“Since 2011, the share of first-time home buyers has been under the historical norm of 40% as buyers face tight inventory, rising home prices, rising rents and high student debt loads.”

That said, if you’re looking to purchase your first home, here are two things you can consider to help make your dreams a reality.

Save Money with First-Time Homebuyer Programs

Being able to pay for the initial costs and fees associated with homeownership can feel like a major hurdle. Whether that’s getting a loan, being able to put together a down payment, or having money for closing costs – there are a variety of expenses that can make buying your first home feel challenging. 

Fortunately, there are a lot of public and private first-time homebuyer programs that can help you get a loan with little-to-no money upfront. CNET explains:

“A first-time homebuyer program can help make homeownership more affordable and accessible by offering lower mortgage rates, down payment assistance and tax incentives.” 

In fact, as Bankrate says, many of these programs are offered by state and local governments:

“Many states and local governments have programs that offer down payment or closing cost assistance – either low-interest-rate loans, deferred loans or even forgivable loans (aka grants) – to people looking to buy their first house . . .” 

To take advantage of these programs, contact the housing authority in your state and browse sites like Down Payment Resource.

The Supply of Homes for Sale Is Low, So Explore Every Possibility

It’s a sellers’ market, meaning there aren’t enough homes on the market to meet buyer demand. So, how can you be sure you’re doing everything you can to find a home that works for you? You can increase your options by considering condominiums (condos) and townhomes. U.S. News tells us these housing types are often less expensive than single-family homes:

“Condos are usually less expensive than standalone houses . . . They are also less expensive to insure.”

One reason why they may be more affordable is because they’re often smaller. But they still give you a chance to get your foot in the door and achieve your dream of owning and building equity. Beyond that, another major perk is they typically require less maintenance. As U.S. News says in the same article:

“The strongest reason for purchasing a condo is that all external maintenance is usually covered by the condo association, such as landscaping, pool maintenance, external painting, paving, plowing and more. This fee also covers some internal maintenance, such as gas, electric, plumbing, HVAC and other mechanical systems.” 

Townhomes and condos are great ways to get into homeownership. Owning your home allows you to build equity, increase your net worth, and can fuel a future move.

The best way to make sure you’re set up for success, especially if you’re starting out, is to work with a trusted real estate agent. They can educate you on the home buying process, help you understand your local area to find options that are right for you, and coach you through making an offer in a competitive market.

Bottom Line

Today’s housing market provides some challenges for first-time homebuyers. But, there are still ways to achieve your goals, like utilizing first-time homebuyer programs and considering all of your housing options. Connect with a local real estate professional so you have an expert on your side who can help you navigate the process.

The post Keys to Success for First Time Home Buyers! appeared first on Residence HQ.

Home Inspection

Here’s the key difference between an inspection and an appraisal. Bankrate says:

“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Home Appraisal

The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Bottom Line

The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Work with a real estate professional today so you have the expert guidance you need to navigate the entire homebuying process.

The post What’s the Difference between a Home Inspection and an Appraisal? appeared first on Residence HQ.

“Move-in-ready homes with curb appeal and in desirable areas—and that are priced to sell—are especially likely to move quickly this spring.”

In today’s market, how you price, your house will not only make a big difference to your bottom line but to how quickly your house will sell.

Why Pricing Your House Right Matters

Your asking price sends a message to potential buyers, especially today.

If it’s priced too low, you may leave money on the table or discourage buyers who may see a lower-than-expected price tag and wonder if that means something is wrong with the home.

If it’s priced too high, you run the risk of deterring buyers. When that happens, you may have to lower it to drive interest when your house sits on the market for a while. But be aware that a drop can be seen as a red flag by some buyers who will wonder what it means about the home.

To avoid either headache, price it right from the start. A real estate professional knows how to determine the ideal asking price. They balance the value of homes in your neighborhood, current market trends, buyer demand, the condition of your house, and more to find the right point. This helps lead to stronger offers and a greater likelihood your house will sell quickly.

The visual below helps summarize the impact your asking price can have:

Bottom Line

Homes priced at the current market value are selling faster, at a better price, and with less hassle right now. To make sure you price your house appropriately, maximize your sales potential, and minimize your hassle, reach out to a trusted real estate professional.

The post Want to Sell your house this spring? Price it right! appeared first on Residence HQ.

“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

With spring approaching, now’s a great time to consider if buying a home makes sense for you. The best way to figure that out is to talk with a trusted real estate professional.

The Largest Part of Most Homeowners’ Net Worth Is Their Equity

You may be surprised to learn just how much of a homeowner’s net worth actually comes from owning their home. The National Association of Realtors (NAR) shares:

“Homeownership is the largest source of wealth among families, with the median value of a primary residence worth about ten times the median value of financial assets held by families. Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage.”

In other words, home equity does more to build the average household’s wealth than anything else. And according to data from First American, this holds true across different income levels.

Investing in Real Estate

Owning a home is not just about having a place to live, but it also offers numerous financial benefits, regardless of one’s income level. One of the most significant advantages is that it provides financial stability and a pathway to build wealth. Unlike renting, where you may be subject to rising rents or an unexpected lease termination, owning a home offers greater control and predictability over your housing costs. Additionally, as you make mortgage payments and pay down the principal of your loan, you build equity in your home, which can be a valuable asset over time.

