Buyer Cheat Sheet for a Seller’s Market

CheatingThe home buying market started to heat up in February this year and it’s only gotten busier. The number of available houses for sale is roughly 9% lower than last year at this time and that number was lower than the year before. If you’re house hunting, here are some good tips to get you ready for what you’ll find out there. Competition can be stiff for some properties. One of my clients lost the opportunity to buy a home by only $100.00! Here are some thoughts from some other professionals about today’s housing market.

In a seller’s market, home buyers need to be willing and able to act fast to snag the home they want. This spring, areas across the country are facing a limited number of homes for sale.® offers up a cheat sheet for surviving a seller’s market.

Be on call. “If you’re only looking now and then when it’s convenient, you’re probably wasting your time,” says James Malmberg, a real estate professional in Sherman Oaks, Calif. He suggests treating house hunting like job hunting. If someone calls with a lead, follow up promptly to gauge whether it could be a good fit and don’t linger.

Bring the paperwork. To be taken seriously, buyers would be wise to get a mortgage pre-approval letter as well as a “proof of funds” form from their bank to show they have enough to cover a down payment. They’ll be able to act quicker when they do find the right house.

Limit the contingencies. In a seller’s market, buyers may need to drop some of the contingencies to score the house. Sellers prefer the fewest number of hurdles to closing as possible. If your buyers come in with several contingencies — such as “if” they secure financing — the sellers are more inclined to bypass their offer and take another with less hassle. Also, “don’t waste your time lowballing a seller,” advises Sean Kelley, a real estate professional with Howard Hannah in Pittsburgh, Pa. “Always put in an aggressive offer.”

Cast a wide net. Search for homes outside prime locations if faced with limited or high-priced choices. Buyers need to carefully consider what they’re willing to compromise on. “Sometimes properties sit, even in a seller’s market, because of a problem that is scaring other buyers away,” such as some renovation work that may need to be done, Malmberg says. Those “flaws,” however, might not be a big deal to your buyers. “Finding a house this way can also cut down on the amount of competition you will face,” Malmberg adds.

Source: “Surviving a Seller’s Market: The Ultimate Cheat Sheet,”® (April 7, 2016)

If you’re in the market to buy or sell, give me a call at  and we’ll look at your situation to see what makes the most sense for you and your family.

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What to expect if you’re buying a house this Spring

DSC03046This March, 2016, article by Housingwire’s Brena Swanson gives good advise.

While spring home buying started early this year, as famous Punxsutawney Phil confirmed without a shadow of a doubt at the beginning of February, this doesn’t mean you’re quite ready to add the title of homeowner to your name. It’s likely to be the biggest financial decision you will ever make, and one that does not need to be decided on the premise that everyone else is doing it.

To help in your deliberation, HousingWire talked to Ralph McLaughlin, chief economist with Trulia, to compile a list of five factors that define this year’s housing market.

  1. Selling your home will be easier, but buying your next one may be more difficult.

McLaughlin explained that inventory of all homes for sale is down over 35% over the last four years.

“We are in a time of short supply, which is great news for sellers because they will likely be faced with multiple offers due to the little inventory out there,” he said.

But on the flipside, he noted that it’s not so great for people looking to buy a home. “They will be up against a lot of other people and against a short supply of existing homes,” McLaughlin said.

Interestingly enough, he said that the inventory of starter homes, or the homes that are in the least expensive, are probably at the lowest supply they have been in four years.

The February S&P/Case-Shiller report echoed similar inventory concerns, with Zillow Chief Economist Svenja Gudell commenting on it saying, “There are a lot of economic forces at work behind the scenes that will have a big impact on housing as we enter the busy home-shopping season. Low inventory is a factor in almost every market, so buyers should be prepared for a limited selection in the months to come.”

  1. It’s finding a home that’s tough to come by.

McLaughlin advised that shoppers should consider buying a new home or a new home off a plan.

Rather than deal with bidding wars, he said you should turn to new inventory, specifically homes off a plan.

In the most recent new home sales report, McLaughlin explained that the share of new home sales not started, in other words homes purchased off a plan, hovered near a 10-year high.

