current monthly payment to calculate your debt load. And you don't have to consider a debt at all if it is scheduled to be paid off in less than six months. Add all this up and it is a figure we'll call your monthly debt service.

In a nutshell, most lenders don't want you to take out a loan that will overload your ability to repay everybody you owe. Although every lender has slightly different formulas, here is a rough idea of how they look at the numbers.

Typically, your monthly housing expense, including monthly payments for taxes and insurance, should not exceed about 28 percent of your gross monthly income. If you don't know what your tax and insurance expense will be, you can estimate that about 15 percent of your payment will go toward this expense. The remainder can be used for principal and interest repayment.

In addition, your proposed monthly housing expense and your total monthly debt service combined cannot exceed about 36 percent of your gross monthly income. If it does, your application may exceed the lender's underwriting guidelines and your loan may not be approved.

Depending on your individual situation, there may be more or less flexibility in the 28 percent and 36 percent guidelines. For example, if you are able to buy the home while borrowing less than 80 percent of the home's value by making a large cash down payment, the qualifying ratios become less critical. Likewise, if Bill Gates or a rich uncle is willing to cosign on the loan with you, lenders will be much less focused on the guidelines discussed here.

Remember that there are hundreds of loan programs available in today's lending market and every one of them has different guidelines. So don't be discouraged if your dream home seems out of reach.

In addition, there are a number of factors within your control which affect your monthly payment. For example, you might choose to apply for an adjustable rate loan which has a lower initial payment than a fixed rate program. Likewise, a larger down payment has the effect of lowering your projected monthly payment.

What's a Mortgage?

Likely the largest debt you'll ever take on, a mortgage is a loan to finance the purchase of your home.

Your home is collateral for the loan, which is also a legal contract you sign to promise that you'll pay the debt, with interest and other costs, typically over 15 to 30 years.

If you don't pay the debt, the lender has the right to take back the property and sell it to cover the debt. To repay the debt, you make monthly installments or payments that typically include the principal, interest, taxes and insurance, together known as PITI.

Principal -- The principal is simply the sum of money you borrowed to buy your home. Before the principal is financed you can give the lender a sum of cash called a down payment to reduce the amount of money that will be financed.

Interest -- Usually expressed as a percentage called the interest rate, interest is what the lender charges you to use the money you borrowed. As well as the given rate, the lender could also charge you points, and additional loan costs. Each point is one percent of the financed amount and is financed along with the principal.

Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments are largely interest during the early years and principal later.

In addition to your principal and interest, your mortgage payment could include money that's deposited in an escrow or trust account to pay certain taxes and insurance.

Generally, if your down payment is less than 20 percent, your lender considers your loan riskier than those with larger down payments. To offset that risk, the lender sets up the escrow account to collect those additional expenses, which are rolled into your monthly mortgage payment.

Taxes -- The taxes are property taxes your community levies based on a percentage of the value of your home. The tax is generally used to help finance the cost of running your community, say to build schools, roads, infrastructure and other needs. You must pay property taxes even if you don't need an escrow account and even after your mortgage is paid off.

Insurance -- Lenders won't let you close the deal on your home purchase if you don't have home insurance, which covers your home and your personal property against losses from fire, theft, bad weather and other causes. Even if you pay cash for your home, you should buy home insurance unless you can afford to repair or rebuild your home if it's damaged or destroyed.

If your home is in a federally designated high flood risk zone within a flood plain and you are signing for a federally insured loan, federal law mandates that you must buy flood insurance. If you are not in a high flood risk zone, you still may buy the coverage.

If you put less than 20 percent down on your home purchase, most lenders will also charge you private mortgage insurance (PMI) premiums. The coverage doesn't protect you, it protects the lender from you defaulting on the mortgage. Without the coverage, many buyers could not otherwise afford to buy a home. Effective for loans written on or after July 29, 1999, lenders must automatically cancel PMI when your mortgage balance shrinks to 78 percent of the home's original

What kind of loan? -- There are thousands of loans available out there from a variety of lenders, but in general, the mortgage you choose will likely be determined by at least several key factors:

How much down? -- Loans with 5 percent down or less are now widely available in fact, loans from major lenders with no money down have appeared in recent years.

If you place less than 20 percent down, lenders will want the mortgage guaranteed by an outside third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer (PMI, or private mortgage insurance, is required by lender to protect against any mortgage defaults). More than 2.5 million VA, FHA and PMI loans are generated each year.

How's your credit? The best rates and terms are only available to those with solid credit. To get the best loans, make a point of paying credit cards, installment payments, rent and mortgage bills in full and on time.
Are you a first-time buyer? It might seem that "first-time buyer" means someone who has never owned property before, but under most state programs, the term refers to those who have not owned property within the past three years. State-backed first-timer programs often feature smaller downpayments and below-market interest rates. For details, speak with your local REALTOR®.