Furthermore, homeownership can provide tax benefits, such as deductions for mortgage interest and property taxes, that can reduce your overall tax burden. Moreover, owning a home can also provide a sense of pride and accomplishment, as well as a stable environment for yourself and your family.

To take advantage of these benefits, it is essential to work with a local real estate agent who can guide you through the home-buying process. They can help you identify properties that fit your budget and lifestyle and provide insight into the local housing market. With the help of a knowledgeable agent, you can start investing in homeownership and take the first step towards building financial stability and wealth for yourself and your family.

The post One Major Benefit of Investing in a Home appeared first on Residence HQ.

1. Lean on a Real Estate Professional

Rely on an agent who can support your goals. As Bankrate notes:

“. . . select the best real estate agent for your needs. They will be a critical part of your home buying process.”

Agents are local market experts. They know what’s worked for other buyers in your area and what sellers may look for in an offer. It may seem simple, but catering to what a seller needs can help your offer stand out.

2. Know Your Budget

Understanding your budget is especially important right now. As Sandy Higgins, Senior Wealth Advisor at Capstone Financial Advisors, puts it:

“Understand your current budget … what are your expenses, how’s your spending, would you need to make changes?”

The best way to understand your numbers is to work with a lender so you can get pre-approved for a loan. It helps you be more financially confident, and it shows sellers you’re serious. That can give you a competitive edge.

3. Think Through Everything Before Making an Offer

Today’s market isn’t moving at the record pace it did during the pandemic. That means you may have a bit more time to think before you need to make an offer. According to Danielle Hale, Chief Economist at realtor.com:

“In general, you likely have more time to make an offer, although that’s certainly not a guarantee. If you’re on the fence about a home or its asking price doesn’t quite fit your budget, you might want to keep an eye on it, and if it doesn’t sell right away, you may have some room to negotiate with the seller.”

While it’s still important to stay on top of the market and be prepared to move quickly, there can be more flexibility today. Lean on the advice of your agent as you explore the options in your market.

4. Work with Your Advisor To Negotiate

During the pandemic, some buyers skipped home inspections or didn’t ask for concessions from the seller in order to submit the winning bid on a home. Fortunately, today’s market is different, and you may have more negotiating power than before. When putting together an offer, your trusted real estate advisor will help you think through what levers to pull.

The post How to Make your Best Offer on a Home? appeared first on Residence HQ.

What is home equity?

Your home equity is your personal financial investment in your home. Generally speaking, it’s your home’s fair market value, less any mortgage balances or existing liens — including the balance you owe on your mortgage.

It’s important to note that your home’s equity is not the same as your net proceeds. When you go to sell your house, you’ll have to pay closing costs and other fees related to the transaction. These expenses are paid directly out of your equity before you can even access the money, thereby decreasing your total profit.

How does home equity work?

When you first purchase a home, your equity is simply your down payment amount. Then, as you pay off your mortgage balance, any payment applied toward the principal increases your equity. Your equity also increases as your home’s value rises with your local real estate market. In an ideal world, the market is healthy and appreciating, and your equity and net worth increase over time. 

There are three ways your equity increases. And no matter how you are gaining equity, more equity is always better. It’s an asset that you can tap into down the road when you decide to sell, take out a second mortgage or get a reverse mortgage. 

1. Equity increases with mortgage payments

Every time you make a mortgage payment, part of your payment goes toward principal, and part goes toward interest (you may also pay property taxes and homeowner’s insurance as part of your payment, but for brevity’s sake, let’s just consider the parts of your payment that affect your equity). The principal is what builds your equity.

At the beginning of your mortgage, the bulk of your payment will go toward interest for your lender. The change in the principal versus interest payment over time is called an amortization schedule. Depending on the length of your loan and your interest rate, at some point down the road, the balance will shift, and the majority of your payment will go toward principal, helping you build equity even faster. 

2. Equity increases with market appreciation

As long as housing market conditions are healthy, your home’s value should appreciate over time. Of course, how much equity you’ll gain (and if you risk losing equity) depends on your timing. 

For example, if you bought at the height of the market — in 2006, for instance — and then tried to sell during the Great Recession, you might have ended up with negative equity. Also called “being underwater,” negative equity is when you owe more on your home than it’s worth. Since markets typically appreciate over time, being underwater on your loan is relatively rare. 

3. Equity increases with home improvements

You can also increase your equity by completing home improvements. New mechanicals, landscaping, additions and renovations (when done strategically and with budget in mind) often boost your home’s value, in turn increasing your equity stake. 

Some of the most popular home improvements include minor kitchen remodels, exterior improvements, bathroom remodels and finishing basements. It’s rare to complete a home improvement project with a 100% return on your investment, but you can come close if you take a strategic approach. Focus on improvements that buyers love, and be cautious of over- improving. 

How to calculate home equity

Now that you know what home equity is, you probably want to know how much equity you have in your own home. Knowing roughly how much equity you have is helpful if you’re thinking of selling, and it’s also an important factor if you’re considering a home equity loan or line of credit — more on that later. 

Most people don’t own their homes outright. 59% of homeowners are still paying a mortgage on their homes. This means that calculating equity isn’t as easy as simply assessing your home’s market value. 

1. Find out what your home is worth

Depending on when you purchased your home, it might be worth more or less than you initially paid for it. To find out what your home is worth, run the comps yourself or have your real estate agent provide a fair market value for your home, based on similar recently sold properties in your area. Here’s an example to walk you through the calculation: You purchased your home in June 2013 for $250,000 with a 20% down payment and a 4.07% interest rate. Today, your home is worth $315,000. 

