Friday, February 27, 2009

First Time Home Buying 101: Renovations & Upgrades

You've been looking at homes and probably found some that are pretty nice, but perhaps need some work. Your real estate agent most likely has offered advise on each home and made suggestions as to what you could do to make it perfect. Your agent may be pretty wise on costs, but they aren't contractors. However, they may be able to direct you to a professional that they know has a reputation for doing good work.

Some things like a roof that needs replacing soon, a furnace that won't last much longer, a worn out carpet, may be negotiated in your in your offer. But you will still may have to have the work done. Almost anyone that has undergone a lot of renovations, remodeling, etc., will tell you to plan on everything taking "twice as much time and twice as much money". This is no joke! So be careful and know how much you want to take on. If during your home inspection, you discover all the wiring needs to be replaced....ouch! Sometimes, you open a "Pandora's box" and more issues just keep surfacing. (The reason for a home inspection!) Sometimes "loving" a house just isn't enough and you will have to make the hard choices. "Should I stay or should I go!"

I would completely agree that if the house you choose needs some cosmetic changes you shouldn't let that keep you from purchasing it. The location is great, the outdoor space is fantastic, the house itself is of great quality, but it is somewhat outdated or decorated in a style that really doesn't fit your taste. For example, the paint color choices are dreadful and there is some wallpaper you hate. Then plan to roll up your sleeves and get to work! You should be able to change the light fixtures, unless you think the power is turned off at the light switch. In that case, after you pick yourself up from the floor, you'll call a electrician.

When it comes to things like tearing out walls, "gutting" the kitchen or the bathrooms, it is not only expensive, it takes time and it is a mess! You will be living in that mess until it is done! The question is, will it get done? Will you have to spend more money buying the tools you need to do the job than it would cost you to hire a contractor?

I think many times people watch to much TV and think they can do anything. Unless you are really a perfectionist, most of those projects will probably look like "you did it yourself". Granted, some people love to do this stuff, but unless someone in the family is really skilled at it - hire somebody. It will save a lot of family arguments! If you have a job, kids, your husband travels, when is it going to get done? In 5 or 10 years, just before you decide to downsize and sell the house? Seriously, even if your husband was a contractor, (unless he is retired) would you want him to come home and spend every waking minute "renovating"? There is a reason for the old saying "the shoemaker's kids never have shoes".

Personally, I like doing some of these things, but I do know my limitations. That is all I'm asking your to look at. Is it a dreadful chore or something you will enjoy? I wouldn't hesitate to redo an "outdated" kitchen by changing cabinet doors or perhaps painting the cabinets. If I were installing expensive counterpoise, I'd hire a professional. If I was tiling the floor, I'd probably hire a professional simply because it's a big project. If I had a crooked grout line, it's all I would ever see in my kitchen. Even Martha Stewart, who can do everything....has the assistance of about 300 other people.

Just know yourself and be realistic. Can you plan to do a project and finish it before going on to the next one? Will you finish it while you are living in it or just do it before it is sold? If you can afford to hire a contractor and don't mind being "under construction". Go for it!

I'm not trying to convince you not to buy a house that is not perfect, not at all! I just think you should recognise what you need to do and what you want to do. Let's say, you have the location, the landscaping, the view, the style of house, solid workmanship, perfect # bedrooms, bathrooms. You wanted:

  1. Tile floors in the kitchen and baths, but they are vinyl,
  2. Granite countertops in the kitchen and bath, they are not, but they are in decent shape,
  3. Stainless steel appliances, they are older, but clean and in good working condition,
  4. A totally finished basement, it is partially finished but includes a full bathroom.

Should you not buy the house? It is up to you. Personally, I know I could live easily in this scenario, knowing I could budget my projects over time and do what I want. I also know that if I didn't get it done in my time frame, I would still enjoy my home. This is why I made the comment about TV. I am a serious fan of HGTV shows and I love decorating. But, I also know there are options other than granite and stainless steel which seem to be the current trend. Trends change so by the time you sell your home, IT may need "updating". I'd be more impressed with energy-efficient windows, furnace, or even solar panels. Over time, these things could easily save me enough money to add my "wants". By that time you sell, the trends may be changing. Although, I love granite as much as anyone, I might want to try recycled glass or something not yet a trend. I suspect that the future will see far more "green" products. This is my reality, what is yours?

