3 Important Questions To Ask Before Choosing A Real Estate Agent

Hiring an agent is a must if you’re off to sell your property. Of course you want to be represented by someone who’s competitive and is also trustworthy and easy to communicate with, since an agent will have access to information about your finances. You may ask for recommendation from friends and family, or look up online. Once you have a list of names, call them up for an interview. Here’s 3 important questions you should ask:

Experience is the best teacher, especially for this kind of job. An agent that can’t sell will not last long in the field since their earnings are commission-based. It’s ideal to hire someone who has years of experience under his or her belt – they’ve bulked up their contacts, are more prepared to handle situations when faced with conflict, and are better communicators and organizers. Ask for their history of sales over the past 6 months and the areas that they’ve covered. This will help you gauge how competitive they are and how much they know about the market, which are both deciding factors in choosing an agent. Although experienced agents are the better option by default, novices have good things going on for them too. They’re definitely eager and enthusiastic to make that sale. Ask if they’ve been under the wing of a mentor and look up the credentials of that person too. Newer agents will tend to have more time to cater to you since they probably don’t have a string of clients just yet.

This will help you determine if your prospective agent has time for you. If she is working with a dozen other clients, ask her what her strategy is in juggling all of you while still delivering the best possible work. Also ask if she has a team on her side to help her. In line with this, ask for references from past clients. They will of course give you contact to a client with which they had a smoothest transaction with but it’s still best to know firsthand how their experience with the agent went.

This will test if your prospective agent is adamant on selling your property. If she asks for things such as details on the property, what your preferred marketing strategy is, what your timeline is in making the sale, your preferred mode of communication and available hours, it’s an indication that she is making way for a client-centered transaction which works best to your advantage.

3 Important Questions You Must Ask A Listing Agent During An Open House

Open houses are a good opportunity for you to meet personally with the seller and their listing agent so take advantage of this moment to get the details that will help you decide if you will push through with making an offer or look elsewhere. Here’s 3 questions you definitely need to ask as a prospective buyer:

Buying a house is probably the biggest investment you’ll ever make and it’s best to be critical on where you could possibly put a big amount of your money and time on. Open houses are designed to please your senses – there’s fancy lights, newly-painted walls, fragrant candles, you name it! But there might be issues on areas you can’t spot right on such as issues with the roof (ask what material the roof is made of; tile and slate roofs last 50+ years, while asphalt shingles last 15-20 years), wiring, sewage, drainage, heating and air-conditioning systems etc. You can opt to do the investigation yourself while touring the house, and if you’ve spotted issues that the listing agent did not disclose upon your asking – low water pressure, dripping sinks, subflooring covered by a fancy carpet -- that might be a sign to step back. Also ask if the home appliances and systems are covered by a home warranty. Keep in mind that it is required by the law for sellers to disclose to buyers any code violations or structural issues. You can ask for written seller’s disclosure and take photos of problem areas so you could review them when you make your offer.

You can find this information on your own but asking the listing agent can put the information in context. If it’s been on the market for a long time, you could have more bargaining power. But it could be that the sellers had a previous transaction with a buyer whose financing fell through. In the case where the house has been on sale for only a short while, there might be a sling of buyers expressing interest. The information you get will be useful when you make your deal.

It’s good to know information about people you will be surrounded with for a good lot of time in your family’s life. Ask details that correspond to your lifestyle, like if the neighborhood is kid-friendly, or if it’s congenial to retirees. Also ask about nearby schools, hospitals, police and fire stations and make your own research on their credibility and efficiency.

Beware Of These 3 Home Insurance Purchasing Mistakes!

A homeowner’s insurance is a type of property insurance that covers a private residence and its’ assets when losses and damages occur. Once a house is insured, it is typically protected from four incidents:  interior damage, exterior damage, loss or damage of personal assets/belongings, and injury that arises while on the property.