2. Subtract your loan payoff amount

Now you’ll want to factor in your remaining mortgage balance. Contact your mortgage lender for a loan payoff amount, also called an estimated settlement statement. 

Note that your loan payoff is not the same as the loan balance you see on your monthly payment. A loan payoff factors in interest up to your estimated closing date, whereas your statement is only calculated once a month. Your loan payoff might also include a prepayment penalty if you’re selling soon after buying. For the purposes of this exercise, we’ll assume your closing date is today. 

If you don’t have a remaining mortgage balance, your equity is equivalent to your home’s current market value. 

Example: Keeping the same example as step one above, with your 20% down payment, you originally borrowed $200,000. After six years of monthly mortgage payments, your loan balance as of June 2019 is $176,472 with your 4.07% interest rate. 

3. Take the difference as your equity

Subtract your loan balance amount from your home’s current market value. 

Example: Fair market value of $315,000 minus $176,472 in loan payoff amount equals $138,628. 

Remember, that doesn’t mean you will pocket $138,628. At closing, you’ll still need to pay closing costs, which can include taxes, escrow fees and agent commissions, all of which can total 8% to 10% of the sale price. At 10% in closing costs, you’ll end up netting $124,765. 

If you really want to get into the details of your profit, you may also want to subtract any money you spent getting your house ready to sell, like home improvements, repairs or staging.

How much equity do I need to sell my house?

To sell your house, you’ll want at least enough equity to cover closing costs, commissions and any liens on the property. Liens include any outstanding debts on your property, like if you neglected to pay a contractor or are behind on your property taxes or HOA dues. 

Without this equity, you’ll have to bring money to the closing table to settle up your debts. Remember, closing costs can reach 8% to 10% of the sale price, which includes 6% in agent commission and 2% to 4% for other charges. 

If you have negative equity and are at risk of foreclosure due to missed payments, you might consider a short sale, but it can be a challenging process. Your lender will have to agree to it, since they’ll be accepting less for the home than they’re owed. And it can have a significant negative impact on your credit score. 

What happens to equity when you sell your house?

When you sell your home, your home equity is given to you in cash, less any applicable closing costs, your mortgage balance and any other outstanding liens on the property. 

Here’s how the process works:

1. The buyer and/or their lender transfers funds to the escrow account. 
2. Your escrow agent pays off your mortgage, based on the loan payoff amount. They’ll also pay off any outstanding liens. 
3. Your escrow agent pays off any transaction fees, including commissions, property and transfer taxes, or prorated HOA fees. 
4. The remaining proceeds are transferred to the you, the seller. You are now free to use that money to purchase another home or pursue another investment. 

How long does it take to free up my equity when selling?

The average time between a home going under contract and closing is 45 days, but that doesn’t include the time it takes before you receive (and accept) an offer. In 2018, the typical U.S. home spent between 65 and 93 days on the market, from listing to closing. The time on the market varies greatly depending on local market conditions, demand and seasonality. 

Part of what makes closing on a home so time-consuming is the buyer’s loan process. Since 77% of buyers use home loans to purchase, they have certain contingencies they need to meet before they’re “clear to close,” including completing a lender-ordered appraisal and having all of the loan paperwork prepared. 

If you want to free up the equity in your home sooner than two to three months, try the following:

Find an all-cash buyer: Cash buyers can typically close faster, as they don’t have a lender to wait on. They also may waive contingencies to speed up the process. But you’ll still have to take the time to find your cash buyer first! 

What happens to equity in a reverse mortgage?

With a reverse mortgage, you slowly give up equity over time in exchange for monthly cash payments. It’s a way to access the equity in your home without selling, and it’s available to homeowners of retirement age who already have significant equity in their homes. 

How much equity do I have in my home to borrow?

If you want to tap into your equity to make home improvements or pay for other expenses, you have a few options, including a home equity loan and a home equity line of credit (HELOC). 

Here are a few common reasons homeowners might want to take out a home equity loan or HELOC:

• Pay for college, if the interest rate is lower than student loans
• Complete home improvements that raise the home’s value
• Invest in other types of investments with a higher return
• Pay off high-interest debt
• Have an emergency fund available for medical bills or unforeseen expenses 

Traditional home equity loan

A home equity loan is a lump sum loan that you pay back in monthly installments over 5 to 15 years. It is secured by the equity in your home. Here are key features of a home equity loan:

You owe interest on the whole amount: When you apply for a home equity loan, you request a specific dollar amount, then pay interest on the entire amount you’ve borrowed. How much you borrow determines how much you’ll pay each month. 

Interest rates are fixed: Home equity loans have a fixed rate that won’t change over the life of the loan. 

Home equity line of credit (HELOC)

Like a home equity loan, a HELOC uses your home’s equity as collateral. However, it differs in a few key ways:

It is a revolving line of credit: Instead of borrowing a set amount upfront, a HELOC allows you to borrow against the equity in your home on an as-needed basis. Withdraw what you need over time, based on your financial needs. A HELOC can typically be opened up to a loan-to-value ratio of 85%. 

You only owe interest on what you borrow: Much like a credit card, you only pay interest on the amount you borrow, not the total amount you are approved for. 

Interest rates are variable: Your interest rate will vary based on the prime rate. This can be good news if rates drop but bad news if interest rates are on the rise. 

