Archives for 2013

Step 3 of the Home-Buying Process: Make an Offer and Negotiate

3.1 Determine what you are willing to pay for a property

The buyer should determine the price they are willing to pay, not the broker.  However, a broker can do a market analysis of the area to make sure that the price is reasonable.  We will check recently sold houses to see what they sold for, how long they were on the market, and any other indicators of value.

Many buyers feel like they ought to go in with a really low offer and let the seller give a counter-offer.  This is usually not the best strategy, as many sellers will not see this as an opportunity to sell their house, but rather as an insult.  Although a buyer views each house as an investment, the seller may not see it the same way anymore.  They have made memories in that house and established emotional ties.  Make sure to take that into account with your offer.  If you insult the seller, they may decide to not work with you anymore.

The offer is more than just the price you are willing to pay though.  There are things to consider such as the amount of earnest deposit, down payment, inspection period, contingencies, and more.  The purchase agreement is an agreement that can be adjusted for many different factors.  Don’t worry though, that is why you have a broker.  We will help make sense of it all.

 3.2 Submit your offer

Once we have hashed out the details of your offer, we will submit it to the sellers.  There is usually an expiration period on the offer, so we will need to wait until the either the seller responds or the offer expires.

3.3 Negotiation

If the seller accepts your offer, then congratulations, you have just made a very important step to owning a house.  However, if the seller objects to your offer, they usually do one of two things… 1) submit a counteroffer, or 2) reject your offer completely.  If they have submitted a counteroffer, we determine whether it is acceptable or keep going back and forth.  Remember, negotiation is business, so don’t take anything personal.  We may just have to change enough features on the offer until both sides like it, or walk away if it is not reasonable.

If a seller rejects your offer outright with no counteroffer, there could be a number of different reasons.  The offer may have been too low, they could have changed their plans, or timing was just not right.  It is frustrating, but don’t let it get you down.  There are plenty of homes on the market to continue trying until one works.

Photo Credit: “Number Three on Train” by indi.ca on Flickr. CC Licensed.

Step 2 of Home-Buying Process: Find Broker and View Houses

Now that you are pre-approved, you can start looking for houses in your price range.  This is the exciting part!

 2.1 Figure out what kind of house you want

Before you start hitting the streets looking at houses, you must know what you want.  How many bedrooms?  How many bathrooms?  What location do you want?  Knowing what to look for really helps narrow down the search.  If you look at too many houses, they all start blending together, so make sure you have an idea of what you are looking for.

 2.2 Find a Real Estate Broker

Not all brokers are the same; we all have different areas of expertise and experience.  Just because your neighbor or friend acquired their real estate license doesn’t mean they are always the right match for you.  Buying a house is a big commitment.  Make sure your broker knows what they are doing.

Also, we see a lot of buyers view homes using several different real estate brokers.  This can create problems down the road.  For starters, you want a broker who is working for you… if you use several brokers, many will realize that you are not committed to them, and therefore they won’t commit to you.  Secondly, if you view a home with a broker, you are technically committed to them on the house that they showed you.  This can be frustrating if you find the house you love, but you cannot trust that broker.  Therefore, it is always best to view homes with the broker that you trust.

*I am sure that you were expecting us to tell you that we are the best company for your needs.  We will let you decide that.

 2.3 Identify the house you want

Finally, you can start looking at houses.  Before you start driving around though, you should get online and look at the houses available in your price range (our website is great for this, just click the search for homes link).  You can quickly narrow down properties by choosing the location, price, features, and more.  Our search pulls data from the MLS, which is the same service where real estate brokers get their information.  After you have an idea of what houses you like, contact your real estate broker to continue defining your search.

You will want to narrow your search down to about 5 houses before your first appointment.  This will help give you an idea of the market, and you can continue tweaking your searches if none of the first 5 works for you.  Some people find the house of their dreams the first time around, while others search a lot of houses before they find one that suits them.

Also, many real estate brokers have schedules; make sure to give them enough notice to see houses so they can set it up.  If not, you may be disappointed to find out that a broker cannot drop everything to show you a house with no notice.  Sometimes houses are not readily accessible without a prior notice from us as well.

Photo Credit: “Giant number two” by Ruth and Dave on Flickr. CC Licensed.

Home Automation Products are Worth Looking Into to Help Around the House

For the past several years home automation has been catching on.  Up to this point though, it has been too expensive and complex.  But we are reaching the time where it is becoming easier to implement and more affordable.

If you haven’t heard of many of the home automation products, it is worth looking into.  They make life easier in a lot of aspects.