Whether you’re a first time home buyer or not, mistakes can be made. It may cost you a lot if you fail to carefully pick the insurance that’s right for you. We’ve round up the list to 3:

1.     Not understanding exclusions – Every home insurance has exclusions and it’s important that you know which kinds of damage your insurance doesn’t cover. Damages from flooding and earthquake are usually not covered if you’re not located in a coastal area or near a fault. But remember that inland flooding can occur from ground water, as with the case in New Jersey, New York, and Vermont during Hurricane Irene. As for earthquakes, damages in your house may still occur once it hits even if you don’t live near a fault line. It’s also important to note that most policies don’t cover mold and sewage backup, which often happens after a heavy downpour. Mold insurance can run up to $300-$400. It’s advisable to add this in to your insurance if it’s an old home you’re eyeing (and if it isn’t built with mold resistant materials) or if your area is humid. Sewage backup on the other hand only costs about $40 per year so it wouldn’t hurt to add that in, too.

2.     Underinsuring your home – Once a disaster hits and your home needs rebuilding or your valuables need replacing, your insurance should be able to cover up these costs. A mistake commonly made by homebuyers is that they buy only enough insurance to cover their mortgage. Even an amount equal to the current value of the home may not suffice once a house needs rebuilding, because labor and supplies may need to be factored in. Ask help from your agent for the average rebuilding cost per square foot in your area and see if your coverage is close to that figure. Another smart move is to make an inventory of your valuables such as art, jewelry, furniture, antique -- gather your receipts and take photos of the items, then you may schedule an endorsement to raise your limit for contents coverage.

3.     Setting the wrong deductible – The deductible is the amount of money that you pay toward a claim before insurance pays. Be careful to not set it too high or too low, for choosing the former may have you paying for more and your insurance paying for less (or not at all!), and by choosing the latter you may have to pay more than you should for premiums each year. Consult with an expert so that you could make the best decision.

A Complete Guide To Closing Costs

First-time buyers may not be aware of the long list of fees under Closing Costs. Buying a house is a big investment and a tedious process, but we’ve got you covered on the details of these expenses – what they’re for, and how much they usually cost.  In this article, the closing costs are divided into three categories: Lender Fees, Insurance Fees, and Title Fees.

Lender fees

Within three days of receiving your application, your mortgage company has to give you a Loan Estimate which itemizes estimated interest rate, monthly payment, and total closing costs for the loan. Here are some of the fees that could be included in that list:

·       Loan Origination Fee – This is the fee for generating and processing your loan. The rate is usually 0.5-1% of the total loan amount.

·       Discount Points – Basically this is for when you want to buy an interest rate. The amount of this depends on what rate was initially given to you and what rate you want to apply for. Note that this may be optional.

·       Processing Fee – This is for submitting and gathering your loan application. Usually this costs less than $500 in the United States.

·       Appraisal Review Fee – A professional appraiser will check the property for its market value. Lender require this to make sure that the house is actually worth what was declared in the contract.

·       Credit Report Fee – A credit report is a detailed account of your credit history and your credit points. Lenders require this for qualification purposes for the loan. Usually it’s the lender’s company themselves who order this from a credit report bureau.

·       Courier Fee – Lenders employ couriers to deliver documents during the transaction. Some lenders will put this under the processing fee.

·       Underwriting fee – This fee is for a series of steps that evaluate your loan application, like verifying the documents that you have passed, checking if the appraisal on your house is consistent with comparables, and assessing whether you income level is at par with your liabilities.

·       Documentation preparation – Once the underwriting approves your loan, legal documents and miscellaneous such as the mortgage note and deed of trust should be prepared for closing.

·       Wire transfer fee – This is the cost for wiring funds to an escrow company.

 

Title Fee

·       Recording Fee – This fee is for recording the deed and mortgage at the local court house. The amount for this fee depends on the number of pages in the document

·       Notary Fee – Documents such as the deed of trust must be notarized by a registered Notary Public before it can be recorded at the court house. This amounts to usually $10.

·       Title Insurance – This is protection for you as a buyer to make sure that the title is clean and that no contentions will be made against you as the new owner of the house. This may be optional.

·       Escrow fee – This is paid to the escrow company or the attorney who made the closing. This is usually a split expense on the buyer and seller.