For More Discussion about your properties, free free to contact Residence HQ

The post How to Calculate Home Equity? appeared first on Residence HQ.

Celebrities such as Kim Kardashian have helped to popularize home minimalism. This minimalist style is considered the new luxury. It is a rejection of overdone flamboyance in favor of simple design.

Here are the best ways to decorate in a minimalist style to achieve that elegant, simple look without making your home feel sterile or boring. Modern decor and contemporary interior design are closely associated with minimalist design. But what sets it apart is that the minimal design is truly reduced to the essentials. Let’s look at what minimalist decor is all about.

Bare essentials:

First and foremost, the entire concept of minimalist decor that underpins a minimalistic lifestyle is that you do not purchase anything that you do not require. When it comes to decorating your home, this way of thinking should also shine through. Before you begin decorating your home, consider the bare necessities that you will require. Resist the urge to deviate from these bare necessities if you truly want to live in a minimalist home!

White, grey and black

A minimalist home interior typically employs a limited palette of colors. The primary colors for a minimalist home are white, gray, and black. These colors are not only very common, but they also have the advantage of being very subtle. By using neutral colors, you’ll be able to experiment with texture and lighting in your design.

Clear line:

In terms of home interior design, the minimalistic style has two main characteristics: clean and simple. Specifically, by adhering to these two principles, you can create a very elegant, subtle, and modest atmosphere in your home. One way that you can put these into practice is by using clean, simple, straight lines in your interior. This means you should steer clear of complicated patterns.

Monochrome pallet:

The majority of minimalist homes have a monochromatic color scheme. This means that only one color has the upper hand. This is usually a shade of white, grey, or black in minimalist homes. This color serves as the starting point, from which you can experiment with subtle color nuances, shades, and even textures.

To make this less abstract, a monochromatic palette implies that you decorate your home with light, natural colors, and for a finishing touch, you can work with subtle touches of other color tones such as blue or beige.

Textiles:

Minimalist homes have the undeserved reputation of being slightly cold and lifeless. Even though this is not the case, there are some useful tips you can use to add a dimension of warmth to your minimalistic home interior. Working with textiles is one way in particular to accomplish this. This can not only add warmth to your home decor, but also texture and extra layers. You can, for example, purchase carpets, bedding, pillows, or curtains to make your home feel more comfortable and welcoming.

Contemporary furniture:

The addition of contemporary furniture is another obvious aspect of minimalist home decorating. Modern furniture was created after the turn of the century. Contemporary furniture was developed much later and refers to pieces manufactured within the last 20 years.

Aside from the element of time, contemporary furniture is distinguished by its elegance and simplicity. This furniture is distinguished by its geometric, clean shapes, and thus there are no non-essential elements in this department. If you buy contemporary furniture to decorate your home, keep in mind that you should not tarnish the modern look by adding unnecessary decorations or frills, as this will – quite frankly – ruin your minimalistic look.

Add mirrors:

The final tip in this ultimate guide to minimalist home decor is to hang modern mirrors to decorate and make your home feel larger. Choose modern, unframed mirrors to complement your elegant, simple home decor. This will add style and peace to your home. The greater the size of the mirror, the better!

“Check out our more interesting blogs here!“

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To better understand how to prepare emotionally for what can be a marathon search, we spoke with Christina Koepp, a licensed mental health counselor at Wellspring Family Services, and asked her to weigh in on what home shoppers can do to cope with this pressure-cooker of stress.

What makes buying a home so stressful?

Buying a home can invite pressure from every direction. Let’s look at just a few of the potential stressors.

Choosing a home

A home purchase is one of the most significant financial decisions many people make in their lifetime, and on top of that, the process affects basic necessities like shelter and safety.

“Buying a home taps into all parts of our mind: our basic need for shelter, our attachment needs for a safe place to connect with ourselves and others,” says Koepp. “To take the risk and make an offer on a home, we need to be willing to attach to a new place to live, and — simultaneously — hold it loosely enough that it won’t be devastating to lose the bid. It’s a narrow path of guarded optimism.”

The real estate market 

Just about anywhere you look in the U.S. these days, you’ll find a sellers market. This can make the stress of buying a house feel even more pronounced. A sellers market can bring anxiety accelerators like seemingly endless open houses, bidding wars, and getting outbid by all-cash buyers. 

The loan approval process stress

If you’re working with a lender, the process can take weeks or longer. Expect lots of paperwork, which can be all the more grueling if your dream home is waiting. (To ease some of this tension, get pre-qualified before you find a place you want.)

Working with an agent who’s not a fit 

Almost one in five buyers (18%) report that it’s “difficult or very difficult” to find the right real estate agent. If your agent isn’t a good fit, they can add pressure where they should be alleviating it.

Read on for tactics on how to navigate what can be both a stressful and exciting journey.

How can I mentally prepare for the stress of buying a house?

“If you ‘fall in love’ with every home you see, it leaves little room for discerning which is the best fit,” Koepp says. “And you can quickly become emotionally fatigued with each lost bid or opportunity.”

Instead, it can be helpful to think of your home buying journey as a balancing act between vulnerability and healthy detachment. In other words, try to be “vulnerable enough to imagine your life in this potential new place,” says Koepp, while simultaneously employing “the very healthy protective impulse of avoiding getting attached too fully and too quickly.”

Some more tips:

Think about your hopes and preferences in general terms 

With each new home, ask yourself how you’ll feel if you don’t get it, says Koepp. When you encounter a loss, talk about it with someone. Discuss what excited you about the home, then carry that forward in your search. In short, keep an open mind as you search for your dream home.