“Why? The inventory of existing homes continues to fall. Low existing inventory likely pushes prospective buyers away from existing homes towards new homes, and as new home sales rise, this allows builders to sell more new homes off plan,” McLaughlin said.

  1. It’s still cheaper to buy than rent.

Even though inventory is down and buying a home is more difficult and stressful, in most parts of the country, it is still cheaper to buy a home than rent over a 5-year period. And it gets cheaper after that, McLaughlin explained.

Most notably, it’s especially true for younger homebuyers that put less than 10% down. He cautioned buyers to remain patient because over a 5-year period it will be in your financial best interest.

  1. Don’t panic over possible interest rate increases.

“A lot of people ask me this. Should I be concerned? Will it make a difference? The short answer is no,” he said.

As it stands, he said that interest rates are nothing to worry about because what the Fed does is only loosely tied to mortgage rates.

Even if mortgage rates do go up, which they will do in the medium to long run, in places like California and Honolulu, rates would have rise to 4.5% to 5% to roughly equate the cost of renting.

And in the rest of the country, McLaughlin said, “Rates would have to reach 6% to 7%, and we are a long way off from interest rates at that level. Keep an eye on it but don’t fret.”

This article was edited for the Tulsa market. To see the entire article, go here.

If you are thinking about buying or selling a home, give me a call at 918-809-5199 for a free consultation.

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So you’re tired of carpet? Try a hard floor!

HardWoodfloorLet’s face it. Carpet is everywhere in your home because it’s relatively easy to maintain and it’s the least expensive way to cover your floor. But if you’re looking for a way to renew an old living space, hardwoods could be an option. All the basics are right here in this article called, “Flooring 101 – The Basics from Hardwoods to Laminates” by Jacklyn Renz.

There may be nothing in our home that takes more of a beating on a daily basis than our underfoot friend, the floor. Spilled drinks, pet stains, mud tracks, and dust bunnies all seem to make their frequent appearances. Carpets absorb odors, can stain easily, are a magnet for allergens, and can be costly to replace at the recommended average of every 10 years. If you are thinking about moving from carpeting to hard floorings, then we’ve got the low-down on those down low choices that await you.


One of the lower cost materials in the world of hard floorings is laminates. These floors are great for the do-it-yourselfer because they are often easy to install and “float” above the existing flooring, meaning there is no tear out necessary. A laminate floor can come in a variety of colors and textures. These are made of pressed plywood or compressed fibers with a top layer, the piece that we see, made of plastic. The top layer is made of a clear plastic literally overlaying a picture of wood, thus the ability to offer variety at a relatively low cost.

Engineered Woods

The next level up from laminates, as far as pricing is concerned, is engineered woods. The top piece of the plank is made of real wood. The subsequent layers are made of woods such as recycled wood fibers or plywood. Engineered wood can be installed in a variety of ways, the more popular of options being the clickable versions where each plank quite literally, not to mention easily, clicks into place. This may be another option for a DIY project. The price on engineered wood varies, with some varieties comparable to real hardwoods.


The flooring that we most think of when it comes to wood flooring may very well be the real deal. Real hardwoods are just as the name says: made of real wood. Hardwoods come in as many varieties as there are trees that they are made from. Some species that we find readily available in the US are oak, maple, pine or black walnut. Exotic species and types are also available, but the price will rise depending on just how exotic the wood is. Hardwoods are not a project to take on alone because of the fact that each piece must be nailed to the floor beneath it. Real wood can be finished and refinished over and over again, which truly adds a natural beauty to the home.

Bamboos and Cork

Two honorable mentions that must be included in the wood flooring categories are actually not woods at all. The first is bamboo. Bamboo is visually similar to hardwoods, laminates, and engineered woods, but is actually a type of grass. Stranded bamboo is especially durable and all bamboo floorings come in a variety of colors and textures. The second is cork. Cork is made from the bark of a tree instead of the tree itself. The tree is left intact while the bark is harvested every few years. Cork has a protective layering over its top to protect from wear and stains that must be resealed every few years. Both of these are considered more sustainable and more eco-friendly choices when compared to hardwoods.

