Indy Home Book » For Home Buyers

Back-up Offer

Richard — Fri, 30 Jul 2010 17:33:50 +0000

An agent showed a home that I have listed to their customers a week ago that since has an accepted offer on it from another Realtor. The agent who called saw the home now had a sale pending but wanted to know if the Seller would consider taking a back-up offer. The current offer was a good one or the Seller wouldn’t have accepted it, but you never know 100% for sure that any sale will work, so it’s usually in the best interest of the Seller and can’t hurt to have another offer in your back pocket in case something gets soft with the other sale. The back-up offer might even be a better offer in terms of price, terms or less contingencies. Until all contingencies are eliminated or satisfied then the outcome of any transaction is not absolutely certain. So I told them to write the offer, send it over and we would take a look at it.

When I’m working with Buyers, I usually stay away from showing a home that has a pending sale, let alone writing a back-up offer. The reason is that the primary offer in place usually works and I don’t want my Buyer-customer tied up. Something better might come along and they could miss the opportunity to act upon it because they were focused on the other home. The only reason I would is if my customer really wanted that particular home, above all others, and thought it would be worth taking a chance. Besides, the Buyer can always withdraw the back-up offer at any time unless the Seller agrees to make it the primary offer.

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Opening Doors

Richard — Thu, 27 May 2010 13:10:40 +0000

Later today, a customer will be closing on the sale of their home. So this is on my mind right now. They call it a final closing because all facets of the transaction come together and the transfer of title and sale is completed. But if you see the faces of the Buyer and Seller, and get a sense of what is really going on, the true impact of this event is anything but a closing. It’s more of an opening. You can see and feel the pages turning in their lives to the next chapter, and a doorway opening to their future.

I coined a phrase a long time ago that I still use when talking about the importance of one’s home. “A home is where lives are shaped and memories are made.” Helping to effect and being a part of that momentous change in someones life when they move to their new home. This is what continues to drive and inspire me as a real estate agent.

I can hardly wait till the closing later on today. It’s so much fun. Knowing what happens after that, to the lives of the buyer and seller, is the most rewarding thing I do as a real estate agent.

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Tax Incentive Flurry

Richard — Thu, 08 Apr 2010 19:57:21 +0000

The deadline in order to be eligible for the tax incentives from the Federal Government for home buyers is really causing some excitement in the marketplace right now. As most people know by now, first-time home buyers can receive up to $8,000, and seasoned home owners up to $6,500 as a tax credit if they close on a home they are purchasing before June 30 this year. The frenzy though is being caused by the realization that the deadline for the contract to purchase the home must be accepted in writing between buyer and seller by April 30th, just weeks away. Even though terms of the tax incentive program have been widely published for a long, long time, it doesn’t surprise me that a number of people have waited until the last minute. Just human nature. ”Oh my gosh…this really is going to go away soon!”

It’s been interesting lately. I’m in the process now of showing homes to people who are trying to beat the April 30th deadline…and getting phone calls from others I know who are thinking about jumping in. One thing they almost all ask me is if I think the government is going to extend the deadline past April 30th? I honestly don’t think they will extend it…or even need to for that matter. The economy, as far as the housing market goes, is definitely heating up. I encourage anyone with questions to contact me. I’ll be happy to answer any inquiries about the tax incentive program or the market now.

The incentives would be nice to have I guess as long as you were going to buy a home anyway. But it’s never worth buying anything that you wouldn’t buy without them. And a deal isn’t really a deal if it means purchasing something at a time that wasn’t perfect, especially something as important as one’s home.

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Short Sales

Richard — Sat, 27 Feb 2010 12:00:19 +0000

Everyone has probably heard the term “Short Sale” in the last few years. You’d think that those kind of sales are commonplace, but that type of transaction is probably one of the toughest deals to put together if you want to buy or sell a home. Unlike a REO or bank owned property which is a property that has actually gone through foreclosure with the bank emerging as the actual owner, a property that is a short sale candidate is still owned by the homeowner. Typically the owners are behind on the house payments several months and foreclosure proceedings may or may not have begun. The chances of a transaction being successful on a Bank Owned home is a lot greater because you’re dealing directly with the owner.

