Category Archives: buying a home

Questions to ask when choosing a mortgage lender to buy a home.

When deciding to buy a home, the first step is getting preapproved. With so many mortgage lenders out there, how do you choose? Many home buyers who come to me say the same thing. I just called my bank to get preapproved…they have all my information and my car loan…

Banks who are good for checking accounts or even car loans are not always stellar at mortgages, which are riskier and more complicated transactions. The right mortgage lender can be the difference between getting or not getting a home. In a competitive market where the right homes are going into multiple offers, listing real estate brokers and there sellers may evaluate offers, including which lender will get the job done. If lenders have a bad reputation, it can hurt your offer. And the wrong mortgage lender can definitely cost you a lot of time, heartache and money if they do not get the job done.

Beware – rates are not everything. Mortgage companies that cloak themselves in the best rates are not often the best to deal with. If they can’t get the job done, it won’t matter what their rate is.

So here are 6 questions to ask a mortgage lender to see who will get you into your new home.

1. What do I need for a preapproval letter? If they don’t ask you for tax returns, w2, bank statements and proof of employment income right from the start….and pull your credit report…your preapproval is not worth anything and will be worthless to a listing broker with an offer. Sellers want to know the loan will go through and so do you. They need all this information to ensure you will have a successful loan.

2. Do you do your own underwriting locally or in your office? Underwriting is the key to all loans. Underwriting is where they look at all the documentation and ensure the company/investor is satisfied with a minimal risk of default on the loan. This is very complex and involves a lot of precision but also a lot of subjectivity. If the underwriters are with another company or in another state or even another office, the loan officer will be powerless if anything is tricky with you or the house to ensure the loan gets done.

3. Who do I deal with during the loan process? Service counts for a lot. Companies where you deal with multiple people in multiple locations, states, etc. usually will delay your loan and cause you more hassles. You want a team where the loan officer, the person you start with is still involved and still your point of contact for you, your Realtor and your attorney. Companies who have you talking to a different person every time will just give you a headache and waste a lot of your time. Internet companies are famous for this, you often are pushed from person to person.

4. What are your loan fees? Of course you want to know what the loan will cost you. But just like rate, you should ask the question (and get it in writing) but that should not be the only factor considered.

5. What loans can you do? Not all banks, mortgage companies and credit unions can perform all mortgages. Renovation loans, FHA loans, various grants and programs loans with home buyer assistance at local or state level…if you are looking for a particular loan product or a few, you want to know they can do the job in house and not send out for underwriting and processing.

6. How many of your deals go through? This is a very important question. Some loan officers are salaried (many banks) while mortgage companies typically are strictly commission…they don’t eat if they don’t close loans. If they could care less if you close or not and merely are fulfilling a quota of preapprovals or applications…they are likely not the lender for you. And lenders who don’t close at least 90% or more of all loans they submit preapprovals for…that is a red flag.