Whichever flooring type you choose, any of these will be sure to add to the unique look of a room. These floors will show well, they wear well, and they will hold their value over the years.

For more, go here:,

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“Improvements” that could devalue your home

If you’ve lived in your home for awhile you may have gotten the DIY bug. Maybe you’re thinking about some changes or upgrades. Generally, renewing areas of your home can give you a brand new feel and can also enhance the value of your home. But some ideas could hurt your ability to sell it if you decide to move. This article from MoneyTalksNews has some examples.

Are you considering converting your home’s garage into a man cave? Before you permanently ditch parking and storage space in exchange for a testosterone-friendly getaway, you may want to consider this: your garage man cave project could hurt your home’s value and make it harder to sell. Turning your garage into a living space is one of four home improvement projects that could end up sucking the value out of your home. Homeowners need to think carefully before they get rid of their garage and turn it into a man cave, family room or extra bedroom, because it could make their home less attractive to many people, according to New York real estate agent Brendon DeSimone, author of the book “Next Generation Real Estate”. A recent survey by real estate investment and operating firm Crescent Communities found that 74 percent of homebuyers said having a garage is extremely or very important. If you still want to proceed with your garage project, consider leaving the garage doors on the outside so if you do sell your house, a buyer has the option to easily turn the space back into a garage, according to Michele Silverman Bedell, of New York-based Silversons Realty. Here are three other home renovation projects that could dent the value of your home:

Removing one bedroom to make another bedroom (or room) bigger: Reducing the number of bedrooms in your house is a big no-no from a real estate standpoint. “When you start eliminating bedroom space, you’ve completely changed the comparable value of your home in the neighborhood,” David Pekel, president of Pekel Construction and Remodeling, in Wauwatosa, Wisconsin, says. By reducing the number of bedrooms in your house, you’ve also reduced the number of potential homebuyers who would be interested in your home, despite how big another bedroom or living space is.

Removing closets: People want, and typically need, closets. Bedell said she had a client who removed the closet from their master bedroom and built a big master bath in the space. The result? The home was much harder to sell.

Wallpaper: Sure, wallpaper can really spruce up a room, but many people don’t like it. Plus removing it can be difficult. I can attest to that. Every single room in my house had wallpaper circa 1979 – think orange and avocado green flowers, silver trees and flocked brown and gold geometric patterns. My husband and I made the mistake of thinking it would be easy to remove. Every room we worked on was awful and time-consuming, and I will never purchase another house with wallpaper. Bedell said overdoing wallpaper or any other finish can deter potential homebuyers and hurt your home’s resale value.

Of course, you shouldn’t shy away from a home renovation project you really want just because it may hurt your home’s value if you sell it. It’s just something to be aware of. If you do decide to move forward with a potentially home-devaluing home improvement project, DeSimone recommends that you “do it in a way that you can put it back when you go to sell.”

These are all good points, especially the last one. You buy your home to live in. You should make it your castle but if you can, do it in a way that is reversible. That way you can enjoy it now and sell it later.

To see the original article from MoneyTalksNews by Krystal Steinmetz, go here.

If you are thinking about buying or selling a home, give me a call at 918-809-5199 for a free consultation.

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You Light Up My Life


Incandescent Light Bulb

So, are you still using incandescent light bulbs in your home? You might think about moving up to the newest technologies. Not necessarily because they’re environmentally friendly but because they will save you real money. Here’s a brief history of the light bulb.

 The traditional light bulb we have used all of our lives was first unveiled in 1878. They haven’t changed much in over 100 years. And why should they? You screw them in, flip the switch, and “let there be light.” The basic weakness of the design, however, is that the bulb throws off more heat than it does light. Some studies put the heat-to-light ratio at 90%/10%. That means that when electricity is applied to an incandescent bulb, 90% of the radiation produced is in the form of heat. Only 10% of the radiation produced is light we can actually see. But when you pay your electric bill each month you pay for both the light and the heat each incandescent bulb in your house produced. In the summertime, you then pay to have your air conditioner remove the heat from your home produced by those bulbs. As we all know, electric energy costs keep climbing. Wouldn’t it be nice if we could figure out a way to make that bulb produce less heat and more light? That’s where all of the new technologies come in.

