7 Things Every Home Buyer Should Know Before Buying a Home

7 things every homebuyer should know before buying  a homeBuying a home is a huge investment for your future and perhaps, one of the biggest decisions that you would make in your life. To ensure that your dream home does not give you nightmares, here are a few things that every home buyer should know before finalizing a deal.

1.       What are your needs?

Have a clear idea of what you are looking for. Do you need a home in the suburbs with lots of open space where kids could run around? Or would you prefer living in the heart of the city where you have easy access to malls and restaurants? If you have children, you’ll have to take into consideration the distance they have to travel daily to reach school. And don’t forget to ask yourself whether you are okay with spending three hours on the road every day traveling to and from work.

Whatever your needs are, every home buyer should know that finding a perfect house which meets all your requirements and falls within your budget is going to take time and effort. But the results are going to be well worth the effort.

Do not comprise on things that matter or get coaxed by an agent into buying a house that is not suitable for you. For many, buying a house is a lifetime investment. A well-appointed house in an unsafe neighborhood is always a bad idea, even if you are getting a very good deal. Never rush into a deal only to regret it later.

2.       Do you have a pre-approved loan?

Pre-approvals help to determine your maximum purchase price. Be ready to provide detailed financial documents to a lender who can tell you how much house you qualify for. You can narrow down your search based on this estimate and save time which would have been otherwise wasted looking at houses outside your price range.

A pre-approved loan lets the seller know that you are serious about buying a house, especially if he is considering multiple bids. It can also speed up the process once you’ve found your perfect house. Again, some banks are ready only to pre-qualify a buyer and do not offer pre-approvals.

At this stage, also calculate how much money you can put down as a down payment on the property.

3.       Are you in a position to meet the miscellaneous expenses?

Owning a house comes with a lot of miscellaneous expenses, such as property taxes, maintenance, utilities, insurance, home owners’ association fees and so on, in addition to your mortgage payments.

Don’t jump into buying a new home just because your friends are doing so or the real estate market is booming or your cards tell you to. Only you can decide whether it is the right time for you to buy a house.

Does your budget allow for a new property at this point in your life? If it means that you have to make tough choices such as moving your kids to a slightly cheaper and less reputed school or your spouse has to slog at office every day without time for personal life, stop and rethink. It may be better to wait for a few more years when you’ll have enough funds set aside to ensure that your lifestyle does not take a beating as a result of moving into your own home.

4.       Should you have a professional inspection done?

It is always a wise decision to have the house inspected by a professional before you reach the closing stage. Some lenders require a professional inspection to ensure that the purchase price is in accordance with the market value of the property.

Though hiring a professional will cost you a few hundred dollars, it is going to save you a lot of money and heartache in the long run. Though it may be tempting to do the inspection yourself, do not attempt it. A professional will be able to tell you if the house has any structural damages or issues that are not evident to your untrained eye.  Though he will give you a written report after the inspection, it would be better if you are able to accompany him during the inspection. He will be able to guide you in person on what repairs or renovations have to be done once you buy the house.

If the professional evaluation unveils any flaws, it can also help you in further price negotiations before you close the deal.

5.       What is your back-out plan?

If the inspection has thrown up huge problems in the property that is going to cost you thousands of dollars to repair or the appraisal value is far less than the purchase price you agreed to, you may want to reconsider your decision and hence the importance of a solid back-out plan.

Make sure that your purchase agreement includes a contingency plan that allows you to back out of the deal and void the contract if the home inspection throws up any major problems.

6.       What comprises a competitive offer?

Though you may be dependent on your real estate agent to get you a competitive deal that is fair to both parties, it is always better to conduct a market analysis which can help you understand the value of the property and tell you what buyers are ready to pay for similar homes in the same area. This can help you come up with a unique bid strategy that will keep you ahead of the competition.

