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Tips for First Time Home-Buyers

by Doug & Gwen Campbell at Sun Bay Associates

In the real estate market, when there is low inventory, being a first time home buyer can be a frustrating experience.  We are going to give you some tips that will help ease the frustration by avoiding some of the problems that the unprepared buyer will run into over and over.

The first and probably most important step of the home-buying process is to get pre-approved for a mortgage before you even start looking at houses.  Pre-qualified is good, however, pre-approval is better since the buyer is further along the process and the lender will be able to let the buyer know what the proper price range should be.  This information helps you avoid the problem of looking at houses that are really out of your price range and  keeps you from being greatly disappointed.  Pre-approval also lets the real estate agent know you are serious.  In fact, most professional real estate agents will insist on a buyer being pre-approved before even showing a house.

Second, it is very important to know what you absolutely need to have versus what you would like to have.  Is that bidet in the bathroom really a deal killer, or is it something that would pretty cool.  Or do you really have to have a two car garage for your one car family?  Is a fully outfitted workshop necessary or can you plan on that for a future project?

The best way to hone in on the house that fits our needs is to prepare your list before you actually get started.  Create a chart and put the things that you positively NEED on one side of the chart. Then, itemize the things that you would really like to have, that are not deal breakers, on the other side of the chart.  Use this as a guide when looking at houses, and since you have already put in the effort to make the determination of what you need to have vs. what would be nice to have, it will be a great tool in your decision making process down the road.

The third thing you need to consider is the neighborhood you want to live in.  There are neighborhoods that are wonderful, except they are in the wrong location, wrong school district, or too far from work, or too near a highway, etc.  Look for the things you want in a neighborhood, such as shopping availability, convenience to highways, or cultural events, or recreation, or churches.  A wise idea is to drive around the area, or even on a Saturday morning take your dog for a walk through the neighborhood and talk to the neighbors.  They will be more than happy to tell you why they live there, and just might mention a plus, or a minus, that will impact your decision.

A fourth item on your home search preparation is to choose your house style and stick to it.  If you are OK with two stories, and climbing stairs, then focus on those types of homes.  If stairs are not your thing, stick to single story houses.  Is a split plan important, so that you can have the master bedroom away from the kids, or does it matter.  How much of a yard do you need?  If gardening is important to you, maybe a condo or townhouse with tiny yard won't work.  It also helps your real estate agent to find you the right properties.  Maybe you are looking for a 55-plus community?  That is the purpose of a buyer's consultation, where the professional real estate agent digs deep into what you need and want in a home.  

People with pets and small children have very different needs than empty-nesters or people who are retired. 

And a fifth thing for consideration, and very important, is to take notes on every house you look at.  Be sure your agent gives you a print out of the listing, with details on the house along with photos to help jog your memory.  After a day of looking at 5 houses, rooms start to blend and the red house with no fireplace actually may have been a white house with 2 fireplaces.  Write your notes directly on the sheet.  After each house, make the determination of which house you liked better, the previous one or the one you just saw. The one you like goes into the keeper pile, the other one gets tossed.  This way at the end of the day, you have one or possibly two houses for consideration, and not a hodge-podge of jumbled recollections.  Believe me, this will really help you in the end when coming time to make the big decision.

After all this preparation, when you see the house you want, since you already were pre-approved, and the house hit on every single one of your need to have items, you can easily sit down and write an offer.

Take all the time you need to find a house you really like and want, however, once you find it, move quickly.  If you like the house, there is a good chance someone else will too.  In a competitive market, your preparation makes a difference and every advantage you give yourself puts you closer to your dream home.

Buyers Need to Know About Closing Costs

by Doug & Gwen Campbell at Sun Bay Associates

Very often buyers come to the closing table to buy the house of their dreams and there is an unpleasant surprise waiting for them. A survey by ClosingCorp of 1,000 first time home buyers revealed that 17% were surprised that there were any closing costs, and 35% were surprised at how high the closing costs were. Wow, someone is not communicating.

