Monday, January 20, 2014

Many issues can be at root of indecision

1:55 AM

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You've looked at dozens of homes. Your REALTOR® is about to tear her hair out with frustration. You are paralyzed, letting one great home after another pass you by. Why can't you make a decision?

Buying a home can be an overwhelming process. There are so many decisions to make and any of them can mean serious financial consequences. A home, after all, is hardly a liquid asset. Nor is it a growth investment, according to Wall Street definitions. It's your greatest financial debt, even while it puts a roof over your head. As it appreciates, it also needs repairs and maintenance. With all that weighing on you, no wonder you've got commitmentphobia.

Yet, you really want to buy a home. You know that few purchases will provide you the quality of life that a home of your own does. There are plenty of advantages, as well - tax breaks, rising real estate values, a stable environment for the family, to name only a few. So you stifle your worries and keep looking for homes. You just can't find the one that's just right for you.

It might be time to back this train up and examine what is causing the conflict between wanting to buy and being unable to make a decision. There is a cause, and it's name is money. The question is, which aspect of money is stopping you from moving forward?

Fear of spending too much
Lenders will loan you money at the top of your ability to borrow. Realtors will suggest that you will be happier in a "bigger, better" home, eliminating the need to "trade up" in a few years. Stretching to buy the most home you can possibly afford is a good strategy, but only under certain conditions - that you have confidence that your salary will rise, that your income is stable, and that you can handle large surprise expenses.

If you've been pre-qualified, you are already looking at bigger, better, more beautiful homes at the top of your range. But something isn't quite right. Even though you may feel that your income is stable, a feeling is telling you that if you buy in this range, you won't have enough in reserves should something happen. Those are your instincts talking, and you should listen, because your desires have been doing the talking up to now. Your instincts are telling your desires to scale back a little.That means backtracking. Talk to your Realtor and ask her to show you less expensive homes. You can't go wrong buying slightly under your ability. In fact, many financial advisors tell their clients to budget about 25% of their income for housing in order to position them to build reserves for savings, investments, home improvements, emergencies and dozens of other reasons. That's almost six percent less than lenders will allow you to borrow. Just think what else you can do with six percent of your income. You'll still have your house, you'll just have more to do other things with.

A conflict in goals
Many couples purchase homes with the idea that they will have a child, so stretching buying power to have the extra space makes sense. But if you are trying to accomplish two big financial goals at the same time - buying a home and adding to your family, then something has to give.

You can't have it all - peace of mind, a large mortgage, and burgeoning expenses all at the same time. Something has to give and the way to do that is simply to prioritize your goals. In what order of importance do you want things to happen? What is most important to you? Whether you are planning a family, returning to graduate school, paying off a student loan, or buying a new car, you surely realize that your financial pie can only be sliced so many ways. Your mortgage is the largest, and the larger it is the smaller the other pieces.

Problems in the marriage
This is one of the toughest issues to address, and one your Realtor can't help you with. But just as you are listening to your instincts about the amount of money you should spend on your new home, you should be paying even more attention to your feelings about your marriage. And only you can answer the question - will we still be together in five years? You should at least be able to predict being together long enough to pay off the interest on your loan! Or you'll be selling your home without the benefit of building any equity and equity only comes with appreciation and mortgage reduction.

Buying a home will not fix a poor relationship. It will only make things worse. So you have a decision to make and it isn't which house to buy. It is whether or not you want this relationship to survive. If you decide you want the marriage, then you must pour your efforts into fixing its problems, including your share of the blame. Be willing to change some things, compromise on others, or accept many things as they are. If you can't do all of those, then to dissolve the partnership is your only other choice. After you have solved the problems in your relationship, you will find your home more easily.

Fear of the future
Fear takes the fun out of a lot of things, but there is reasonable fear and unreasonable fear. Unreasonable fears have no basis in reality, so there is little you can do beyond getting professional help for your anxiety. Reasonable fears you can handle on your own with a little common sense.

Fear can be tamed by looking at the worst case scenarios compared to the best case scenarios. So examine the questions that are really bothering you.

What if we can't make our payments? This question can be balanced by a best case. What if we manage our money so well that we can make double payments? So the fear here is manageable - it comes down to how confident you are about managing your money. If you aren't sure of yourself, get help. Ask someone whose money management style you admire for advice on how to manage your money better. Then stick with it.

What if the value of our home goes down in value? Would you feel as fearful if you asked yourself whether your property will go up in value? Property can go up or down, but all property requires maintenance or it surely will deteriorate in value. This can be easily prevented by having enough budgeted or in your reserves to perform scheduled and unscheduled maintenance. Look at the properties surrounding the home you are considering. Are they maintained with pride? Are they being updated? Then your chances are good that the neighborhood and your home will retain its value. Rest assured that there will always be a buyer for an attractive, well-maintained property.

Because it is not a liquid asset, real estate is not as volatile as you think. It goes down slowly and rises comparatively slowly. And home values even when depressed may get a resuscitation after a few years. Your best hedge against the future is to keep your property in desirable condition.

You can't predict the future. The only thing you can do is prepare yourself to handle what may happen.

So money isn't the root of all evil, but it is the root of indecision - at least when you are paralyzed about buying a home. Thinking through the money issues can help you get moving one direction or the other. For some of you, just reading this article will put your jitters to rest. For others, you may realize that a home isn't in the cards for you right now, and that's OK. Wait a few days or weeks if you need to. Use the time to regroup. It is far better for you to work through a few obstacles than to jump into the largest investment of your life without confidence. If you can work through your fears, get your finances in tip top shape and proceed, you'll find buying a home doesn't have to be a paralyzing decision. In fact, it can be one of the most exhilarating things you'll ever do.