What Kind of Mortgages Can I Get?

The two most common types of mortgages are fixed-rate mortgages and adjustable-rate mortgages, known as ARMs.

A fixed-rated mortgage comes with an interest rate that remains the same for the life of the loan.

The life or term of a mortgage is 30 years by industry standards, but 15 and 20-year term loans are also available.

Shorter term loans come with cheaper interest rates. A 15-year mortgage's interest rate is typically one-quarter to one-half percent lower than a 30-year mortgage. Both the cheaper rate and the shorter term mean you'll also pay less over the life of the loan than you would if you borrowed the same amount of money with a long term loan.

Monthly payments of a shorter term loan, however, are generally higher than the same loan for a long term because the larger payments of the short term loan are necessary to repay the debt sooner.

A long term loan with smaller monthly payments can be easier to budget, but if you have a stable salary that allows you to afford the larger monthly outlay, the shorter term loan could be to your advantage.

Whatever term you choose, fixed rate mortgages protect you from the risk of rising interest rates. Of course, since you are locked in to a given rate, you could end up with a rate higher than the going rate should rates fall.

The second major category of mortgages are ARMs. They come with interest rates that adjust up or down, depending upon current economic trends.

An ARM's rate is based on a money market index. The one-year U.S. Treasury bill is commonly used because it's yield is similar to the 30-year U.S. Treasury bill used to set rates on 30-year fixed mortgages. ARMs might also be tied to other indexes, including certificates of deposit (CDs) or the London Inter-Bank Offer Rate (LIBOR) rates, among other regularly published indexes.

To come up with the ARM rate, the lender will add a "margin," usually two to four percentage points, to the index.

Initially, the ARM rate is lower than the fixed rate, from about a quarter point to two points or more, depending upon the economy. When the first adjustment occurs (from six months to many years) and how often the rate adjusts, depends upon the terms of the loan. After the first adjustment occurs, subsequent adjustments can occur every six months, once a year, or during larger periods. The adjustment period is disclosed in the loan.

ARMs generally have limits or "caps" on how high it can adjust during each adjustment period as well as over the life of the loan.

The caps protect you from drastic market changes, but ARMS don't offer the stability of a fixed rate loan.

ARMs' lower initial rate, however, can help you qualify for a larger loan or start you off with smaller payments than you'd have to pay for the same mortgage with a higher fixed rate. And if index rates fall with an ARM, of course, so does your monthly mortgage.

ARMs could also be a good choice for someone who knows his or her income will rise and at least keep pace with the loan rate's periodic adjustment cap. If you plan to move in a few years and are not concerned about the possibility of a higher rate, an ARM also could be a good choice.

 What Are My Mortgage Loan Options?

The two most common types of mortgages are fixed-rate mortgages and adjustable-rate mortgages, known as ARMs.

A fixed-rated mortgage comes with an interest rate that remains the same for the life of the loan.

The life or term of a mortgage is 30 years by industry standards, but 15 and 20-year term loans are also available.

Shorter term loans come with cheaper interest rates. A 15-year mortgage's interest rate is typically one-quarter to one-half percent lower than a 30-year mortgage. Both the cheaper rate and the shorter term mean you'll also pay less over the life of the loan than you would if you borrowed the same amount of money with a long term loan.

Monthly payments of a shorter term loan, however, are generally higher than the same loan for a long term because the larger payments of the short term loan are necessary to repay the debt sooner.

A long term loan with smaller monthly payments can be easier to budget, but if you have a stable salary that allows you to afford the larger monthly outlay, the shorter term loan could be to your advantage.

Whatever term you choose, fixed rate mortgages protect you from the risk of rising interest rates. Of course, since you are locked in to a given rate, you could end up with a rate higher than the going rate should rates fall.

The second major category of mortgages are ARMs. They come with interest rates that adjust up or down, depending upon current economic trends.

An ARM's rate is based on a money market index. The one-year U.S. Treasury bill is commonly used because it's yield is similar to the 30-year U.S. Treasury bill used to set rates on 30-year fixed mortgages. ARMs might also be tied to other indexes, including certificates of deposit (CDs) or the London Inter-Bank Offer Rate (LIBOR) rates, among other regularly published indexes.

To come up with the ARM rate, the lender will add a "margin," usually two to four percentage points, to the index.

Initially, the ARM rate is lower than the fixed rate, from about a quarter point to two points or more, depending upon the economy. When the first adjustment occurs (from six months to many years) and how often the rate adjusts, depends upon the terms of the loan. After the first adjustment occurs, subsequent adjustments can occur every six months, once a year, or during larger periods. The adjustment period is disclosed in the loan.

ARMs generally have limits or "caps" on how high it can adjust during each adjustment period as well as over the life of the loan.

The caps protect you from drastic market changes, but ARMS don't offer the stability of a fixed rate loan.