 These buyers got the news that it cost money to borrow money, and then other costs were added to the transaction, and they were caught by surprise. What buyers need to understand, and they should be told by the professionals, is that there are additional costs to buying a home over and above the price of the house.

When a buyer is paying cash, the closing costs are minimal. Very often under $1500. When purchasing a home for, let's say, for $250,000, costs to consider include the following.


Bank Fees, such as loan origination, loan discount or other fees unique to that lender

Title Insurance

Credit Report

Survey

Appraisal Fee

Termite Inspection

Home Inspection

Deed Recording

Balance of HOA or condo Fees for the month

Doc Stamps

Homeowner's Insurance

And others as well.

It is incumbent on the lender to provide the information well ahead of closing to their buyers that there will be fees above simply the cost of the house. It can be embarrassing for a buyer to sit at the closing table and not be aware of these charges. The lender and the real estate agent should have disclosed these fees to the buyers so they are  prepared and know well in advance.

Fannie Mae has estimated that closing costs run between 2% and 5% of the purchase price of a house. It is good for the buyer to be aware that if purchasing a home for $250,000, they may need to come up with as much as $12,500 in cash, above the down payment, to have a successful closing.

In order to avoid unpleasant surprises like this, buyers need to work with reputable lending institutions that encourage buyers to ask questions. And real estate agents ought to provide every buyer an estimate of closing costs well ahead of the closing date. This estimate is not a binding document, however, it does notify the buyer that there are costs involved when buying a home. A professional real estate agent will be careful and the estimate in most cases, will be very close to the final amount actually due for closing. 

Buyers should obtain wire instructions directly from the title company so that all funds are wired a day or two in advance of closing. This will eliminate delays at closing, as well as embarrassment.

An informed buyer is a great buyer who will have a good experience.

What Is My House Worth?

by Doug & Gwen Campbell at Sun Bay Associates

How often have you wondered "What is my house worth?"  This is a common question for every homeowner.  Whether your house is a real Victorian mansion or a little cottage, everyone wants to know "What is my house worth?"

There are a few things you can control to enhance the value of your house. 

  1. The curb appeal, does it look good from the street?
  2. Is the lawn neat and trimmed, the paint fresh?
  3. Inside, is the house clean and uncluttered?  Clutter costs you cash.
  4. Are the windows clean?
  5. Are there pet odors, or smoker odors?  These odors will eliminate lots of buyers.
  6. Are the carpets clean.
  7. Is the roof in good condition?
  8. Does the air conditioner perform efficiently and quietly?
  9. Staging.  This is all about presenting your house in the best possible light for the buyer.  Remember, once the seller has made the decision to sell the house, it is now a commodity and must be presented in the best light for sale at the best possible price.

A couple of things you and your Realtor cannot control when wondering what is my house worth.

  1. Location - you really can't say the house would be worth more or less in a different location, it is where it is.
  2. Price.  Some Realtors will tell you they can set the price.  Quite simply, they can't.  The marketplace will set the price.  Some sellers, and some Realtors, won't like it, however, the market will give you the answer to your question, what is my house worth.

So, when pricing your hose, be sure to keep it real, don't ask for more than the market value, don't try to sell memories - buyers want to make their own memories and won't pay a premium for yours.

And most important of all, do everything you can to enjoy the entire experience.

 

How to Be a Successful For Sale by Owner (FSBO)

by Doug & Gwen Campbell at Sun Bay Associates

Are you looking to sell your home?  Torn between using a Realtor or going For Sale by Owner, or FSBO?  Read on and you can be a successful For Sale by Owner or FSBO.

Price your house right.  Do a comparative market analysis, visit homes that are comparable to yours, go to the public records and review recent sales (within the last 90 days, as a rule), and do research on the internet for pricing guidance.  Do this and you should be able to set the price correctly.  Remember, do not price the house at what you want to get, price it where the market will buy it.

Once you have decided on the price, market the property.  Remember, when you have decided to sell, your home has now become a house, a commodity to be sold.  That may sound cold, however, buyers are seldom interested in paying a premium for your family history.  Pin your house on Pinterest, promote it on Facebook, advertise on Craigslist, use Twitter, Instagram and any other social media you would like to.  You can even advertise to a specific audience on Facebook, just be sure you know how so it does not cost a fortune.