What you need to know about using an Attorney in a Real Estate Closing

Many of my clients ask if they have to use an attorney when buying or selling a home. While the answer is no you don’t have to but you need to use an attorney when buying or selling a home and here is why.
1. Who is going to explain all the paperwork to you at the closing? By law in Illinois, only an attorney can explain the mountain of paperwork from the mortgage note to the deed to the closing charges to ensure that you are getting what you paid for and that you understand everything you are signing. So unless you want to just sign a bunch of papers you don’t understand, you need a real estate attorney there with you when signing.
2. If you are selling property…there are a myriad of paperwork that needs to be completed for transfer taxes and there are documents to be reviewed like the title, survey, deed. If you don’t understand every word and paragraph, how do you know it is completed properly? How do you know that your error will not put you in future litigation?
3. Dealing with the other attorney…In Illinois, most sellers use an attorney, so if you are a buyer, you would have to deal directly with the attorney on everything, inspection repairs, extensions, title problems and review? While these things are not rocket science they do require a level of knowledge and experience to be successfully achieved. If the other side has it and you don’t…you are putting yourself at a disadvantage.
4. Are you sure you are protected and getting what you are entitled to? Buying and selling a home is complicated. The deed and title need to be reviewed to ensure there are no liens. The survey needs to be reviewed. Real estate taxes and exemptions can expose you to paying more taxes out of pocket than necessary. A real estate attorney will review all these items and protect your interests now and in the future.
5. Make sure it is a real estate attorney who has experience in real estate. You would not have a cardiologist perform brain surgery. Both doctors, but specific knowledge and experience are required. Same with attorneys, there are nuances that only attorneys who practice in real estate will know and recognize. This could be the difference between preventing or solving a problem or something you will have in the future.
6. Where do you look for a real estate attorney? Your Realtor and/or lender are great resources. They work with attorneys every day and can give you a personal recommendation. Then you should talk to them and ensure you feel comfortable with them. It is important that you feel comfortable asking questions and ensure they have time to help you and will communicate with you.
7. What should I expect from my attorney? Some attorneys are the “just see you at closing types.” You are better off with someone who is with you every step of the way, not just on the day of closing. They should review all the paperwork, communicate with the Realtors, lender, title company and other attorney. They should answer all your questions and keep you up to date. They need to protect your interests and do what is best for you. And they should work well with all the parties involved to make a smooth transaction. If they seem difficult to work with, they are likely not the right choice. Real estate transactions have a lot of moving parts, all parties need to work together to ensure a smooth and successful experience. And keep in mind, while an assistant or paralegal can do a lot of the paperwork, they should not be the one answering your questions and explaining paperwork. That is what your attorney is for.

8. What should you pay for a real estate attorney? You usually pay a flat fee, not by the hour, phone call or retainer for a real estate transaction. It is paid at closing. You can negotiate the fee, especially as the seller of the property, but again it is more important to get a good attorney than save a few bucks.

Simply said. You don’t know what you don’t know. In every industry there are experts that people rely on to protect, educate and inform them. Doing it yourself you could miss something that will cost you money, hassle and more in later years. Unless you understand all the paperwork and laws…get an expert. After all, this is not only your home, but your largest investment.

Creepy Distractions that Turn Off Home Buyers when Selling a Home

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As a Realtor, I see a lot of unusual, even crazy things in people’s homes. If these silent idiosyncrasies could be explained by the home seller, I am sure they would make more sense. But in their absence and left to the imaginations of home buyers, these eclectic eccentricities can often creep home buyers out …distracting them from the advantages of the home and maybe completely turning them off.

I once entered a room with a full-sized child doll sitting in a rocking chair in the corner of the room. You could not see it until you entered the room. It surprised each and every person who came into the room and needless to say, no one really saw that room. Or the full-size “butler” statues – yes they scare you because they seem like a real person when you walk in the room. Startling to say in the least, creepy to say in the most. This goes for any personal possessions that may not be appreciated by the general public. Doll collections with eyes seemingly following you all over the room are not much lower on the creep-o-meter. Realistic stuffed toy animals of cats sitting on beds or a large tiger in the corner, are another eerie distraction.

And Taxidermy…I have seen heads of nearly every animal on the wall, as well as various skin rugs on walls and floors, horns on walls and full-on stuffed formerly live animals. While these trophies are treasured by the home sellers, to a homebuyer who may not share this hobby, they are unsettling and unpleasant. When you are blindly entering a home, it can cause children to be afraid and many times scare even adults who are not expecting a “jungle room.” Home sellers, let’s put it this way, do you want the home buyers referring to your home as the “dead animal” or even the “jungle” house after their visit. No, that will not sell your home. Put them away in storage, boxes, etc.

Marked graves in the yards for pets or urns of grandma on the mantel are another turn off. While the urn will move with you, home buyers only can wonder how many fluffy and spot bones they will inherit if they buy the home. What is unseen….is the best answer for this.

Weapons in the homes, from samurai swords and cross bows to maces and guns are more common than you would believe. Best to keep the armory put away in a closet in a box, etc. Not only are they dangerous, especially for children viewing the home, but also could be a theft temptation you don’t want to deal with and a potential insurance nightmare you definitely don’t want to deal with.