If you are worried about cash flow, then making disproportionately large house payments will tarnish the joy of home ownership, unless you can find ways to cut down the other pie pieces. Work to improve your cash flow. Accelerate your credit card pay -offs Don't incur new debt. Rebudget your expenses and eliminate unnecessary expenditures. Make compromises - vow to cut down if you can't cut something out. Be willing to move timelines for meeting your goals. Don't be influenced by others to live beyond your means. Set your sights on an affordable home, and you may find your dream home will appear right before your very eyes.

Contact Us
AURUM ESTATES
#1-2, Opp. Uniworld Gardens,
Adjoining indian oil petrol pump,
Sohna Road Gurgaon
(Haryana) 122018
Tel: +91 124 3295123
Mob: +91 9999997969
Fax: +91 124 2217833
Email: info@aurumestates.com
website http://aurumestates.com

1:46 AM

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Q: I would like to purchase my first home in 6 months. A loan officer pulled my credit report a few months ago and I've almost paid off my bills. I have about another $4,000 in balances left on four accounts. Should I pay off my debt before buying a house?

A: The answer always depends on several factors, but as a general rule - no. If you're looking to purchase a house soon, like the reader above, then you need cash for down payment (unless you're looking at a zero down program), closing costs and then reserves.

The down payment can range from 1 percent up. In the above example, the $4,000 could go a long way toward closing. But if you spend all your extra cash to pay off that amount, then you are at ground zero again and have to start saving up for the above mentioned expenses.

Besides, the traditional debt-to-income ratio calculation allows buyers to have consumer debt when qualifying for the loan. The standard debt ratio is 28/36 - 28 percent of your income can be used for your mortgage payment, which includes taxes and insurance; and 36 percent for the mortgage payment plus the rest of your debt.

For example. A person who wants to purchase a $200,000 property with a 10 percent down payment must qualify for a $180,000 loan. At 7 percent on a 30-year fixed rate, the estimated PITI would be about $1,400 per month (depending on your local property tax rate). That payment is 28 percent of $5,000, which means our buyer would have to make $60,000 annually to qualify for the above described loan.

In addition, the borrower can have another 8 percent in debt - bringing his or her total debt payments to $1,800 per month. As you can see, if you pay off a loan balance for $4,000, but it only gives you another $75 - $100 in monthly cash flow, it's not going to positively effect your buying power. It just eats up the cash you would have had without paying off the debt.

Granted, there are some loan programs that allow higher ratios, but you are more than likely going to pay higher interest rates and points to use that type program.

Keep in mind, I adhere to the G.O.O.D. principle - Get Out Of Debt - just as a matter of smart money management. But it's not always the best move to pay off all your debt while you're trying to save money for the purchase of your house. Owning a home is always a lot better than renting and if paying off your consumer debt first keeps you out of the housing market, then you're really losing money by paying rent instead of building wealth and taking advantage of tax benefits through homeownership.

This is especially true if you live in an area that is experiencing good appreciation in home values. If nothing else, you can refinance your house in a few months or years and pay off the debt with cash from your equity. This way, the interest now being used to pay off the credit card balances is tax deductible, because it is part of your house payment.If the $200,000 property above is appreciating at 5 percent (just below last year's national average of 5.5 percent, according to the National Association of Realtors), then in one year, that house will be worth $210,000. The next year it will be worth $220,500 - which gives you more than $40,000 of equity to dip into to pay off consumer debt if you want to. (The $40,000 comes from subtracting your loan amount - $180,000 - from the current value of your house - $220,500.) With a bit of patience and budgeting, you've now started building wealth by leveraging your money. The $20,000 down payment has more than doubled, you now have equity to pay off debt and you're taking home more of your paycheck because you can deduct all that interest each year from your income, thus lowering your tax bill.

1:41 AM

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A condo can offer a good location at a less expensive price.

Photo by Brian Weiss

Buying a home is one of the biggest and most important decisions you’ll ever make. Whether you are a first-time buyer, or a veteran homeowner looking to trade up or make a new start, you will inevitably be faced with a number of questions. Your answers will lead you to the home that’s right for you.

One of the most fundamental questions all homeowners face is whether to buy a condo or single family house. There are advantages and disadvantages of each and only you can know what’s right for you.

For Boston newlyweds Michelle and Kevin Millsom, 31 and 36, it was an easy decision. With high-powered financial careers and no children, they were drawn to the excitement of the city and wanted their fingers on the pulse. They bought a penthouse apartment with a breathtaking view of Boston’s famous esplanade and Charles River.

“We enjoy everything the city has to offer—the restaurants, theatre, outdoor concerts. We walk everywhere and find the easy access to the airport to be a plus since we travel frequently for work,” said Kevin. “When we have children, we may think about a house in the suburbs, but for now this is where we want to be.”

Like all things, living in the heart of the city comes with tradeoffs. For the price of their two-bedroom/two-bath condo, they could buy a home three times the size, just a short 20-minute commute away. They share decision-making for their building with fourteen other tenants and pay pricey condo fees to cover the costs of insurance and upkeep. Their car sits idle most of the time in a $300 per month rented parking spot only to leave for short jaunts to the grocery store or visits to see family. But for Kevin and Michelle who want to spend their spare time out and about, the location and convenience can’t be beat.