Use a good camera to take high quality photos of your house.  Remember, the first look a buyer gets of your house over 90% of the time is on the internet.  Bad photos will greatly reduce the pool of potential buyers.  It may be wise to hire a professional photographer who is experienced shooting for real estate marketing.  Depending on your market, you can find a photographer who will do the work between $125 to $500, depending on the specific needs of the situation.

Then be sure to take advantage of internet sites such as Zillow, Trulia, Homes.com, Realtor.com and perhaps even build your own specific website for the house.  All you need to do for that is buy the web domain, build the site, and put the house on the site.  You may be able to hire a high schooler to do this for you for $500 - $1,000.  Be sure to use relevant keywords so buyers can find your house in an online search.  There are tools available on the internet, such as Google, that teach you how to pick the best keywords.

Now you've got this far, make a video so people can actually see your house.  Upload it to YouTube and buyers will be able to find it online, as long as they use the right keywords.  Be sure to put yourself in the video so you can talk about the best parts of the house, improvements you have made, what attracted you to the house in the first place, and cover important issues a buyer might ask, such as taxes, nearby schools, insurance costs, utility costs, convenience items like shopping or airports, etc.  Even explain why you are a FSBO. 

Come up with a catchy name for your video or website, then link to all your social media outlets.

Put a professional sign in the yard so people driving by will know the house is for sale.  A generic sign with Sharpie lettering on it will get potential buyers to think "Yard Sale" prices.

Make sure that all buyers who want to come into your home are actually who they claim to be and are in fact, qualified to purchase your home.

Being a successful For Sale by Owner, or FSBO, can be challenging and may not be for everyone.  If you do everything right, your may sell your house quickly and for a fair price. Who knows, being a FSBO might even be fun!

Or, you can hire a Realtor who does this already.

First Time Home Buyer Tax Credit - Extended

by Doug & Gwen Campbell at Sun Bay Associates

Attention: 2009 First Time Home Buyer Tax Credit Extended!!

Do you qualify for the tax credit? Find out...

The new law will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight. Additionally, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for married couples.

If you are a first time home buyer and would like to take advantage of the tax credit, or if you are have been in your home for five years or more or the last eight years and would like to take advantage of the $6500 credit to purchase a new principal home, now is the time.

First time home buyer tax credit

by Doug & Gwen Campbell at Sun Bay Associates

Just in case you didn't see our newsletter, this is being posted to bring you up to date.  It is really important.

Home buyers can claim a special tax credit worth up to $8,000. The American Recovery and Reinvestment Act offers qualifying home buyers a tax credit equal to 10 percent of a home's purchase price, up to a maximum of $8,000. The tax credit is offered to first time buyers, and those who have not owned a principle residence in the past three years. To be eligible for the tax credit, buyers must meet general income requirements and close on their purchase before December 1, 2009.

Under new rules introduced recently by the Department of Housing and Urban Development, qualifying buyers can apply the $8,000 tax credit toward the purchase of a home. To facilitate the process, the Federal Housing Administration is permitting its lenders to extend short term bridge loans, which will enable qualifying buyers to apply their tax credit toward closing costs, buying down their interest rate, or increasing their down payment above the FHA required 3.5 percent.

Please contact us today for more details on this once-in-a-lifetime program.

Buyer Beware, Make Sure a Realtor Is There!!

by Doug & Gwen Campbell at Sun Bay Associates

Many home buyers, especially first time buyers, think they can save a little money if they don't work with a real estate agent.  This could be a very expensive mistake.  On of the best reasons for a buyer to work with a Realtor is that it is FREE!  It does not add any cost to the purchase of the house and sellers generally expect that a buyer will be working with a Realtor, since the seller probably is.  A Realtor will guide the homebuyer through the many issues of the contract negotiation process.  The real estate agent will perform an evaluation of the house so the buyers gets the best possible value for their money.