Avoid all-or-nothing thinking by considering your preferences in a general sense — an updated home, an architectural style, a set of neighborhood characteristics, etcetera. This can remind you that there’s more than one place to find joy and contentment.

Identify your non-negotiables as clearly as possible 

The way to balance being general with your wants is to be as clear as possible with your deal-breakers. “Know before you look if you’re really only open to a condo with three or more bedrooms, or a house with a garage,” says Koepp. “It’s easy to be swept up in a home that may have some dream elements, even though it has deal-breaker issues.”

Above all, Koepp says, offer yourself the grace that this won’t always be a neat and tidy process. “You get to be human in the midst of it.”

Find the right agent to help you cope with the stress of buying a house

Your agent is your guide through an often complicated journey. Make sure they provide peace of mind and not the opposite. If your agent is doing something that makes you uncomfortable, communicate it to them. Further, clearly articulating your wants, preferences, and non-negotiables will help your agent get aligned. This can ease your mind and allow you to focus on what’s important. If it’s still just not a fit, consider looking for a new agent. 

Tips for easing the stress of buying a house in the current housing market

Manage your expectations

“Prepare for a marathon, even if it’s just a sprint,” says Koepp. You don’t know how long it will take to have an offer accepted. “It could be a couple homes you offer on; it could be 12.” Keeping your expectations flexible helps avoid disappointment.

Extend kindness to yourself 

Koepp says this part can be challenging for some people. “It can be easy to doubt your judgment, become angry with your home-buying partner, or get obsessed with searching,” she says. “All these responses are understandable! Being kind means finding ways to rest, recharge and integrate each step along the way.”

A few things to try: Take a short break from scrolling through listings to re-center yourself, prepare a comforting meal after a lost opportunity, or be intentional about regularly getting to bed earlier, if you can.

Talk about your home buying stress with someone you trust

It’s helpful for many people to simply “say out loud what’s rolling around in their mind,” says Koepp. “Some prefer to journal. Use whatever works for you; try to share the challenges, insights, dreams and goals that you’re noticing. Reach out often to loved ones to keep your awareness, energy, and perspective in line with your goals and hopes.” This will help you process as you go. 

How to bounce back after an unsuccessful offer

First, pause to reflect, then let it go 

Koepp says it’s important to honor the deep disappointment that can result from a lost opportunity you felt invested in. “Take a few hours or even a couple days to acknowledge that experience, and know it will fade.” Next, find a way to feel gratitude. This may help counter the propensity to dwell solely on what was lost. 

Learn from each loss 

“In my experience, each bid process is unique and comes with its own challenges and insights,” says Koepp. “Again, note what you were surprised by and integrate it into your process for future bids.”

The post How to manage the Stress of Buying a House appeared first on Residence HQ.

FAQs

What is a home inspection?

Performed by a licensed professional home inspector, a home inspection is a comprehensive review of the home that’s for sale, based on a visual evaluation and testing the home’s systems and components. The result is a home inspection report, which details the current condition of the home and alerts buyers to any major issues. Most buyers request a home inspection when buying a home so they can avoid spending thousands (or more) in unexpected repairs after closing, and to protect themselves from overpaying for the property.

What is a report contingency? Is it common?

A home inspection contingency is an addendum to the offer contract that allows the buyer to conduct an inspection and then back out of the deal if they are unsatisfied with the findings. Occasionally (and most commonly in a very competitive sellers market), buyers may waive their right to an inspection in order to make their deal more appealing to the seller.

What’s included in the home inspection contingency?

The language in each contract varies, but usually it states that the inspection must be satisfactory to the purchaser, and if it’s not, they can renegotiate the terms of the deal or call the deal off and receive any earnest money back in full. If you have questions about the terms of the home inspection contingency your buyers are presenting, ask your real estate agent — before you sign.

Who pays for a house inspection report?

Typically, the buyer pays for their own inspection, and can use a licensed home inspector of their choosing. However, sellers who may be concerned about what might be found in an inspection sometimes opt to pay for their own pre-inspection. Based on the results, you can price your home accordingly, and you won’t be surprised by the results of your buyer’s inspection. Do note that any problems revealed in your pre-inspection have to be disclosed to your buyer.

How long does the buyer have to conduct a home inspection?

The timeline depends on the market and the contract, but within 5-10 business days of both parties accepting the deal is standard.

How long does a buyer have to request repairs from a home inspection?

Again, it depends on the market and your specific contract. Usually, the 5-10 business days allowed in the contract includes both conducting the inspection and requesting any repairs in writing. In a buyers market, buyers sometimes have more time, but in a sellers market, they usually have to act quickly.

Should sellers attend the home inspection?

If you’re selling your house on your own, then it makes sense for you to attend the home inspection. If you’re working with an agent, it’s best to have them attend on your behalf.

Top reasons home inspections fail

Sellers are often caught by surprise when a buyer’s inspection report comes back with a long list of repairs, even if the home isn’t very old. Here are some of the most common major issues that come up during inspections.