On the other hand, Adriana Forte, 62, lives in a condo in the Boston suburb of Arlington and misses all that a single-family home has to offer. Six years ago, after her divorce, she bought a “condex,” (a two-family home with a shared wall) with the belief that managing a home would be too much for her alone. But it turned out to be the wrong decision for her. Now, she is desperately seeking a single-family house to call her own.

“It’s difficult to live with neighbors so close,” Forte said. “First there was the noise. My neighbors are night people, and every night they are just getting geared up when I’m trying to sleep. Then I found myself handling 100 percent of the finances and maintenance of the duplex—without compensation. I may as well be living in my own house!” Forte also misses the fresh air and private outdoor space. For her, maintaining a home and garden is pure enjoyment. The privacy is what she misses most.

What is most important to you? Give consideration to the following:

Location – Where do you want to be? Are there options for both condos and single-family houses in this area?
Privacy – Is it important to you to have complete privacy or do you find close neighbors to be a comfort?
Responsibility – Do you need total control over decisions affecting your home or are you attracted to the idea of sharing decision-making with your neighbors?
Maintenance – Are you a homebody who enjoys getting dirty in the yard or are you delighted with the idea of never having to cut a blade of grass again?
Budget – How much do you have to spend? Depending on where you want to live, a condo may be the only option that meets your budget.

These considerations and others will help you determine the best choice for you now. And just remember, if your interests and priorities change in the years ahead, you can always sell your home and make a move, this time with experience as your guide.

1:38 AM

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When you’re buying a house, there are a lot of unknowns—and once you’ve bought a home, you’re committed, usually for years. Contingencies clauses in your home purchase contract might help take away some of the uncertainty of buying a home by detailing conditions that must be met before closing will take place.

How mortgage contingencies protect buyers

One very common contingency is a mortgage contingency. A mortgage contingency gives buyers added security during the home-buying process; it states that a buyer will try to get a particular kind of mortgage (traditional, Veterans Affairs or Federal Housing Administration) at or below a certain interest rate for a set amount of the purchase price (generally 80 percent) by a specific date before closing.

If the buyer is unable to secure a loan at the stated terms, he can back out of the contract, and the earnest money deposit returns to him.

How mortgage contingencies protect sellers

However, mortgage contingencies provide protection for sellers as well. If a buyer who can’t secure a loan neglects to tell the seller by a predetermined date, the buyer is still obligated to purchase the home, even without financing. And if the buyer can’t or won’t secure a loan, many contingencies permit the seller to find a mortgage for the buyer.

Sellers can word mortgage contingencies to protect themselves in other ways: The deadline for the contingency can be set at least a few weeks before closing to prevent the buyer from backing out at the last minute, for example. The earnest money could also be negotiated at a percentage that is high enough to pose a significant loss to the buyer if he or she doesn’t properly follow through with securing financing.

Other contingencies

Appraisal contingencies go hand-in-hand with the mortgage contingency. There are two ways appraisal contingencies work. One version states that if a buyer can’t get an appraisal that is at least as high as the seller’s asking price, the buyer may back out of the deal. The other states that if the buyer can’t get an appropriate appraisal, the buyer can ask the seller for a lower purchase price. Then, if the seller refuses, the seller may back out.
Inspection contingencies give the buyer a certain period of time (usually three to 14 days) to perform whatever inspections are needed to confirm his or her interest in the home. If these inspections reveal any problems, the buyer can back out of the deal.

There are many other possible contingencies, such as insurance contingencies or mold inspection contingencies. The common types of contingencies vary from state to state.

Pay attention to the fine print

The wording of a contingency is key—they’re not just filler in your contract! If you’re not paying attention, you could lose money, miss deadlines and, worst of all, you could be liable for buying a property even if you can’t procure a loan.

1:34 AM

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Although the thought of paying a mortgage is more enticing than paying rent, it's important to understand all the costs involved in buying and owning a home as you determine whether you can afford to join the ranks of homeowners.

Potential buyers sometimes forget to factor in the down payment, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.

The days of calling up the landlord to fix your problems come to an abrupt halt when you're a homeowner. You'll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you'll probably eventually encounter costly repairs, such as replacing the roof or windows.

To determine whether you can afford to buy a home, you should do the following:

1. Determine the property value of homes that interest you. The property value (what the home is worth) is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.

2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Down payments, based on a percentage of the value of the property and determined by the type of mortgage you select, typically range from three to 20 percent of the property value. Don't forget to factor in private mortgage insurance, a policy that allows mortgage lenders to recover part of their financial losses if a borrower fails to full re-pay a loan. Mortgage insurance makes it possible to buy a home with as little as 3 percent down. Usually, the lower the down payment, the higher the PMI, which typically will cost somewhere between $40 and $125 a month.

3. Get an estimate of your closing costs, including points (the dollar amount paid to a lender for obtaining a lower interest rate on a loan—one point is one percent of the loan amount), taxes, recording, inspections, prepaid loan interest, title insurance (a policy that insures a home buyer against errors in the title search; cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller) and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 7 percent of the property value. You'll receive an estimate of these costs from your lender after you apply for a mortgage.

4. Add the down payment requirements and the closing costs together to determine the amount of money you'll need right off the bat. But you're not done yet.

5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.

6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.5 percent of the purchase price of your home.

