1. Why use a buyers agent when buying a home?
2. Choosing your lender
3. All about lenders fees
4. Don’t forget your pre-approval letter
5. What you can say to your lender
6. Have your buyer representative protect you in the purchase of your new home
7. How to avoid the 10 silly mistakes the uninformed buyer makes!
8. Five keys to successful negotiation
9. How to succeed with counter offers
10. To lock or not to lock your loan
11.Tips for the Home Inspection
12. Simplify your move
We thought we would start out by explaining further about the service we provide as BUYER REPRESENTATIVES. In fact, WHY USE A BUYER REPRESENTATIVE?
Purchasing real estate is a complex and major transaction with many details to be handled. In the majority of cases the seller will be represented by an agent who is bound by the laws of agency to look out for the best interests of his/her client.
So, who will be looking out for YOUR best interests?
As YOUR Buyer Representative we are serving your best interests at all times
This means we have no loyalties to the Seller other than to be honest and ethical in any transaction(s) we enter into together. We are in YOUR corner making sure all your options have been explained to you, that you are purchasing your home at the best possible price and that you were given all the information needed for you to make an educated decision.
And what does this cost you? NOTHING! It will cost you no money out of your pocket for our services. The home Seller pays our commission. And if you are considering a New Home, we can go with you as your Buyer Representative and the builder pays the fee.
Two Important Facts about NEW HOME PURCHASES:
1) We must accompany you the first time through any new home subdivision. (This is when you first look through models)
2) It is a common misconception that you will put the commission dollars in your pocket if you go to a builder without a Realtor….THIS IS NOT TRUE!
The builder cannot “de-value” identical properties because of commission. The builder pays the Realtor out of their marketing funds, which has no effect on the purchase price of the homes whether you go in with an agent or not.
So let’s Recap. A Buyer’s agent will…
1. Evaluate YOUR specific needs and wants and help you locate properties that fit those specifications.
2. Assist YOU in determining the amount that YOU can afford (pre-approve), and show properties in that price range and locale.
3. Assist in viewing properties — accompany YOU on the showings, or preview the properties on YOUR behalf to insure that the identified specifications are met.
4. Research the selected properties to identify any problems or issues to help YOU make an informed decision prior to making an offer to purchase the property.
5. Advise YOU on structuring an appropriate offer to purchase the selected property.
6. Present the offer to the seller’s agent and the seller on YOUR behalf.
7. Negotiate on YOUR behalf to help obtain the identified property at the best possible price keeping YOUR best interests in mind.
8. Assist in securing appropriate financing for the selected property.
9. Provide a list of potential qualified vendors (e.g. movers, inspectors, carpenters, etc.) if these services are needed.
10. Most importantly, fully-represent YOU, buyer, throughout the real estate transaction.
And again, at NO COST. So why would you go it alone? Let us know when you’re ready to purchase and we can team you up with an experienced Buyer Representative to be on your side and look out for you when purchasing your next home.
Some of the biggest misconceptions held by buyers relate to the belief that all lenders, and all mortgages, are pretty much the same. Also, buyers tend to think that the mortgage process doesn’t start until AFTER you find the house you want and negotiate a successful offer. These misunderstandings are not surprising when you realize that the vast majority of buyers only experience the mortgage process once or twice in their lives.
Unfortunately, in this situation, ignorance is certainly not bliss!
If you fail to ask the appropriate questions of your potential lender, you may do serious damage to both your negotiating position and your pocketbook.
Questions you should ask every lender before you shop for a house:
Will you pre-approve me? This is very important. Negotiating is much easier for the buyer when the seller KNOWS, ahead of time, that you will get your mortgage.
How quickly can my loan go through? Again, if the seller knows you can close quickly, this may sway the negotiations in your favor.
Do you carry Adjustable Rate Mortgages? The lower the rate, the more you can qualify for (and Adjustable Rate Mortgages have initial rates lower than fixed mortgages). While you may not opt for this mortgage in the end, knowing it is available is like putting an extra “line of credit” into your pocket.
Do you have Convertible Loans, or loans with a conversion option? If you do find the need to use the Adjustable Rate Mortgage, can you change it to a fixed rate in the future? At what cost?
