How Does A Seller Decide Which Offer To Accept ?

The market has definitely perked up this spring already and we are seeing more multiples offer than before.  With multiple offers on homes it has changed the dynamic of how buyers are and should be submitting offers.  Not every home with multiple offers will result in a bidding war, so I want to take the time and explain give you a quick overview on what factors of your offer will be taken into consideration by the seller.

Financing:

• Cash Deal: This has more than one benefit to the Seller, but normally the offer will be significantly lower than what the list price is because of the simplicity of the deal.  First it can close right after the title has cleared because there is no bank involved.  Second, it is usually in "Sold As Is" which means no work will be done to it.  The buyer is still permitted to do the home inspection but you will be much less likely to have anything repaired or replaced. 

• Conventional Loan: This refers to the terms, there will be a larger down payment with this loan and the appraisal might be a bit easier. Since there will be no PMI included in the mortgage payment it will increase what the buyer can afford by monthly payment.  From a sellers point of view the term itself is better because the buyer is putting down a large amount down of 20%.  

• FHA Loan: This again refers to the terms, with a smaller down payment this is often where we see buyers asking for a "Sellers Concession".  For a buyer with this loan there will be PMI that will need to be accounted for, and the appraisal must be handled carefully so that the loan to value comes in where it is needed to.  

• VA Loan: This is a tough sell for a Seller because the buyer does not have to put any money down.  When I have a buyer who is using a VA Loan I suggest still putting down the same amount as what would be due for an FHA Loan to show the Seller your commitment, and you can receive that money back after closing.  

Additional Financing Terms:

• Sellers Concessions: The easiest way to explain this term is it just like taking a cash advance from the mortgage to have your closing costs included.  There is 2 points of view for a seller with this.  First is if the home is going to appraise for $10,000 - $12,000 more why shouldn't they find a buyer willing to pay that.  Second is that what if the home does not appraise will their buyer still be able to purchase the home, or will the deal go bust! 

• Using Gifted Funds: This is something very common with first time buyers, they will count on "gifted funds" from friends or family.  Buyers must check the guidelines of the bank in which they are using about what amount of money can be gifted, and what information they will want and need from the "gifter".  Many times buyers think it can simply be written as "gifted" and that be it, but each bank works differently you should let your agent speak with your Mortgage Representative to be clear on those terms.  

Conditions: 

• Buyers With Homes To Sell: When a buyer has something they need to sell, it puts the seller at risk.  First the funds from the buyers are more than likely coming from proceeds of their sale.  This means that not only does the seller need  things go smoothly with their home, but they are dependent on an agent who is not working for them to push the other deal through quickly and smoothly.  Secondly, timing with this kind of sale is very important because the buyers will only have about a week window after one home closes to get into the other which puts the sellers in a position where the buyers timeline is much more important than theirs.  

• Buyers With Nothing To Sell: Obviously it is better because the sale is not dependent on any major factors aside from their homes appraisal going smoothly.  It also means that the timeline will have less in the way of deadlines aside from the normal mortgage commitment time which is usually between 30-45 days from contract.  

• Home Inspections: First let me say no matter what the case is, spend the time and money to get a home inspection no matter how many offers are on a property.  It is your way of knowing exactly what your getting yourself into, if you want to move quickly and don't want to spend the money ($500 - $750) at least have a licensed contractor check it out.  Depending on what repairs or replacement you want done, can change the mind of a seller on which offer to take.  If another offer comes in $5000 less they may go with it simply because of what conditions the offer is based on.  

The most important piece of advice I can give anyone who is starting their search is to make sure you have an agent who is working for you.  If the home is aggressively priced they should know it and be able to point you in a direction that will get you an accepted offer the quickest so that you don't lose out.  To see more about how to decide on what to offer, and what the process is look here. 

Deciding Whether To Buy Or Rent, What You Need To Know !

It's that time of year again where we see renters deciding whether or not they will continue renting, or will consider being a new homeowner ! This blog is to help all those considering purchasing answer that most common question "Should I Buy Or Should I Rent?" 

Why Should I Buy A Home Instead Of Rent ? 

It's a fact that in most markets, buying a home is significantly cheaper than renting.  Renting is money you will never get back, but buying a home is an investment in your future.  In most areas, if you can afford to rent, you can afford to buy! For more information on this topic you can refer to my blog, here it will give you both the pros and cons for both buying and renting, as well as offer you alternative options.  