7. Next, budget for maintenance and repairs. HouseMaster, a home inspection company with 300 franchises nationwide, said that based on a study that evaluated 2,000 inspection reports, the typical costs of major repairs are:

Roofing: $1,500 to $5,000
Electrical systems: $20 to $1,500
Plumbing systems: $300 to $5,000
Central cooling: $800 to $2,500
Central heating: $1,500 to $3,000
Insulation: $800 to $1,500
Structural systems: $3,000 to $1,500
Water seepage: $600 to $5,000
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce or creatively fund your down payment—it can come from a variety of sources. Check with your realtor or lender to find out what's available.

You'll also need to factor in the cost of homeowners insurance. In addition to the type of construction, age of the home, your credit history and past insurance history, new issues like litigating costly toxic mold cases are raising homeowners insurance rates.

In fact, the National Association of Insurance Commissioners reports that homeowners will spent an average of $822 on homeowners insurance in 2007, the last year data was available.

In your final analysis of whether you can afford to buy a home, you'll want to weigh the costs with the financial benefits—a consistent mortgage payment (unlike rent, which can increase), the tax benefits (you can deduct, in most cases, mortgage interest, closing costs, and property taxes), and the all-important appreciation factor—the rate of increase in a home's value.

And of course, you'll want to weigh perhaps the biggest benefit of all—having a place to call your own.

Contact Us
AURUM ESTATES
#1-2, Opp. Uniworld Gardens,
Adjoining indian oil petrol pump,
Sohna Road Gurgaon
(Haryana) 122018
Tel: +91 124 3295123
Mob: +91 9999997969
Fax: +91 124 2217833
Email: info@aurumestates.com
website http://aurumestates.com

1:29 AM

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Asking a friend or family member for a home loan can be tricky, considering the large sum of money involved. Entering into a private home loan isn’t a decision to make lightly—after all, you’ll be seeing Aunt Martha at the holidays for years to come—but your loved one might be more likely to make the loan if you explain how it will also work to his or her advantage.

How to ask for the loan

When you approach your friend or family member for a home loan, have a plan in mind.

Thomas Fox, community outreach director at Cambridge Credit Counseling, told bankrate.com readers that borrowers should approach a private home loan the same way they would a mortgage from a bank.

“Borrowers should be realistic about what a practical repayment plan would be and not try to borrow more than they can repay. You have to treat it the same as any kind of loan and be realistic," he says.

If this approach seems businesslike, that’s because it is. When you create a legally binding loan contract, even your mother can take you to court for missed payments—and she can win.

How private home loans are similar to traditional ones

Private home loans, also called private mortgages or intrafamily mortgages, aren’t all that different from a loan from a bank or credit union. Like institutional loans, with private home loans:

Both lender and borrower sign a promissory note (also known as a mortgage note) stating the terms of the agreement.
Your promissory note should establish the amount loaned and the interest rate, as well as the repayment dates and frequency.
You will draw up a mortgage (also called a deed of trust). This document gives the lender the right to foreclose on the property if you fail to stick to the repayment plan.
The lender holds a lien on the mortgaged property.

The arrangement legally protects the borrower as well. The lender may not foreclose on your house due to a family disagreement and can’t request repayment in full because of other financial needs. So if Aunt Martha wants to go on a cruise, she can’t demand that you foot the bill as long as you’ve been sticking to the agreed-upon repayment schedule.

Private home loans benefit borrowers

When you borrow from a friend or family member, you benefit in several ways:

Better interest rates. You can negotiate with your lender to determine the interest rate that works best for you. Even if that rate is lower than what you’d pay for a loan from the bank, it can still work out to the lender’s advantage – more on that below.
Setting your own repayment terms. When you and Aunt Martha make a contract, you can determine which repayment schedule works best for you— monthly, semi-weekly or any other. Don’t take advantage of your lender’s generosity, though: You are still legally obligated to make payments as stated in your promissory note.
Federal tax deductions. With a private home loan, you can still take the same tax deductions that you would with an institutional loan.
Private home loans benefit lenders

Lenders also receive benefits in a private home loan:
- Better interest rates. Even if you and Aunt Martha agree on an interest rate that is lower than what is offered through an institutional loan, she can still come out ahead. The rate you determine could still be higher than what she earns through a savings account or other investments.
- Regular income. With the structure provided by your promissory note’s repayment plan, Aunt Martha will know exactly when to expect your payments and how much they will be.
Missing payments with a family loan

No matter who loans the money, Aunt Martha, a bank or credit union, sometimes unforeseen life twists happen. You might lose your job or have medical bills that pile up. As with any lender, discuss the situation with the family member who loaned you the money. The options are the same as other lenders: loan modification can include lowering payments in exchange for a longer loan term, temporarily freezing payments or maybe letting some payments slide. However, dodging Aunt Martha’s calls aren’t the way to go!

Contact Us
AURUM ESTATES
#1-2, Opp. Uniworld Gardens,
Adjoining indian oil petrol pump,
Sohna Road Gurgaon
(Haryana) 122018
Tel: +91 124 3295123
Mob: +91 9999997969
Fax: +91 124 2217833
Email: info@aurumestates.com
website http://aurumestates.com

1:24 AM

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The spring and summer months are traditionally the busiest times of year for the residential real estate market. Weather is more cooperative and many families like to move while the kids are on their summer break.

But in recent years spring, for many regions, has meant more homes on the market, but also more buyers, fierce competition and an increase in prices.