• Roofing issues: Roofing troubles can range from a few missing shingles to leaks or soft spots, or even a full roof replacement if the roof is old or failing.
• Electrical problems: The most common electrical issues include wiring that’s not up to code, frayed wiring, or improperly wired electrical panels.
• Plumbing issues: Leaky pipes (and resulting water damage), failing water heaters, and sewer system problems are some of the most expensive.
• Foundation problems: Cracking foundations, settling, and basement water damage can be costly fixes.
• Termites and pests: Termite damage, as well as the presence of other pests or vermin, can be a big red flag for buyers.
• Mold: Mold issues are a common problem, especially in wet or humid climates, and repairs can be extensive.
• Window and door issues: Failing window seals, windows and doors that don’t open and close properly, or broken panes are commonly found by inspectors.
• Asbestos or lead paint: This is a serious issue, and something you should be especially cautious of if you’re selling an older home. Many contracts have specific requirements related to asbestos and lead paint, so be sure to disclose everything you know.
• Chimney damage: Old chimneys can be a safety hazard, and they often need to be removed if not in working order.

While a bad home inspection report isn’t what any seller is hoping for, the good news about the process is that as a result of the inspection, the buyer knows what they’re getting into and has the chance to ask for repairs or walk away — both actions that protect the seller from future liability.

Buyer action: What happens after a home inspection?

Depending on the terms of your contract, the buyer may do one of three things after receiving the inspection report on your home:

• Request repairs: The buyer may request that the seller complete a list of requested repairs, as a condition of the sale moving forward.
• Ask for a credit: The buyer may request a credit (also called a concession), in an amount that’s enough to cover the repairs. They request a dollar amount they want back as a closing credit, which won’t change the purchase price, but will lower your net profits. This is a common option for buyers who want to do the repairs on their own terms, or if sellers are refusing repairs.  
• Back out of the deal: A worst-case scenario, the buyer can usually back out of the deal as a result of a bad inspection. Note that buyers who are getting cold feet will sometimes use the inspection as an excuse to back out, even if the report only finds minor issues.

Questions sellers should ask themselves (and their agent) after the home inspection

• Which repairs are mandatory? You’ll want to prioritize repairs that are a safety concern or legal issue.
• How much will repairs cost? If you’ll be taking care of the repairs, you’ll want to get at least three quotes from reputable contractors.
• Do you have to hire a professional or can you DIY the repairs? It depends on what your buyer requests, the type of repair, and your own skill level.
• How much credit will you have to offer if you don’t opt to do the repairs before closing? The amount and type of credit you offer to the buyer varies based on the level of repairs needed, but you’re in good company — 83 percent of sellers make some sort of concession to close the deal.
• How can you negotiate repairs? Your real estate agent is a big resource here, as they should have negotiation strategies that help buyers and sellers meet in the middle on repair requests and come up with reasonable solutions.
• Should you even bother with repairs? In some cases, it may make sense to consult with your agent and weigh the pros and cons of the costs of repairs versus letting the buyer walk and re-listing your home as-is.

Bad home inspection recourse for sellers

Don’t panic if you receive a bad home inspection. Reasonable buyers will understand that no home is perfect — not even new construction. And remember, they want to buy your house! So, they should want to move the deal forward as much as you do.

You have a few options, and should pick your course of action based on what makes the most sense for you financially and for your local real estate market. Here are some options:

• Make the repairs: If you feel that the repair requests are reasonable and you can afford to complete them, this is usually the best course of action. You’ll want to keep the deal moving forward if at all possible, since if the deal does fall apart, you’ll have to disclose the findings of this first report if you re-list your home, and you could risk scaring off a future buyer. 36 percent of buyers have the seller correct the problem before purchase.
• Give a credit: As we mentioned above, buyers are often amenable to a repair credit. But, even though you won’t be completing the repairs, you’ll still want to get quotes from a contractor so you don’t offer a credit that’s way too high.
• Sell as-is and lower the sale price: Selling a home as-is with a lower sale price can be a practical solution if you can’t afford to do the repairs or if you’re in a hurry to sell.
• Offer a one-year home warranty: Purchasing a home warranty for the buyer can be a nice olive branch to offer. It will only cost you a few hundred dollars, and it gives the buyer peace of mind in case any issues come up in the first year after closing. This is especially appealing for inspection findings that aren’t necessarily failing items, but aging systems that will need to be replaced within the next few years.
• Barter in other ways: You can always offer to barter with other items, like furniture that wasn’t originally included but the buyer might want, or appliances you weren’t planning on leaving behind.

Home inspection problems: What to do if you don’t trust the inspection report

Knowing what to do when a home inspection is bad can be tricky. Buyers choose their own home inspector, and occasionally a seller will feel like the report is incorrect or exaggerated.

Regardless of the inspection results, home inspectors should not be advising buyers as to whether they should move forward with the purchase. Their job is simply to inspect and report their findings, and then let the buyer come to their own conclusion.

Home inspectors have been sued before by sellers who believe a deal falling through was the fault of the home inspector and their incorrect reporting. Whether you’re able to sue the inspector depends on state laws. However, it can be difficult for sellers to challenge the inspection as a third party, since the relationship in question is between the buyer and the inspector.

What to do if the buyer backs out

Remember, if a buyer backs out and you re-list, you’re going to have to disclose whatever was found in the report to future buyers, so the best thing to do is go ahead and complete the repairs and hold on to documentation from your contractor that proves the work was done.

You could also add a mention of the repairs to your listing description. Buyers and their agents will know your home is back on the market after being under contract, and being forthcoming about why — and letting buyers know that all issues have been fixed — can be a good strategy. Here’s an example: “Seller has fixed every item from previous inspection report, including a new roof and electrical panel.”