For us consumers there are three newer technologies that have become popular and a fourth exciting discovery that could change the entire game.

 First, there are halogen bulbs. For example, think of those floor lamps that use the long thin bulbs that you can’t touch when you replace. They get very hot and the light they emit is measured in high wattages, up to 1000 watts. Like incandescent bulbs they are dimmable. They’ve been around for quite a while and their efficiency is better. They use 40% less energy than incandescent bulbs. So that means, where it takes 60 watts to produce the average 800 lumens of light for an incandescent bulb, a halogen can produce with only 36 watts of power. That’s a big improvement but technology is doing better.

 Next there are CFL bulbs, the “curly-cue” bulbs that screw into standard sockets used by incandescent bulbs. They use even less energy, up to 75% less. To produce 800 lumens of light they only use 15 watts of power. They cost more but they also last up to ten times longer than incandescent bulbs. My personal experience with them has been spotty on this point. Some last longer than others. Sometimes they die right away. And there are other drawbacks to them. In the beginning they took a moment to actually turn on, they had to completely warm up to fully illuminate, and they had mercury inside them. If you accidentally broke one you almost had to call hazmat to clean up the breakage. The newer versions use much less mercury but it’s still in there. And these bulbs are not dimmable.

 Finally, there are LED bulbs. LEDs use only 10 watts to produce 800 lumens of light. That’s one-sixth the amount of power of an incandescent bulb. When they first came out they were prohibitively expensive. Even though a bulb is expected to last twenty years, at $20.00 each it would take a long time to get a return on your investment. But prices have fallen through the floor on these bulbs. Today you can buy a pair of LED bulbs that look just like the original incandescent bulbs for $3.98 at a box store. That’s less than $2.00 each. Dimmable LED bulbs cost a bit more. At that price it doesn’t take long for the bulb to pay for itself. Some people complain that the light they give off is a bit harsh. I really haven’t noticed any difference myself.

 One of the reasons people are spending so much time lately talking about light bulbs is because the Federal government banned the production of the original incandescent bulbs. While they’re still available for the time being, once the stock of them is sold there will be no more of them. That is, unless a new discovery at MIT changes all that. Here’s how they explain what they’ve achieved with the ordinary light bulb to the MIT newspaper. “Their new light bulb encases a traditional light-emitting filament in a photonic crystal that reflects the escaping thermal energy back toward the filament where it is reabsorbed and converted to light. The crystal is made of thin layers of Earth-abundant elements, stacked and deposited on a substrate. The crystal works to reflect a variety of wavelengths, arriving at an array of angles, but allows the necessary wavelengths of warm incandescent light to pass through.”

 OK, I didn’t understand it either but the end result is what’s important. It could make the plain old ordinary light bulb we’ve all been accustomed to since we were kids twice as efficient as today’s LED bulbs. That is a game changer.

 Of course it will be years before we see this technology on the shelf at Home Depot. In the meantime we have LED light bulbs. I consider them to be the best buy right now for my money. And if I do have to replace one someday I can just throw the old one in the trash. I removed all of the incandescent bulbs from my house three years ago. Believe this or not, I experienced a 15% reduction on my electric bill shortly thereafter. It was a pleasant surprise.

 If you are looking for an effective way to reduce your electricity bill, think about replacing your light bulbs. If you’re looking to replace your entire house with another one, call me at 918-809-5199. I can help.

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I want to buy a “fixer upper”.

assorted_toolsEveryone is looking for a deal these days. When you work as hard as most people do, you want your money to go as far as it can. One of the ways people try to do this is by purchasing a property that needs a little work. Maybe it needs paint or carpet or wallpaper removal, but the thought is that if you can get the house at a good price you can put a little “sweat equity” into it to improve the value without having to pay as much for the house. Sounds like a good plan. Here are some thoughts to consider if you are thinking about doing this.