If you are frequently losing out on bids or being rejected, it may be time to reevaluate your approach. In real-estate, low-balling does not always get you the best deal and in today’s competitive housing market, low-balling probably won’t get you the house you want

7.       Will you have enough money to spend on refurbishing and decorating later?

If you invest all your loose cash in down payment and closing costs on your new home, you may find yourself short of money to do the necessary upgrades and decorations before you move in. Save enough money beforehand so that you can adapt your new home to suit you and your family, buy new furniture, convert the third bedroom into a home office and so on.

As you can see, there are many things to consider when embarking on your journey to buy a home.  If you are a first time home buyer, the best advice is to work with a reputable Realtor and do your homework.  Many home buyers have rushed in to buying a home only to find themselves living in a beautiful home with no money left over each month to leave it and enjoy life. But home buyers that pay attention to the details, especially the financials of owning a home, end up be very happy home owners.  Here’s hoping that will be you!

Click here to see current homes for sale anywhere in the US.

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5 Things to Look For When Choosing a Home Builder

5 things to look for when choosing a home builderWhether you are planning to buy a ready-to-live condo or build a customized home, it is very important to choose the right home builder. A beginner to the real estate market might find himself overwhelmed by flashy brochures and aggressive marketing that promise you the moon – and the stars. So how does one separate the wheat from the chaff? We have put together a list of 5 things that you should look for when choosing a home builder.

1.  Is there a match between your needs and the builder’s experience?

Does the builder’s overall experience match with what you are looking for? Many builders specialize in different categories such as luxury apartments for the upper class, compact modern apartments for the urban couple and so on. However, if you are planning to live in a traditional home with an old-world feel, you need a builder who has expertise in this area. This is hugely important because the building process and materials themselves may differ in each case. Find out if the builder has worked on similar designs in the past and ask to see previous constructions or model homes. If the firm is relatively new, find out if they have experienced professionals on their payroll.

2.  What do their previous customers say?

Most builders these days are ready to provide references. Though you can always talk to them, it would be better if you can search for others on your own. Set a day aside to visit his previous projects and talk to a few customers. Plan your visit mostly on a weekend when people are relaxed and willing to talk.

Ask the home owners whether they are satisfied with the builder, whether he kept his promises, whether they faced any problems during construction and after they moved in and so on. Try to find out if they are willing to buy another home from the same builder or to recommend the builder to a close friend or a relative and most importantly – their reasons for the same.

Visiting an actual home provides a better feel of the quality of construction. A model home is usually displayed fully furnished and can tend to distract you from the actual construction.

The local home builders’ association and consumer complaint forums may be other good sources of information on the builder and his reputation in the market. You may be able to determine whether there are any pending complaints against the builder or whether any previous customer has filed a legal action suit against him.

3.  Do they offer guarantees?

If you are buying a new property, find out if the builder is giving a long-term structural warranty or guarantee on the building. What is the standard response time that can be expected? Find out from previous customers whether the builder has been regular in his promised services, responses to complaints and maintenance. Are they ready to give it to you in writing?

If your builder’s warranty does not extend to even the minimum market standards, then I would recommend that you rethink your decision.

4.  Is the builder insured?

Are the builder and his contractors covered by insurance for job site injuries, accidents, storm damage or other hazards? Make sure that his policy offers protection against property damage and includes employers and public liability insurance.

Public liability insurance covers injury to the general public and third parties during construction (for example, a passing pedestrian is hit by a falling metal sheet). Employer liability insurance provides protection to the employee who is injured while working on the construction of your building. Make sure that your builder has this coverage, or you may find yourself dragged into unnecessary litigation. A contractors’ all-risk coverage will protect the under construction building against accidental damage.

Also find out if the builder is licensed and if so, by whom. Some areas require that you work with a licensed builder.

5.  Quality and resale value

A home is one of the biggest investments that you might make in your lifetime and hence it is important to do your homework carefully. The quality of the construction and products used will make a huge difference in its resale value down the years.

