Five First Time Home Buyer Mistakes

Buying a home for the first time is an exciting process.  At the same time, it is one that is filled with steps and details.  Deciding which home to purchase and which mortgage to borrow are decisions that have lasting consequences.  As you embark upon your home buying excursion, keep in mind these common mistakes of first time home buyers.

Purchasing a home too fast.  Perhaps it’s the excitement of purchasing the first time.  Or maybe it’s a fear that the “perfect” home will be purchased by another borrower.  Whatever the reason, many first time home buyers make the mistake of rushing through the home purchasing process.  They tend to spend too little time searching for the right home.  Often first time homebuyers end up dissatisfied with the home they’ve purchased.

Buying too much home.  Another mistake made by first time home buyers is purchasing a home that’s right at, or even a little beyond, their limits.  Many times this leaves the new homeowner with little or no disposable income.  What good is a large home if you are unable to furnish it?  None at all.  Purchasing a smaller home and leaving yourself some wiggle room is much better than eating up your monthly income with mortgage payment.

Holding out for the dream home.  First time home buyers might pass up several houses they like because they believe that there is a better house out there for them – one that is complete with everything they want and need.  In the meantime, houses that have most of the items they are looking for are being taken off the market by other buyers.  If a significant period of time passes, market prices could go up and the first time home buyer ends up paying more for a home than expected.  Even worse, the buyer ends up so worn out from house shopping that he, or she, ends up settling.

Not getting mortgage pre-approval.  A pre-approval will do wonders for the first time home buyer’s shopping experience.  Being pre-approved for a mortgage gives you an idea of what you will be able to pay for a home.  Some first time home buyers, not realizing the value, forgo pre-approval to get a head start on home shopping.  What’s the worst that could happen?  You could find a home you absolutely love and fail to obtain financing for it.

Not comparing mortgages.  Shopping around for a mortgage is just as important as shopping around for the home.  Many first time home buyers do not realize that mortgages from different lenders have different costs and different terms.  There are so many cost factors of a mortgage that can vary from one lender to the next.  It only makes sense to shop around for the best deal.

Be informed of the steps that you must take and the decisions you must make as a first time home buyer.  Information and education are the best tools to equip you in the process of purchasing your first home.

 Contact Lisa Jones and get a better understanding of how your property can benefit from above.

 

 

First Step, Real Estate Agent

If only more home buyers put as much thought and time into choosing their real estate as they did into choosing their home.  Perhaps the overall home buying experience would go a lot more smoothly.  It seems like it should go without saying that if you want to purchase the home of your dreams you should first choose the real estate agent of your dreams.  However, it doesn’t always happen that way.

Many home buyers are so eager to get to the home search that they rush through the real estate agent selection process.  Keep in mind that the real estate agent you choose is the person that you will be working with throughout the real estate transaction.  While it is possible to “fire” your real estate agent and start over with a new one, you will lose a lot or ground this way.

You have the right to interview as many real estate agents as you would like to make a decision on the professional that you would like to work with.  There are many real estate agents on the market to assist you.  Each of these agents has a different level of experience and training.  They also have different personalities and styles of working with you.  Each of these has a factor on the experience you will have.

Don’t choose an agent just because he or she was conducting an open house that you attended.  A real estate agent you meet in this way should be interviewed and referenced just like an agent that you cold-called or received as a reference from a family member or friend.  Avoid making the assumption that just because a real estate agent is working an open house that the agent has experience.  This is not always the case.

The best way to find a real estate agent is by asking for references from people you know who have recently purchased a home.  This way you can find out a lot of valuable information about the agent before ever contacting him or her.  Ask questions about the real estate agent.  How did he or she handle the process?  What things did the buyer not like about the agent?  Did the agent listen to the buyer’s needs?  These are just a few of the questions you need to have answered about a prospective real estate agent.

Once you have the contact information for a few real estate agents, you should begin interviewing them to inquire about their services.  Ask about their specialties.  Let the agent know what you are looking for in a home and ask how the agent can help you.  Does the agent have experience in working with buyers that are looking for similar houses to you?  What is the real estate agent’s success rate?  Finding out this pertinent information about a real estate agent helps ensure you make the best decision.

After you have settled on a single real estate agent, enter an agreement that the agent will work with you exclusively.  This prevents the agent from working as the seller’s agent in the even that the seller does not use an agent.

 

 

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For Sale: 5BR/3BA Single Family House in College Station, TX, $2,175

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The Secret of “After Settlement Escrow” to Solve Problems

Most FSBOs (people who are selling their own homes) are aware of the conventional use of escrow. In this article, we look at ways to use escrow to solve problems. 

Escrow

Escrow means different things in different parts of the country.  In California it’s part and parcel of the settlement process. In Virginia, while there’s no formal escrow before settlement, the settlement agent gathers title information, draws or has a deed drawn, coordinates with the lender, receives various inspection reports and in general conducts an informal escrow in the days before settlement. The difference is that, in Virginia, usually documents aren’t signed by the parties until they meet at the settlement table.  It’s the use of escrow after this period that we’re concerned with here.

A Problem Rears Its Head

What’s possible varies from state to state, but creating an escrow account (usually held by the settlement agent) after a home is sold can solve problems. What sorts of problems? Let’s look at a few.

First of all, let’s assume the buyer or seller needs, or wants, to settle by a certain date. Lots of things can cause this including the date school starts, the date a breadwinner starts a new job or the date of settlement on the seller’s new home.

Now, let’s suppose a problem crops up which would prevent that settlement deadline from being met.  Such problems might be caused by the discovery of termites and termite damage, the discovery of encroachment on a utility right of way by a garden shed on the property being sold or the discovery of high levels of radon gas within the home.  