First of all, unless you’re looking at new construction you probably won’t find a house that doesn’t need at least a little something done to it after you buy it. Maybe it’s the hot pink walls in the bedroom or the lime green kitchen appliances. Every house has something. Most likely this isn’t really going to change the overall value of the home on the open market. Personal preferences are just that: personal. After you get through “improving” the look of your new house you have something you love but maybe others aren’t impressed by. You’ll find that out when you try to sell it yourself. Because of this, don’t expect small things like this to affect the overall price that much. You’re buying the house because it fits your family and your lifestyle. The little things are secondary. Once you walk into the house that just shouts at you that it’s “the one”, you won’t really care that the faucets in the master bath are gold.

Then there’s the second group of houses: those that are not move in ready. These properties have bigger issues. The carpet may be filthy or there may be holes in the walls. Possibly the HVAC system is questionable or appliances may not work or are gone completely. In these cases the properties are priced accordingly and seem like a good deal. I’ve been with many a client who has walked through a house such as this and made statements like, “oh, I can deal with that if the sale price is right.” And maybe they can. But if you’re one of these types of clients you’ll need to take into consideration two things.

If you need a loan to buy a house remember the bank will be your partner in the purchase. If the house is in too bad a condition the lender will not approve the loan. When they send their appraiser out to the address he will make notations about the poor condition of the dwelling. Since the bank is holding the property as collateral against your promise to pay the note, if they don’t feel the house is a good risk you will be denied.

Assuming the house is in good enough shape for the lender the next thing to consider will be the expense of the repairs for you. You may be saving several thousand dollars on the purchase of the house but then you’ll need to spend the money you saved to make the repairs so you can move in. Recarpeting a whole house, replacing an HVAC system, buying new appliances, and wall repair can cost a lot of money. You’ll need to either pull that out of savings or use credit to purchase them. In the latter case you still have payments but now they’re at a much higher interest rate than your mortgage. In the former case, you could have taken that same amount of money from savings and lowered the initial amount you were borrowing from the lender to buy a house that is move in ready without the repair headaches.

Home loan interest rates have been inching slowly upward but they are still at historic lows we may never see again in our lifetimes. If you buy a home and get one of these low interest rates you’ve already won big time. If you’re a do-it-yourselfer and you love the challenge by all means go for it. But if you’re someone who’s just trying to find a way to save a few extra bucks, simply buying right now is a win for you. You’ll probably never be able to buy as much house for your mortgage dollar than right now.

If you’re thinking about buying a home, I can help you. Call me today at 918-809-5199 and we’ll get started!

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What Do I Do Now? part 5 – Contract to Close

 o4smHn9DNow that you have a contract, everything shifts into overdrive to get the deal done. There are several things you will need to do before close. You’ll need a closing company to help you with the transfer of the Title from the seller to you. That company will inspect the Title on your behalf to make sure the seller is able to transfer the house to you free and clear of any liens or encumbrances. If there are any liens or a mortgage against the property the closing company will make sure those are paid off on closing day from the money you are paying to buy the house. This research takes about two weeks and will most likely be done before your lender is finished with his part.

During the five days after the contract is signed you will take your contract to your lender and start the underwriting process. Since you’ve already been talking to him about your purchase and you’ve given him enough information to get your pre-approval letter you will be moving to the next step in the loan process. The lending company will tell you not to do any shopping for furniture just yet! In fact, don’t make any major changes in your financial situation. Don’t change jobs, don’t apply for credit, don’t buy anything with the credit you already have. Everything needs to stay the same for thirty days while they get the loan in place. Even if you looked good on paper when you got the pre-approval you could jeopardize your purchase by adding debt to your credit rating before you close. If any of these things do happen outside of your control, tell your lender immediately. In the meantime your lender will send an appraiser out to the property to verify that the house is worth the price you are paying.