And while the Nazi flag may be reminiscent of an inside joke or historical memorabilia or something to the home seller, home buyers could easily be offended enough to ignore the home’s attributes and head for the door. Or better yet, they may never come to see the house as they see the photography on the internet and in listings.

Snakes, tarantulas, hamsters, gerbils and lizards may be in cages, but do you want to take the risk that recoiled home buyers will not enter those rooms with their slimy occupants present. If they have to stay in the room, best to cover them …. out of sight, never in mind.

And “Friendly” cats and dogs may be fine for your guests while you are around, but home sellers need to cage or remove these residents and not leave for unsuspecting home buyers…and agents for that matter. You don’t want agents and homebuyers skipping your house when they go to the door and “spot” is barking his head off at the front door awaiting them.

Real life encounters are not limited to pets. Believe it or not, more than once, I have opened a bedroom door to see a lump in the bed that was not laundry, but a real person sleeping in the bed. Both the buyers and I couldn’t get out that room or that home faster.

Again, while it is your home, it also is a product. If you wouldn’t like it in a department store, don’t put it in a home you want to sell. Remember, first impressions last forever and are not easily erased.

Is your condo association property manager working for you or for themselves?

If you want to live in a condo or townhome, an association and usually a condo association property manager is a necessity. But it is adding another layer of control over your life and your home, so you need to be sure you have the best possible representation working in the best interest of all the condo residents.

Most people have little involvement in their condo association until something happens. It is often hard to get attendance of the residents and even harder to get people to participate in the condo board. What you want in an condo association property manager is someone who is going to help all the residents with building maintenance and repair planning, proper budgeting and general management. But often what you end up with is varying levels of bureaucracy with managers who are difficult to deal with and even harder to communicate with. Here are a questions to ask when you are considering management of your condo or townhome association property manager.

Do you have the property license, insurance? Make sure they have the proper credentials. In Illinois, people who manage properties must have a Community Association Manager license with the State of Illinois. Per Illinois regulation, the person who deals with the association’s money, contracting, etc. needs to have this license. So, if the person you deal with on a regular basis for everything does not have this license, this is illegal, sometiemes even if they are working for the person with the license. Administrative staff have specific tasks they can and can not do. Anyone can verify this license on the Illinois Department of Professional Regulation websitehttp://idfpr.com/licenselookup/ Also, make sure the company and/or the person has proper liability insurance, like general liability or errors or omissions insurance and some kind of bond if they hold your money. This protects the association and all the residents.

What is their experience/reputation? Even properly licensed individuals can vary in experience. Let’s face it, some people are good at their job and some are just not. Before you hire a condo association property manager, talk to people on their other associations. Yes, references are often like calling someone’s mother – you are not going to get a bad reference or they will not give the person to you. I recommend asking for the board member names and numbers of ALL the associations they represent and maybe even ask for a couple non-board resident names. Check them out.

What are ALL the fees they charge? Not only the fees they charge monthly, but what other fees are involved. Do they charge extra for accounting fees? If legal and accounting fees are outside, do they markup those professional fees? What fees do they charge for resident sale transactions? Managers often charge fees during sale transactions to cooperate. This is something no one usually knows or asks. They charge to give the buyer a copy of the bylaws, budget and/or declarations. This can be $100-200 charge to the seller. Sometimes they also charge the buyer and/or seller a fee to transfer their records from the seller to the buyer. I have seen anywhere from $250 to $350 for this charge. These fees are usually a surprise to the seller, but are not an option.
Any condo association property management agreement should disclose and negotiate ALL FEES they can ever charge to residents or potential buyers. Also, should have an agreed timetable for responding to inquiries from residents and requests for documents.

Realtors and residents often see the real truth of the deal with condo association property managers when selling their home. Property managers are an important component to ensure a smooth sale transaction. Contracts require buyers get a copy of the budget, bylaws, and declarations and require the association complete a form indicating the health of the association, if there are any pending assessments or law suits. The association and their cooperation or lack thereof can jeopardize your sale. This is about the time many residents find out just who their association property manager is working for…you or themselves. And if you have an uncooperative condo association property manager during the sale transaction, your buyer may decide that they don’t want to live in a condo or townhome that has this difficult a manager – too much hassle.