Let’s further suppose that the buyer and seller have agreed on the basic solution of the problem. In the above examples, typical solutions might be that the seller will have the home treated for termites and have a licensed contractor repair the damage. Or the seller will have a contractor move the shed out of the right of way. Or the seller will install a radon mitigation system.  Of course, everything is negotiable, and a buyer who wants a property badly enough could agree to fix the defects himself.

What if the pest control company, contractor or the radon mitigation company can’t finish their work until after the planned settlement date?  What happens then?  Most frequently, settlement is delayed until these sorts of things are taken care of, but sometimes that isn’t desirable.  Sometimes delay of settlement can be a deal killer.

Problem Solving 101

Enter the “after settlement escrow.” The parties agree that an amount of money (usually a bit larger than the estimate) is set aside in escrow pending completion of the work. The escrow agent has clear (usually written) instructions about what must be done before the money is released to the person who put it up (or before the work is paid for and any excess returned to the person who put it up).

The funding of an after settlement escrow usually comes from the proceeds of the sale, so it can be used where there are no funds to take corrective action any other way. Even if the person responsible could get a loan for the purpose, the process could take too long to meet the settlement deadline. In that way, it can be a “cash flow” solution, too. 

No matter what problem you encounter, it’s usually possible for a willing seller and a willing buyer to work things out. Remember that all sorts of needs can be accommodated without anyone’s being a loser.  Situations in which both buyer and seller are winners happen frequently. With any luck, that’s what will happen in your case. It just takes creativity and persistence.

Contact Lisa Jones and get a better understanding of how your property can benefit from above.

 

FSBO Tip - Don't Do It

My Number one FSBO Tip? Don't sell it yourself! A "FSBO," or house "for sale by owner" can sell fast, and for as much as it would have if listed with a real estate agent. Sometimes - but not normally. Consider the following ten points.

 1. Buyers work with agents. Most look at MLS listings. Sell it yourself, and they won't see or hear about your home. How do you find that "right" buyer or get top dollar when you're invisible to most of the market?

 2. Your FSBO will get lower offers. Naturally, the buyer thinks you'll take less because you're saving the commission! Save a $10,000 commission, get $10,000 less - where's the advantage in that?

 3. Advertising is expensive. The costs the real estate office normally pays are yours if you sell it yourself. How much could you spend on ads if it takes a a year to sell?

 4. They have the resources. And you don't. Agents have books of sold properties to look at, for example, to determine the best price for your home. You can dig through county records, but you do have to value your time too, right?

 5. They know the market. What's the target market for your house? Young couples, retirees? What features do they want? You should know these things before you write your ads. An experienced real estate salesperson will know.

 6. They know the laws. What about written disclosures, and who pays for the real estate transfer tax? When you sell it yourself you don't get to ignore the laws.

 7. Are you a good salesperson? Can you develop rapport and properly answer objections? Could your defensiveness scare off a buyer who criticizes your home? Think back on your own purchases, and you'll realize that a good salesperson makes a difference.

 8. Paperwork. Will you help the buyer properly fill out an offer to purchase? An agent would. Do you have the other closing documents ready?

 9. Agents negotiate for you. When did you last learn a new negotiating technique? Can you counter-offer without scaring off a buyer? A good salesperson is trained in these skills.

 10. You may not save anything. The documents, newspaper advertising, signs for the yard - it's all your expense when you sell it yourself. After your hard work, you may get low offers and negotiate poorly. Honestly, sellers often net less money from the sale when they try to save the commission.

Most "FSBO" sellers eventually turn to a real estate agent for help. You could learn the things an agent does, but is it worth it to spend all that time and maybe not even save any money? Don't sell it yourself unless you really know what you're doing. That's my number one FSBO tip.

Looking for a real estate college station agent you can entrust your property with, click here.

 

For Sale: 4BR/3BA Single Family House in College Station, TX, $185,500

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Four Advantages of Real Estate Ownership

The following key factors are commonly accepted as the major reasons real estate continues to be a good investment.  For the majority of real estate participants, these factors are the most critical issues in a real estate venture.

1.) Real Estate is a Necessity:  Real estate is at the very core of human existence. We all have three important basic needs: food, clothing and shelter.  Our world continues to expand as more and more people are being born every day. In addition, there continues to be larger migrations of people from rural areas to more populated locations. Therefore, people will always have the need for temporary lodging, permanent shelter and places to conduct business.   

2.) Hedge Against Inflation:  Inflation is the invisible force eating away at the purchasing power of our dollars. A dollar, however, doesn’t buy today what it once used to.  It is also evident that the quality of goods our dollars purchase is also diminished.  For instance, the McDonald’s “Big Mac” has become progressively smaller year after year. Plus, when we purchase a box of our favorite breakfast cereal, the bag inside the box is practically half empty.

From the tenant’s perspective, rent seems to go up constantly and anyone on a fixed income may find it difficult to keep up with the cost of living increases.  The owner of the property also feels the effects of inflation in the form of increased property related expenses, taxes, utilities and maintenance costs.  As property costs rise, owners typically pass these costs on to their tenants in the form of increased rents and fees. Furthermore as inflation increases so do property values; owners will often benefit from the property appreciation.

3.) Production of Income:  The most attractive and lucrative reason for owning real estate is in its ability to produce passive income for the property owner.  Rent is accruing daily while payments made by the tenants pay down debt balances and produce predictable profits.  Once the property is free and clear, the portion of income that was once used to service the debt payments now goes into the owner’s pocket.

4.) Appreciation in Value:  Due to inflation, property appreciates in value.  Usually, this statement is generally true.  While there are no guarantees, if care is taken with regards to timing of the acquisition and trends in the overall marketplace, real estate tends to perform well when inflationary conditions are flat with some moderate expansion.

 

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