The reason they are called a Short Sale is, for one reason or another, the amount that the sale of the home will bring on the market is “short” of what the Sellers owe to the lender. For that sale to work, the lender has to decide if they are willing to take less than what is owed so that they will release the current lien for the new sale to proceed. That’s not easy to get done. Every lender has their own policy about how to approach that and every home and sale has unique circumstances. Even if the lender decides that they would be willing to take less to get the property sold, the original home owners usually are required to pay back the difference, so they are not off the hook.

If someone wants to buy a home that is a possible short sale, they must be in a position where they can wait for the outcome and decision of the current lender. If it works great, if not, then it’s not critical. And they must be in a situation where they do not have to move by a certain date. So if this fits your situation and you found a home that you really want that’s a possible Short Sale and you are willing to step through the process to see if it works, then I’d say to go for it. Your wish might just come true.

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First-time Home Buyer Mistakes

Richard — Tue, 02 Feb 2010 17:42:41 +0000

I saw a list recently on a National Association of Realtors website stating what real estate experts consider to be the most common mistakes that first-time home buyers make. According to this list they are: (1) They don’t act quickly enough to make a decision and someone else buys the house. (2) They don’t do enough to make their offer look appealing to a seller. (3) They don’t think about resale before they buy. (4) They don’t ask enough questions of their lender and end up missing out on the best deal. (5) They don’t find the right agent who’s willing to help them through the home buying process.

Well, that’s a pretty accurate list although I don’t know if the order is arranged in terms of importance. But what struck me is that most of these same “mistakes” are made by a lot of experienced home buyers too.

Re: Offers. Because of over-generalized and inaccurate reporting by the media, in the last year or so especially, a lot of buyers believe that the market is so slow, and so tilted in their favor that no other buyers are out there looking, and therefore they can take their time about making an offer. That’s just not true. They also seem to think all sellers are desperate and should be willing to take a huge reduction on price. It does happen…but is rarely the case. For instance, I just attended a closing this morning where the Seller I represented got very close to their asking price and there were two other buyers waiting to purchase the home if the sale were to fall through for some reason. Here in Indianapolis, the 2009-2010 market is a good solid market…not on a record pace obviously like 2006…but still very good like the 2003-2004 market. So what I’m saying is that in most cases, slow or low-ball offers don’t work, unless it’s an inferior listing that is way over-priced.

Re: Resale Value. The fact is, the average first-time buyer stays in their first home for only four years. And on average, all home owners stay about seven years. So everyone should always, always, always consider resale value before one makes an offer on a home.

Re: Lenders. Financing is the key component to any transaction. I had a customer once who insisted on using an online mortgage source because their rate looked attractive. The only trouble was, the loan didn’t fund on time for the closing which caused a huge problem, and there were some “surprises” in the fine print in the terms of the loan that they were unhappy with. There are local lenders that will match or beat any rate out there, as well as closing costs, plus are a lot more accessible to answer questions and provide customer service. Local is always better for a number of reasons. I usually recommend a lender when someone is ready to buy. I know which lender will have the best product to fit their situation and I simply want my customers to get the best deal out there.

If a buyer chooses the right agent to assist them, the whole process should go smoothly from start to finish. Knowledge and experience is crucial, but someone with a pleasant demeanor and a positive attitude is important too. If an agent has all of those qualities, then the process should be comfortable all the way through. No surprises…and actually fun.