For example, it is often a problem to have condo association property managers take forever to get the documents to the buyer and lender and not respond to emails and calls from the buyer and seller’s agents and attorneys and lender.

In one case, I had a deal cancel because the condo association property manager did not disclose that there was a lawsuit against the association. Lenders will not lend money for that deal. So, the seller could only have a cash buyer, which is a very low percentage and will affect the amount of the sales price. In another situation, the association manager failed to advise that there was a special assessment pending until the last minute, forcing the seller to pay additional money they did not anticipate to finalize the deal.

Condo association property management is not an easy job. You have to answer to a lot of residents who all have differing opinions on everything, but I am often surprised when a seller says the condo association property manager is horrible and very difficult to deal with. Then why have them?

How to Win or Lose Multiple Offers when Buying a Home

I hear this all the time from home buyers, especially first-time homebuyers. I am tired of losing a home in multiple offers. With buyer demand, low interest rates and inventory shortages, multiple offers have been a standard in the home buying game, especially in competitive marketplaces and in the first-time buyer more affordable homes category of the market.

Home buyers never win in a multiple offer or bidding war. You don’t know what the other buyers are doing, what their financing is, how many of them are there. It can get very discouraging for home buyers. But, if you want a home and are in it to win it, you can’t be discouraged. You just need a strategy.

Timing is everything. Home buying in a competitive environment is no exception. The cream of the crop homes don’t last long. Beating other offers to the punch could make the difference between a sole negotiation with you and the seller and a multiple offer, so you need to know what is out there and go see it right away. Get into the home right away, even if it is inconvenient, do it. Keep abreast of the market by having your Realtor send you updates on the multiple listing service MLS 2x per day, morning and afternoon, that way you have the most accurate and updated listings available.

And you need to be ready to make a quick decision. Be prepared with your preapproval letter ready. Have all the decision makers attend the first showing. Waiting for your parents to come even the next day and you could be behind the eight ball. While it is important to make a wise unhasty and considered decision, you need to know your marketplace, do your homework and consult your Realtor expert so you know when the right thing comes along.

Don’t submit a low ball offer. That is the first way to lose a home to multiple offers. If you are offering on a fast-moving in-demand home, don’t try to negotiate too much and go really low. Home sellers can consider other offers up until you have a signed (not verbal) contract. If you low ball to try to get the price down, you will lose the home – guaranteed. If another offer comes in, you will definitely pay more to get the price. In a multiple offer, the list price usually becomes the rule, so you sometimes need to get right on it, close to it or over it to win the house.

Again, timing is the biggest factor. Homebuyers always need to consider the market, but not over consider. Remember, if you are getting a loan, and most people are, the home’s value will need to appraise. As a homebuyer, you can never overpay for a home. If you think the price is too high, much better to have no competition in negotiating after an appraisal than keep missing out. Yes, homebuyers do need to pay for the appraisal, so there is some chance of loss, but most times sellers will negotiate once they have a buyer. If you are not sure, have your attorney extend the inspection period and do the appraisal right away, then you can reduce potential risks and losses.

Other terms of the purchase can also be a way to win in a multiple offer. Cash maybe king, but the price is the main consideration to most home sellers. The only way to beat a cash offer is to outbid them. But if you are a cash offer or put more money down, that can be appealing to a seller. Conventional financing is usually more appealing than FHA financing.

Home seller concessions like closing costs, surveys, termite inspections, home warranties and percentage of tax proration can be another way you can beat out the competition. Down payment assistance or relative gifts can be one option other than seller paid closing costs. You can get your own termite inspection, survey and home warranty or do without them. Most financing options no longer require termite inspections and survey. Established homes with obvious boundaries do not necessarily need a survey. And unless your inspection reveals an potential issue with termites, you may not need. VA loans still however need a termite inspection, but it can be provided by the buyer.