ARMs' lower initial rate, however, can help you qualify for a larger loan or start you off with smaller payments than you'd have to pay for the same mortgage with a higher fixed rate. And if index rates fall with an ARM, of course, so does your monthly mortgage.

ARMs could also be a good choice for someone who knows his or her income will rise and at least keep pace with the loan rate's periodic adjustment cap. If you plan to move in a few years and are not concerned about the possibility of a higher rate, an ARM also could be a good choice.

 

Contract Negotiation

The natural focal point of a real estate purchase contract is the selling price of the home, but the price isn't the only factor that determines the net bottom line for both the buyer and the seller. Is a bargain for the buyer really a bargain if he or she is paying all the transaction costs? Is a top price for the seller really a top price if the buyer wants all the furniture to be included in the purchase price? Or if the buyer they can't come up with the downpayment or qualify for a mortgage?

Before you decide to go ahead with a great price, here are five other bottom-line points to consider:

1. What are the estimated transaction costs and who will pay for what?

Typical costs include the brokers' commission, a home inspection, a termite inspection, escrow or attorney's fees, a title search, an owner's title insurance policy, transfer taxes and recording fees. The price tags on these items vary greatly around the country. Who pays for what is a matter of both local custom and negotiation.

2. How much money is the buyer putting into escrow and how soon?

A big deposit -- called "earnest money" -- and a substantial down payment are generally seen as a sign that the buyer is serious about completing the transaction. From the seller's point of view, the more money the buyer places in escrow and the sooner the money is transferred, the better.

3. Is there a mortgage financing contingency and how specific is it?

The mortgage escape clause is a must for buyers, unless they're paying all cash for the home. Without this contingency, buyers can be legally obligated to purchase the home even if they can't obtain financing. Further, an open-ended statement that says the buyer will obtain a loan "at the prevailing rate of interest" leaves the buyer completely exposed to interest rate fluctuations. A statement that says the loan must be at an interest rate "not to exceed xx percent" and on specified terms is preferable.

4. What furniture, fixtures and appliances, if any, are being sold with the property?

Technically, anything that's permanently affixed to or installed in the home is real property. Everything else is the seller's personal property. This distinction is a narrow one and it naturally leads to a fair amount of confusion. Are built-in appliances real property or personal property? What about a shelving system? A chandelier? Window coverings? Potted plants in the backyard? Sellers who intend to remove anything that's attached to the home should have that spelled out in the contract. And the same goes for buyers who expect to acquire any of the furniture or other movables.

5. What will happen if either side breaches the contract?

Unless an unmet contingency triggers the abandonment of the contract, it's a binding legal document. Buyers who fail to perform can lose their deposit money. Sellers who try to back out can be sued for "specific performance," which forces the sale of the home to the buyer. Many contracts also specify that disputes must be brought in small-claims court or presented for arbitration or mediation.

Tip: Ask your real estate agent to go over the standard contract with you before you receive or make a purchase offer. That way, you'll know what to expect and be prepared to negotiate the best deal you can get.

 

Home Inspections


Get a top-to-bottom examination of your new home

Suppose you bought a house and later discovered, to your dismay, that the stucco exterior concealed a nasty case of dry rot. Or suppose that winter when you fired up the furnace, you discovered a cracked heat exchanger leaking gas into your home.

The best way to avoid unpleasant surprises like these is to arrange for a home inspection before you buy. A good home inspection is an objective, top-to-bottom examination of the home and everything that comes with it. The standard inspection report includes a review of the home's heating and air-conditioning systems, its plumbing and wiring, the roof, attic, walls, ceilings, floors, windows and doors, the foundation and the basement.

Getting a professional inspection is crucial for older homes because age often takes its toll on the roof and other hard-to-reach areas. Problems can also be the result of neglect or hazardous repair work, such as a past owner's failed attempt to install lights and an outlet in a linen closet.

But a home inspection is also a wise investment when buying a new home. In fact, new homes frequently have defects, whether caused by an oversight during construction or simply human error.

Reasonable Fixes: Home inspections cost about $250 to $350, depending on the size of the house and where in the country the home is located. Inspection fees tend to be higher in urban areas and cities than in rural areas. Real estate agents can usually recommend an experienced home inspector. You can find one through a friend or the Yellow Pages under "Building Inspection" or "Home Inspection." The American Society of Home Inspectors, a professional trade group, also has a database of qualified inspectors on its Web site.

Some builders may try to dissuade you from getting a home inspection on a home they've built. They may not necessarily be trying to hide anything because most builders guarantee their work and will fix any problems in your new home before you move in. Some builders, in fact, will offer to do their own inspections. But if you'd prefer a more objective appraisal, insist on an outside inspection.

Self-Education: Education is another good reason for getting an inspection. Most buyers want to learn as much as they can about their purchase so they can protect their investment. An examination by an impartial home inspector helps this learning process.