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Earnest Money

Richard — Tue, 08 Dec 2009 12:00:25 +0000

When an offer is made by a Buyer on a property, it may take a counter offer or two or more sometimes before the Buyer and Seller agree on all terms of the Purchase Agreement. But upon acceptance, the Buyer must deliver an earnest money check from them immediately, usually by their agent, made payable to the Broker who has the home listed. The purpose of earnest money is just what the name implies. It shows the Buyer is in earnest about buying the property. Even though there is a signed offer, if the earnest money check has not been delivered, then the Seller can void their offer and accept another offer. There is confusion sometimes on this point as some agents think they have two days to get the earnest money check to the Listing Broker. Realtors locally use a statewide standardized Purchase Agreement which clearly states that the earnest money is to be delivered upon acceptance. The only exception to this being if other terms were added in the agreement by the Buyer as a further condition such as “Buyer will deliver the earnest money to the Listing Broker within 24 hours after acceptance”. If the Seller agrees to that then the Buyer has 24 hours to deliver it instead of immediately. There is a state law which says that all earnest money must be deposited in the Listing Brokers account within two banking days from acceptance. That’s why some agents interpret this to mean they have two days to deliver it. But in reality, they are taking a big chance sometimes that the Seller will void their offer. I would imagine that their Buyer customers would be very upset if they lost the home they wanted because the agent did a bad job of informing them about how the procedure works…or even worse, the agent was lazy about jumping in their car and delivering the check quickly.

Earnest money is deposited and kept in the Listing Brokers account until the transaction is ready to close, and that sum is then applied to the amount that the Buyer must bring to closing. If for some reason the transaction were to fall apart before closing, the Seller does not automatically get to keep the money…nor does the Buyer automatically get it returned. The Listing Broker keeps it until there is a signed agreement between the Buyer and Seller as to the earnest money. If the Buyer and Seller still can’t agree about it, the Listing Broker will keep it until directed by a court as to how to disperse it.

In all the years I have taken part in transactions, I have never had one problem with earnest money. Usually transactions go without a hitch and in the very rare case where a transaction cannot be completed for some reason…possibly home inspections or the financing falls through…the Buyers and Sellers have always been fair about it.

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Home Buyer’s Tax Credit

Richard — Mon, 23 Nov 2009 21:04:32 +0000

There was a lot of speculation as to whether the First Time Home Buyer’s Tax Credit initiated this year would be extended. It took a while for Congress to make up it’s mind, but the credit is not only extended, it is expanded now to include current homeowners as well who are looking to buy another home. There are of course some conditions and prerequisites in order to qualify, but the vast majority of people will qualify.

Since the credit is given back to people as a refund or credit on their taxes, paid to the IRS, I figure the best source to check for conditons of the current program is with the IRS itself…straight from the source. So here are the details of the Home Buyer’s Tax Credit from the IRS’s website. Simply put, first-time home buyers will recieve an $8,000 credit and current home owners will receive $6,500 if they purchase a home by April 30, 2010 which closes by June 30th.

The effect of this credit should not only help to invigorate the market in modest price ranges, but the mid to upper price ranges as well. The deadline for having a transaction under contract is April 30, 2010, so the tendency for a lot of people would be to relax and wait till spring. But actually right now or soon would probably be the best time to buy a home if possible. After the first of the year, the market traditionally starts heating up, which increases competition. But with the FTHB Credit, there will be even more competition which should raise prices further. Also, interest rates now are at an all-time low. Those will not stay at the same level. So if someone is thinking about a move soon, it might be a good time to move forward…sooner rather than later.

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Home Warranty

Richard — Tue, 03 Nov 2009 01:07:55 +0000

One of the things that I almost always recommend that Buyer ask for when they make an offer on a home is for the Seller to provide a Home Warranty. Unless the home is just newly built and therefore covered by the builder or manufacturers warranties for major components, then it makes sense to have a home warranty policy to provide peace of mind and protection against a costly repair. A Home Warranty doesn’t cover everything about the home. It typically covers the furnace/AC, water heater, plumbing, electrical system and appliances. The cost is about $375 for a one year policy and there is a deductible amount for each repair or service call. Typically the deductible is $100 but that amount as well as the cost of the policy itself and what specifically is covered varies between warranty companies.