If you're in the market for a house this spring, there are a number of steps you can take to try to give you the advantage over other homebuyers, including:

If you're going to work with a Realtor or real estate professional, get started early. Interview three or four, get references and let the person you choose know exactly what you're looking for.
Get your loan pre-approved. This will give an advantage on several fronts. First, it will be done and out of the way. Second, you'll know how much the bank is willing to loan you so you know in which price range to look. And third, it shows sellers that you're serious and ready to buy when you make an offer.
Figure out how much you have for a down payment. NAR says first-time buyers typically make a down payment of 6 percent on a home purchase, and 24 percent of down payment funds were gifts from relatives or friends. If that's not an option, there are many loan programs that accept down payments of five or three percent. And don't forget closing costs, which will often run two to seven percent of the property's purchase price.
Be ready at a moment's notice. If you're in an especially tight market, your Realtor will be reviewing new listings as soon as they're available. If he or she finds something that matches your criteria, you'll want to look at the house and be ready to make an offer -- quickly.

When looking at houses, look at the potential. There are major factors you won't be able to change -- the neighborhood, proximity to work and schools, the basic floorplan of the house (unless you plan on completely renovating), and size of the back yard, among other things. If you're put off by paint or carpet color or old linoleum floors, envision what the walls will look like with your color of choice and the floors in a material you prefer.

If you're buying in a seller's market, listen carefully to your Realtor or agent about how much you should offer. If there's competition you may want to offer more than the listing price and you shouldn't try asking for things like carpet allowances or a long closing date. If you know sellers may have several offers in front of them, you'll want to make yours the best.
Begin thinking about homeowners' insurance now. Begin by making sure your credit report is accurate -- credit histories are sometimes used to determine whether a company will insure you, and, if so, at what rate. Also, the Insurance Information Institute says you should get a copy of your loss history report, such as a CLUE report from ChoicePoint or an A-PLUS report from Insurance Services Office. This is a record of home insurance claims you have filed. If you have not filed any insurance claims in the past five years, you won't have a loss history report. The better your report, the better chance you'll have of obtaining reasonably-priced insurance on the house you buy. And if you're renting, make sure you have renter's insurance -- it's helpful to have insurance history when you obtain insurance for your new house.
Contact Us
AURUM ESTATES
#1-2, Opp. Uniworld Gardens,
Adjoining indian oil petrol pump,
Sohna Road Gurgaon
(Haryana) 122018
Tel: +91 124 3295123
Mob: +91 9999997969
Fax: +91 124 2217833
Email: info@aurumestates.com
website http://aurumestates.com

1:18 AM

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First-time home buyers who want affordable homes may want to take a hard look at fixer-uppers, smaller homes and cheaper commutes to work to save on the costs of buying and owning a home.

Real estate brokers say many home buyers expect more than they can afford in a home and once they start pounding the pavement for housing their disconnect could be discouraging.

In an online survey of 150 of its brokers, Coldwell Banker discovered some disturbing trends among first-time home buyers.

While nearly half of the Coldwell Banker brokers surveyed said affordability was the No. 1 concern for first time buyers, 81 percent of those buyers also consider move-in conditions to be very important when searching for homes. Only 7 percent are considering fixer-upper homes.

The real estate company suggests more buyers should examine the fixer-upper option -- among others -- to get the affordability they seek.

"In the past, first-time home buyers were willing to purchase older, more basic houses in an effort to save money and break into homeownership," said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate, LLC.

"It is important for first-time homebuyers to remember that by considering a fixer-upper for their first home purchase, they can build equity over time and later move up and into their second-stage home that better reflects their expectations," he added.

Buyers looking for affordability who go with the fixer-upper option should get the home professionally inspected to determine what fixing up is necessary, and certainly not bite off more than they can chew. Even homes that need a basic face lift -- paint, carpeting, landscaping, window treatments and other cosmetic touches -- can come with big savings. Homes that may require professional upgrades cost even less, but the buyer has to weigh the discounted price against the cost of the improvement.

Coldwell's study also found some disconnect between affordability desires and what buyers want in home size and its location.

The vast majority of first-time buyers, 71 percent, were looking for larger homes than they were 10 years ago, brokers reported, but bigger isn't better when it comes to price. A smaller single-family home or a condo or townhome can be cheaper by virtue of the smaller footprint and square footage. The smaller cost on a smaller home also could come with affordability

Forty-one percent of brokers also said, for their buyers, proximity to their workplace was numero uno when it came to considerations made when looking for a home. Higher gasoline prices have made the job center location factor even more crucial, however, in most metros, a home's proximity to employment centers comes with an added cost. Homes nearer job centers cost more because of the added value of reduced transportation costs and time (which is money) spent commuting.

However, buyers can enjoy the best of both worlds if they purchase a cheaper home away from job centers, but in a transit oriented development (TOD) or other distant community that offers low-cost public transit to work. Carpooling, trip sharing and car sharing communities boost the idea of affordable housing.

Coldwell Banker also said 46 percent of the survey respondents reported that first-time home buyers look at five to 10 homes, on average, before making a purchase.

The message is simple here. Spend more time looking at more homes for sale. Instead of five to 10, make it 10 to 20. Take the time to find affordability. Discounts were more likely available from homes that had been on the market for 90 days or more; homes for sale that were owned by long-time owners; homes for sale from flipping investors down on their luck; and properties owned by we-want-to-sell-real-estate banks who now know what it means to be careful what you wish for.