Do you carry fixed-rate mortgages with 30-year terms? With 15-year terms? This is irrelevant in the mortgage world. However, comparison shopping of items like interest rates, application fees, points and other lender closing costs can yield you substantial savings.
Are you an FHA direct lender? If FHA is an option (and many first-time buyers go FHA), then this is a good question to ask. Sometimes the processing time can really be shortened with a direct lender. Again, this is a good negotiating tool, since it may get you to the closing sooner.
Are you a VA direct lender? For those who qualify, a VA loan can be a wonderful option. Again, dealing with someone who is a direct lender for this type of loan can really streamline the approval process and help you with the seller.
Do your mortgages carry a pre-payment penalty? Pre-payment penalties, which had all but disappeared from the industry, have recently reared their ugly heads again! ASK! And make certain you fully understand the circumstances under which you may trigger that penalty.
Are you a portfolio lender? Some lenders keep the loans they make “in-house,” and some sell the loans to other institutions. While it does not impact you (or the terms and conditions of your loan) if it is sold, there is a good reason for asking this question. Portfolio lenders often have more leeway during the approval process and can tolerate past credit problems that others may not want.
Are your fees negotiable? Let the lender know you are comparison shopping. Politely asked, this question will appear to be just one more factor in your decision-making process. If the lender really wants your business, you may be surprised by the answer! In any case, if you don’t ask, you can be certain that no one is going to just offer to drop their fees.
Taking a few minutes to ask these questions of a number of lenders can pay off big time. These benefits may come in the form of a more favorable negotiating position for you with the seller and/or as a direct savings in relation to your loan. In either case, doing your groundwork with lenders is a smart and important way to begin your home buying process.
The mortgage lending procedure is, shall we say, not always a walk in the park. If you’re a borrower, you likely face such commands as “document this,” “apply here,” “provide that,” and “sign here–and here and there.” Meanwhile, lenders also keep talking about fees–a fee for this and a fee for that. Lots of fees
Administration fees.
Document fees.
Application fees.
Processing fees.
Underwriting fees.
Wire fees.
And–who knows–maybe “fee fi fo fum” fees.
Fees are a by-product of marketplace realities. A 30-year fixed rate mortgage is, well, just a 30-year fixed rate mortgage, and similar loans tend to have similar prices–especially in an era when borrowers can increasingly compare mortgage rates and terms.
Since loan rates are largely similar for like mortgages, lenders need to somehow raise revenues without appearing to have higher loan rates. One approach is to have competitive rates–and also fees.
Lenders may not start turning a profit on a mortgage until well into the loan’s second year. Huge up-front costs associated with loan departments, payrolls, rents and other expenses need to be offset, so lenders charge fees during the application process.
Some lenders charge more fees and some charge less. You need to shop around. Just because a lender doesn’t charge one particular fee doesn’t mean they don’t charge another. If a lender tells you they “don’t charge” for loan underwriting, that may be true–but they may well charge for something else. One lender may charge $500 for underwriting and processing while another charges nothing–but somehow charges $500 for administration and documentation fees.
Names don’t matter. The trick is to ignore fee names and instead concentrate on total costs and when they are paid. Lenders with “low” rates and points may offset those rates with higher fees. Conversely, loans with few if any fees may have slightly higher rates and points.
It doesn’t hurt to ask lenders about fees. Simply getting a rate and points quote from a lender may not be enough. Ask them directly about any fees and the purpose and cost of each one.
This is especially important regarding fees that will be waived upon closing. For instance, a lender or broker might charge a $300 “application” fee that will be
Here are five reasons why getting a pre-approval letter is a must.
Most home buyers know they should get a mortgage pre-approval letter from a lender before they begin seriously shopping for a home. But the reasons for this advice aren’t always clear, and buyers sometimes are dismayed by the amount of paperwork involved. Here is some of the reasoning behind the advice:
Qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a “pre-qual” from a Web site is just as easy. Enter some information, click “submit” and voilà.
A Pre-Approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming than a pre-qualification but the additional due diligence is exactly why the pre-approval carries so much more weight!
2. You’ll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there’s no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors, down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on, are part of the calculation.
And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history, or. you may qualify for more!