When you visit the builder’s previous or other ongoing projects, pay special attention to quality of construction and building materials. Are they signs of seepage or outward structural issues? Are his homes environment-friendly? Are the plumbing fixtures, electrical switches, woodwork etc. of good quality or is he trying to cut costs? Has he used the same products that he used in his model home? Some builders use well-reputed brands in their models and use substitutes in the actual construction. Read the fine print in their marketing brochures carefully. Don’t forget to ask what items displayed in the model home will be included in the standard pricing and what comes at an additional charge.

If you are venturing into real estate for the first time, read your contract carefully or have a real estate lawyer go through it. Never take a hasty decision while choosing a home builder or it may end up being a very costly mistake that you have to live with for the rest of your life. The cheapest may not always be the best option. You may end up spending more in the longer run on repairs and maintenance if the builder has tried to give you a cheaper quote by using substandard materials in his estimation.

You may also want to check with your builder at what stages before or during the building process you will be able to suggest additions and changes. Though some builders are not agreeable to changing their plans for a single owner, especially if you are buying into a condominium, there may be certain stages of the construction or before it when you can request for specific upgrades.

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Multiple Listing Services (MLS) Demystified

The MLS - Multiple Listing Service - Homes for Sale

If you are new to the real estate market and are interested in buying or selling property, a Multiple Listing Service (MLS) is the place to go to. But what exactly is the MLS and how does it fit into the real estate sector?

Multiple listing services are huge databases used by real estate brokers to share detailed lists of properties entrusted to them. Of course, the agent should have the consent of the homeowner before he adds the property to the service. Another real estate agent can bring a buyer and both agents will share compensation if a sale happens. Usually only licensed real estate agents or employees of a company which is a member of a Board of Realtors are allowed to become members of an MLS. A member is expected to post details of all properties with the service, unless the owner has said otherwise.

What are the benefits of MLS?

Real estate agents use comparative market analyses (CMAs) and reports provided by multiple listing services to arrive at a good price for a property that you may like to sell or buy. An agent may also be able to sell more properties than he would have if he was not a member of a multiple listing service. Transactions also happen much faster when there are more people working to identify and bring forward actual buyers for a property.

Who can use the MLS?

But is MLS only for real estate agents? No. As a seller you will be happy to know that listing your property on such a service gives it greater exposure and a bigger outreach than an advertisement in a newspaper. More interested buyers mean greater pricing power for the seller. Though you will have to work with only a single real estate agent, a number of other agents will also be working to find the right buyer for your property with the help of details given on the MLS system. The chances of your property being sold faster and at the best possible price are higher if your property is MLS-listed.

If you are a buyer, you have more options to choose from and get easier access to a larger number of property listings that meet your requirements. For example, coming up with a list of houses that match a specific price range, location or square foot area can be as easy as a few clicks. MLS systems are much more detailed than other similar tools in the real estate industry and include information such as condition of the property, history, renovations done, zoning information and so on. You can also see several properties listed under the service through a single agent instead of contacting different real estate companies for each property.

Search the MLS

A brief history of the MLS

Are multiple listing services a recent phenomenon? Not really. Hundreds of years ago, groups of real estate agents used to meet at local associations where they used to discuss properties known to them. If another agent was able to come up with a buyer and help speed up the sale of the property, they would agree to compensate him. The first MLS was thus born out of this unique spirit of sharing and mutual benefit in the real estate industry.

Initially MLS data used to be available only to real estate agents. Huge lists of properties were printed monthly and updates used to be sent out every week to all real estate agents who had registered for this service, showing which new properties were added to the list that week and which houses were sold. But today with the advent of internet, the process has become extremely simple and less cumbersome. There are more than 800 such services operating across the country. Many update their lists every hour so that current real-time information is available at your fingertips.

What’s more, today any ordinary person who has access to a computer and is interested in buying a property can search for listings on an MLS website on his own. Of course, some information is withheld from a prospective buyer for security reasons and made available only to authorized real estate agents.