Coldwell Banker also said 46 percent of the survey respondents reported that first-time home buyers look at five to 10 homes, on average, before making a purchase.

The real estate company suggests more buyers should examine the fixer-upper option -- among others -- to get the affordability they seek.

Coldwell's study also found some disconnect between affordability desires and what buyers want in home size and its location.

1:12 AM

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Wait! That house may seem like everything you’ve ever wanted, but before you make an offer, take some time to consider a few things beyond the size, style and price.

When buying a home, it’s easy to let emotions get in the way of reality, or get sudden amnesia about factors that may make a difference.

"Sometimes we want something so badly, we’re not willing to ask all the questions we should,” says Leslie Levine, author of "Will This Place Ever Feel Like Home?"

For instance, she says, you may see a basketball hoop over the garage and assume the neighborhood is great for kids. But a closer inspection may show that it’s rusted and hasn’t seen a ball in a decade, and that other yards in the neighborhood have no jungle gyms or tire swings out back

1. Visit at various times of day
The windows that let in so much light during the day may be a peeping Tom’s dream at night. That seemingly quiet residential street may be a noisy, highway-feeder street during morning or evening rush hour; or it may be near impossible to get from your quiet street across traffic and onto the feeder street in the morning. The adjacent school may seem like a nice perk if you’re buying in the summer, but during the school year, daily playground noise and extra traffic may be more than you bargained for.

2. Look through recent newspaper archives
“Make sure you’re getting information on what you can’t see,” Levine suggests. Perhaps the municipal water well that feeds your neighborhood has high levels of contaminants or a proposed high-voltage power line may soon be coming through your back yard. You can also check with the city or county to see if there are any proposed projects.

3. Talk to neighbors
How many people in the neighborhood own their homes? Sometimes it’s hard to tell at first if you’re choosing a neighborhood that’s primarily rental houses.

4. Ask if the neighborhood has an association
“Is there a newsletter for it? How often does the neighborhood get together? Do they have a block party every year?” Levine asks. “Even if you don’t plan to attend, the fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house. It’s a nice, safe way to celebrate something.”

5. Quiz the sellers What problems are they aware of that the house had in the past – even if they’ve been fixed? An ice dam five years ago may have caused water damage that has since been repaired. But it’s good to know that the house may be prone to ice dams so you can take preventive measures rather than find out the hard way. Discovering the basement flooding was solved by building up the landscaping in a particular area will prevent you from leveling the ground there in later years.

6. Get a home inspection
Virtually all houses have defects, according to National Association of Exclusive Buyers Agents. Some will be obvious and most will be curable. But knowing what needs fixing can help you negotiate a lower price – or at least prepare you for costs you’re soon to incur. Strongly consider getting inspections, too, for lead paint, radon and wood-eating pests.

7. Get detailed records on past improvements This isn’t always possible. But if you’re told the house’s exterior was painted two years ago – and then see a receipt noting the whole project cost just $1,000 – then you’ll be forewarned that cheaper materials were used and that you may be looking at repainting sooner than you thought.

8. Don’t just assume remodeling will be a snap If you voice your ideas to the sellers, you may be able to glean valuable insights. For instance, perhaps that shower is in an odd location because, when remodeling 10 years ago, the previous owners discovered a costly structural impediment to putting a shower where it would seem more appropriate.

9. Consider the view “So many neighborhoods now have teardowns. So look at the two houses on either side of you. If this neighborhood has had some teardowns, one of those houses might be a candidate. And they may build some behemoth structure that affects your light or the way your house looks or your view,” Levine says.

10. Ask for utility bills You may adore the Cape Cod architectural style or the high ceilings and walls of glass in a modern home – but those winter heating and summer cooling bills may push your monthly payments beyond affordable. Ditto for the water bills you’ll pay to maintain a pristine landscape.

11. Pay close attention to taxes
Don’t just ask what the seller’s most recent tax bill was; ask what several recent tax bills have been. In some areas, houses are re-appraised – and taxed at higher rates – frequently. That great deal and good investment may not seem quite so grand if the property taxes skyrocket year after year. Again, look at newspaper archives or talk to your Realtor about the way taxes are used in this area. In some cities, schools are substantially funded through property taxes – which means you can count on yours increasing regularly.

12. Check with city hall
NAEBA recommends looking into the property’s and neighborhood’s zoning, as well as any potential easements, liens or other restrictions relating to your property. The seller should disclose these facts, but it’s better to be safe. If you’re using a buyer’s agent, he or she should be able to help you with this.

13. Reconsider the bells and whistles
Are you sure you can live with a one-car garage, or a detached garage, or on-street parking? The pool may be a nice bonus, but can you afford the upkeep?

14. Explore the surrounding area If you’re not just making a cross-town move, you may not know that only three blocks away, this pretty neighborhood backs up to a dumpy commercial area or a less-than-savory part of town. If the home is near an airport, fire station, police station, hospital or railroad track, expect to hear trains, planes or ambulances throughout the day and night. Make sure you’re not too close to an agricultural area that may generate odors or kick up dust or other airborne problems.

1:00 AM

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Indeed, more than 40 percent of the previously owned homes on the market have at least one serious defect, according to HouseMaster, a major home inspection company with offices in more than 390 cities in the United States and Canada.