Ask if you can follow the home inspector on his or her rounds. Most inspectors are glad to share their knowledge, and you'll be able to ask plenty of questions.

Homebuyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to purchase the home unless these problems are remedied.

You could elect to include a clause that makes your obligation contingent upon the results of the inspection. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home's price or the contract's terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won't affect the sale price.

 

Closing

Know exactly what's involved for a smooth finish

The process of closing a home loan differs across the country. However, there are common elements of this process. Knowing what to expect and being prepared will make the closing an event you look forward to, rather than one to dread.

1. Set the Closing Date:

Not all closing dates are equal. Make sure to set a date that's in your best interest. Some things to consider:

Does it give you enough time to prepare your move?
Is it near the end of your lease so you won't pay unnecessary rent?
Are there tax implications (if it falls at year's end, would you be better off pushing it to January)?

Closings must be coordinated with many parties that may include the seller, the lender, yourself, the seller's mortgage holder, respective attorneys, the real estate agent, the transfer agent (if it's a co-op), the managing agent (if it's a condo) and the title company representative.

2. Select a Closing Agent:

A third-party agent of your choosing is needed to prepare the required documents, disburse the funds and activate the transfer of ownership. Your attorney, the escrow agent, the title company or a professional closing agent can act in your behalf.

3. Title Search and Insurance:

Title insurance companies review the history of your new home's ownership to insure that no one else has claims on your property. Title insurance is required because it protects you and your lender against loss resulting from a title dispute.

4. Property Survey:

Sometimes title insurance companies require a survey of the property to verify zoning location and boundaries.

5. Homeowner's Insurance:

Most lenders require this. It protects your home and its contents from fire, theft and most disasters. Sometimes additional hazard and/or flood insurance is required.

6. The Final Walk-Through:

This is your last chance to inspect your new premises and make sure that the seller has completed all repairs and met the conditions specified in the purchase contract.

7. Rate Lock:

Often, you may select to lock in an interest rate at the time of your mortgage commitment and lower it before closing if market conditions change for a nominal fee. Some lenders allow you to lock in your rate anytime from application up until five business days before your scheduled closing.

8. Good Faith Estimate:

Before your closing, your lender will give you a final "Good Faith Estimate of Settlement Costs" to help you prepare for the closing.

9. Last-Minute Detail Check:

A few days before the closing, you'll want to finalize all details with your closing agent.

Closing costs and escrow amounts: Your Good Faith Estimate may not include all closing costs such as interim interest or property taxes. Finalize actual costs at this time with your closing agent to avoid last-minute surprises.
Acceptable method of payment: In most cases, certified or cashier's checks must be prepared in advance.

Miscellaneous items: Some counties require photo ID, evidence of hazard or flood insurance or other miscellaneous documents. This is the time to gather any ID and miscellaneous paperwork that may be required at closing.

 

10 Secrets Every New Home Buyer Should Know

1. First, visit with your real estate agent.

Before you step into a model home, know how much house you can afford. If you currently own a home, you will probably need to know the net proceeds from its sale to calculate how much cash you’ll have available. Your real estate agent can analyze this to narrow down what that net proceed figure is likely to be. If you are a first-time buyer, you will need to pre-qualify to nail down how much of a home you can afford.

2. Put experience on your side.

Remember that the sales agent in a model home represents the builder, not you. If you don’t have a professional real estate agent working on your side, you are not being represented. Your real estate agent can help you to understand new home construction, warranties, financing, and differences in price, quality, and lot selection to help you obtain the best value.

3. Not all builders are created equal.

Some builders are known for their craftsmanship, while others are known for innovative use of space, below-market financing, or exceptional customer service during construction and after move-in. Your real estate agent, who makes a profession of real estate, can help you find the best home for your needs.

4. Get the whole story.

Investigate the reputation and financial strength of the builder. Be sure to obtain "spec sheets" that cover the home features, which can cover everything from floor plans to energy efficient ratings, and from immediate-delivery inventory to lot availability.

5. Look "under the hood".

Learn all you can about the community. Review the common amenities. Find out from local land use officials what else is planned or could be built in the area, especially where there’s vacant land. Read the rules of the homeowner’s association – or determine whether one will be set up – and investigate whether it has adequate reserves set aside to build or replace major amenities such as pools or major roads. Consider commuting routes and times.

6. Choose your options carefully.

The higher the base price of the house, the more options and upgrades you can add without overpricing for the neighborhood. Make the most of builder incentives, typically free upgrades or credit off the purchase price. Upgrading means selecting quality above "builder standard" for carpet, floor coverings, detailing, appliances, and kitchen fixtures. Options are items that the builder installs while constructing the house. Options that add usable space, such as a sunroom or a computer room, add most to resale value. Remember that some improvements can be added later and sometimes for less money, such as a deck, finished basement, or landscaping.