Common seller repairs after home inspection

Before you go too far down the path of arranging for seller repairs after the home inspection, it’s important to separate reasonable buyer requests from unreasonable ones. Buyers shouldn’t expect the house to be flawless.

Reasonable requests after a home inspection

• Major electrical issues that are safety or code issues
• Plumbing, drainage, sewer, septic, or water issues (or well water issues, if applicable)
• Mold or water damage
• HVAC problems that affect home comfort
• Leaking roofs or missing shingles
• Termite and pest damage
• Building code violations
• Lead paint or asbestos
• Elevated radon levels (a common issue in homes with basements)

Unreasonable requests after a home inspection

• Anything under $100 that the buyer can reasonably fix on their own (especially in a sellers market, where buyers shouldn’t want to come off as overly picky)
• Cosmetic issues, like paint touch-ups or older tiles
• Minor water damage, like a leaky toilet
• Renovations — you’re not responsible for turning the home into your buyer’s dream home
• Loose fixtures that can easily be fixed with a few tools
• Minor electrical fixes
• Basement floor cracks that have no structural impact
• Cosmetic landscaping or garage cleaning

The post What is Bad Home Inspection for Sellers? appeared first on Residence HQ.

However, the process of buying land is different and often more difficult than buying an existing home. Knowing how to buy land can help you determine whether it could be the right path for you. Before making any decisions, ask yourself the following questions:

How will the zoning rules affect your long-term plans for the property?

Every piece of land is zoned or classified for a specific use, whether it’s residential, agricultural or commercial. Local counties or cities establish the zones and the rules about what they will allow in those zones. The local department that keeps that information is usually called the zoning, planning or building department. 

Zoning information is critical in determining whether you’ll be allowed to build what you want on the property. The rules will be different for each county or city. Many cities and counties put their zoning maps and property information online, so be sure to check the department’s website first.  

Beyond your specific parcel, you’ll want to consider the immediate area and any plans that could affect the value of the property or your ability to enjoy it. You can find that information in the county or city’s “general use” plan.” This spells out plans for the area over the next 5, 10 or 15 years.

For example, suppose you want to build a home on a quiet parcel in a rural area. The planning document can tell you whether there are future plans in that area for a landfill, power plant, commercial zone or new road nearby that could influence whether you want to live there. 

Staff at the government agencies responsible for zoning are well-versed in the details of the plans and can answer any questions you have. No one expects you to be an expert, so reach out to them if you need help deciphering the plans.

Are there deed restrictions on how you can use the land?

A deed is the legal document that transfers ownership of a property. It includes a description of the property, along with any restrictions on what you can build or how you use the land. Deed restrictions are found most often in communities governed by a homeowners’ association (HOA). You’ll need to follow the restrictions in addition to whatever zoning rules apply. 

Some common deed restrictions imposed by HOAs include:

• limits on vehicles and where they’re parked
• fences
• types of pets
• types of home-based businesses
• the amount of time you’re allowed to live in an RV during the year 

Ask the HOA for a copy of its Covenants, Conditions and Restrictions (CC&Rs), which spell out the restrictions. Read it carefully. If you have any questions about the CC&Rs or if there is no HOA to obtain them from, consult a real estate lawyer for more information. A real estate lawyer can assist in obtaining this information through a title search.

Can you build on the land?

It may seem like an obvious question, but there are numerous factors that can foil your plans for building on a piece of land. Contact your county or city planning department to gather information about the parcel you’re considering. Questions to consider include:

Is the land prone to hazards such as landslides?

Is the land in a flood zone? If it is, the flood designation could require flood insurance, which can cost hundreds of dollars a year.

Does the land contain wetlands or other environmentally sensitive areas? 

What is the land’s topography? Flat parcels are the cheapest to build on. If you have to move a lot of dirt and trees to create a building pad, it’s going to cost more to build. 

How close to the property line can you build? Local governments impose building restrictions called setbacks on property that will affect where you can build on the land. A setback creates a buffer zone of sorts. It establishes a minimum distance between the home you want to build and a curb, property line or other structure. Setbacks, which contribute to safety, aesthetics and privacy, differ depending on locale. Take the property setbacks into account when determining whether there is a large enough building space for your home in the area you want to build. 

Is the soil suitable for building? A simple soil test or geotechnical investigation can determine how much weight the soil can handle. This is critical information that will tell you whether the ground is strong enough to support a foundation. It can be required before you can get a permit to build on the land.  

If you’re planning to farm the land or suspect there’s some contamination, a soil test can provide that information, too. And if you’re in a rural area with no sewer connections, a percolation or perc test can tell you whether the soil has suitable drainage for a septic system.

Consider adding contingencies when buying land

If you’re going to make an offer, you should consider adding contingencies that will give you time to investigate whether you’ll be able to use the land the way you intend. Among the more common contingencies:

• zoning
• septic system viability
• a survey showing easements and property lines
• environmental tests if warranted

Having contingencies can allow you to walk away without losing your earnest money if the limitations on the land conflict with your plans.

Are you buying land with easy access?

How will you get to the property? If it’s on a main public road, you’ll likely have no problem.

Often, especially in rural areas, the only access to a piece of land is over someone else’s property. Without what is known as an “easement,” your property is considered landlocked. 

Ensure that a right-of-way easement — essentially a right of passage — is granted, in writing, before you agree to buy the land. Otherwise, you won’t be able to access it by land, which could  diminish its use and value. 