First Time Home Buying 101: Touring Homes

Now the fun begins! At this point, you've met with your mortgage broker or a loan officer and know how much money you can qualify to borrow.

You have chosen your real estate agent, you have discussed your needs and perhaps faxed copies of homes you liked from the internet. Your agent has found a number of homes for time to do some marathon shopping! (The agent may show you one home or several at a time. Lets assume, because you are flying across country, that your agent has mapped out several homes to view in the few days you are in the area.)

The agent may ask you to meet at their office or have you drive to the property. Leave it up to the agent to make that choice. If you do meet with your agent and he/she suggests that they will drive you it can be a plus. It will give you an opportunity to discuss the homes between stops and chance to learn about the area from a person living there. Also, it will save you from getting lost!

  1. Dress comfortably. Most of the time you will be looking at vacant homes.
  2. Wear comfortable shoes that you can slip on and off easily. Generally, these homes will be immaculately cleaned, so it is really considerate if you can leave your shoes at the entrance.
  3. Pack a few snacks and a couple of your favorite energy drinks. (It could be a really tiring day, your agent will get tired also and may suggest a stop at local coffee shop! Take the opportunity, you will get energized, get to chat about what you have seen, and enjoy some local flavor!)
  4. Take a notebook and even your digital camera. After seeing a home, you can go back to the car and make notes about the property. Obviously, don't bother if it is a property you wouldn't consider purchasing. It is easy to forget or confuse homes or features about homes that you liked or disliked when seeing a lot of them at a time!

Touring the homes:
As you walk through the house you will either be impressed or distressed. This is where having that "expert eye" is really important! You will hear your agent talk about "structure" or "good bones". Those are the things hard and expensive to change. When they talk about "cosmetics" it is refering to the horrible paint colors, wallpaper choices, "cheezy" light fixtures. These things are usually pretty simple and not terribly expensive to do something about if everything else is great. (Will talk about renovations and updates soon.)

Most likely your real estate agent will have narrowed the spectrum of homes to include as many of your wants and needs as possible. Hopefully, you will find the home that absolutely "wows" you. If not, don't get discouraged.

  1. Notice the outside of the home, stucco, siding, vinyl?
  2. Do you have to walk a lot of steps to enter the home?
  3. What is the condition of the roof?
  4. Does it have a comfortable floor plan?
  5. Are the rooms a good size?
  6. Is there good closet space?
  7. How old are the kitchen appliances?
  8. Is there a pantry? Laundry room?
  9. Turn on the faucet and flush the toilet. Does it seem like there is good water pressure?
  10. What type of heating and/or air conditioning? Is it energy efficient?
  11. What are the windows? Energy efficient or old and leaky?
  12. Look in the cabinets under the sinks. Do they look as though they are water damaged?
  13. Do you see cracks in walls or water stains on the ceiling?
  14. Does the workmanship appear professional?
  15. Does the home look as though it has been well-maintained?
  16. Does it appear that you will have to spend a lot of money in updates?
These are things you can observe while walking through the rooms rather quickly, realize that your real estate agent is there to help you and will probably notice many more items than this list. Your comments will only assist your agent in determining what is really important to you.
Location cannot be changed like paint color. If a location within a specific driving distance is priority, you may have to make some compromises if it means finding that home within your budget.
Acreage: Depending on the amount of acreage you need, you may be further from a city or even in a rural area to get it. This may further reduce the choices if the drive to work is in the city.
Views: If having a view is really important, it may be at a higher cost so you may (or may not) have to consider homes that require some compromises to remain within your budget. Views can sometimes be tricky. If you find a home with a perfect view today, will it remain perfect? By that I mean, if another home is built, will it destroy your view? If you have paid a premium to get the view and sacrificed on the house will your "values" remain high if a high-rise apartment just blocked your view of the ocean? Questions for your agent! Many places have restrictions on what may be built so that views cannot be blocked.
Established landscape: It takes a long, long time for trees to grow! Moving into a development of new homes sometimes means NO landscaping! A really beautifully landscaped yard can cost thousands! If you find a home with established trees and/or professional landscaping can be a real plus. It can not only save you money, but a plus if you decide to sell your home. However, if the reason you LOVE the home is because of "the old oak tree" in the front yard, ask yourself, "would you still love the home if lightening struck the tree and it had to be cut down"? Mother nature is not always kind...anyone surviving a tornado or hurricane, could attest to their world looking different after the fact. I'm really not trying to sound like a fatalist, just reminders of priorities. I would probably buy any house that was located on an ocean beach as long as it had indoor plumbing!