7. Negotiate with the builder.

Many buyers don’t realize that there may be room for negotiating price, upgrades, or options. You may have the most possible room for negotiation if the builder has a completed but unsold home. Unless you are buying in a "seller’s market", builders may offer discounts or special financing to help close a sale.

8. Make sure the contract works for you.

Be certain that the agreement with the builder includes some safeguards for you, such as putting your deposit in escrow, itemizing your upgrades, allowing you access to the site to check on construction progress, and a 30-day advance notice of the closing date.

9. Financing can make or break you.

Some builders, especially those in high-volume communities that place many mortgage loans, offer special financing packages. But using the builder’s financing is not the only option in the highly competitive world of mortgage lending. You should shop everything, including interest rates, points, and lender fees.

10. New doesn’t mean perfect.

New homebuilders typically use modern materials that are durable, low maintenance, stronger, quieter, safer, and even wired for the next century. But new doesn’t mean perfect. You should discuss with your real estate agent the option of hiring a home inspector. Use what you learn from the inspection to create a builder "punch list" to fix major problems before closing.
Did you realize that nearly half of all new home buyers use a real estate agent to assist them? Those who brave it alone may not realize that there is no cost to the buyer for this necessary representation!

 What Every Seller Should Know:

Get the House Ready

From experience, REALTORS® also know that a "well-polished" house appeals to more buyers and will sell faster and for a higher price. Additionally, buyers feel more comfortable purchasing a well-cared for home because if what they can see is maintained, what they can't see has probably also been maintained. In readying your house for sale, consider:

  • How much should you spend
  • Exterior and curb appeal
  • Preparing the interior

How much should you spend

In preparing your home for the market, spend as little money as possible. Buyers will be impressed by a brand new roof, but they aren't likely to give you enough extra money to pay for it. There is a big difference between making minor and inexpensive "polishes" and "touch-ups" to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room, and doing extensive and costly renovations, like installing a new kitchen. Your REALTOR®, who is familiar with buyers' expectations in your neighborhood, can advise you specifically on what improvements need to be made. Don't hesitate to ask for advice.

Maximizing exterior and curb appeal

Before putting your house on the market, take as much time as necessary (and as little money as possible) to maximize its exterior and interior appeal. Tips to enhance your home’s exterior and curb appeal:

  • Keep the lawn edged, cut and watered regularly.
  • Trim hedges, weed lawns and flowerbeds, and prune trees regularly.
  • Check the foundation, steps, walkways, walls and patios for cracks and crumbling.
  • Inspect doors and windows for peeling paint.
  • Clean and align gutters.
  • Inspect and clean the chimney.
  • Repair and replace loose or damaged roof shingles.
  • Repair and repaint loose siding and caulking.
  • In Northern winters, keep walks neatly cleared of snow and ice.
  • During spring and summer months consider adding a few showy annuals, perhaps in pots, near your front entrance.
  • Re-seal an asphalt driveway.
  • Keep your garage door closed.
  • Store RVs or old and beaten up cars elsewhere while the house is on the market.
  • Apply a fresh coat of paint to the front door.

Maximizing interior appeal

Enhance your home’s interior by:

  • Giving every room in the house a thorough cleaning, as well as removing all clutter. This alone will make your house appear bigger and brighter. Some homeowners with crowded rooms have actually rented storage garages and moved half their furniture out, creating a sleeker, more spacious look.
  • Hiring a professional cleaning service, once every few weeks while the house is on the market. This may be a good investment for owners who are busy elsewhere.
  • Removing the less frequently used, even daily used items from kitchen counters, closets, and attics, making these areas much more inviting. Since you're anticipating a move anyhow, holding a garage sale at this point is a great idea.
  • If necessary, repainting dingy, soiled or strongly colored walls with a neutral shade of paint, such as off-white or beige. The same neutral scheme can be applied to carpets and linoleum.
  • Checking for cracks, leaks and signs of dampness in the attic and basement.
  • Repairing cracks, holes or damage to plaster, wallboard, wallpaper, paint, and tiles.
  • Replacing broken or cracked windowpanes, moldings, and other woodwork. Inspecting and repairing the plumbing, heating , cooling, and alarm systems.
  • Repairing dripping faucets and showerheads. Buying showy new towels for the bathroom, to be brought out only when prospective buyers are on the way.
  • Sprucing up a kitchen in need of more major remodeling by investing in new cabinet knobs, new curtains, or a coat of neutral paint.

 Contract Negotiations

The price isn't the only factor that determines the net bottom line.

The natural focal point of a real estate purchase contract is the selling price of the home, but the price isn't the only factor that determines the net bottom line for both the buyer and the seller. Is a bargain for the buyer really a bargain if he or she is paying all the transaction costs? Is a top price for the seller really a top price if the buyer wants all the furniture to be included in the purchase price? Or if the buyer can't come up with the downpayment or qualify for a mortgage? Before you decide to go ahead with a great price, here are five other bottom-line points to consider:

1. What are the estimated transaction costs and who will pay for what? Typical costs include the brokers' commission, a home inspection, a termite inspection, escrow or attorney's fees, a title search, an owner's title insurance policy, transfer taxes and recording fees. The price tags on these items vary greatly around the country. Who pays for what is a matter of both local custom and negotiation.

