Helping Buyers and Sellers with North Texas Real-Estate

Posts tagged “Denton County Real Estate

Should I Stay or Should I Go?

imagesMost agents would agree that you not be present when showing your home. Prospective buyers are uncomfortable having owners hovering or milling about. It can provoke buyers to look quickly without gaining a proper feel for your home.

Sellers mistakenly believe home shoppers will miss important features. They also feel they can help “sell” the property by pointing up the positives:

  • Providing too much information in a short time can leave a less-favorable impression
  • You could actually hurt your cause by calling attention to something buyers aren’t interested in
  • If they feel like they are being rushed, they are likely going to move on to the next property on their list

Real estate agents are best-suited to showcase your home. They are trained to read buyers and know when, what and how to relay information. Let buyers discover your home’s features at their own pace.

You want buyers to spend as much time as they wish envisioning the possibility of living in your home someday. So do yourself a favor… go to a neighbor’s home, the library or shopping. The inconvenience will be worth it in the long run.

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House Hunting Part 7 – Negotiations

Negotiate as defined by Merriam-Webster is to confer with another to arrive at the settlement of some matter. The hunter has done their homework and found the perfect abode, the one he/she cannot live without, and the excitement builds. He/she has their Realtor write an offer they sign and submit to the Seller’s agent annegotiation-strategies-trainingd wait. Sometimes word gets back fast or drags on seeming like an eternity. When it does arrive, the offer is not in the form of a contract but a counter offer.  The counter is a good thing; it means the original offer is not too low.  If the price is much lower then what the Seller is expecting he may just reject the offer and ask the Buyer to submit another more reasonable offer. However, the counter means you are in the game and now the fun starts. Everything in the offer is negotiable; however, in Texas, a few things are customary for the Seller to purchase, such as title insurance and a home warranty.  When buying a house the Purchaser is not actually purchasing the property, he /she are buying a title to the abode, the right to occupy and use the space. Title insurance protects the document from claims and limitations placed on the title by others. This can save the Buyer a lot of heartache and financial loss. The home warranty is a one-year contract with a home warranty company and is different from homeowner’s insurance in that the warranty covers major appliances such as air conditioners, heaters, pools, and plumbing fixtures etc.

The typical negotiation points in an offer are price, repairs, closing costs, survey, closing date, and possession. Sometimes the option period is included and on rare occasions, escrow/earnest money.  In order to determine a reasonable offer price, a good Realtor will perform a comprehensive market analysis (CMA/comp). This is the same procedure used by the Seller’s agent to set a price on the home so makes sense for the Shopper to do the same. A CMA compares similar properties in the same or comparable neighborhoods that recently sold, and averaging price per square foot of the abode. The house hunter will have a better understanding of the market value. Market value is a very important concept to understand when purchasing.  Market value is the cash price that a willing buyer and a willing seller would freely agree upon, given reasonable exposure of the property to the marketplace, full information, and no undue compulsion to act.

The goal in all negotiations to find the true market value and this is hard, because many times the Seller has an over inflated assessment of his/her castle and on the other side the Buyer is unrealistic. A good house-hunting guide educates the Client while showing listings and explains the price differences of listings and coaches the Consumer on pricing. Sometimes repairs are needed and often are negotiated twice, once at the initial offer and a second time during the option period after a home inspection. Safety hazards are the number one concern for Buyers; these repairs are typically accepted by the owner, others such as updating and taste, not so much.  Closing costs are also on the table. Certain loans have particular limitations on how much a Seller can contribute to closing costs. The well-informed house hunter must be aware requesting payment of closing costs reduces the overall bottom line of the house for the Seller, when negotiating both need consideration. The survey is required by the Title Company, sometimes the Seller has a copy of a good survey the Title Company can use, however if the owner has changed the foot print of his abode or has added a permanent fixture to the yard then a new survey is required.  The time to close takes at least twenty-one days but depends on the lender or the type of purchase. Cash for instance quickens the closing time. Possession after closing depends on if the Seller requires more time to vacate the property. The option period is the time allowed by the Seller in which the Buyer can get out of the contract and not lose his/her escrow/earnest money. Typically, the length is ten days at a minimal cost. Escrow/earnest money guarantees the Buyer will come to the closing table; the cost is normally $1,000 per $100,000 of price, and both money for the option period and escrow/earnest money refunded at the closing table.