How Do I Know I'm Ready To Buy A Home? 
The best way to know if you're ready to purchase a home is to look at your current situation.  You don't need to be employed with the same place for 2 years, you just need to have had a steady income in one field for the past 2-3 years.  You will want to run your credit and take a good look and make sure everything that is on the report is correct, if not you will want to have it corrected! You will also want to make sure you have money saved up for a down payment, in some cases you can withdraw from an IRA penalty free for a first time home purchase.  For more information on this topic you can refer to my article, here.

How Much Money Will I Have To Pay Upfront To Buy A Home? 
This is not an easy answer, because there are two factors depending on what kind of loan you take and the amount of the loan is what will decide your down payment.  For an FHA Loan you will need to put down 3.5% where a Conventional Loan you will need to put down atleast 20%.  The average cost of a home in Suffolk County is about $325,000 which would require a FHA down payment of $11,375.  

You will also need to factor in closing costs, but you can also ask for a sellers concession or have the money "gifted" to you from a friend or family member.  This ranges again by the loan amount, and any mortgage broker is required by law to give you a good faith estimate of closing costs, this is why you should always choose a reputable bank Of course, Coldwell Banker Mortgage is more than happy to help and you will always be given all of your loan options.

Once you have decided that you are in a financial position that you would like to go ahead and begin searching for your new home there are a few things you should look into.  You will want to learn the difference between what kind of homes are on the market, who you should have working for you, and what happens once you have found that "perfect home".  Because each of these topics are best explained in detail I will list each topic below with a direct link to blogs to help you get informed ! 

• Why You Should Work With A Buyer Broker
• What Kinds Of Home Are On The Market
• Benefits Of New Construction
• Short Sale VS Foreclosure
• What To Offer For That House 
• What Happens After Your Offer Is Accepted 
• What It REALLY Means To Be In A Buyers Market 
• Tips To Finding The Perfect Home

Easy Energy Saving Costs

It is official Winter is upon us, after having a moderately mild fall other than our visit from Hurricane Sandy mother nature has reminded us that we are very much into winter.   In today's economy we are all trying to find ways to save a little where we can so I decided to write a blog about some simple tips to save some money on your heating bills.  These are all low or no cost ways so it is great for those who are not looking to invest in a whole new heating system because they are selling the home  or perhaps just renting ! 

Give Your Room A New Look

• Many people switch curtains come the winter time to a heavier fabric, which is obviously a good idea you should also take advantage of the daylight sun still being able to provide some heat.  I will give you a quick example, I have very large windows and doors in my home specifically from my dining room into my living room.  Instead of putting 4 heavy panels on each I use 2 on each end, and leave sheers on the middle which allows the heat from the sun to get into these rooms during the daytime.  

• Another easy way is to move around your furniture, instead of just pulling the furniture a few inches away from the radiators or vents spend the time and rearrange the space. Actually moving the large furniture like sofas or beds that are nearby allow the heat to radiate freely and remember this is only temporary so it may not work all year round but this is temporary !   

• If your home has bare floors like wood or tile, invest in a few throw rugs to put down they can add a bit of style and they help make things a little bit cozier if you decide to keep your thermostat at a lower temperature ! 

• Light a fire ! Well if you don't have an actual fireplace that can be a bit hard to do but there are some great inexpensive faux fireplaces that take up little space, but can produce a great amount of heat if one room just gets a bit chilly ! The other great thing is that they don't require a complicated installation and you can take them with you onto your next home.   There are a variety of kinds from ones that look similar to a flat screen TV complete with crackling wood sounds & remote to large wooden ones with mantles ! 

     

Give Your Heating System A Once Over

• One of the most overlooked parts of your heating system is often the air filter, it is a good thing to change periodically and if your in a rental most landlords will be happy to either allow you to change it or do it themselves.  You should also take a look around and make sure there are no leaks where the joints are meeting this is something that is very important for those who have forced hot air/CAC units that run through attics and basements.  

• Change out your thermostat to a programmable one or even a simple upgrade to a digital can help you be aware of how high your heat actually is.  I am very guilty of getting a bit chilly and turning up my thermostat and going just a little bit farther than I thought because I have the older "dial" thermostat.  The newer digital thermostats can also be programmable so the heat will go up once it is closer to the time when you will actually be using it.  