Wednesday, February 18, 2009

First Time Home Buying 101: Finding the Home

Hopefully, at this point you have found your real estate agent. Your agent has referred you to a mortgage broker that is knowledgeable in ALL types of programs, including FHA, VA and/or community programs designed for persons such as teachers, firemen, etc. Or, you have found a mortgage broker, you are "pre-approved" for an estimated loan amount, and your broker has referred you to an exceptional real estate professional!

Granted, the law does not require you to hire a real estate agent. You can meet with a homeowner, agree on a sales price and sign a contract. However, if you do NOT hire a real estate professional, I strongly urge you to hire an experienced real estate lawyer. A lawyer is the only person that can give you legal advise. You really don't want to make foolish and costly mistakes. There are many more unusual circumstances in acquiring loans and finding homes than ever, with foreclosures, auctions, and short sales. Although, they have existed before, certainly not with the frequency as now. It can make for a really great deal, but you really want to know what the deal is!

These are what you are used to seeing on the Internet, in the newspaper, from signs posted in front of homes. They are on MLS (Multiple Listing Service) and sold by a listing agent for a commission. They are the most familiar to the average real estate shopper. Of course, the listings will include foreclosures, short sales, bank owned, etc. (I'll give a brief definition in this section).

Foreclosures: There are a lot of them now, so I suspect most agents are pretty familiar with how to deal with these properties. But, you should ask your agent if they are skilled in this area. Sometimes these properties are fantastic, other times not so great....if the homeowner had to choose between the mortgage payment or food on the table, chances are they didn't do a lot of "renovations or updates". They will be sold "as is". In the case of a foreclosure, "as is" is exactly that, be aware, but don't run scared! You could find a real "diamond in the rough" A professional that is experienced can tell you what to walk away from, and a home inspection is critical.
Pre-foreclosures: Sometimes an ad will read "beat the bank". Generally, this means the homeowners are in trouble and no they can't keep up with the payments. Simply, they want to sell the home quickly and not destroy their credit. They will usually sell it for what they owe, plus an amount of a few thousand dollars to "keep their heads above water" or even pay for their first month rent and deposit! This may be less common than in the past because the market has changed so much that many houses are not even worth what is owed. You need to know the value of the house in today's market. Your real estate agent will have an "experienced estimate" as to whether the price is logical.
In foreclosure: Once the payment's have lapsed, the lender "bank" will serve notice to pay by a certain date or the house will go to auction. The homeowner will have pay the payments and a lot of attorneys fees to get out of foreclosure. Now, some banks are more willing to negotiate a different scenario with the homeowner simply because the banks now has a lot of vacant houses.
Short Sale: The property is in foreclosure, but not yet gone to auction. The seller owes more money than the house is now worth. The "bank" is willing to accept a short-sale. This means your offer is less than what is owed on the mortgage. The owner of the house could accept your offer, but the "bank" has to agree to accept it. The seller does not receive any money. These can sometimes take months. Again, a good idea to work with an agent or lawyer that knows the process.
Auction: The payments haven't been made in the time allotted and the house goes to auction.
The lender will usually place a reserve price. (If they don't receive that much, they will keep it.) It is really not for the faint of heart! Chances are you are bidding from a photo, without a pre-inspection. There are situations where after you purchase home, the former homeowner has an amount of time for "redemption". In some states, up to year to get the home back. If the people are still there, they become tenants and YOU might have to evict them. If they have moved, they sometimes get pretty angry. When you finally get to see the property, it could be trashed in the inside........actually, really trashed. You may be missing everything, water heaters, copper tubing, appliances, windows.
Foreclosed: Okay, so the house didn't sell at the auction. Nobody bid on it, the price was high, whatever. It now belongs to the bank. The "bank" has had to evict the tenants and contacts an agent to sell the property for them. You will see terms like "as is", bank-owned, no warranty. You truly get what you get. The bank has probably never seen this place and now owns hundreds or thousands just like it. But, now you and your agent can look at the house just as any other listed property. If you like it, you put in an offer, have it inspected and proceed. Your real estate professional could be a real asset to you here. The banks may be willing to negotiate on the price because of their inventory. Remember, a real estate agent can't tell you what to do or how much to offer on a property. They can tell you if it seems reasonable. They know the area, the prices homes in the area have been selling for, but they don't have a crystal ball. The final decisions will always be in your court!