3. You’ll have more leverage in negotiations with the Seller. Sellers always prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you’ll be able to obtain a mortgage.
4. Your Buyer Representative will work harder on your behalf. A pre-approval letter signals to your Representative that you’re a well-qualified buyer who is serious about purchasing a home. In fact, some agents won’t even show property to buyers who don’t have a pre-approval letter.
Take it as a positive sign that the Buyer Representative who asks for your Pre-Approval letter is very busy (also read that as professional and probably successful) and takes his business and your goal of finding you a home very seriously.
5. A few caveats: Pre-approval letters aren’t binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.
If you haven’t gotten your Pre-Approval letter and don’t know where to begin, contact us and we can direct you to some outstanding lenders.
Don’t find the home of your dreams only to find out it will remain a dream because you didn’t have the financing in place!
You’ve been pretty good about keeping your credit rating up. Always paid on time, every time. There may have been a late payment or two a few years back, but you never took anyone for their money. But today you got a phone call from your loan officer wanting “credit explanations” regarding some items that happened about two years ago. Why? You were late!
First, let’s define what “late” means from a mortgage lender’s perspective. When you open your credit card statement, you’ll see a statement date and a due date. Lenders only really care about anything that is more than thirty days past the due date. If the due date is the 15th of the month and the credit company posted your payment on the 20th of that same month, it’s not considered late for credit reporting purposes. However, if your payment is posted more than thirty days past the due date, then you’ve got a “late” payment which may count against you when applying for a mortgage.
CAUTION! While payments less than 30 days overdue may not show up on credit reports, credit reports should not be the only concern raised by late payments. Late payments can trigger penalties, revised loan terms and contract defaults with creditors. If you borrow, make a point of paying on time and in full.
More and more lenders rely on credit scoring and automated underwriting systems when making a credit decision. However, even these automated systems may still “ask” for a satisfactory explanation of previous credit transgressions.
So what do you say when the lender calls wanting an explanation?
The Truth. Over the years there have been many phone calls from frantic borrowers wanting to know what they should say when asked for a credit explanation. “It’s been almost two years since I made a late payment on my department store credit card. I have no clue why it was late, much less remember the circumstances!”
Then explain it that way.
Lenders aren’t looking for some outlandish reason your payment was late. No “my dog ate it” tale is required. Usually, a simple answer such as “I thought I had made the payment on time” or “I really can’t recall, I’ve never been late before or since” or even “I forgot” can work.
Just tell the truth and move on. Many times the lender just wants to fulfill an underwriting guideline which requires them to provide a credit explanation along with any derogatory credit entry. That’s really about it.
Remember that lenders do not expect perfect credit. People do make mistakes and payments are missed. It happens even to people with great credit–it just doesn’t happen often.
Major credit problems such as bankruptcies or foreclosures will require more homework and detail. Sometimes lenders want to ascertain that the bankruptcy or foreclosure was something beyond the borrower’s control, something caused by a disability, loss of job and so on. And a lot of times they’ll want some third-party verification to verify what caused the financial problems, proof such as medical bills in the event of an extended illness or injury, or evidence that in fact you were indeed laid off and couldn’t find work.
But just remember that if ever a lender needs an explanation regarding a credit issue: answer truthfully.
The rules are that if you visit the sales office of a new home builder without your Realtor, the builder will not recognize the relationship and will not compensate the agent, even though the agent made you aware of the community. Having representation by your agent if you buy a new home costs you nothing since the builder pays the Realtor fee, and you will not be credited the fee on your purchase if you go without one.
Although agency laws states that you must be treated fairly by the builder‘s agent, the salesperson you speak to on site is the agent of the builder and will do his best to uphold the laws of agency and put the needs of his client first, the builder.
So for no cost, by bringing an agent with you, not only do you save lots of time and focus your search, you get the expert representation of an agent working solely for your interests throughout the buying process. That includes representation during:
Initial discussions
First walkthrough
Help with area evaluations and disclosures
Advice on upgrades and lot location that maximize resale value
Attendance and expert advice at the contract signing
Financing options advice
Communicating with your builder during construction
Attendance at final walkthrough and helping with any issues not to your satisfaction
Attendance at the close of escrow signing and assisting with any loan discrepancies.