• Check what temperature your hot water heater, often times we don't even realize what this is set at but 120 degrees is the best place for it to be.  

• Look at the average temperature you keep your thermostat on, if you lower it 1 degree it can save you between 1% - 3% less fuel, as well as heating costs.  Another way is to actually leave your heat on one temperature lowering your heat drastically when your not home and than hiking it back up can often times cost more because of how high you raise it to "get rid of the chill" 

These are just a few of the easy ways to save a few bucks and keep a bit warmer on these chilly nights ! 

What To Look For When Buying A Renovated Home

So I am sure those buyers who are out there looking have noticed the abundance of renovated homes that are currently on the market.  I am finding there are two very extreme opinions about these renovations, either the buyers absolutely refuse to even look at them, or they will look at nothing other than a renovated home. 

I would never tell anyone to not consider a renovated home, because there are some definite advantages to buying a home that has been renovated.  At the same time there are some very specific things you will want to take a look at when it comes to buying one of these homes. 

•  How long did the renovation take? Your buyers broker will be able to tell you when the home sold to the investor, from the day it closed to the day it came back onto the market is what you want to focus on.  If it was flipped within a short period of time (30-45 days) you will want to have a very thorough home inspection.  The reason for this is because in that short of a time period it was more than likely a cosmetic renovation.  
• What was done during the renovation? Certain things are quite obvious, but just because the home has new baseboards it does not mean that the heating was upgraded, you want to check the boiler/hot water heater/oil tank.  It could be that they did not require being replaced but the only way to know for sure is to let a home inspector look at it.  Don't ever assume that just because a light switch was replaced, that the electrical system was upgraded, most investors will upgrade the electric to 200-amp service, which is ideal for a remodeled home.  
• How many homes has the investor renovated? More and more people are choosing to take advantage of all of those short sales by buying them and re-selling them.  Many investors are well known in the Real Estate community, you may not know them but your buyers broker will be able to find that information out for you just by talking to the listing agent.  Do not attempt to find this information out on your own, call your broker! I personally have a investor who has been doing this for 15+ years, and I have investors who have been doing this for 2-3 years but I only work for those who do quality work.  
• What kind of warranty is provided? It is very common that new construction builds that they provide some sort of home warranty, but you always should ask if this exists on a remodeled home.  Some investors will simply give you the warranty paperwork that is provided by the manufacturer of the items the put in the home; others will offer you added warranties about the work that was done by their contractors.  It is not very common but you should still ask the question because it is a definite plus if they do! 

Those 4 questions on the most important questions you will want to know the answers to before you put in an offer on a renovated home.  Not every investor throws together remodels, but these homes are not for everyone.  If you are an avid to it yourself, or even have friends that are contractors many times you can do the same cosmetic work over the course of a season as the investor did.  I would like to think of myself as pretty handy, but I could never come close to what any of my investors do as far as quality of work.  So let's look at a few of the perks of buying a renovated home.  

The obvious perk is you are getting a turn-key home, that you will be the first to live in and will include some 

sort of warranties that you ordinarily would not have.  

 Investors now are smart and in order to move their investments instead of rushing through the renovation they

price the home a few thousand dollars UNDER market value that means your paying less for a better home.  

The reality is the renovated home came about because of an estate/short/foreclosure sale, which means the investor

has done all of the dirty work for you this is a very big perk for those areas that were really hit when the economy

went because the majority of the homes your looking at will be these renovations. 

Here is an example of a renovation, mainly cosmetic but the electrical was upgraded, plumbing as well and an extensive rehab done to the property itself including the retaining wall in front.  

BEFORE 

AFTER 

A renovated home is not for everyone, take the time to talk with your Realtor about your wants/needs as well as your price range.  If your working with a buyers broker they will be able to guide you on what kind of home is best for you.  I always try to reinforce the importance of having a buyers broker working for you but it is a absolute must if you are planning on buying one of these homes.  Only a buyer broker will be able to do the kind of research this home will require, the listing agents are legally obligated to get the best possible deal for the investor, not for the buyer.  If you are planning on looking specifically at renovated homes I would suggest going one step farther and working with an agent who is knowledgeable on these kinds of homes, not only selling them but listing them and working with investors they will know right away what questions to ask, and what answers you want to hear !!