 

Insurance

·       Private Mortgage Insurance (PMI) – This is required by lending companies if you made a down payment below 20%. When the deal is closed, this expense will be rolled into your monthly mortgage payment.

·       Homeowner’s Insurance – This financially protects the property and its contents from disasters such as fire and theft. Most lenders require 1/6 of the amount of this to be put into an escrow account at closing.

·       Flood Insurance – This will be required from you by the lender if the house is located in a flood zone.

10 Important Things To Know Before Listing Your House For Sale

Putting up your house for sale puts you in a place of responsibility as the owner, because of course; we all know that earning profit is not that easy. But rest assured that after this experience, you will have gained more skills, insights, and tricks!

1.     Do your homework: research on the price range of properties in your area – Doing this saves you from overpricing or under pricing your house. Look into houses within your area that are of similar feature to yours in terms of lot size, number of bedrooms, bathrooms, and parking capacity. If you have time to spare, visit these homes yourself during their open houses. Checking competition will also help you evaluate not just the right price for your home, but also things that you could improve on your house to make it look more marketable.

2.     Make your house market-ready – With all the available (free) information for everyone today, buyers have higher standards in choosing a house. They may have envisioned the perfect home on their mind through browsing magazines or photos on Instagram or Pinterest, and it would be of an advantage to your property if you at least try to make it look as if it’s straight from their dream. If you’re willing to spare extra cash and effort, you could hire a team of professionals composed of a home stager, landscaper, painter, and handyman. Just make sure that you account these expenses for your final pricing. No budget? You can opt to go DIY. Also, the cheapest way to make your home market-ready is to make sure that it’s clean and free from clutter at all times.

3.     Hire a reliable agent – You shouldn’t just hire an agent from a pool of names and faces listed in your directory; ask trusted friends for referrals on agents and interview them before hiring. Ask the right questions to your prospective agent so that you know how selling your house will be handled.

4.     Have a professional inspect your house before pre-listing – Buyers might make their offer contingent upon certain inspections such as pest and septic, so it might be a good idea to hire a professional home inspector in order to tend to the issues you may not have spotted on your house. Ask for a detailed report from your home inspector and have them include photos for proof.

5. Any season is a peak season for selling a house, except winter – As most people are busy with Holiday errands and out-of-town, out-of-country trips and social gatherings, there wouldn’t be much buyers on the hunt for houses. You could put your listing on hold until spring comes, but if you’re taking your chances, you could still try during winter, as there are also fewer sellers. That means less competition!

6. Prepare necessary documents – Your agent will notify you of the necessary documents needed once the selling transaction begins. This may include documents on title of property and outstanding balance on mortgage (if any) & pay-off balance. Gathering these documents ahead of time will ease the way for a faster transaction.

7. Yup, it may not sell like hot cakes – Despite countless preparations (including the emotional one) and seeing your house as The Best Ever in the Market, it may not sell as quickly as you thought and wanted it to be. Relax, a house is a huge investment on the part of the buyer, and they may be nitpicky on the average and flaky at worst.

8. You could be your own salesperson, too – Don’t rely solely on your agent to do all the marketing – you could ask a photographer friend (or if you know how to take good photos yourself) to capture your home as beautiful as possible. You could use social media to your advantage by putting up ads on Facebook and Instagram (it’s actually cheap), or just by simply posting it in your social media accounts and asking friends and family to share it.

9. Have a gauge on your potential profit (or loss) – Reduce the selling price to the following expenses that will be incurred throughout the selling process:

 
  • Title charges
  • Government recording and transfer changes
  • Real estate agent sales commissions
  • Additional settlement charges
  • Debt obligations that needs to paid off on an ongoing mortgage
  • Home repairs and enhancements prior to listing

10.  Research on current tax laws – You could have your agent explain this to you as they may be knowledgeable and updated on tax laws, but it’s good to also do some research on your own. It could also help you when estimating your potential profits after selling.

First-Time Home Buyers, Are You Making These 7 Mistakes?