Tax prorations are usually a small consideration, but combined with others above, it can win. Depending on the current exemptions, assessment and tax increases and since your lender escrows your taxes at closing and each month, you may not ever have a dime out of your pocket for a tax proration at 100% vs. 5 or 10% over the last tax bill.

Offering to buy the home “as is”. You should always still have an inspection and you still have the inspection contingency in place in a contract, so if you say you will purchase as is and there are deal breakers at the inspection, you can always renegotiate. With other buyers moving onto other deals by then, you may be on your own. You shouldn’t go into the deal with this plan to about face on this term, but you still have options.

There are always pitfalls with the appraisal or as is back up plan though. Backup offers could be in place, so the home seller may just go back to that, but other buyers may not wait around and move onto other homes.

Other terms like favorable closing dates or post-closing possession may suit the home sellers needs and favor your offer.

And if you are tired of the multiple offer game and don’t want to play anymore, there are other options. Very few times does a diamond in the rough have multiple offers. Could be the home a little old lady lives in that is in good condition, but is not updated, could be a foreclosure home. You can get a rehab loan to fix up the home the way you want. You still get your dream home and often a better price and less frustration.

Advice for empty nest or senior move down homebuyers

When you find yourself with an empty nest and you have too much house for your needs, a smaller home and maybe a different area or lifestyle may be the best option. Here are some tips for empty nest homebuyers or senior homebuyers when you are considering a home change.

Assess what you want in a home and what you need for the way you live now. As an empty-nester, the way you lived in your family home when you had kids is not the way you live now. You want to look for an area, home style or needs that suits your new empty-nest lifestyle.

Do you want to do yardwork anymore? Are you ok being in an attached home? Maintenance-free homes are popular among empty nest homebuyers because they no longer want to spend time or have the capability to mow lawns and tend yards. Townhomes or condos are the best bet for a maintenance-free home, but cost of assessments and being attached is something that goes a long with the maintenance-free home benefit.

Do you want activities and a lifestyle? For those over 55, active adult communities can offer a maintenance-free home, even in a single-family home, and also offer activities and other benefits for empty nest homebuyers or senior homebuyers.

Where do you want to live now? Area also can play a part in a new lifestyle. Empty nest homebuyers and senior homebuyers may want to live near friends, relatives or their children. Schools are no longer the main factor in the home buying decision, but affordability and taxes could be the most important aspects for empty nest homebuyers and senior homebuyers who can be on retirement or moving toward a fixed income. Crime, transportation and proximity to shopping, restuarants, doctors or services also can be relevant looking at current and future needs.

What kind of home do you need – how big and how small? Size and style of a home are a consideration. Empty nest homebuyers and senior homebuyers no longer need 4 bedrooms, a huge home and a big basement. They may or may not want a basement. They can usually do 2 or 3 bedrooms, and scale down on square footage. Just eliminating one or two bedrooms and redundant family areas like family room and living room spaces can naturally reduce the square footage. Remember, whatever space you have, you will need to clean and pay for the taxes, maintenance and upkeep. Most empty nest homebuyers and senior homebuyers are moving to reduce that work and cost anyway, so it is a good time to look at what your space needs are.

One big mistake empty nest homebuyers and senior homebuyers do is try to fit their old lifestyle into a new home. Furniture is the biggest issue. You may not need a big dining room set for your new home. But if you plan to host family gatherings, you may still need the space. If you don’t have kids anymore, why have so many sets of bedroom furniture? Take the best and sell or donate the rest. Don’t make the new house fit your furniture, make it fit your new lifestyle and needs. And make your kids come and get all the stuff they left behind in your home. They have homes of their own and if they wanted the old trophies, posters, games and other memorabilia that bad, it would already be at their homes. You don’t need to keep or get a big home to store their belongings.

Do you want stairs or one level? Stairs may be something you don’t want to deal with. Even if your mobility is perfect now, you need to think down the line to avoid being forced to move again.