Lots of times I hear that Buyers do not want to inconvenience an agent by bringing him around until they have a better idea of what they want or that they would rather go it alone first to move around more easily. Like I said earlier, you can cut down on your time tremendously if you have an agent do the research and take you to only the communities in your price range and preferred style.
Homebuyers today face a steep learning curve. There’s much to know, much to learn and a great potential for “rookie mistakes”–with potentially costly consequences.
What should you check? Here are 10 basic issues to consider.
1. Rushing into the transaction. Buyers looking for homes in extremely tight markets may feel pressured to make an immediate offer. Instead, it makes sense to become familiar with the local market before making a purchase offer.
2. Not asking enough questions. First-time homebuyers, by definition, simply don’t have homebuying experience. It may be uncomfortable to ask questions, but ask anyway. Brokers can’t answer unasked queries.
3. Searching in vain for the “ideal” house. Many buyers run themselves and their brokers ragged as they repeatedly dismiss homes that meet most–but not all–of their specifications. A buyer who turns down a house that meets most criteria may lose the best available property as well as good financing if market conditions change.
First-timers should surely view different homes before making an offer. That way they can better understand the marketplace and know more about local prices. Brokers will often recommend that buyers, and particularly first-time buyers, avoid jumping on the first property they see–but that they don’t drag their feet when the find a house they love, either.
4. Avoid Overbuying. Homes routinely seduce buyers into becoming “house poor,” spending so much for a home that they must forego annual vacations, restaurant meals and other forms of entertainment. Pre-approval can help determine a reasonable target price range and also identify the mortgage programs which can work best for you.
5. Waiting for 20 percent down. That’s an admirable goal, but years in the future for many first-time buyers. Instead–especially in markets with rising values–buy now with little down. Consider VA, FHA and loans with private mortgage insurance (PMI).
6. Be realistic. It’s tough to ignore a home’s curb appeal, but what about practical matters? Enough space? Off-street parking? Good construction? Low maintenance? How far to work? Boring stuff–but important.
7. What about zoning? Is the property next door zoned for a 24-hour service station? Fire station? Nuclear test site? Ask the broker about zoning for the property and also the surrounding area.
8. Ignoring representation. The odds are overwhelming that the seller has a broker. What about professional help for you? Ask about buyer brokerage services so you can have equality at the bargaining table.
9. Skipping an inspection. A professional home inspection is simply a “must” whether you are buying an existing home or a new one. Speak with inspectors before you enter the marketplace to see how they work, what they cost and what they recommend.
10. Don’t underestimate closing costs. There is more to buying a home than a downpayment. I can help you estimate probable closing expenses–information you need to avoid unwanted financial surprises.
Is there more you can do? Sure. Buying a home is a complex process–so feel free to ask any questions and let me help you prepare before you go into the marketplace.
Whether you’re a buyer or a seller, you want to succeed in the realty marketplace. That’s natural and reasonable, but what are the steps you need to take to triumph?
Negotiation is a complex matter and all transactions are unique. Both sides–buyer and seller–want to feel that the outcome favors them, or at least represents a fair balance of interests. In the usual case, there is a bit of bluff, some give-and-take and neither party gets everything they want.
So how do you develop a strong bargaining position, one that will help you get the most from a transaction? Experience shows there are five basic keys that will determine who wins at the negotiating table.
1. What Does The Market Say?
At various times, we’re in a “buyers” market, a “sellers” market or a market where supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.
Because all properties are unique, it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you’re a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.
2. Who Has Leverage?
If you’re on the front page of the local paper because your business went bust–and the buyer knows it–you have less clout in the bargaining process. Alternatively, if you’re among six buyers clamoring for that one special property, forget about dictating an agreement–the owner can sit back and pick the offer which represents the highest price and best terms.
What are the Details?
A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.
Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator and pay the first $5,000 of the buyer’s closing costs. The second owner made no concessions.
In this example, the first house was actually sold at discount–the $275,000 purchase price less the value of the roof repairs, closing credit and other items. If you’re a buyer, this is the deal you want. If you’re a seller, you would prefer to be the second owner and give up nothing.
4. What About Financing?
Real estate transactions involve a trade–houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:
Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available–a loan application can be declined because of appraisal problems, title issues, survey findings and other reasons.