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Nest

For instance, one of the most popular products recently is the thermostat called Nest.  Nest connects to the internet, allowing users to adjust temperature settings from their phone and computer, while also receiving monthly reports and updates.  But what is really interesting about Nest is that it reads your patterns, and adjusts the temperature accordingly.  It will learn when you go to sleep, and conserve energy at night, while bringing the temperature to a comfortable level before you wake up.  You just have to set your temperature normally for several weeks, and it will start taking the rest from there.

They also recently came out with a product called Nest Protect.  This is a smoke detector/carbon monoxide detector.  It will alert you when the battery is going low, so you don’t have to get the dreaded beeping alarm in the middle of the night.  It will send you alerts if it senses problems, and you can silence it with a wave if it goes off falsely.

 Smart Locks

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Another interesting set of products is smart locks.  There are several of them out there, with August Smart Lock, and Goji Smart Lock being two of the big ones.  They basically allow you to unlock/lock your doors from your phone.  But the interesting thing is that they can sense your presence when you come near, and automatically unlock your door, saving you from having to find your keys or put items down if your hands are full.

One cool feature that Goji implements is the ability to take pictures of people that come to the door and send it to your phone.  This helps for security, but it also allows you to unlock the door for friends and family when you aren’t nearby.

While most of the options are pretty expensive at the time being, they should become more affordable as more competition enters the market, and people become aware of them.

Other Cool Options

belkin-wemo-xlThere are a lot of other good options for home automation.  The Belkin WeMo line of products has automation for lights and outlets.  You can set up sensors for lights to turn on when you walk into the room.  And, you can control items that are plugged in on the outlets to be controlled by a timer, phone, or schedule.

Other things you can do around the house are…..

– Set your coffee or tea maker to have a fresh brew ready when you wake up in the morning.
– Open your blinds during the day when it is hot, and close them at night.
– Feed your pets on a schedule for a predetermined amount.
– Control your garage door from your phone.
– Water your yard or garden automatically on a schedule.

If you look around at the products that are available, you will see that you can get as complex as you would like.  I think we are entering an interesting time with some great products coming out.

Step 1 of Home-Buying Process: Prepare, Budget, and Get Pre-approved by a Lender

1.1 Make sure buying a house is the right strategy

The first step to buying the home of your dreams is to first ask the right questions about why you are buying a house.  Do you plan on sticking around for several years?  Are you just buying a house because you think that is what you are supposed to do when you can afford one?  I have some great articles on buying vs renting that you can scroll through.

1.2 Find out what you can afford

Once you are sure that buying a house is the right strategy, you must look for a house that you can afford.  We don’t want you to stretch the wallet in order to make your payments.  You must look for an amount that you can maintain every month, while still being able to pay for unexpected maintenance and life fluctuations that come up.  Just google “afford monthly mortgage” and all sorts of sites with mortgage affordability calculators come up.

Just remember, it is your responsibility to budget correctly, not your bank’s.  Sometimes your bank will tell you how much you can “afford,” but only you can be sure about that.

1.3 Find out your credit score

Everyone is entitled to a free credit report at least once per year.  Just google “free credit report” and find a reputable company to get yours.  Mortgages usually require a good credit score nowadays.  A score of 720+ is deemed excellent, while a score of 620- is deemed as subprime by many lenders.  If you need to bump up your score before getting a loan, it could help you secure a better rate.

1.4 Get Pre-approved

This is one of the most important steps in the home buying process.  We almost made it a full step of its own.  Check out our article, why getting pre-approved is important to starting a house search.

In order to start this process, you must find a lender.  There are usually two types of lenders: local banks and mortgage brokers.  Our recommended first step is to try the bank that you deal with.  If you have established a good reputation with them, they will probably be more willing to work with you on getting a good pre-approved rate.  The advantage of a local bank is that they usually know the local market and can process everything in-house, which makes it a smooth process.

If you feel like your local bank is not a good choice for you, there are plenty of mortgage brokers out there who can help you out.  Basically, they assess your finances and then shop around financial institutions in order to find a loan that fits your needs.  The disadvantage to them is that they get a commission off of your mortgage, so they will sometimes shop around the institutions that give them a better commission to begin with.  If you are worried about this, just ask the broker about the various commission structures.

Also, make sure you are getting pre-approved, and not just pre-qualified.  The difference is that pre-qualification is just an estimate of what you can afford, but a pre-approval is a statement of fact.  Usually a bank puts a time period on their pre-approval, so make sure you are aware of when the pre-approval expires.

Photo Credit: “Number One” by John Ayo on Flickr.  CC Licensed.

What is a Mortgage?

I was reading through the blog at Doorsteps.com recently, and they had this info graphic explaining what a mortgage was.  I thought it might help for someone who wasn’t quite sure.  All credit for this goes to Doorsteps.com…..