The current tight housing market has created the semi-new phenomena of multiple offers. In this case, several Buyers are after one castle and the Seller has many offers to consider.  This almost creates a bidding situation however a Realtor is not a licensed auctioneer and it is illegal for them to create an auction, so the Seller’s agent cannot give the price of the highest offer to another Purchaser.  Multiple offers create a nerve-wracking circumstance for house hunters and true market values can go out the window. Although, if he/she loves the house and no others are available, the Buyer may be tempted to offer a price above market value. If the Client is using cash, there is no problem, but when a loan is involved, especially FHA and VA loans then the house-hunter could find themselves with a low appraisal. The lending institute financing the loan typically does an appraisal of the home’s value to determine if the abode purchased provides enough collateral for the loan. If the loan is higher than the lenders appraised market value of the house, either the Buyer or the Seller must pay the difference. The house hunter may not have enough cash so it falls onto the Seller to lower her/his price. If this does not happen, the deal is dead.

Negotiations do not need to be difficult. As long as both parties are realistic and have good representation, this portion of the real estate process should be easy. One good hint for all potential house hunters is to be emotionally unattached to the abode prior to closing, easier said than done, but can produce a smarter purchase.  See ya down the road. http://www.djlyons-realtor.com


House Hunting Part 6 – Pulling the Trigger

thCAML1JQPSometimes it is the first home you tour; sometimes the hunt goes on for months searching high and low for the perfect abode. With the list in your hand, you eliminate the wrong ones and each one you discard gets you closer to the one you will keep. All will click, the house will feel like yours, down to the layout, the features, the neighborhood, and you will know when it is the right one. Now you are ready to pull the trigger. If you have your pre-qualification or better yet pre-approval letter, are aware of your price limitations, and have some cash on hand, making an offer is easy.

First, your house-hunting guide should produce a comprehensive market analysis (CMA/Comp) of the house to determine if priced correctly. After reviewing a few listings, you will start to notice overpriced or undervalued houses, however until your Realtor completes a CMA you will not know for sure how much you should pay. The danger the house hunter must avoid is paying too much. Some types of loans have strict appraisal guidelines which could come back to bite you in the contract phase of the process. If the Buyer agrees to dish out, too much for the perfect castle, he/she may find the home does not appraise and if that is the case, someone must shell out the difference and this might create an awkward and unaffordable situation.

An offer is a contract only signed by one party, the Buyer. The Seller accepts the offer and signs the document and when executed becomes a contract. In Texas, we use the “One to Four Family Residential Contract” promulgated by the Texas Real Estate Commission (TREC). The offer states the exact address and legal description of the abode and shows the amount offered to purchase and what kind of loan you plan to use as well as the down payment. The down payment depends on the loan. A conventional loan can require 5-10% down, while a FHA loan only requires 3.5%. VA loans are as little as no down payment provided you qualify. Everything on the contract/offer is negotiable. The offer states the exclusions from the contract usually found on the Multiple Listing Services (MLS) info sheet and includes items the Seller wants to keep. This can include anything from curtains to built-in speakers. All in the home attached, nailed down, screwed in etc. is considered a part of the house and is only excluded using this portion of the agreement. In Texas, the Seller may keep the refrigerator. All other build in equipment must stay.

Earnest money is a guarantee the Buyer will come to the table at closing. Except for certain circumstances spelled out in the contract, the Buyer could lose this money should he, /she breaches or breaks the contract. Typically, earnest money is $1,000 for every $100,000 of purchase price and paid with a check made to the title company. The title company holds the money, which is returned to the Buyer at closing. The hunter must submit a copy of this check with the offer. The title company requires a current survey; in some cases, the Seller has a good copy of a survey yet in most cases, a new one is required. Who pays for a new survey is negotiable. If the listing needs repairs, there is a section of the contract to negotiate whatever needs fixing. Closing costs are also negotiable consult with your lender the amount a Seller can pay per loan terms. The offer also demands the Seller to submit a Seller’s Disclosure; provided the Seller does not give the Buyer a disclosure, the Buyer can terminate the contract at any time with escrow money returned. The Seller typically pays for Title insurance and the home warranty. The offer also states the estimated closing date. The closing date depends on some factors, usually how long the loan funds. The closing date can also hinge on the Seller or Buyer, when one can move in or the other move out, and instructs when possession of the abode takes place. Most of the time it is after funding of the loan, however maybe the Seller needs a couple extra days to move out, a temporary lease is submitted either with the offer or during negotiations. The option period can cost $100-$150 and gives the Buyer typically ten days to cancel out of the contract for any reason what so ever and not lose the escrow money. If the contract is broken during this period all the Buyer loses is the option money. If the option is not used the money is returned at closing. A “Third Party Financing Addenda” is attached to the offer when the Buyer is obtaining a loan. A good Realtor http://www.djlyons-realtor.com will help you with the offer and should explain every detail.