There are Internet sites for houses sold by the owner also. These homeowners have decided they do not want to hire a real estate agent to sell their home. Have your real estate agent check with them if you feel it "might be the one". Often, if your real estate agent calls the homeowner they will allow YOUR real estate person to show the home. If not, and you proceed on your own, be sure you work with an experienced real estate lawyer. You want to know its "free and clear" and "ALL the ducks are in a row."

  1. If you are considering one of these homes, ask the homeowner if the property has had an appraisal done. This is what a professional appraiser has determined the value of the property to be.
  2. Ask the homeowner if they have a completed home inspection for you to view. Sometimes the homeowners (FSBO or not) will have completed appraisals, and ALL the inspections and have them available for you to read or have copies for you to take with you.
  3. Often people feel that a FSBO is overpriced...that people think "their" home is worth more than it is when actually viewed by a professional.
  4. They don't want to pay a commission.
  5. They have had a really bad experience with a real estate agent.
  6. A real estate agent has listed the property and they haven't been able to sell it.
  7. They are living in the house and are tired of inconsiderate agents (there are always some that spoil it for everybody) calling for an appointment while in the driveway or knocking on the door with their phone in hand.
  8. Whether they are living in the house or not, they will be the people showing it and selling it. It can be a bit more uncomfortable if you really don't like the house. It is hard to be "frank" with someone that decorated or remodeled a house they are extremely proud of, when you think it is less than wonderful! They might not "see" that it has defects.
  9. The positive side is that you do meet the homeowners and they know ALL about the house. They generally will like to talk about the house and give more details, perhaps some that don't improve their chances of selling the house.
  10. You will have a lot more homework to do without a real estate person. For example, checking the "comparables" in the neighborhood to see if the selling price asked is reasonable.
  11. Don't buy without a thorough home inspection, it is usually completed after the offer is accepted. In your contract your agent or lawyer, will state the offer is "contingent upon the home inspection." You shouldn't buy any home without one, but your real estate agent would normally "walk you through" these steps and know which professionals to recommend.
Flat Fee Listings: These types of companies list properties for the seller on the MLS for a "flat" fee. Basically, the homeowner is showing and selling their home themselves. However, they generally encourage real estate agents to bring buyers to view the property. The buyer's agent will receive a commission.

LEASE TO OWN: The buyer pays an "option fee" and an additional amount above the rent each month. It is usually targeted for the person that would have difficulty obtaining a mortgage, probably due to credit issues. The theory is that you pay rent, plus an additional amount or premium to help with your future down payment. The contract should establish the purchase price of the home and is usually for 1 - 3 years. The hope for the buyer is that they will, in that amount of time, qualify for a mortgage. However, if the buyer chooses not to purchase or falls behind in their rent, they will lose both the "option fee" and the "rent premium" money.

  1. Know the purchase price.
  2. Buyers often pay all maintenance, taxes and insurance.
  3. Sellers receive the mortgage deductions.
  4. You pay the seller, not the mortgage company.
  5. Probably a "hard to sell" property.
If you decide to do this, which would only make sense if you cannot get a mortgage at the current time, be sure you hire a real estate lawyer to check out the contract. A real estate agent cannot give legal advise.