A sellers offer to provide a warranty is useful tool to help sell the home too and may help to bring a higher price for the home. Or it will just help to effect the sale in general because Buyers feel less skittish about the condition of the home and components there. Also, the Seller can ask for the policy to begin at the start of the listing term with no cost to them so that if anything that is covered breaks, the only thing they pay is a deductible amount. They don’t need to pay for the policy until final closing. So it’s a win-win situation for the Seller. The home is covered during the marketing period and afterwards too for the Buyer.

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The Sky Is Not Falling

Richard — Tue, 15 Sep 2009 15:18:55 +0000

It shouldn’t surprise me by now but it still does. The power of suggestion coupled with the choke-hold that the media has on the public collective consciousness. This rings true on just about any topic…but of course I’m a little more focused on real estate than other areas of discussion. The sky is NOT falling. I’m wondering what it will take to convince some people of that? The market is OK and getting better. But good news doesn’t sell newspapers. And the Nightly Evening News without stories that make people concerned about their own well-being don’t attract viewers. So I know we will never get any positive news with the same bravado that the negative news has been given.

Most Buyers who are looking for a home in a certain area, when given the facts about recent comparable sales there, understand the market dynamics. But I still run into Buyers that think the real estate market in general is moving closer to deaths door no matter what evidence you produce…and that every Seller either is, or should be having a fire-sale with deep discounts. That just is not the case. For most Sellers around here, market values have been a little flat for the last year or two. It is true that on a case-by-case basis, some properties have sold for discounts but there have not been any wholesale across the board discounts. Some have even risen in value. It all depends on the specific home, neighborhood, and the Sellers circumstances for wanting to sell. Those Sellers that MUST sell no matter what have sometimes had to offer discounts, especially in homes in the upper price ranges. The entire market is clouded by stories of these in the media. But there has not been a substantial devaluing of properties in our area as some believe.

I figure the best thing to do is just keep telling the truth about it…which is: If you are a Seller, it’s a great time to sell. Inventories are down from previous levels, so there is less competition. If your home is in good condition and priced right, it should sell. And if you are a Buyer, selection is still very good and interest rates are unbelievable. Last time I checked, a 30 year/fixed rate loan was 5.125%. Competition for homes that are in price ranges that first-time-buyers are attracted to is heating up though as the Government Incentive-$8,000 Tax Credit deadline of November 30th looms closer. If someone is a first-time buyer or has not owned a home in the last 3 years, and interested in taking advantage of the incentive, then they really should get their purchase under contract by no later the midde of October.

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Buying a Home…Emotion or Logic?

Richard — Tue, 01 Sep 2009 23:32:50 +0000

I’ve been showing homes to two different buyer-clients lately who are looking for a home in the same general price range. The homes description and areas they are looking in are different. But what’s most interesting to me though is the way they proceed in the looking process. Both have a totally different mindset and they couldn’t be more different in their approach.

One is all about the emotional elements that a home provides. One that gives them the feeling they want. The space inside, the architecture and design, colors, the openness of the floor plan, beauty of the yard, etc. They understand it’s an investment too but are not that concerned about the numbers as long as it’s fair and reasonable.

The other Buyer looks at the general features and qualities too but places a high importance on comparison of other homes we have looked at… list of features, cost of utilities, past sales and current offerings of other similar homes in the area, property tax amounts, cost of possible updates, room sizes, square footage, etc. A more logical approach to buying.

One of the things I like about this business is the diversity. It makes every day interesting. No two people I encounter are alike and they have different things that motivate them and different reasons for making decisions. There really is no right or wrong way. In the end it’s all about happiness…what makes them happy. I try to supply the information or provide the input they need to explore all the possibilities and make their decision whether it is emotion or logic based…or a little of both.

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