Submitting an offer to the Seller’s representative consists of the contract signed only by the Buyer, the “Third Party Financing Addenda” if a loan is involved, a copy of the escrow check and a copy of the option check. Once sent off, it is time to say a prayer and cross your fingers. Sometimes the response comes right away and sometimes the answer takes a few days. Making an offer is exciting, fun and nerve-racking however, the joy has only begun. See you down the road.


House Hunting Part 3 – Scouting

You did all of your homework. You contacted a lender and you know your price limitations. You honed in your wants and needs, determined your desithCA9CN550red locations to live. Your weapons sharpened you are ready for the hunt. Scouting is the next step. Not too long ago newspapers and magazines were your best choices to find a new house. Today the internet is king and by far the best place to start the search. Most folks sit in their home offices, usually at night, when the kids are asleep with a cup of coffee or a glass of their favorite Pinot in front of a computer screen clicking away on one site after another. There are many web sites to choose. Some of the more popular ones are, Trulia, Zillow, Homefinder and Realtor.com. All you must do is write in a location input the price range and a few other details and bam, a whole page of available houses appear. Seems so easy yet you must take care.  Unfortunately, independent listing websites are not monitored for quality and on some of these sites; anyone can post a home for sale. The hunter may find the perfect abode only to discover the house sold two months ago or you may find a fictional abode. Some unscrupulous Realtors place false advertisements on these sites only to get your business, when you call the Realtor accompanying the listing for a showing, he or she will tell you “sorry it just sold; however I know a few like this one I can show you.”  I have heard stories of Realtors placing a ‘for sale’ sign in front of their own homes they are not intending to sale and snapping a photo to place on the web to get business. Not all Realtors are like this; however, there are a few bad eggs. Not all web listings are bad; the prudent hunter needs to be aware of the pitfalls.  Realtor.com is the best search website on the net. Realtor.com gains their information from the MLS (Multiple Listing Services) even so you must verify.

This is a good time to find a Realtor. A Realtor who is connected with the MLS can verify if the web listings are true. They can also set you up to receive fresh listings by email. A Realtor will take the information you gathered and place it in the MLS to limit the search to your criteria. The houses you receive are true with no worries of expired or fraudulent homes. A Realtor who misrepresents a listing on the MLS might be , or banished.  If you are not ready to seek a Realtor, another good place to search is on brokerage sites. Some of the major brokerages in North Texas include, Prudential, Century Twenty-one, Keller-Williams to name a few. Most brokerages have reciprocity agreements with competing brokerages to display houses. The listings on brokerages sites feed directly from the MLS and are true. Craig’s List and the Green Sheet websites also advertise homes, however again be aware of fraudulent Sellers.

The internet is a powerful tool. Over 37% of hunters start the hunt searching on the internet. Another 38% start with a Real Estate Professional who also uses the internet. With so much information on houses at your fingertips, the hunter should have no problems scouting for the perfect castle. …See ya down the road.   http://www.djlyons-realtor.com


House Hunting Part 2 – The Gathering

John-Ferneley-Preparing-for-the-Hunt-102155 You have your pre-qualification letter; better yet, you went ahead and applied for a pre-approval letter. You know the limitations the lender has placed on you concerning how much you can spend on a home. So, what is the next step? The lender has shown you how much of a loan you can qualify for; however that may not be how much you really want to spend. The next step is to budget. Collect monthly bills from the last six months. Compare your monthly expenses with your monthly income. Include estimated grocery, gas, eating out and any other type of expense. Determine how much of a monthly payment you can afford. There are several good, free mortgage calculators on the internet, better yet contact your lender and he or she will give you a monthly payment estimate you can work backwards from there to determine how much you can spend. Include the down payment in your calculations. This step will save you from wasting time looking at houses you cannot afford  plus save you from any heartbreak if you fall in love with a an abode that is financially out of reach.