  1. Know where your money is going.
  2. Know if there are liens or if this property is in or close to foreclosure.
  3. Know what you can lose, and the reality of your personal situation. Do you really think you can have your credit corrected and obtain a mortgage in the allotted time? Or would you be better renting and correcting your credit without the "premium".
These were popular in the late 1970's, early 80's when interest rates were high. I suspect we may see more of them again, simply because loans are currently harder to get. Again, the laws on these will vary from location to location.

  1. The sale is between the buyer and seller.
  2. The seller receives a down-payment plus interest on the loan.
  3. The seller finances the property and retains title until paid in full.
  4. Know if you could pay in full prior to the ending date of the contract without penalty.
  5. You will most likely not be working with the "skilled eye" of your real estate agent or with a mortgage broker to guide you through the contracts.

Again, hire a real estate lawyer for legal advise! You really want someone to assure that your interests are safe in this or any type of contract. Also, to assure all documents and title is retained with a holding company. If the seller has a mortgage on this property, remember, the seller is making the payments to the mortgage company. You will want to know they are being paid!

A home is probably the largest purchase you will make in your lifetime. It should be a happy time and one of celebration. It is smart to know your budget and be wise, but when spending this much money the price of a lawyer can be pretty small!

Saturday, February 14, 2009

First Time Home Buying 101: Agent or Not?

Yes, Yes, Yes! I think I've already answered this question with all my references to your real estate agent! Granted, a home can be purchased without the aid of a real estate agent; however, they do earn their money. Their job is to find right home for you.


  1. You are a first-time buyer.
  2. You are purchasing a home in an unfamiliar location.
  3. Laws vary from state-to-state. They know the laws, however, they are not lawyers and cannot give legal advise.
  4. The agent is familiar with the county, city, neighborhood.
  5. The agent has access to all new listings on MLS.
  6. MLS (Multiple Listing Service) also gives the agent access to property history, includes when purchased, purchase price, tax information. It also includes information as to days on the market and prior listings.
  7. A real estate agent Is an experienced negotiator, familiar with the market, finance issues.
  8. Can refer you to others in the industry to help with your purchase; i.e., mortgage brokers, appraisers, home inspectors, even movers.
  9. They have seen hundreds, perhaps thousands of homes and know the what to look for--the good and the bad....the issues that could save you money and the ones that could potentially cost you a fortune.
  10. All the foreclosures, short sales, auctions, etc., in this market present totally different issues than the market did a few years ago, when their were actually "bidding wars" for homes. The real estate agent will know how to guide you through these specific situations.

REAL ESTATE AGENTS AND AGENCIES: (General & simplistic description. Laws can vary.)

A real estate broker is a person in the office holding the license to own/manage a real estate office. Ultimately, the broker is responsible for every transaction and supervision of the real estate sales associate. The industry is highly regulated by the State. Brokers may also list and sell real estate. All Realtors, agents, sales associates pass an exam and are licensed by the State. Many agents don't necessarily want to be "management" or supervise other agents. They like selling. The point being, don't feel that you have to have a broker working for you.

Real estate agents work on a commission. When an agent (agency) is hired to sell a property, a contract is signed stating what the commission on the sale will be. Generally, it is 6% of the sales price. (This can vary, but let's keep it basic!). So how does that apply to you?

  • Example: Agent X has a home listed for sale. Your agent, Z, takes you to see that home and you decide to purchase it. When "title" transfers to you, the 6% is split between the two agents. The agents then must pay an amount of their percentage to the brokerage where they work). Now, had you seen the home listed with agent X's name, contacted X and purchased it, X would receive the entire 6%. X would be representing both the seller and the buyer.

I think it wise to find your own agent. The listing agent (X) has a contract with the seller to sell his property at the highest price. I feel it's is better to have YOUR agent negotiating the best deal for you. The result may be the same, but at least you know your interests were given 100% attention. (The laws on this may vary in different states, but I don't know of anywhere it is not allowed.) I have heard of agency's that will ask another agent in the office to assist the buyer simply so there are no appearance of conflicts.