2. How much money is the buyer putting into escrow and how soon? A big deposit -- called "earnest money" -- and a substantial downpayment are generally seen as a sign that the buyer is serious about completing the transaction. From the seller's point of view, the more money the buyer places in escrow and the sooner the money is transferred, the better.

3. Is there a mortgage financing contingency and how specific is it? The mortgage escape clause is a must for buyers, unless they're paying all cash for the home. Without this contingency, buyers can be legally obligated to purchase the home even if they can't obtain financing. Further, an open-ended statement that says the buyer will obtain a loan "at the prevailing rate of interest" leaves the buyer completely exposed to interest rate fluctuations. A statement that says the loan must be at an interest rate "not to exceed xx percent" and on specified terms is preferable.

4. What furniture, fixtures and appliances, if any, are being sold with the property? Technically, anything that's permanently affixed to or installed in the home is real property. Everything else is the seller's personal property. This distinction is a narrow one and it naturally leads to a fair amount of confusion. Are built-in appliances real property or personal property? What about a shelving system? A chandelier? Window coverings? Potted plants in the backyard? Sellers who intend to remove anything that's attached to the home should have that spelled out in the contract. And the same goes for buyers who expect to acquire any of the furniture or other movables.

5. What will happen if either side breaches the contract? Unless an unmet contingency triggers the abandonment of the contract, it's a binding legal document. Buyers who fail to perform can lose their deposit money. Sellers who try to back out can be sued for "specific performance," which forces the sale of the home to the buyer. Many contracts also specify that disputes must be brought in small-claims court or presented for arbitration or mediation.

Tip: Ask your real estate agent to go over the standard contract with you before you receive or make a purchase offer. That way, you'll know what to expect and be prepared to negotiate the best deal you can get.

 

Prepare Yourself for Closing

Know exactly what's involved for a smooth finish

The process of closing a home loan differs across the country. However, there are common elements of this process. Knowing what to expect and being prepared will make the closing an event you look forward to, rather than one to dread.

1. Set the Closing Date: Not all closing dates are equal. Make sure to set a date that's in your best interest. Some things to consider:

Does it give you enough time to prepare your move?
Is it near the end of your lease so you won't pay unnecessary rent?
Are there tax implications (if it falls at year's end, would you be better off pushing it to January)?
Closings must be coordinated with many parties that may include the seller, the lender, yourself, the seller's mortgage holder, respective attorneys, the real estate agent, the transfer agent (if it's a co-op), the managing agent (if it's a condo) and the title company representative. Definition of Terms
Closing: The consummation of a real estate transaction. The closing includes the delivery of a deed, financial adjustments, the signing of notes, and the disbursement of funds necessary to complete the sale and loan transaction.

Good Faith Estimate: A document which tells borrowers the approximate costs they will pay at or before settlement, based on common practice in the locality. Under requirements of the Real Estate Settlement Procedures Act, the mortgage banker or mortgage broker, if any, must deliver or mail the GFE to the applicant.

Source: Wells Fargo Home Mortgage

2. Select a Closing Agent:A third-party agent of your choosing is needed to prepare the required documents, disburse the funds and activate the transfer of ownership. Your attorney, the escrow agent, the title company or a professional closing agent can act in your behalf.

3. Title Search and Insurance: Title insurance companies review the history of your new home's ownership to insure that no one else has claims on your property. Title insurance is required because it protects you and your lender against loss resulting from a title dispute.

4. Property Survey: Sometimes title insurance companies require a survey of the property to verify zoning location and boundaries.

5. Homeowner's Insurance: Most lenders require this. It protects your home and its contents from fire, theft and most disasters. Sometimes additional hazard and/or flood insurance is required.

6. The Final Walk-Through: This is your last chance to inspect your new premises and make sure that the seller has completed all repairs and met the conditions specified in the purchase contract.

7. Rate Lock: Often, you may select to lock in an interest rate at the time of your mortgage commitment and lower it before closing if market conditions change for a nominal fee. Some lenders allow you to lock in your rate anytime from application up until five business days before your scheduled closing.

8. Good Faith Estimate: Before your closing, your lender will give you a final "Good Faith Estimate of Settlement Costs" to help you prepare for the closing.

9. Last-Minute Detail Check: A few days before the closing, you'll want to finalize all details with your closing agent.

Closing costs and escrow amounts: Your Good Faith Estimate may not include all closing costs such as interim interest or property taxes. Finalize actual costs at this time with your closing agent to avoid last-minute surprises.
Acceptable method of payment: In most cases, certified or cashier's checks must be prepared in advance.