Is outdoor space important? A big yard is probably not essential anymore. Empty nest homebuyers and senior homebuyers mostly don’t want to deal with a lot of outdoor space, but may still want some outdoor options. So even single-family homes can have less outdoor play areas.

Resale is less of a consideration on these homes as empty nest homebuyers and senior homebuyers are not looking to climb the property ladder anymore. Lifestyle and affordability are more of a factor as empty nest homebuyers and senior homebuyers usually have more equity in these homes and are not likely to go underwater. However, resale always needs to be in the thought process somewhere, just may not be in the top priorities.

One big caution for empty nest homebuyers and senior homebuyers is to make these decisions with their needs in mind, not necessarily the opinions of their family. While family and adult children may offer opinions on any of these decisions, as empty nest homebuyers and senior homebuyers, it is important to listen, consider and then make the decisions that suit you the best. Sometimes adult children let sentimentality toward a family home interfere with what is the best for their parents. And their tastes, desires and thoughts are not always yours. Remember, it is your home, you need to live there, not them.

HOW DOES AN APPRAISAL WORK WHEN BUYING OR SELLING A HOME?

Appraisals are a necessary component of getting any home approved for a loan when buying or selling a home. Cash deals do not require appraisals but loans, which comprise most home deals, DO require an appraisal which needs to be valued at least at list price.
Appraisals for buying a home and selling a home have both objective and subjective components.
Market value – Appraisers consider 3 of the comparable properties in the last 6 months against the selling home. Which comparables they use are subjective, but the comparables are objective. This is 80% of the appraisal value.
Adjustments – Similar home type, square footage, immediate area (subdivision or town), school district…these are the criteria generally used by appraisers to establish comparable properties, but minor adjustments can be made to ensure a fair appraisal when selling a home. Adjustments for finished vs. unfinished basement, number of bedrooms, number of baths, number of garage spaces ad whether attached or detached, type of siding on the home, age of the home, lot size, condition/upgrades, and whether or not a home is distressed (foreclosure or short sale) all can factor into an appraisal when selling a home. All these adjustments have guidelines, but the adjustments and the amounts are subjective. Upgrades and lot size usually take the hardest beating on these adjustments and never really get a real and true value. If you have an acre and other homes are subdivision lots, don’t expect the price of the lot itself to be accurate in the adjustment. It will be a fraction, mostly due to the flat vacant land market and difficulty in value. The same is true of exceptional upgrades. You may get a superior value, which will help, but it will not be the cost of what you paid. So, if your home is over-upgraded for your market, compared with similar homes, it will be a fraction of what you paid for the upgrades. This is usually around 10% of the appraisal value.
Condition – Totally subjective. Appraisers would not have seen other comparable homes, but can see pictures on the MLS. They assign a poor , fair, average or superior rating. This can affect 10-15% of the homes value. Also, if you have an FHA loan, there are some repairs that would be required to be done before the home can be loanable. This is subjective but also is

required by FHA requirements. These are all generally safety requirements. Roof condition, GFI outlets, etc.
Frequently asked questions about appraisals when selling a home.
If a neighbor with a similar home sells their house undervalue just to get out, will that hurt my homes’value? Yes, if it is not a short sale or foreclosure, there will be no adjustment.
If the house does not appraise, can the buyer pay extra to meet the agreed price? Sometimes, it depends on the lender and the type of loan. However, it is often difficult to convince a buyer that they should pay over value for a home. Also, they would need to have extra cash, since any payment over the appraised price would need to be in cash. Not the difference between the loan amount and the appraised value, but the appraised value and the purchase price of the home.
Who pays for the appraisal? The buyer
Does the seller get a copy of the appraisal? No, unless they are asking for a price adjustment as a result of the appraisal.
Does the appraisal amount stay with the home if a deal were to fall through? Possibly. If it is an FHA loan and the lender files the case number and the appraisal, then the appraisal – bad or good – will stay with the home for up to 6 months.
How to basements count toward assessed value. Whether finished or unfinished will count, however, walkout, lookout basements are still considered below grade, even if one foot is below grade. The square footage, qualified bedrooms and bathrooms will still only be counted at a percentage of their total worth as compared with above-grade.
So, it really doesn’t matter what you, your buyer, or the agents think of the worth of the house. It only depends how it stands up to similar homes in the area.