A potentially fast way to find easement information is to check the plat map for the property. A copy of the plat map, which also shows the property boundaries and measurements, can be found at the county or city clerk or recorder’s office. However, plat maps and recorded easements can be confusing and complicated to understand, so speaking to an attorney or other professional in this area is highly recommended.

If there is no existing road to the property, you’ll need to factor the cost of building one into the purchase price.

Are there utilities on the property or will you have to install them?

In larger planned developments, the builder generally brings utilities, such as water, sewer, natural gas and electricity, to the lots.

In rural areas, however, buyers may need to go to greater lengths to connect to utilities. That could involve drilling a well, installing a septic system or digging trenches to connect with electricity or water. All are likely to be costly projects. Off-grid technologies can open up possibilities for power, water and waste disposal, but the cost and viability of those options should be considered. 

Does your parcel have internet access?

Internet access also could be a major issue for people who need high speeds — or reliable access — for work-from-home situations. There are increasing numbers of work-around solutions, including accessing the internet via cellular service providers. However, home connection to an established provider tends to offer the most reliable service.

Get bids or estimates on any work that needs to be performed before you sign a purchase agreement, or have your real estate agent make your agreement contingent upon your acceptance of the bids or other due diligence investigation. 

How will you purchase the land?

Not all lenders handle vacant land loans, so it may be a bit of a challenge to finance your purchase. 

The owners of raw land —  which is land without any utilities, sewers, or streets — may offer seller financing when they’re selling it. If not, try local banks or credit unions.

People can buy raw land with no intention of building on it. Raw land lenders set their own qualifications and LTV guidelines that establish the level of risk they’re willing to assume on a particular loan. Higher risk loans tend to come with higher interest rates.

But if you’re buying land with the intention to build on it, there are a few things to keep in mind.

Buying land to build a home

If you intend to buy land and then build a home on it or buy a modular/manufactured home, it’s best to determine if you can qualify for a construction-to-permanent loan first. Once the home is near completion, you can start searching for a traditional mortgage to refinance your construction loan.

If you’re seeking financing in this way, consider the costs involved in developing the land when applying for a loan. The costs can include tree removal, grading, drainage and creating an access road, as well as bringing utilities to the site and building a structure. Get bids or estimates for all the work required before seeking financing so you’ll know how much you need and what type of financing to apply for.

Buying land with utilities

If you‘re buying a piece of land that already has utilities on it, and plan to live on it in an RV or tiny home, the financing is likely to be straightforward. But if you’re planning to build, you may be required to have building plans in hand in order to apply for a construction-to-permanent (CP) or combined construction loan to finance the purchase of the land and the building of your home.

Buying land with cash

If you’re paying cash for the land, it may be possible to obtain a construction loan later to build on the land using your equity in the land as a down payment.

As you can see, buying land has a lot of similarities to the process of buying an existing home, but requires an extra level of diligence to make sure you’re buying the right land for your dreams. It is really important to find a lender or advisor you trust and who can help guide you through all of the intricacies of the financing process for vacant land, especially if multiple loan products are necessary to achieve your goals. 

How to buy land

If you’re just exploring ways to buy land and aren’t ready to engage a professional, start by crowdsourcing some information. Seek out online forums for people who have already gone through the process, or talk to a local builder to see what might be involved. And spend some time searching for what’s available in your desired area. 

The process of buying land generally mirrors the process of buying a home and is likely to  include the following steps: 

Contact a lender 

If you plan to finance the purchase of land, work with a lender to discuss options. This pre-qualifying discussion will help you understand your budget for land. Your lender will walk you through several, possible financing solutions including a land loan, USDA loan, SBA 504 loan (for business use) or a home equity loan. 

Hire a real estate agent experienced in buying land

The process of buying land usually begins with an experienced agent. Look for a professional who is familiar with the area and who has experience in land sales. Some agents who have taken special training in land sales will advertise themselves as an accredited land consultant. You can start by comparing agent reviews.

While it’s possible to do the legwork yourself, a local builder also can help you decide whether a plot is suitable for development and help through the process of developing it.

Shop for land

In addition to working with your agent or builder to identify property, expand your search to include local newspapers, online classified advertising, websites that specialize in land and even an in-person search of the area to look for for-sale signs, especially in rural areas. 

Research the parcel

Consider whether you’ll be able to build the home you want, and whether you can do so within your budget. Some of things to consider include zoning, setbacks, legal access to the land, the availability of utilities, any HOA restrictions and environmental and soil limitations. Reaching out to professionals like lawyers, inspectors, surveyors, and contractors to help navigate all of this information is highly recommended and can make this process a lot easier. 

Submit a land purchase offer

If you have an agent, you’ll work with them to craft an offer. Some of the contingencies to consider: financing, including a property appraisal, title search to ensure there are no liens or other owners, buildability as determined by soil tests, setbacks and zoning. Be sure the offer gives you enough time to investigate the issues so you don’t get locked into a contract on a piece of land that you can’t build on.

Apply for a loan for buying land

If you like the lender you’re working with, formally apply for a loan now that you know the cost of the property. Your lender will verify your income, assets and debts as part of its underwriting or risk assessment process for the loan. 

Close on your land purchase

Once your financing has been approved, your lender will set a day for closing, which is when the sale is finalized. You should have homeowners insurance in place, even if it’s just liability insurance. 

Once you’ve closed, the land is yours.

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