But buyers who are “pre-qualified” or “pre-approved” (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.
The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it’s possible that the transaction could fail because the buyer can’t get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.
The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.
Alternatively, high rates or even rising rates may drive buyers from the marketplace–and that’s not good for anyone.
It used to be that downpayments were a major financing hurdle–but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 100 percent financing–mortgages with nothing down–are now being made by conventional lenders. Reduced downpayment requirements are good for both buyers and sellers.
5. Who Has Expertise?
Imagine you’re in a fight. The other guy has black belts in 12 martial arts–and you don’t. Who’s going to win?
Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?
You’re a serious buyer. You’ve made an offer; the seller said “no,” so now you make a
Counter offer. All at once it happens–the seller accepts an offer from someone else.
Your first question: How is this possible?
Your second question: What could have been done differently to produce a better result?
To answer these questions, let’s review the bargaining process.
The seller is under no obligation to accept a counter-offer. An “offer” is an “offer”–it’s not a “contract.” Owners are free to look at–and accept–other offers.
Why?
Because a “counter-offer” is really a new offer. Even though the buyer and seller might agree to some or even most of the terms of a purchase/sale offer, any change effectively creates a counter-offer. In other words, all previous bets are off and the parties are back to square one in the negotiation process.
Why would a seller accept another offer? It could be that another buyer came in with a higher price, better terms or fewer contingencies. A competing buyer might have flashed more earnest money in front of the seller. Or perhaps the seller got tired of the tedium and stress produced by offers and counter-offers and wanted to bring the volley to a halt.
How might you do better? Here are three strategies.
1. Begin with the end in mind.
In other words, know which issues are most important for you, as well as what concessions you’re willing to give up.
Suppose–in order–you require a price limit, minimal closing costs and a quick closing. If you got one of the three items would that be enough? Two of three? Must you get all three? If you got your price– he top priority — but not the other two items, would you go ahead with the purchase?
The trick here is to determine what’s important–what’s a “must” and what isn’t.
2. Communicate your position.
If a buyer’s agent is negotiating on your behalf, explain what you’re willing to offer–and how much is too much. The broker can then look at current market conditions and suggest the best approach to take on the basis of price, terms and negotiating tactics.
If a buyer broker represents you, it’s good to write out exactly what the agent can share with the seller and the seller’s representative. That way there’s less chance that inappropriate information can be leaked to the seller, information that might erode your negotiating power.
3. Show your interest.
Be honest with the seller about your interest in the property. This doesn’t mean revealing all of your bargaining strategies or suggesting a willingness to pay any price. Instead, show just enough interest, involvement and motivation to signal that you’re serious.
While counter-offers are designed to let the other party know you’re still in the negotiating game, they represent some risk to both buyer and seller. A counter-offer is a new offer, and a new offer may not interest an owner or a buyer. Sensing what to ask–and when to back off–are both part of the bargaining
That is the question. But there is no sure answer because either choice involves some risk. If you lock now and rates fall, you lose. If you don’t lock now and rates rise, you also lose.
Alternatively–and here’s the good news–you win by locking before rates rise and you also win by not locking in a market where rates are falling.
What to do?
The first step is to understand how the locking process works. In essence, there is no single lock-in “standard”–a “lock-in” with one lender may be radically different from the lock-in program with another. Here are some issues to check:
–What is being locked-in? An interest rate? Or an interest rate and points? Given that “points” are a form of interest, if a rate is locked-in but not points, then the effective rate for the loan can rise before closing if the interest level stays the same–but the number of points increases.
–How long is the lock-in? A typical lock-in lasts 30 days, but longer terms may be available.
–Is there a cost to lock-in? If you pay a fee for a lock-in and borrow at a different rate or from a different lender, then the lock-in fee will be lost. In some cases, lenders collect a lock-in fee and then credit the money to the borrower at closing. In this situation, there is no additional cost to lock-in if you go through with the loan.
–What does the small type say? Some lenders have been known to lock-in rates–unless “market conditions” change; then all bets are off. But ask yourself a question: is there ever a time when “market conditions” do not change? Surely there must be a reason why interest rates change daily if not more often. In this case, the fine print effectively defeats the benefits a borrower wants from a lock-in.