Housing Trends…in-law arrangements in homes have made multigenerational buyers more common

Home buyers looking for in-law arrangements in homes have experienced sharp increases in demand putting sellers with the potential for in-law arrangements and suites in a great marketing position.

Parents are aging and sometimes costs of care and other complications require adult children to take them in. But on the other side of the generations, high cost of renting, divorce and difficulties finding jobs have resulted in necessity for in-law arrangements adult children and sometimes their families to live with the folks too.

In many cultures, multi-generational living is commonplace, but it is new to the masses in the US.
What multi-generational buyers are looking for are ways to have a complete or partial living arrangement for either side of the familial spectrum, while maintaining a comfortable separation, when needed.

Older parents coming out of their own living arrangements are often the most difficult to accommodate. They are used to living on their own, so “downgrading” to something less than what they had on their own can be a sore subject.

They will at minimum want as much of their own separate space as can be provided. Private bedroom with on-suite bath (usually no tub), decent-sized bedroom and closets, sometimes a sitting area and sometimes a kitchen. And usually no stairs.

While basements can often accommodate all this and more, older parents usually can’t or don’t wanted to be relegated to the “dungeon” – even with a chair-lift to handle the stairs. And they want to feel comfortable in the space to live as their own home, not like they are intruding.

Buyers looking for this kind of accommodation will likely have to do some renovation to make this happen. Renovation loans can be obtained in order to make changes, even moving walls, etc. They require a higher level of and come with a bigger interest rate, but the money in the mortgage is cheaper than credit cards. Sometimes the sale of their home can be used for this extra money. But don’t look for sellers to be ok with 2 home contingencies to buy a home. Not going to happen.

However, additions are more expensive and a lot more hassle. Looking for homes with extra 1st floor rooms, like a den, sunroom or 1st floor master bedrooms often can be a perfect in-law suite. Adjacent living rooms can be tapped to make a suite where parents can have privacy to have friends over, etc. If utilizing the 1st floor master, enough space has to be made to accommodate a 2nd master on the 2nd floor.

Many “in-law arrangements” are basement suites. While this will not often suit older parents, it is often perfect for young couple, single or young family needs. They can benefit from the proximity of parents for potential babysitting and save a lot of money with no rent payments, and sometimes better schools and area than they could afford. And they also have a completely separate retreat and living area, which both parents and adult children alike appreciate.

Depending on the family dynamic, the in law may not the final decision maker, but they may have a say in the final plan. Need to plan ahead to ensure you don’t ruin the space so it can not be reasonably reverted if necessary by a future buyer.

Sellers who have this type of feature in their homes or can even offer an idea of how it can easily be done, can certainly market that feature to capture some of these new buyer needs and put their homes ahead of others in the marketplace.

Selling and Buying a Home with Home For Sale or Close Contingencies – Facts and Fiction

If you are selling you home, do you buy a new home first or do you wait until you sell and risk two moves and being homeless. It can be a dilemma and can be exacerbated by complications of a large family or work schedule, schools, transportation, etc.

Once upon a time, buying a home contingent on the sale of your home was normal. When the housing slump occurred, sellers did not have enough confidence in the market that the buyer could sell their home to risk taking their home off the market. Since 2015, that is beginning to change. Sellers are having more confidence in the market, but not total confidence. Here are some facts for buyers and sellers about contingencies.

Buyers:
. You can not purchase a foreclosure or short sale home contingent upon the sale or close of your home. And banks will not give you months to sell and close on your home.
. A purchase contingent on sale or close is a big seller concession, they need to be compensated with a better offer price to risk losing market time.
. Best time to ask for contingent on sale or close is during the winter months. Sellers are not risking as much. . You have better chance and price negotiation on that – still no foreclosures or short sales.
. Do the inspection up front, but not the appraisal. Yes, the inspection costs money but you need to show the seller good faith that you are serious about the deal. Inspection items are negotiable and need to be done within the 1st week of any contract so no one wastes their time.

