Before You Buy
This section deals with general information for you to consider before completing an offer to purchase real estate. Our goal is to provide our clients with The Skinny on Real Estate so you can make informed decisions on buying and selling. Again, "this skinny information was compiled from various sources and is deemed reliable. While it is believed to be accurate, it can not be guaranteed. Consult your lender, accountant, attorney and other professionals as appropriate for their advice and opinions." Please contact us directly with any real estate question regarding the buying process.

5 Reasons You Need a REALTOR^®

1. A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.
    
2. Selling or buying a home is time consuming. Finding a home that meets your needs can be a time consuming process. Then it usually takes another 45-60 days or so for the transaction to close after an offer is accepted.
    
3. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with someone who speaks that language.
    
4. REALTORS^® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. That’s why having an expert on your side is critical.
    
5. REALTORS^® provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and roof, home selling or buying is often a very emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you keep focused on both the business and emotional issues most important to you.
    
6. REALTORS^® are members of the NATIONAL ASSOCIATION OF REALTORS^®, a trade organization of more than 1 million members nationwide. REALTORS^® subscribe to a stringent code of ethics that helps guarantee the highest level of service and integrity.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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Using a Buyer’s Agent

The previous article listed reasons you need a Realtor^®.  When you set out to buy your next home, it is also a good idea to enlist the help of a Realtor^® to be your Buyer’s Agent. The National Association of Realtors defines a buyer’s agent or buyer representative as a "real estate licensee who is hired by prospective buyers to represent them in a real estate transaction." Your Buyer’s Agent can help you with the following:

1. Set up searches specific to your request
2. Show you properties
3. Perform a Marketing Analysis
4. Explain the buying process & what you can expect through closing
5. Explaining agency and the Contract of Sale
6. Negotiate on your behalf
7. Promote your best interests

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7 Reasons to Own Your Own Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home. Consult and confirm all information with your accountant and attorney. Tax laws change!
    
2. Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there's no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS^® found that a typical homeowner has approximately $50,000 of unrealized gain in a home.
    
3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.
    
4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax. Consult and confirm all information with your accountant and attorney.
    
5. Predictability. Unlike rent, your mortgage payments don’t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.
    
6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.
    
7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

To calculate whether renting or buying is the best financial option for you; use this calculator courtesy of Ginnie Mae:
http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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5 Common First-Time Homebuyer Mistakes

1. They don't ask enough questions of their lender and miss out on the best deal.
    
2. They don't act quickly enough to make a decision and someone else buys the house.
    
3. They don't find the right real estate professional who is willing to help you through the home buying process.
    
4. They don't do enough to make their offer look good to a seller.
    
5. They don't think about resale before they buy. The average first-time buyer only stays in a home for four years.

Reprinted with permission from Real Estate Checklists and Systems (www.realestatechecklists.com)

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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10 Tips for First-Time Homebuyers

1. Be picky, but don't be unrealistic. There is no perfect home.
    
2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
    
3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.
    
4. Don’t wait to get a loan.  Talk to a lender and get prequalified for a mortgage before you start looking.
    
5. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
    
6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
    
7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
    
8. Don’t let yourself be "house poor". If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
    
9. Don't be naive. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.
    
10. Get help. Consider hiring a REALTOR^® as a buyer's representative. Unlike a listing agent, whose first duty is to the seller, a buyer's representative is working only for you. And often, buyer's reps are paid out of the seller’s commission payment.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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10 Things to Take the Trauma Out of Home Buying

1. Find a real estate professional (aka SkinnyAgent!) who’s simpatico. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the practitioner you choose is both skilled and a good fit with your personality.
    
2. Remember, there’s no “right” time to buy, any more than there is a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price and a good home won’t stay on the market long.
    
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
    
4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
    
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
    
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself—room size, kitchen—that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in your new home.
    
7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
    
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
    
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
    
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually from 1998 to 2002, a home’s most important role is as a comfortable, safe place to live.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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Your Property Wish List

While your opinions on the type of home you want to own may change during the home buying process, use this easy checklist to help you prioritize and make the shopping process less time consuming.

• How close do you need to be to: (a) public transportation _______ (b) schools _______
  (c) airport _______ (d) expressway _______ (e) neighborhood shopping _______
  (f) other_______?
• What neighborhoods would you prefer?
• What school systems do you want to be near?
• What architectural style(s) of homes do you prefer?
• Do you want a one-story or two-story house?
• How old a home would you consider?
• How much repair or renovation would you be willing to do?
• Do you have special facilities or needs that your home must meet?
• Do you require a fenced yard or other amenities for your pets?