Working with a Realtor is also very important when looking for new construction.  The builder's agent is working for the builder, not the buyer.  A buyers' agent will work diligently to protect the buyers' interests, and will help secure independent home inspections before closing to make sure the contractor has in fact completed the house and that there are not lots of little unfinished details or worse, shoddy craftsmanship.  The buyers' agent's job is to protect you.

Definitely work with a realtor if you are considering purchasing a home that is For Sale By Owner, or FSBO.  According to the National Association of Realtors, more than 95% of FSBO homes sold have a Realtor involved in the deal.  Often, FSBOs don't have the experience or knowledge to price their home properly or to get the home selling transaction to a successful conclusion.  By not knowing complex real estate laws, FSBOs simply may not follow the laws written to protect the consumer.  This can result in lawsuits that, if a Realtor had been involved, most likely would have been avoided.  Make sure you have someone to represent your best interests.  Your Realtor may be the only professional  with the experience to get you through the entire transaction.

Good Realtors have extensive experience working with lenders and can help buyers find the right mortgage professional with the right loan products for the buyers.  They know how to get the loan closed.  Realtors also are great resources for finding home inspection companies, home repair tradesmen like electricians, plumbers, lawn maintenance, carpenters and contractors, surveyors, and many, many other professionals. 

Of course, the whole relationship is built on trust.  You, the buyer, must believe that the Realtor is truly working for you.  If you, as the home buyer, do not feel comfortable that your real estate agent truly is working in your best interests, the solution is simple.  Find the right Realtor.  Since this is one of the largest and most complex financial transactions you will ever make, it is vitally important that you feel comfortable with and have trust in your Realtor. 

A good Realtor will help make the purchase of your new home a great experience!!  Enjoy it.

Limited Time $8,000 Tax Credit for First Time Home Buyers

by Doug & Gwen Campbell at Sun Bay Associates

For a limited time home buyers can claim a special tax credit worth up to $8,000. The American Recovery and Reinvestment Act offers qualifying homebuyers a tax credit equal to 10 percent of a home's purchase price, up to a maximum of $8,000. The tax credit is offered to first time homebuyers, and those who have not owned a principle residence in the past three years. To be eligible for the tax credit, the home purchase must be recorded between January 1 through December 1, 2009.

The full tax credit is offered to buyers with reported income up to $75,000, or $150,000 for married couples filing a joint return. Partial tax credits are available to for those with income levels up to $95,000, or $170,000 for those filing jointly. Contact us today for more details on this exciting program!

Should I Buy a Home Now?

by Sun Bay Associates

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.  For more information visit www.SunBayAssociates.com

New $7,500 Tax Credit for First Time Buyers

by Sun Bay Associates

The Housing and Economic Recovery Act of 2008 was just signed by President Bush with some amazing benefits for first time homebuyers. Call everyone you know who wants to buy their first home (or who hasn't owned one in three years), this is too good to miss - it's a $7,500 tax CREDIT (not deduction but a credit).

If you have not owned a home in three years, you qualify as a first time home buyer. If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for this credit. Call your friends who just bought a home since April 9th and tell them they may take $7,500 off their tax bill if they qualify. It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500. This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit. In other words, you take $7,500 off your tax bill. But there is a catch; the credit you receive now is actually an interest-free loan that must be repaid.

The loan has no interest, and will be paid back over 15 years. You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment. You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year. If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house? You pay the balance back at the closing. So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house. What happens if you do not make enough money when you sell your house? They forgive the rest of the debt.

Other restrictions stipulate that you have to buy your first house in three years before July 1, 2009, not have super high income, not use bond financing and buy anywhere in the US.

If you'd like to learn more about this program, please call me or visit www.SunBayAssociates.com !

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Photo of Gwen and  Doug Campbell - The Campbell Team Real Estate
Gwen and Doug Campbell - The Campbell Team
at Keller Williams Realty
30522 US Hwy 19N, Suite 107 S
Palm Harbor FL 34684
Doug's Cell 727-741-4189
Gwen's Cell 727-741-7260
Fax: 888-447-7908