Sellers
. Never take a contingent on sale/close contract over a non contingent contract. Yes, you may get a little money more, but it is not a done deal and wasting precious market time can cost you more than you gain if it doesn’t go through.
. Your house is NOT SOLD. There are no sure things here, there is always a risk. Keep showing it.
. Your agent should do a market analysis of the buyer’s home to ensure their home is saleable or closeable to mitigate the risk.
. Don’t compound contingent on sales. So don’t you get a house contingent on sale/close when your buyer has the same situation. And don’t take a contingent on sale/close deal if the buyer’s buyer has the same. Just like dominos, too much risk, it could all come tumbling down.
. Not all sellers should consider a contingent on sale/close. Contingent on close is better, but if you are in a good market and getting tons of activity…..better not to risk it.

The property ladder can not move without someone taking a risk. Contingencies on sale/close can work, but due diligence is required to calculate the benefits and risks. Many sellers and buyers benefit from this, but both must be realistic.

The RIGHT way to look at closing costs when selling a home or buying a home

Closing costs when selling a home or buying a home seem to always be a tug of war between buyers and sellers. Buyers think that sellers should include closing costs for them. A lot of times when I show younger people their parents or grandparents always tell them “they (the seller) should include closing costs.” Sellers often oppose the idea of including closing costs for buyers, often sellers say. “Why should I pay their closing costs. If they can’t afford closing costs, maybe they shouldn’t be buying a home.” The truth is both parties are wrong. When selling a home or buying a home, closing costs become just part of the equation to make the deal happen. However, the way to look at it is not seller concessions or seller paying the closing costs…it should be seller allowing the buyer to finance their closing costs by making it part of the deal.

Many buyers need the closing costs to make the deal happen. There are a lot of people who just are not savers any more. They may good money but the down payment is about as much as they can do. But buyers need to realize that the seller doesn’t owe them anything. And while every thousand dollars costs a buyer $5 dollars a month in monthly payment, $1,000 dollars is a $1,000 to the seller.

Sellers need to realize that they don’t get to decide who gets to buy a home or who does not get to buy a home. Sellers should not care who is buying and what their financial situation is, as long as they are approved to buy the home and will get the loan and offer an agreeable price.

When buying a home, you should consider financing your closing costs. It can help you get into a home and use your savings for down payment or improvements to the home, moving, etc. it all takes money and if you can finance the closing costs, it can cost you only a few dollars more each month.

When selling a home, you should consider the request to “pay” buyer closing costs as allowing the buyer to finance their closing costs. It does not affect your net. As long as you are getting the amount you want, what do you care if they include the closing costs in their mortgage?

I often negotiate my deals based on the net to the seller. Don’t include closing costs in the initial negotiation, but let the other party know you intend to add the closing costs to the deal once a net to the seller price can be agreed upon. That way it is not an emotional or adversarial issue for the buyer or the seller. It is a non issue and you can focus on the price – bottom line to the seller.

The only time this becomes an issue is when the appraisal does not meet value. Then it becomes a little sticky. Appraisers are supposed to consider the closing costs paid on the contract, but sometimes they don’t and the closing costs become a pawn in the renegotiation.

When buying a home, buyers need to understand that sellers are entitled to get at least the value of the home, as appraised. Remember, appraisals are not always true to the real value of the home. It is based on the recent comparables, so sometimes the home’s value is more, but it is suffering from lack of comparables or neighbors who are giving away homes to get out.

Home Sellers need to understand that appraisals may or may not be indicative of the true value of the home, but the current market value depends on the comparables, nothing else. And while sometimes, the buyer can come to the table with money above the appraisal, sometimes they don’t have that extra money. And often it is difficult to get a buyer to pay above the appraisal price.

Closing costs need to be considered by both parties as a part of the deal and means to the end to make negotiations go smoother.