"Virtually every 'used' home needs some repair or improvement," said Kathleen Kuhn, CEO and president of HouseMaster. "That's to be expected. But with today's high prices, you want to make sure that you are aware of any major problems in a house you are considering purchasing, and what it will take to remedy the situation."

Drawing from their own findings from more than one million home inspections, HouseMaster says the most serious home defects to be on the lookout for are:

Cracked heater exchange
Failing air-conditioning compressor
Environmental hazards including radon, water contamination, asbestos, lead paint, and underground storage tanks
Moisture in the basement
Defective roofing and/or flashings
Insect infestation -- termites or carpenter ants
Mixed plumbing
Aluminum wiring
Horizontal foundation cracks
Major house settlement
Undersized electrical system
Chimney settling or separation

Kuhn says most of these problems can be repaired. However, depending on the specific problem, the cost can be substantial, particularly if the defect involves one of the major systems. The cost could become a factor in whether you ultimately buy the house.

For example, a new air conditioning compressor could cost you up to $1,200. A new roof or repairs can cost at least several thousand dollars. A wet basement could cost up to $5,000 to remedy.

If you enter negotiations to buy a particular house, your agent should advise you to provide a provision for renegotiating or backing out of the contract if a home inspector finds major problems.

"If the property inspectors find that little or no corrective work is required, you have little or nothing to negotiate," say Eric Tyson and Ray Brown in their book, Homebuying for Dummies. "Suppose, however, that your inspectors discover the $200,000 house you want to buy needs $20,000 of corrective work for termite and dry-rot damage, foundation repairs, and a new roof. Big corrective work bills can be deal killers."

If repairs are needed, there are several ways to proceed if you still want to buy the house, the Dummies book advises.

The sellers can leave enough money in escrow to cover the cost of repairs, with instructions for the escrow officer to pay the contractors as the work is completed.

The lender can withhold part of the full loan amount in a passbook savings account until the work has been done.

The sellers may give a credit for the work. Lenders may disapprove of this last alternative because there aren't assurances that the repairs will be made.

A home inspection usually costs between $250 and $400. Hire a qualified inspector. Try to get referrals from friends or anyone you know who has had a satisfactory experience with a home inspector. Also, look for affiliations with organizations like the American Society of Home Inspectors or the American Association of Home Inspectors. Both groups require its members to be certified, meet professional qualifications, and adhere to specific business ethics.

Once you make an appointment with a home inspector, it's important to be there.

Your investment of spending these few hours with the inspector could prevent headaches and save time in the future. As the home inspector examines the various systems and components of your home, ask him or her to explain what problems may be encountered down the road, what signs to look for, and how to prevent them. Try to learn how things work and how to maintain them. The inspector may also point out little flaws or oddities that don't measure up to being mentioned in the report, but may warrant keeping an eye on.

Says Kuhn of HouseMasters, "A pre-purchase inspection is your best protection against buying a home based more on emotions, rather than as a sound investment."

12:53 AM

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Buyers are finally being able to take advantage of cooling trends in previously hot markets. Multiple offers are no longer being thrown at sellers as soon as the For Sale sign hits the front yard.

Competition has dwindled in many areas as investors disappear and buyers take to the sidelines. Unless a buyer thinks his local market is headed for a big downturn, this could be the pause that allows him to get into the market with a few perks unheard of in recent years as a bonus.

So how do you know what shape your market is in? Economists believe that real estate is closely tied to employment, so if you’re in an area of growing employment, don’t expect to see double-digit depreciation anytime soon. In areas such as the Midwest, where auto manufacturing is king, prices have fallen sharply and will likely continue until the industry rebounds.

Here are 10 things buyers need to know to negotiate the best deal in a market shifting to their favor:

1. Human nature is the biggest problem for sellers and buyers to overcome in a changing market. Prices stagnate or drop a few percentage points and it’s amazing how different buyers and sellers react. Sellers still think their house is “special” and immune to the market. Buyers figure every seller is about to be foreclosed on and make ridiculous low-ball offers. Smart buyers do their homework, know what size home they need, how much they can afford and then search the market for what they want and negotiate fairly.

2. When you make an offer, know the recent comparable sales; it’s the best bargaining tool. “See what’s going on out there,’’ says Beverly Durham of ReMax Gold Coast Realty in Camarillo, Calif., where entry-level single-family homes begin at $500,000. “Make an offer $10,000 to $15,000 under what the last one sold. Even in this market, if you insult your seller, they won’t want to deal with you. Sellers know what the last one sold for. You want them to at least look at your offer.”

3. Find out as much as you can about the seller’s motivation -- retirement, job, divorce, wants to move up but only if he gets the right price. Durham says if a buyer knows the seller’s motivation they can negotiate a better deal or move on to the next property.

4. Multiple Listing Service (MLS) properties usually state what the seller owes. If not, your agent should be able to track down the figures. There’s a big difference in negotiating with an owner who owes more than the house is worth and one who has a lot of built-up equity.

5. “After 45 to 60 days the seller is usually absolutely sick of keeping their house spotless and sick of people walking through,’’ said Durham. This is when a seller may be the most anxious about selling their house as traffic to their house has likely fallen sharply.

6. Unless you’re incredibly handy and have time and cash, go after houses that are as updated as you can afford. This is easier to do in a stagnant or falling market and fixers aren’t usually discounted enough to be worthwhile.

7. In a tighter market, it’s not too much to ask the seller to add the closing costs to the price of the house. It’s better to put 20 percent down and add the closing costs to the loan than put 15 percent down and pay the costs upfront.