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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Tips for Finding the Perfect Neighborhood

The neighborhood you choose can have a big impact on your lifestyle—safety, available amenities, and convenience all play their part.

1. Make a list of the activities—movies, health club, church—you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you’re considering to engaging in your most common activities.
    
2. Check out the school district. The Department of Education in your town can probably provide information on test scores, class size, percentage of students who attend college, and special enrichment programs. If you have school-age children, also consider paying a visit to schools in the neighborhoods you’re considering. Even if you don’t have children, a house in a good school district will be easier to sell in the future.
    
3. Find out if the neighborhood is safe. Ask the police department for neighborhood crime statistics. Consider not only the number of crimes but also the type—burglaries, armed robberies—and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area?
    
4. Determine if the neighborhood is economically stable. Check with your local city economic development office to see if income and property values in the neighborhood are stable or rising. What is the percentage of homes to apartments? Apartments don’t necessarily diminish value, but they do mean a more transient population. Do you see vacant businesses or homes that have been for sale for months?
    
5. See if you’ll make money. Ask a local REALTOR^® or call the local REALTOR^® association to get information about price appreciation trends in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good an investment your home will be. A REALTOR^® or the government planning agency also may be able to tell you about planned developments or other changes in the neighborhood—like a new school or highway—that might affect value.
    
6. See for yourself. Once you’ve narrowed your focus to two or three neighborhoods, go there, and walk around. Are homes tidy and well maintained? Are streets quiet? Pick a warm day if you can and chat with people working or playing outside. Are they friendly? Are their children to play with your family? Ride around at various times to see a sample of the neighborhood activity.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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Tips on Buying in a Tight Market

1. Get prequalified for a mortgage.  You’ll be able to make a firm commitment to buy and make your offer more desirable to the seller.
    
2. Stay in close touch with your real estate sales associate to find out first about new listings that come on the market. And be ready to go see a house as soon as it goes on the market.
    
3. Scout out new listings yourself. Look at Internet sites, newspaper ads, and drive by the neighborhood frequently. Maybe you’ll see a brand-new “for sale” sign before anyone else.
    
4. Be ready to make a decision. Spend lots of time in advance deciding what you must have so you won’t be unsure when you have the chance to make an offer.
    
5. Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don’t try to go too low to get a deal. In a tight market, you’ll lose out.
    
6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.
    
7. Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy anything. And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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The Pros and Cons of Condos

Condominiums and townhouses offer an affordable option to single-family homes in most areas. But consider these facts before you buy.

1. Storage. Some condos have storage lockers, but usually there are no attics or basements to store belongings.
    
2. Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors; this may not be a good fit. However, if you hate yard work, this may be the perfect option for you.
    
3. Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.
    
4. Maintenance. Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.
    
5. Security. Many condos have keyed entries and or even door attendants. Plus, you’ll be closer to other people in case of an emergency.
    
6. Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity or not.
    
7. Resale. The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual.
    
8. Freedom. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.
    
9. Proximity. You’re much closer to your neighbors in a condo or town home. If possible, try to meet your closest prospective neighbors before making a decision.
    income and little other debt. 

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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10 Questions to Ask Your Condo Board

Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive—and organized—its members are.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
    
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
    
3. How much does the association keep in reserve? How is that money being invested?
    
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
    
5. What does and doesn’t the assessment cover—common area maintenance, recreational facilities, trash collection, snow removal?
    
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.
    
7. How much turnover occurs in the building?
    
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
    
9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.
    
10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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Hidden Home Defects to Watch For

No home is flawless, but certain physical problems can be expensive. This list in not all-inclusive, but watch for:

1. Water leaks. Look for stains on ceilings and near the baseboards, especially in basements or attics.
    
2. Shifting foundations. Look for large cracks along the home’s foundation.
    
3. Drainage. Look for standing water, either around the foundation of the home of in the yard.
    
4. Termites. Look for weakened or grooved wood, especially near ground level.
    
5. Worn roofs. Look for broken or missing copings and buckled shingles as well as water spots on ceilings.
    
6. Inadequate wiring. Look for antiquated fuse boxes, extension cords (indicating insufficient outlets), and outlets without a place to plug in the grounding prong.
    
7. Plumbing problems. Very low water pressure, banging in pipes.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®
Copyright 2005. All rights reserved. www.REALTOR.org/realtormag 

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