  1. Locally you could ask a friend or neighbor.
  2. Go back to the Internet listings. Each listing has the agency, usually the agent's name and also a photo.
  3. Go to a agency web site in the area you are moving, very often the site will have "profiles". The profiles have photos and "bios". ." If someone impresses you - give them a call.
  4. Go to a real estate office, meet the agents.
  5. Go to "Open Houses". You can get a first-hand impression of the agent at work. (Because you are moving across the country, it may be something you would do at your current location to receive a basic impression of what you are looking for in the person you hire to represent you). Every time you enter a house, you will learn more, not only about what skills you want to see from your agent, but also about what to look for in selecting a home.


  1. Whether meeting on the phone or in person, did you have a good impression of the person?
  2. Did you feel that this is a person that will diligently spend the time it takes to find you the right home?
  3. Did you think your personalities "clicked"?
  4. Does the agent seem willing to answer all your questions?
  5. Do you feel this person is "hearing" you?
  6. When you are shopping for homes, do feel you are feel you are being pushed to buy?
  7. Do you feel you are only seeing or encouraged to buy property at the top or above your "price point"?
  8. Does the person seem knowledgeable in answering your questions or giving explanations?
  9. Do they seem to have done their homework?
  10. When shopping for homes, are they talking about the area, the school district, etc.,?
  11. When you in a home, does the agent point out the defects as well as assets?
  12. Do you feel they are knowledgeable about repairs or renovation costs?

The real estate agent, of course, wants to sell the property. They want your business when you decide to sell that property. You are a great referral for business and will talk to friends and neighbors. The best advertising is a client that thinks "you walk on water".

Everyone has different criteria as to why they buy a specific property. Remember, the agent may have only seen this property from photos prior to your visit together. Is your agent noticing things like the age of the furnace, foundation cracks, etc.? I want to know the "the why or why not" from their "experienced eye." I don't want a "money pit" and would appreciate an agent that actually says "I don't think this is a good choice for you, let's find something better."

After working with your agent, you realize really aren't impressed with this person. Whatever the reason, if you are not comfortable and don't feel that it is simply resolved, find another agent! You are not under a contract with them. Having said that, if you have found the right agent, who is working diligently for you, it is simply common courtesy to have them representing you when you purchase.

  • Example: You are driving down the street and see an "open house". Agent X has the listing and is showing the property. You love it and think you want to buy it. Call your agent and tell them, they will probably drive right over. Or tell Agent X , "I'll have my agent call you." At least give them a really fair chance.

Friday, February 13, 2009

First Time Home Buying 101: Wants vs. Needs

Buying real estate always involves compromise. If you were to purchase land and build a house out would still find that there are compromises. Chances are you think you know exactly what you want; Unfortunately, that is probably not how it works. All family members have their wants and needs and may not always agree on what is important. The trick is to get as close as possible to make every one's wishes happen within the constraints of your budget and location.

Make a list of what you WANT in your new home. Make a list, of what you NEED in your new home; i.e, you have to have a certain number of bedrooms. Then list what you consider an absolute DEAL BREAKER , you just will not live with or without. Have everyone in the family contribute. Some items on that list will change in priority after you begin looking at properties. Sometimes, what you think is really important may be an easy compromise when you see a property and you just know "it is the one".

The list is really for your family, but can really help your real estate agent rule "in" or "out" properties to see. A good agent will appreciate knowing those things about you. He/she will spend a lot of time researching properties that will include your priorities within your budget. Your agent may show you homes that might be a "spectacular deal" for you, something they anticipate you'll like, or simply show a property for comparison. But, you don't want to have a real estate agent just chase around and show you everything. Looking at homes sounds like fun, but it can get really time consuming and exhausting! (Take your thermos of coffee and a supply of energy snacks.)

Examples: (You most likely found things that really interested you on Internet searches)


  1. Location - close to shopping
  2. Specific school district
  3. Style of house
  4. Age of home
  5. Basement
  6. Type of heat (gas, electric, etc.)
  7. Energy efficient windows
  8. Garage
  9. Fenced
  10. barn
  11. View


  1. Location - commute to work
  2. # Bedrooms and/or in-law unit
  3. # baths
  4. Large kitchen
  5. Acreage
  6. Established landscape


  1. Location too far for a reasonable commute
  2. Noisy neighborhood, heavy traffic, barking dogs, etc.
  3. Property needs major repairs, poorly maintained.