Miscellaneous items: Some counties require photo ID, evidence of hazard or flood insurance or other miscellaneous documents. This is the time to gather any ID and miscellaneous paperwork that may be required at closing.

 

The Home Inspector

Regardless of what the inspector may uncover, you shouldn't be overly concerned about the actual home inspection.

Your home is in escrow, and the buyer has scheduled a home inspection. Should you be worried about what the inspector might find? The answer depends, of course, on the condition of your home and how well you've maintained its major components over the years. Regardless of what the inspector may uncover, however, you shouldn't be overly concerned about the actual home inspection. Keeping in mind that disclosure laws and customary real estate practices vary from place to place, here are six suggestions as to how you might help the home inspection process go smoothly:

1. Leave the premises. It's perfectly reasonable to absent yourself from your home during the home inspector's visit and turn over the duties to your real estate agent. Your agent should be familiar with the home inspection process and be able to act as your representative. In fact, many listing agents prefer that the seller not be at home during the buyer's home inspection.

2. Be courteous. Some sellers mistakenly assume the home inspector is an adversary. Experienced professional home inspectors aren't on a mission to find fault with every tiny aspect of your home. The home inspector's role is to offer the buyer a fair assessment of the property. Tips: Don't keep the inspector waiting on your doorstep and allow at least two hours for the inspection.

3. Don't attempt to refute negative comments about your home during the inspection. Inspectors don't appreciate being followed around by argumentative or defensive home sellers (or sellers' real estate agents). The time to explain and negotiate will come after you receive and review your copy of the inspector's report.

4. Don't make statements about your home that are beyond your personal knowledge or can't be verified. For instance, if the inspector asks you how old the roof is or when certain appliances were installed, check your records before you answer. If you have documentation, provide a copy of it. If repairs or modifications were made prior to your purchasing the home, don't guess when that work was performed. The same caution about misrepresentations applies to questions about whether permits were obtained for remodeling, the exact square footage of your home, the name of the architect who designed it and so on.

5. Don't block access to normal living areas of your home. If the home inspector can't enter a room or complete some other aspect of the inspection, that will be noted in his or her report and the buyer may question it.

6. Make agreed-upon repairs promptly. The buyer may ask the inspector to okay any repairs you agree to make as a result of the inspection. The sooner you make the repairs, the sooner the contingency can be met. Delaying the repairs until the last minute won't stop the buyer from having those items reinspected, but it could delay the closing of escrow.

When to Refinance

One common type of refinancing is when you have an adjustable-rate mortgage (ARM) and you refinance to a fixed-rate mortgage. Your mortgage payments with an ARM adjust with changes in the market rates; so when interest rates go up, your monthly payments likely go up. But with a fixed-rate mortgage, your interest rate stays the same for the entire term of your loan. The predictability that comes with locking in the same interest rate for as long as you live in your home is one reason why changing from an adjustable-rate mortgage to a fixed-rate loan is one of the more popular refinancing choices -- especially when interest rates are falling.

Or, you may have taken advantage of the traditionally lower interest rates in the first years of your ARM and now that your monthly mortgage payments have increased, refinancing to a fixed-rate loan looks attractive. You should work with your Fannie Mae-approved lender to compare the financial index, margin, and any rate caps in your existing ARM with current market rates before you decide to refinance to another type of ARM. It is important to understand how often your mortgage will adjust and how much your payment can change with each adjustment and over the life of the loan.

You may be interested in changing from one kind of ARM to another or refinancing with the same kind of ARM to get a lower interest rate. Be sure to ask your current lender whether any conversion terms apply or if there are costs to convert to another type of mortgage.

When to Refinance: Scenarios

Another reason to refinance is to use the equity in your home perhaps for a major purchase or a child's education. You've been building equity in your home since you first started making monthly mortgage payments. Part of your payment was used to pay principal -- helping you build equity -- and the rest was used to pay such items as interest and taxes and insurance.

Often referred to as a "cash-out" refinance, drawing on the equity in your home provides an easy way to get cash you may need for other purposes.

10 Biggest Selling Myths Uncovered

Selling a house can be a bit like having a baby -- everyone gives you advice that you may or may not have asked for, in spite of the fact that the experience is unique to each individual every time. And just like having a baby, there are many myths and "old wives' tales" to be de-bunked. Among the truths are the following ten:

Myth: You should always price your home high and gradually correct the sales price downward.

Truth: Pricing too high can be as bad as pricing too low.

Your strategy in listing high may be that you will always have the chance to accept a lower offer. But the truth is that if the listing price is too high, you'll miss out on a percentage of buyers looking in the price range where your home should be. Offers may not even come in, because the buyers who would be most interested in your home are scared off by the price and won't even take the time to look. By the time the listing price is corrected, you may have already lost exposure to a large group of potential buyers.