During the first ten days after the contract is signed, you will do your inspections of the property. Don’t skip this part! It will cost roughly $550 but it is money well spent. You are making the purchase based on the way the property looks to you on the surface. But if there is a major fault in the property it might change your willingness to purchase, or at the very least affect the negotiated purchase price. You have the opportunity to inspect every aspect of the house. Remember you also negotiated a repair cap into the contract that was a dollar-amount the seller automatically agreed to spend to do needed repairs. Above that amount any other repair costs would then be negotiable. You should not consider this repair money as a way to “nickel and dime” the seller with a lot of trivial repairs. But if something needs attention you will make that request on the TRR (Treatments, Replacements, and Repairs) form.

Also during the first ten days you should call your hazard insurance company and apply for home owners’ insurance. In Oklahoma we have an issue with bad weather that can beat up a 25 year roof and reduce its usable life span to half that long. The insurance company will inspect the house to verify that it is insurable. That includes the roof.

You should know that as your agent I can help you with recommendations for any of these services including a reputable insurance company, Title company, and certified inspector. But you don’t have to take any of my suggestions. You can choose all of your own companies without my input. Do what you feel on this one.

All of these items will be finished by the time the lender gets your file out of underwriting. When that happens you are ready to close! Your contract included a scheduled date for closing but you can close early if everyone agrees. The contract also has a default five day grace period to close if you need just a bit more time to get everything done. Try not to use this grace period. The closer you get to the closing date the more stress everyone is feeling. Get it done on time to leave everyone smiling at the closing table.

Finally, most of the time everything goes smoothly but sometimes the best laid plans go bust. Since you put up earnest money in the beginning you’ll want to know under what circumstances your earnest might become jeopardized. There are three things that can kill a deal. If you find something wrong with the house during your inspections that changes your mind about your purchase you may cancel the contract without loss of your earnest money if you do it within the first ten days. Under most circumstances if your loan is denied or if the house doesn’t meet appraisal your earnest will be returned. But if either of these things happens deep into the closing process after the seller has spent money to ready the house for you, some or all of your earnest money could be forfeited. But even in this situation you will have to agree and sign off on the disbursement of the funds to the seller before any of your funds will be released.

You should also know that if the house is uninsurable this does not release you from your commitment to buy the property. That is why it is important to call your insurance company during your initial ten day inspection period. If this is discovered during that first ten days you may cancel the contract without loss of your funds.

The day before closing day you will receive a closing statement from your closing company that will spell out every penny you will spend to close. All charges, credits, taxes, fees, credit for your earnest money, and the cost of the property will be included. At closing you will pay in advance for your one-year hazard insurance policy. Additionally, you will pay the equivalent of 25% of the total cost of that policy into an escrow account that the bank will set up for you. You will pay 25% of the projected amount of yearly tax into the escrow account as well. Part of every monthly payment to the bank will also be collected and deposited here. In December the lender will pay your property taxes from this fund. On the anniversary of your purchase they will pay the insurance company to keep your hazard policy in force.

You’ll be at the closing table for up to two hours signing documents for the lender and the Title Company. But when you’re finished you will own a home! Be sure to get all of the keys. Then change out all of the locks. It is now your home after all.

If you’re thinking about buying a home, I can help you. Call me today at 918-809-5199 and we’ll get started!


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What Do I Do Now? part 4 – Making the offer

love You’ve found the house! Now it’s contract time. This part comes with a bit of stress. In order to keep that to a minimum, your Real Estate agent will be your go-between during the negotiations. You tell me what you’re thinking about the property and I relay the information to the seller’s agent. In this way you get to keep the seller at arm’s length and things will be much easier for everyone involved.

There are several parts to the contract and you should make sure your agent explains everything to you to your satisfaction. If you don’t understand any part of the process you should ask questions. The agent does this every day. You don’t. Make sure you are satisfied with the information you are given.

In the contract you are going to do more than just tell the seller what you want to pay for the property. You will tell him how you intend to pay for it. This is where your preapproval letter comes in. You will include this with the offer. It will show the seller you’ve talked to a lender who is willing to work with you to buy the house. You will tell him how much earnest money you are willing to pay up front with the contract. The amount of this earnest check can vary widely but I usually suggest that it equal 1% of the price of the house. This is another way you show the seller your offer is serious.