"Fixer-uppers" are great bargains for some people. You must have time and enjoy doing it. Some people really enjoy this type of work, but know what it is going to cost you - not just in money! I'll write more about renovations and repairs later, but keep in mind that most houses don't get "updated" until it is time to put them on the market. Paint is simple and cheap, but many other things just become "projects" that don't get done. Know your own reality!

Tuesday, February 10, 2009

First Time Home Buying 101: The Internet

I know you've been dying to check out the internet for homes! It is a great place to start. You will find a tremendous variety of homes in every price range. Most of the sites will offer numerous photos both the exterior and interior of the home, plus a property description. It is fun! You will discover the hours slipping away and feel that it is as addicting as a video game.

The internet sites operated by real estate companies insert "tools" to calculate your basic mortgage information for the home you are viewing. It's a tool to give you a "ball park" estimate of the monthly mortage payment on that property.

Most major real estate sites will do "courtesy listings". That means they are getting information from MLS and listing not only their listings, but also listings from all the other real estate companies. Some of these sites are kept up-to-date within 15 minutes of a listing sent to MLS. Obviously, the interest for them is that you will call their company when buying a property.

Whether moving across the country or across town, the internet will let you browse what is available in the area that interests you and help you define what you like and dislike.
  1. When you find a property that you think really suits your needs, print, email, or bookmark the listing. You probably won't have any difficulty finding things you like, but rather amazed at how many homes you like.
  2. You will begin to discover what is really important to your needs and find many similarities in what you find attractive. For example, you may discover you like two story homes, one-level homes, or daylight ranchers. You will also find styles that may be unfamiliar, but are characteristic of the area; i.e, east coast vs. west coast.
  3. You may find yourself attracted to only older homes or new homes. Perhaps you are attracted to more acreage, location or view. Having a file established with your favorites can later be shared with your realtor, mostly to share your personality. A bit like me going to the hairdresser with a photo of Angelina Jolie. Of course, the hairdresser is thinking "you must be kidding". Your real estate agent is probably thinking "you want this for how much?" Don't worry you'll get down to reality! But your agent will quickly see trends in your choices.
  4. Don't be afraid to check the listings above your price point. Depending on rapidly changing circumstances you might find "the next bracket" makes a tremendous difference in what you receive for your money. Sometimes a few dollars more on the monthly payment could save tremendous dollars in remodeling costs. Real estate is negotiable, perhaps now more than ever before.
  5. Check Google map for mileage and the estimated time it will take to drive to work. This is especially helpful in familiarizing yourself with an area where you may not know the names of the counties, surrounding towns or local references. Google Earth will let you view the topography of the area.
  6. You will soon realize you are recognizing the names of local real estate companies, agent photos, their specialties, i.e, hobby farms, waterfront property.

What are good sites to start with?

  1. There are a tons of good sites:,,, Century,, Keller-Williams (,, are examples of companies that have agents located across the country. Once on their sites you will often find "courtesy" listings that can take you to "local" companies and agents. Check their sites also.
  2. - go to the state and city you are interested. Many agents list properties on "Real Estate for Sale". Also you will find homes listed by homeowners.
  3. The local newspaper's on-line classifieds.
  4. Look at the unexpected. For example, Farm & Ranch magazine has on-line listings. It is a great source for farms or farmettes. It is a good site, great pictures (terrific magazine), but being a magazine the listings may not be "updated" as frequently, but you may discover an agent "profile" that impresses you.

Should I buy the house I found on the internet?

Never buy without seeing it in person! Buying on the internet without seeing the property...your chances of being overjoyed with your purchase are about as good as your odds of winning the lottery!

  1. The photos of property are always distorted. (Try taking a picture in your own house!) Rooms that look large, may actually be really small.
  2. Quality of the workmanship is hard to determine. (Some do-it-yourself homeowners perhaps should have hired a professional!) Detail on a photo is deceptive.
  3. Remember, the photos are designed to highlight the the most positive features of the property.