Your real estate agent will be able to offer you a comparable market analysis for your home. This is essentially a document that compares your home to other similar homes in your area, with the goal of helping you to accurately assess your home's true market value.

Myth: Fix-ups can wait until later. There are more important things to be done.

Truth: Fix-ups make your house more marketable, allowing you to maximize your return (or minimize loss) on the sale.

By and large, buyers are looking for an inviting home in move-in condition. Buyers who are willing to tackle the repairs after moving in automatically subtract the cost of needed fix-ups from the price they offer. You save nothing by putting off these items, and you may likely slow the sale of your home.

Myth: Once potential buyers see the inside of your home, curb appeal won't matter.

Truth: Buyers probably won't make it to the inside of the home if the outside of your home does not appeal to them.

Many buyers today will drive by a home before deciding whether or not to look inside. Your home's exterior will have less than a minute to make a good first impression. Spruce up the view of the house by keeping the lawn mowed, shrubs and trees trimmed, and gardens weeded and edged. Clear the walkways and driveways of leaves and other debris. Repair gutters and eaves, touch up the exterior paint, and repair or resurface cracked driveways and sidewalks. You can also add additional appeal by placing potted flowers out front, hanging a wreath on the outside of the door, positioning new street numbers, and a putting out a pleasing welcome mat.

Myth: Once potential buyers fall in love with the exterior look of your home, you put interior improvements on the back burner.

Truth: Buyers have no qualms about walking right out the front door within 60 seconds if the house doesn't look like it could be theirs.

Remember that most buyers are looking for an inviting home in move-in condition. You might consider spending a few dollars on: painting, if the existing paint is in bad shape or an unusual color; carpeting, if it shows excessive wear or an outdated color or style; refacing kitchen cabinets; scrubbing bathrooms until they are sparkling clean; or several other key repairs or replacements.

Although you may be uncomfortable with spending a few thousand dollars on your home right before you sell it, it's not uncommon for the right work to more than pay for itself in a higher selling price and shorter marketing time. Your real estate agent will consult with you about the repairs and replacements that will benefit you most.

Myth: Your home must be every home buyer's dream home.

Truth: If you get carried away with repairs and replacements to your home, you may end up over-improving the house.

At some point, improvements that you make to your home can rise far above and beyond what is customary for comparable homes in your area. For instance, there may not be another swimming pool in your entire subdivision. After spending $20,000 to install an in-ground swimming pool that you hope will lure buyers, you may find that it only raises the market value of your home by $10,000 because there are no other comparable properties to support the market value of the pool.

As a rule of thumb, if your improvements push your home's value higher than 20% above average neighboring home values, don't expect to recoup the entire amount of improvements. Your real estate agent can advise you as to the scope of projects you might consider in preparing your house for sale.

Myth: Buyers are unswayed by sellers that offer creative financing options.

Truth: By offering flexibility in financing options, you may lure even more prospective buyers.

You might consider offering seller financing, paying some of the buyer's closing costs, including a one-year home warranty, or other buyer incentives. Your real estate agent, who has professional knowledge of local market activity, can help you decide what incentives, if any, to offer.

Myth: You are better off selling your home on your own, thus saving the commission you would have paid to a real estate agent.

Truth: Statistically, many sellers who attempt to sell their homes on their own cannot consummate the sale without the service of a professional real estate agent. And those sellers who are successful in selling without a real estate agent often net less from the sale than sellers who do use a professional real estate agent.

You probably visit a doctor when you are in ill health. You also likely take your car to a mechanic for repair and maintenance. When you require legal advice, chances are that you seek the services of an attorney. Doesn't it make sense that you should contact a real estate professional when you are preparing to sell your biggest asset?

Myth: Good sellers are available to guide prospective buyers through the home, giving the whole process a more personal touch.

Truth: Prospective buyers will feel more that "this house could be" their home if the current owners are not there.

The presence of homeowners and/ or their family members in the home while it is being previewed can make buyers feel like they are intruding. They really do need to be able to visualize this house as their home, which can be difficult to do when they are acutely aware that it is still your home. Your real estate agent will be happy to look out for your home during open houses or showings.

Myth: Successful sellers insist that the terms of the sale happen their way or no way.

Truth: If you approach the sale of your home as an adversary of the buyer, you risk losing a perfectly solid buyer for no good reason.

Always remember that both you and the buyer have the same basic end goal: for you to sell your home and for the buyer to buy your home. Your real estate agent will join you in approaching negotiations in a positive frame of mind, which often results in a win-win proposition for both you and the buyer. And if both parties are satisfied with the outcome of negotiations, very few things will come between you and the closing table.

Myth: When you receive an offer, you should make the buyer wait. This gives you a better angle at negotiating.

Truth: You should reply immediately to an offer!

When a buyer makes an offer, that buyer is, at that moment in time, ready to buy your home. Moods can change, and you don't want to lose the sale because you have stalled in replying.