What are FSBO listings?

A homeowner can directly list his property on an MLS without going through a real estate full service real estate broker by using an FSBO (For Sale By Owners) service. FSBO companies charge a fee to post your home for sale on the MLS.  Earlier you had to pay a percentage of the sale as sales commission if you wanted your property listed on MLS without an intermediary, but now many MLS websites allow you to submit your property details for a flat fee of a few hundred dollars and gain the same exposure you would have if you had gone through a Realtor.

Real estate listings and much more

Today MLS websites offer much more than a comprehensive listing of all properties available for sale or rent in your area. Current real estate news, analyses and resources, mortgage and tax calculators, free and paid property appraisals, virtual tours, interactive maps and detailed information about cities and neighborhoods are other features offered by such websites to help their customers ease into the process of buying or selling a house.  Most websites also send automatic emails to home buyers who subscribe to the service for free to update them of new listings that meet their criteria.

 Click here to search the MLS in any city in the USA

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8 Ways to Make Your Move Eco-Friendly

move eco friendlyThose who love and care for nature always find a way to incorporate environmental-friendly measures into everything they do. Even when you’re done searching for your new home and planning your move, there are options available to make a good part of the process environmentally friendly. Below are some of those options which help you keep a relatively low environmental footprint:

1. Find a moving company committed to environment protection as you.
Green moving is a trend that’s gaining in popularity, and responsible moving companies too are pitching in with their own innovations to make the move as environmental-friendly as possible. Bio-diesel trucks, moving pads composed of 100 percent recycled cotton, and rentable crates for packing your belongings are features that some moving companies offer to customers. Your first step towards making a green move is to find a moving service that shares your sentiments about nature. A bit of research will help you locate the best one.

2. Cut down on use of cardboard boxes.
The average move uses 60 cardboard boxes, that’s the equivalent of a half-ton tree. Studies reveal that 50 percent of cardboard ends up in landfill. If it is recycled, the process is energy and water intensive, and it produces toxic by-products. Reusing a friend’s cardboard boxes is a good first step. A good quality cardboard box can withstand three to 10 uses. However, there are some more eco-friendly alternatives to cardboard boxes, as well as other traditional packing materials.

3. Use eco-friendly packaging materials.
Ask your mover if they offer reusable bins made out of recycled plastic. Plastic bins can be used up to 400 times. Moreover, the moving company will provide you the bins well in advance on request and take them away after you have unpacked. If they don’t have plastic bins, you can consider alternatives to plastic bubble wrap, packaging peanuts, and foam wrap. Green packing peanuts are made from bio-plastics, a form of plastic derived from renewable sources like vegetable oils or corn starch. Geami wrap, a die-cut recycled paper split by a machine to form protective packaging, is another great alternative to bubble wrap.

4. Use what you have innovatively to pack things.
The most ingenious way to securely pack your fragile belongings is to wrap them with towels, bedding, and clothing you already have lying around the house. It’s definitely a win-win move because you need to pack these items anyway.

5. Consider these green moves seriously
The condition of the moving truck will greatly affect the amount of gas it uses and the carbon dioxide it emits. The load, the size of truck, and the way you drive will also make a difference. Greener moving options are being offered by many moving companies now. Their trucks run on biodiesel fuel. Use services that have made the upgrade. You, too, can contribute to the environment by discarding unwanted items and lightening the truck load. If you have to transport your car, transport it by rail instead of having it shipped by truck. Trains are four times more fuel-efficient than trucks.

6. Use eco-friendly cleaning supplies
You must leave the old home clean and tidy, and if your new place has been vacant for a while, you will want to clean it as well. Create a small cleaning kit that you can carry easily. If you plan ahead, you can ensure that the cleaners you use are biodegradable and non-toxic instead of shopping at the last minute for cleaning chemicals and harsh detergents.