It’s easy to fall in love with your dream house (and the idea of finally buying one), and we all know that when you’re as enamored as you are pressured to take a big leap, your judgment could be clouded. Remember that stakes are high when you’re purchasing a house, so here’s a list of major mistakes you should avoid doing at all costs:

1. Underestimating (or forgetting) the added costs

Buying a house entails a list of expenses other than the price of the house itself. There are loan application costs, mortgage insurance, and closing costs, to name just a few. You may also need to spend on several renovations once you move in. One tip: a fourth (or better, half) of the price of the house should be stashed in your account in order to cover for these expenses.

2. Not getting a buyer’s agent

Getting an agent who will represent you as a buyer could give a more critical eye to deals and transactions, as opposed to negotiating solely with a seller’s agent who’s legally obligated to work for their client’s interests.

3. Falling prey to “too good to be true” home values

These advertised low rates are all over the internet, and online home valuation sites can set unrealistic payment expectations. It’s good to have an experienced real estate agent explain the rationale on market prices through a conducted comparative market analysis based on internal industry data.

4. Not doing research on the neighborhood

You might have found the house of your dreams, but hey, it doesn’t exist in a bubble. It’s best to know about the status of the location of the house in terms of the ease of transport around the area, the crime level, presence of earthquake fault lines, proximity to schools, hospitals, and police stations, etc.

5. Going house hunting without a pre-approved mortgage

Getting pre-approved for a mortgage plan requires a professional evaluation of your credit report and credit score, which puts you in place in terms of your finances: how much could be lent to you, and how much you could afford to regularly pay.

6. Skipping home inspection

A house could look like it’s in top shape but it’s not impossible that it has some share of defects. A certified home inspector with a trained eye can spot problems which you could miss like termite infestations and gas leaks. If significant issues are detected, you may negotiate with the buyer to lower the price.

7. Failing to see it as a long-term investment

It may be appealing to you to own a great house, but there are also a lot of things to consider. Ask yourself first if you could stay and work around that location for more than 3 years, and if your family could live a peaceful and thriving life in that neighborhood. If the answer is no, it would most likely be that you’re only throwing around your hard-earned money and effort.

Top 10 Fees You Need To Know About When Purchasing A Home

The price tag on your dream home isn’t the only thing you are going to pay for. The list of added fees could be long, and may vary across states and countries. This article will help you know which fees are commonly associated with buying a home. Be prepared for them – know where these fees are for and when you have to pay for them.   

1.     Earnest money – Think of earnest money as a sort of reservation fee: it’s a sum that indicates seriousness to purchase property. The amount may vary across localities, customs, or even the whims of the seller. For instance, the seller could ask for a bigger earnest money amount because of the buyer’s request for extended period to closing, or because of the buyer’s inability to secure a mortgage. But usually the amount of it correlates to that of the purchase price. Another thing to note about earnest money is that it could be held secure by a third-party account known as an escrow account. This is the recommended option since an escrow account protects both the interests of the buyer and the seller. The typical arrangement is that when the selling transaction is finalized, the earnest money is put in as part of the down payment. In the case where one party backs out, the money will be handed to whoever was willing to push through with the transaction – to the seller if the buyer backs out, and vice versa.

2.     Down payment – The down payment is the biggest chunk in the list of fees payable before closing the selling transaction. Usually, buyers should shell out 5 to 25% of the total price of the house while the remaining cost is shouldered by the mortgage loan. The interest of the mortgage loan and the accompanying monthly payment is dependent on the amount given in the down payment -- the higher the down payment, the lower the interest rate and monthly fees. 

3.     Home Owner’s Insurance – This fee offers financial protection for your home against disasters such as interior and exterior damage, injury that occurred while on the property, and loss or damage of personal belongings/assets located within the property. Make sure to read your policies thoroughly so you know your coverage. Note that mortgage companies require this insurance to approve a buyer for a mortgage. You may opt to independently apply for this type of insurance but your mortgage company (especially if it’s a bank) may offer one for you for an extra cost. The amount of this fee will be based on the value that you choose and the value of your home.