8. Items to ask for that shouldn’t offend sellers are paying for new kitchen appliances or washer and dryer. Most sellers will be willing to do so to close the deal. Durham also says it’s OK to ask sellers to pay up to the first year of homeowner association dues.

9. Don’t request anything that requires quality workmanship. “Don’t ask them to paint,’’ Durham said. “They won’t do it the way you want. They’ll do a lousy job.’’ Also, don’t get carried away and ask for the entire store. Be reasonable.

10. Make sure to look at the big picture. In changing markets you should be planning to stay for at least five years, so don’t get caught up in a $2,000 price difference. Remember, the goal is to get the house you want to live in for some time, not to impress friends with how you worked the previous owner.

12:36 AM

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How to prepare for a seamless transition

If you're moving this summer, the busiest season for moving, you know how daunting it can be. But if you create a blueprint for your move, the transition from house to house will go more smoothly.

Here are 10 things you can do to prepare for a seamless transition.

1. Full serve, partial serve or a do-it-yourself move. Can you do it alone or should you hire a licensed moving company for a full-service or partial-service move? This is one of the first and often most difficult questions soon-to-be moving households face. The answer depends on your lifestyle, household size, budget and amount of time you have to get everything accomplished. Get written quotes from at least three licensed moving companies so you know you’re getting the best deal based on your specific moving needs. Moving yourself or doing a partial-service move? Packing calculators can make it easier to estimate the amount of boxes and packing materials needed.

2. Plan to unpack BEFORE you pack. Take photos of each room in the new home before you arrive with furniture, plants, appliances and family in tow. Write down on a clip board where each item should go in your next home before packing, and carry it with you on moving day. List out the major items that need to be assembled first. As you place each item in its new room, cross it off the list and you will be one step closer to enjoying your new home.

3. Be strategic about packing. If you have more than a month to ‘pick up and move’, start early. Complete a free change of address and schedule utilities ahead of time at Moving.com. Start packing early. Whether it’s one room, one cabinet or a drawer at a time, weed through what may be years of accumulation. As you’re going through your belongings, divide everything into these helpful categories: donate to charity, give to a friend, recycle, trash, pack now, or keep handy until moving day. You’ll be surprised at how much you can donate, recycle or give to friends. And, you’ll not be overwhelmed with the task at hand three days before you move.

4. Moving is NOT child’s play. Plan ahead. Consider daycare on moving day, or get help from a friend or family member. Provide lunch or some other appropriate thank you gesture if you do call in a favor. If that’s not an option, prioritize setting up safe places for your children to play in the new home on moving day so they’re not underfoot. This will help everyone remain happy and calm on moving day.

5. Don’t fight with Fido. Sometimes we forget that all the packing and constant in-and-out of visitors is stressful for animals. Consider checking your pet into a daycare facility, or setting up a time for a friend to take them or check them into petday care. Don’t let your four-legged best friends get lost in the shuffle and remember to make day-of moving arrangements.

6. Keep track of small parts. Some items need to be broken down into pieces when moving, but do you know what to do with the small screws and washers that you end up with? Rather than tape them to the furniture, which can result in losing them, put everything in a baggie that is clearly marked and sealed. Keep all of the separate baggies together in one box on moving day and personally take it with you to your new home.

7. Take pictures of electronic hook-ups. Hooking up TVs, DVRs, home theater systems and computers can be challenging. Before unplugging any wires for the move, take a photo of the connections, print them out and label them in detail. This will create fewer headaches when setting up technology in the new home. Keep track of all loose wires using baggies or boxes that are clearly labeled, and personally carry these easy-to-lose items on moving day.

8. Packing cleaning products and toxins. Products such as detergents, pesticides and paint are heavy and unwieldy to pack. Dispose of as many as possible before the move in an eco-friendly way. Call your city’s waste disposal department for guidance on proper disposal. For items that must be transported, pack them in a small box within a larger box for protection against leaks. Don’t overstuff boxes with these items! Consider marking these boxes in a different color, and seal them extra tight. Keep them separate from the rest of the boxes, particularly if you have kids and pets.

9. Consider getting full value insurance protection. If using a professional mover, it may cost a few dollars extra, but it provides peace of mind and eliminates later annoyances. Investing in full value protection means any lost or damaged articles will be repaired or replaced, or a cash settlement will be made at current market value, regardless of age. It's important to note that the required minimum coverage of 60 cents per pound would not cover the replacement cost of more expensive items such as a flat screen TV if damaged in transit.

10. Know your rights. If using a professional mover, research your rights as a consumer with either the Federal Motor Carrier Safety Administration (FMCSA) for interstate moves or contact the state agency within the state in which you reside for moves within state. Also, enlist the help of the Better Business Bureau (BBB) or local law enforcement if the moving company fails to live up to its promises or threatens to hold your belongings hostage. FMCSA requires interstate movers to offer arbitration to help settle disputed claims.

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Monday, January 20, 2014

Many issues can be at root of indecision

Cash on hand may be more important

Which is right for you?

Use contingencies as a safety net when buying your home

Be sure to factor in all the costs

Private home loans benefit both parties

Getting started early is key to success

Try fixer-uppers and smaller homes

Don't let your emotions cloud your judgment

Buying? Here's why you need a home inspection

Buyers have the advantage in this shifting market

How to prepare for a seamless transition

10 Summer Moving Tips

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