–Is there a “float down” option? In this situation you lock-in a rate–say 7 percent and 1 point–but have a one-time option to lock at a lower rate if interest levels and points fall.
–What happens if you can’t close by the end of the lock-in period? Typically, you lose the rate you reserved. This is not unfair because a lender cannot be expected to hold a given rate indefinitely.
–When you lock-in a loan, lenders have one of two choices: They can secure a loan commitment with an investor at the promised rate or they can play the market and hope that by settlement they can get your rate–or better.
But what happens if a lender plays the market and rates go up? The lender loses. The problem is that not all lenders play fair. It doesn’t happen often, but some lenders will delay the loan application process past the lock-in period, thus ending their commitment to make the loan.
–How can you avoid this problem? Consider lenders recommended by your broker. An experienced broker will know which lenders have a good record delivering on commitments.
In general, whether you lock-in or not, it’s best to be in continual contact with the lender. Make a point to promptly supply all required paperwork, and keep notes showing when you spoke with the loan officer and what was discussed. Get timed, dated and signed receipts for all paperwork you deliver.
So when should you lock-in? There just isn’t a single answer that works for every situation. You need to consider general interest trends–and also that no one can predict future rates. At best, a properly-written lock-in can limit exposure to rising rates–and that’s not a bad deal.
With thoughts of how you’re going to arrange the furniture in your new home, whether you’ll make the deadline for registering the kids for their new school and how you’ll find a mover on short notice, the home inspection process sometimes takes a back seat. But it shouldn’t.
A home inspection is perhaps the most important chapter in the home-buying saga. You’ve seen the beautiful tile floors, the new carpet and the freshly painted walls, but do you know what lurks in the bowels of the heating system, what lies in the crevices of the roof and if anything–other than water–can be found in the interior plumbing?
You should–you’re about to plop down a huge down payment and commit to a 15- or 30-year mortgage. A home’s condition is important to you.
Some 77 percent of all home sales in the United States last year involved a home inspection, according to a study by the American Society of Home Inspectors (ASHI) and the National Association of Realtors.
“It’s clear from the study that more people are recognizing the importance of home inspections,” said John Ghent, president of ASHI, the largest non-profit professional organization for home inspectors.
By following these pointers, you can maximize your home inspection benefits:
-Know what it includes. Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing.
-Know what an inspection does not include. Inspections for a typical home require several hours, but they do not inspect every dent and scratch. For details, speak with any inspector you are considering.
-If you’re selling, get a home inspection before you put your home on the market. This can avoid surprises down the road when potential buyers have the home inspected by their own professional. If major or potential problems are detected, they can be repaired before you try to sell.
-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 Association of Home Inspectors (AAHI) or ASHI. Both groups require its members to be certified, meet professional qualifications and adhere to specific business ethics.
-Be cautious about hiring someone who may have a conflict of interest or may not be impartial. For example, a retired roofing contractor who now does home inspections to make a few extra dollars may find a problem with–you guessed it–the roof. This person could take advantage of your need to find someone to make repairs in a hurry, leaving you to wonder if the repairs were needed.
-Include a proper home inspection contingency in your purchase agreement. This is important. If an inspector finds that the home can’t survive another rainy season without $20,000 worth of roof repairs, you’ll want to have the option of bailing out of the deal, asking the seller to make the repairs or lopping the appropriate amount off the purchase price.
-Be there for the full inspection. Spending a 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 the home, ask him or her to explain what problems may be encountered down the road, what signs to look for, what repairs and replacements are likely to cost and how to prevent big maintenance bills.
-Try to learn how things work and how to maintain systems and equipment during the inspection process. The inspector may also point out little flaws or oddities that don’t measure up to being mentioned in the report, but may warrant watching.
-In the case of new construction, consider three inspections: at the time the foundation is first poured, when walls are up but not closed and at the walk-through before closing. Yes, this is expensive, but in the context of a long-term investment–and a big investment, such as a home–the cost is easy to justify.
Once the inspection is complete, the inspector will write a report. If major problems are found, then you have the knowledge to better guide your negotiations. And if your new home receives stellar findings, then you’ll have the peace of mind that will be a welcome relief once you’re settled into your new home–priceless!