4.     Property taxes – The value of this varies across countries, states, municipalities, and neighborhoods. In the US, some states have property tax rates as high as 6% of the home’s value. This tax goes into the neighborhood’s public service expenses like building schools, repairing roads and sewage systems, etc. 

5.     Private Mortgage Insurance (PMI) – This expense plays on both the interests of the lender and the home buyer: the lender is protected in case the buyer fails to pay the mortgage loan, and the buyer will be able to shell out less money, as down payments are usually required to cover 20% of the total price of the house. The buyer could opt to pay for this for a whole year’s worth, or they could have it rolled together with their monthly mortgage payment. 

6.     Appraisal fee – This fee is for a when a professional appraiser evaluates the home you’re going to buy in terms of its market value – checks for the features in the interior of the house, and also goes around the neighborhood to check how much the other houses are worth for. The cost for this range from $300 to $500, but homes located in remote areas could cost more. Mortgage companies require an appraisal of the property they are about to (partly) purchase for you so that they can make sure if the house is worth more than you’re borrowing. In the event that you fail to pay the mortgage, the lender can take possession of the house and sell it, and your debt will be paid off by the sales made from selling the house.

7. Loan origination fee – Among the fees for mortgage, this fee is the largest amount. The buyer pays this to the lender to generate and process the loan. The amount of origination fees is a percentage of the total loan, usually falling between 0.5% and 1%. Buyers with a large loan amount may negotiate to lower this fee.

8.     Title search fee - A title search is done to ensure the buyer that the seller is the legal owner of the house, and that there are no outstanding claims of ownership from other parties against the property. A title company or an attorney is hired to conduct this. In the US, title search fees are about $200 or below, but can vary among title companies by region. One strategy to lower the cost for this is to contact the company that currently holds the title insurance policy on the home you’re going to buy. They may offer you the old title search on file for a lower price than title search companies ask for.                       

9. Home inspection fee – A lender may require this before approving your loan. At first you may think of this as unnecessary but a home inspection can make or break a deal: the professional home inspector may spot faults in the home that you might have missed and were not disclosed to you by the seller such as issues with pests, fire and safety, and electrical and sewage systems.

10.  Closing costs – Closing costs are usually paid after the title has been transferred from the seller to the buyer, but there are times when some of them are paid before the deal is finalized. This number carries a long list of expenses, some of which may be shouldered by the seller based on settled agreements. It encompasses mortgage loan fees, insurance fees, and other expenses that are included in the whole transaction process. 

Note that some of these fees, such as the property tax and the homeowner’s insurance are prepaid costs, meaning the payment for them will recur throughout the time that buyer is the legal owner of the house. Also remember that some of the closing costs may be paid before or after the transfer of title, and some may be integrated with your monthly payment to the lender/mortgage company.

The Complete Home Sellers Checklist (Interior Preparation)

Before putting your house on the market, make sure that every room inside your home has the best chance of passing the standards of even the most meticulous visitors.

It may seem like a daunting task, but don’t be overwhelmed. We made this complete checklist to help you get the job done.

Remember that first impressions last -- so it’s important to really strive to make your home stand out. Once you finish checking all the items on this list, your agent will then be ready to market your house at the best price possible.

How To Get Pre-Approved For A Home Mortgage Loan (It's Easier Than You Think!)

Getting pre-approved for a home mortgage loan may seem like a daunting task until you read on and find out that it doesn’t take much work!

 

If you’re eyeing a home that is the stuff of your dreams – good location, best imaginable layout and finishes, and reasonably priced -- the odds would be in your favor if you get a pre-approved mortgage loan. The process doesn’t happen overnight of course, but with enough patience and cooperation, it won’t be a hassle to jump through the hoops.

Be sure to know what a good credit score looks like, as well as how to prepare a gift letter.

Transactions between you and the lender will run smooth if you are attentive and cooperative. After all of the necessary documents are given, the automated underwriting system will give a pre-approval letter and will enumerate any conditions that need to be fulfilled for full approval.