I remember looking at a place that had posted photos of a property that included large shed. I never saw that shed on the property and wondered about those photos. Finally, while driving around the neighborhood, I discovered the shed.... it was two farms away! You don't want to become an internet "horror" story!

Friday, February 6, 2009

First Time Home Buying 101


This blog is based on a scenario presented to me from my daughter who has been a renter. Her family is moving across country and considering purchasing their first home.

It is easy to let buying a home become an emotional decision, but it is also important to choose wisely. It is likely the greatest financial decision you have made to date, other than having children! The information included here is to assist you in making wise choices by asking questions, avoiding the impulsive, and having some knowledge of the process involved in buying a home. The laws pertaining to real estate will differ in every state; therefore, this is not intended to supersede the advice from your professional expert, but may include tips or clarifications any first time buyer may find beneficial.

Now is the time to buy!

You have great credit. The real estate market will probably never see as great a decline in home prices as we have seen in the past couple of years. It may get slower, but that is unpredictable. With all the foreclosures, employment losses, there is a "glut" of homes making it a "buyer's market. I don't think you should wait to see if this is the bottom of the market, if it isn't, it is close enough!

  • "Media" experts are predicting interest rates at unprecidented lows.
  • The new economic stimulus package is offering large tax credits for home purchases.
  • As always you can deduct mortgage interest from your taxes, whereas rent is not deductable.

PREPARATION: The first thing I think you should do, even before looking for homes is to go to your bank and speak to your loan officer and/or a mortgage broker. Loans are harder to get - find out what you qualify for and what you preparations you will need to do.

The loan officer at the bank is an employee of the bank. They are selling the products of that bank, i.e., the loan. An independent mortgage broker sells "loans" from various lenders. Each lender offers different "products" with different rates, terms, etc., eventually I'll talk more about that. However, the choices offered have obviously gotten less with the high home foreclosures.

  • Explain to bank/broker your situation, i.e., moving to another state, new job, more income, in the same industry, and want to prepare to purchase a home.
  • Ask the bank or broker to run your credit report (usually nominal fee). Retain the report or a copy of it for your records. Each time a report is run, you can lose points on your FICO score. (Prior to final approval on a loan, the lending company will always run your credit report to verify information).
  • Upon seeing your credit report, your banker/broker may make suggestions to you-- what you might want to "pay down" or "pay off". Lenders want to see that you have credit cards (usually 3), they want to see what your limits are, if they are "maxed" out, how you pay on them, so don't try to eliminate ALL your debt.
  • When you see your good credit score, don't make a major purchase like buying a car. It could change your position on buying a house.

Take into consideration what you pay for rent now; is it a struggle to pay? If so, you don't want your house payment to be more. You will be responsible for taxes, insurance and maintenance. Your lender and real estate agent will help you with that later. Right now we are just doing homework. (I know you just can't wait to start browsing the net for homes!)

HOMEWORK - Set up your folder, either physical or electronic.

This is a good time to begin collecting all the information the banker/broker will need when getting your loan for that dream house. Start putting your folder together and keep it where you have secure, but easy access to it.

  • Ask your banker/broker what information will be needed in that folder to apply for a loan.

The banker might talk about "conditions". This is really a term used by the lender that describes all the things they are going to ask you for. Some are pretty basic; they vary with different lenders and each loan program. When you think you've done them all, they will ask for something else or they will want them sent again! (That is why I recommend having this folder).

Examples of items for your folder or "conditions";

  1. Credit Report;
  2. Two years of bank statements;
  3. Possibly a certain number of future house payment months in "reserve" (savings, or other form of available cash);
  4. Verification of rent paid from your landlord; (have their name, address & phone available)
  5. Verification of employment; (again, have contact information)
  6. Verification of mutual funds, stocks, etc.;
  7. Copies of business licenses;
  8. Current pay stubs;
  9. Tax returns for (?) years. These will vary with every loan to some degree. Invariably, you might think you have every possible bit of information in your "file" and when it comes right down to loan approval -- they will think of something else!
  10. Your first born child. (Just checking to see if you are paying attention!) Actually, it may feel like this may be the next request at times. Don't get impatient...we know loans are harder to get and there are less companies to give them. Consider yourself one of the lucky ones.