The average American moves every seven years.
There are those, however, who move more frequently–once or even twice a year–because of job requirements. Typically, these folks are assisted in their moves by the relocation department of the company for which they work. Moving, which is a headache for most of us, is for these frequent movers angst-free and painlessly executed.
How do frequent movers succeed?
The first piece of advice is don’t go cheap. Even if you are moving within the same town, or even down the block, hire a professional, reputable moving company to do the work.
This doesn’t mean you cannot handle some of the move yourself. You might want to pack the china, silverware, some glasses, your personal computer and the table it would sit on. That way, you will have a place to eat and have the ability to send and answer email.
Before you even start your move, take a complete inventory, which will be helpful if you need to make an insurance claim.
Such an inventory should include clear photographs of tables and chairs, antiques, living room furniture and bookcases. You’d probably not be surprised how things get nicked, even by reputable movers. While a moving company may be the top of the line, there is no guarantee that every employee will adhere to that philosophy, and when the foreman isn’t looking…
You should also photograph “tight” parts of the house through which the movers will be bringing your possessions so that you can have evidence of damage. By tight, we mean stairways and doorways.
No mover is perfect, and accidents do happen. But since most movers offer insurance coverage for various amounts–paid $50 for $10,000 worth in our recent move–you should have the proof if a claim is necessary.
In addition, keep some spackle and paint around to do repairs.
Find the right mover.
Begin your search for movers immediately after you know the date of the move. This is especially important during peak moving time, which falls between May and August.
The longer you wait, the less of a choice you will have. And that means an increase in angst.
How do you find a mover?
Check with your broker. Brokers routinely deal with home sales and can both recommend movers and make suggestions that will cut costs and save time.
Also, look in the Yellow Pages. There are local subsidiaries of most nationally-known moving companies–Allied, North American, Mayflower–listed among pages of small and large moving companies in the book.
To be a part of such corporations, these subsidiaries need to adhere to the strict standards these moving giants maintain. These days, most large movers have Web sites that provide information, advice and contact numbers for both corporate headquarters and local movers.
Another source of reputable movers is from the corporate relocation department of your employer, if you have one. A third, but less reliable, is from friends, relatives and neighbors.
When you do get a recommendation, get all the details, such as:
-Were they prompt?
-Courteous?
-Did they choose the shortest route from one place to the other?
-Did they put the boxes and furniture in the places you designated?
-Did they follow directions?
If you are able to, get estimates from five movers. Ask for references, and call those references, making certain they are “real” people–not friends or relatives of the mover.
Get estimates within the estimate. For example, how much would it cost if the movers packed rather than you? If they pack, will they also unpack and set up beds, bookcases and other furniture? If you choose to pack, how much will the boxes cost and how many will you need? What kinds of things should go in what kinds of boxes? A small box should hold books but a large box should be packed with lighter things, such as clothing. Will they wrap the furniture in bubble wrap, and carefully pack the computers, small appliances and breakables?
Will they move antiques and pianos or will you need to find special moving companies for such items? Not all movers are capable of moving a baby grand, so you might prefer to have your piano moved by a licensed piano mover.
You also need to ask if moving items up and down stairs is an extra cost. Or if moving on a weekend or holiday will incur a surcharge.
Most estimates are based on hourly costs by a certain number of movers and, of course, on what needs to be moved. Make sure that you are provided with information on the number of movers needed, the time it will take (including transportation time) and the number of trucks that will be needed.
Once you obtain all the estimates and check out references, then it is time to choose a mover. Base your decision on service, not price. And don’t skimp.
You’ll need to make a deposit–usually about 10 percent of the total estimate. Movers usually will not begin unloading the truck until they receive the balance.
That doesn’t mean your work is done.
You or someone you trust needs to be on hand when the move is under way. You need to supervise and double-check and be around for the questions that the movers will certainly have.
Develop a checklist.
Make sure that the movers adhere to the letter of the contract, and don’t hesitate to complain to the foreman of the crew or the supervisor back the office if things aren’t going as promised any time during the move.
Lastly, don’t forget to have enough money for a tip–probably about $50 per mover per eight-hour move
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