7. De-clutter by holding regular garage sales
Instead of throwing out items that you no longer need or use, you can make garage sales a consistent event by holding them once every six months or maybe a year. This will help in reducing a good deal of unnecessary clutter in your home while allowing people to re-use the items instead of simply throwing them out.

8. Going green in your new home
The energy-saving habit must go on once you are in your new home by creating less waste and recycling. Replace incandescent light bulbs around the house with compact fluorescent lights (CFLs), or, better yet, light-emitting diodes (LEDs). CFLs require less energy than incandescent lights, but LEDs score higher in terms of efficiency. Moreover, unlike CFLs, they don’t contain mercury. Unplug appliances, electronics, and phone chargers when not in use. Buy power strips to make unplugging of a number of electronics at once, a one-switch process. Look for compost opportunities in your new home’s backyard.

Getting organized right from the start makes it easier for you to do things in an environment-friendly way in almost every area of your life.

Photo Credit: Meathead Movers

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FHA Mortgages to Buy a Home Stop If Government Shuts Down

As of this writing, the chances of averting a partial shutdown of the federal government are slim to none as members of House blamed the Senate, and members of the Senate blamed the House, for being unwilling to agree on a spending bill that keeps the government running. The Republican-controlled House of Representatives has passed a measure that ties government funding to a delay of President Barack Obama’s healthcare reform law, even as Senate Democrats vowed to defeat it. If a stop-gap spending bill for the new fiscal year is not passed before midnight on Monday, all non-essential government agencies and programs will close their doors for the first time since 1996.

That includes FHA mortgages. These loans account for about 90% of U.S. home mortgages, so if the pipeline stops, that flow could hurt the housing recovery.

Uncertainty Road Sign

The good news is that most government-backed home loans will be unaffected by a shutdown. Fannie Mae and Freddie Mac pay for their operations out of the fees that they charge lenders, so the loans that they purchase and securitize will continue forward.

Of course when someone says “the good news is”, that means there is a flip side of the coin, and that’s the case here. The bad news is that loans guaranteed by the Federal Housing Administration, the Veteran’s Administration and the rural development loans of the U.S. Department of Agriculture, won’t be processed. If an application for an FHA-insured loan has not been approved by the time the government shuts down, it will not be touched until after the shutdown ends.

FHA-backed loans accounted for 45% of all mortgages used to purchase homes issued in 2012, according to the Federal Reserve. In the event of a shutdown, FHA will be unable to endorse any single-family loans and FHA staff will be unavailable to underwrite and approve new loans. The FHA alone insures about 60,000 loans a month. That’s a big chunk of mortgages to just…  stop.

Many people who try to buy a home have no alternative to FHA, VA or USDA mortgages. First-time buyers in particular often lack the cash for the 20% down payments that most lenders require. FHA rules allow home buyers to make a down payment of as little as 3.5% of the selling price, which would be $7,000 on a $200,000 home, for example. A 20% down payment on a house of the same price would be $40,000. The FHA is also more flexible about borrowers who have had payment problems in the past, or who have short credit histories.

“The housing market is searching for recovery, and we’ve been seeing signs of optimism,” said David Stevens, CEO of the Mortgage Bankers Association. “This could have a sizable impact on the recovery.”

A slowdown in the processing of home mortgages would have ripple effects beyond the housing market. When people buy a home, it triggers economic activity in related industries. Home buyers have their newly purchased homes painted, floors or carpeting installed, new decks built, and landscaping completed. They also fill their homes with furniture and electronics. If a shutdown drags on for more than a few days, the impact on the real estate market and the economy could be quite significant.

No one agrees on what’s really going to happen next, though. Some people think we’re economically headed towards a cliff. Some people can’t believe the legislators would not come to an agreement before the deadline hits. I’m of the opinion that we can’t put anything past these rascals.

Are you ready to buy a home? We can’t do anything about the government shutdown, but we do have MLS listings search that you can use to find your dream house.

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