Now the fun begins. This next step will focus you for the hunt. As any good hunter, you must determine your prey, study its characteristics, and recognize the beast so when the right one comes along you can pull the trigger. To hone in on the target, I suggest making a list. Get a blank piece of paper, notebook paper is fine. On the top, write the maximum price you can afford to spend on your new castle. Leave the first three lines blank and draw a line down the center of the paper to create two columns. On the lines above list the areas you would like to live, perhaps the location of work, good schools, affordable neighborhoods, or just preferences. Include different counties, towns, or subdivisions. These two lines will focus on your hunting territory. Over one column place the title “Needs” and over the second column use the title “Wants.” Under the “Needs” heading, list everything you need in a home. Some examples could include acreage, how many bedrooms, the number of baths, square feet, swimming pool or no swimming pool, age of house, trees on the lot. The “Needs” list are items you cannot live without.  When you are searching for a home on the internet or doing a walk through you have a basis to eliminate the listing. If the abode has all of your “Needs,” you may consider jumping on it and making an offer. The “Wants” column is for niceties. Things you do not need but if the listing has it all the better. You would not necessarily eliminate the house however; you may keep an eye out for something better, and if the something better is nowhere to be found, possibly this one is for you.  These items might include trees, pools, spas, privacy fence, dedicated library etc. When searching for a used home there is some give and take. If you cannot distinguish your “Needs” from your “Wants,” an existing abode may not be what you are looking for and maybe time to consider new construction.

Even though you have everything written down, the list is not in concrete. As you search, your tastes might change. You may list a basement as a “Need” you would soon discover basements are not common in North Texas due to the clay soils. You may find a couple but not many and you may want to adjust your “Needs.” Sometimes you may see a “Want” in a particular house and decide that is not for you, and that is okay, remove the item from the list. Maybe you want to expand your search area or situations have changed so you can increase/decrease your maximum price. The list will simplify things and make it easier to make a logical choice on your new abode and help you pare down the choices. The next Blog will focus on how to hunt…See ya down the road.   http://www.djlyons-realtor.com


House Hunting Part 1 – Preparing for the Hunt

thCAL5TVILMaybe you outgrew your current home or you need to down size. For some it could be time for a first home, for others a relocation is the reason to start the hunt. The process of finding and purchasing a home can be daunting. This series of BLOGS will focus on buying homes. What a house hunter needs to do to find the perfect abode, what to do when you find one, what documents you need to sign and what the buyer needs to do while waiting for the contract to close.

The first thing any diligent house hunter needs to do is to find a lender. I can hear everyone already…find a lender. I have not even started to look for a home yet and you want me to find a lender? Yes, find a lender! With a lender, you can determine how much you can spend on your new castle. At the very least, you need a pre-qualification letter to submit with any offer you make. Stronger yet is a pre-approval letter. What is the difference between the two? A pre-qualifying is the first step and is usually free. The lender will require info such as income, debt, and assets. With this info, he will determine how much home you may be able to buy depending on final credit checks and verification. The letter is submitted with the offer, however, you are not in a strong position. It is much better to obtain a pre-approval letter. A pre-approval is the next step; you must fill out an actual application for a loan, pay an application fee, and submit other documents verifying employment and income. A credit check occurs and you will receive a letter stating the actual amount you can borrow. All things considered equal if a Seller receives an offer with a pre-approval letter and another for the exact amount and terms with a pre-qualification letter the Seller will choose the Buyer with the pre-approval letter every time.

Knowing how much home you can afford is an important first step and will save you from wasting time and the disappointment of finding and falling in love with a house that is not affordable. Being aware of your price limits will also streamline the search. In addition, many Realtors will not even show homes without at least a pre-qualification letter and the way the market is now, it is much better to have one in hand to submit an offer right away then to wait to obtain a letter. To be a good hunter the hunter must be prepared and it is no different with house hunting, find some more info on my website: http://www.djlyons-realtor.com.  See ya down the road.