You will also tell the seller when you want to close the deal. Generally this is a date from four to six weeks out. The lender will need the time to get all of the paperwork for the loan done. There is also a place in the contract for you to ask for “extras” such as the refrigerator or the hot tub. Or maybe you want to be sure that the seller doesn’t leave the jungle gym in the back yard when he moves. There’s a place for that as well.

One of the important parts of the offer is the section on Treatments, Replacements, and Repairs (TRR for short). This is the section that gives you at least ten calendar days to inspect the property for any major defects. During this specified time you should schedule a reputable inspection company to check everything out from top to bottom. A basic inspection will cover the roof and attic; foundation and structural; electrical, mechanical, and plumbing (or EMP); and a termite inspection. Do not skip this part. You will pay around $500.00 but it is money well spent. If you’re getting a loan the lender will require the termite inspection anyway. In the TRR portion of the contract you will ask the seller to promise to repair any defects you find up to a specified dollar amount. After that, if there are still things that need to be repaired or replaced you can negotiate those items with the seller. Or if you find a major hidden defect you weren’t expecting you can cancel the contract and your earnest money will be returned to you.

Of course the biggest decision you’ll make is determining what you want to offer the seller for the property. This is where you’ll find the Real Estate agent to be very helpful. I can research the immediate area around the address and see what other comparable properties are selling for. This is a good starting point. I’ll also be able to see how long the property has been on the market and whether the seller has lowered the price since it was first listed. If the seller will allow his agent to tell me, I’ll check for current activity on the house to see if you have any buyer competition. And I’ll factor in any work that might need to be done on the house, such as new carpet or appliances that will be needed after you move in. Your offer will then be made based on all of these variables.

Finally, about the offer, everyone wants to feel like they got a good deal on their home purchase. Just remember that everyone is different, just as every house is different. What you value in a home may mean very little to someone else. If you love the house then be happy when you make a fair deal with the seller to purchase it. And be aware that at today’s market interest rates you’re saving a truckload of money on the loan. Just a few years from now after the rates have gone up you’ll be sitting in your castle smiling at your low payment.

As we discussed earlier, there is a four to six week period between the time the contract is accepted and the day you close on the property. We’ll talk about what happens during that time in the next installment of “What Do I Do Now?”

If you’re thinking about buying a home, I can help you. Call me today at 918-809-5199 and we’ll get started!

Next: What do I do now? part 5 – Closing the Deal


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What do I do now? part 3 – House Hunting

file000262492675 This is the fun part. You get to look at all the possibilities and imagine yourself living in all kinds of interesting settings. And since you’ve been to your local loan officer for advice, you also have a good idea of what you can afford. You even have a pre-approval letter from the loan company. This letter is a basic conditional commitment from the bank which says that based on the information they know about you so far they will conditionally back your home purchase up to a specific dollar amount. It’s not a 100% guaranty that you will be able to get a loan but it’s a good start. And when you make an offer on a property it tells the seller you’ve done your homework and you know the house you’re making an offer on is within your budget. In Oklahoma, sellers don’t even have to look at your offer if you don’t have one of these included with the contract.

It will take you a few weeks to find the house you will want to own so in the meantime there are a few important things you need to remember about your home loan preapproval. It was made based on a quick snapshot of your financial condition at the time. That condition can change from the day you get pre-approved until the day you actually apply for the loan on your new house. Your goal is to not do anything that could negatively affect your credit. Bret Close with Elite Financial has these valuable tips on what not to do while you’re looking for your new home.

  1. Don’t change jobs, quit your job or become self-employed.
  2. Don’t buy or trade a vehicle.
  3. Don’t increase debt balances or let current accounts fall behind.
  4. Don’t spend money you have set aside for closing.
  5. Don’t omit debts or liabilities from your loan application.
  6. Don’t buy furniture or appliances or make a new credit application.
  7. Don’t originate credit inquiries (no new loans, credit cards, or lines of credit).
  8. Don’t make large deposits or transfer funds.
  9. Don’t charge bank accounts.
  10. Don’t co-sign any loan.

If any of these things become unavoidable, contact your loan officer immediately so he can help you determine the best course of action that will have the least negative impact on your home loan.

A house is the largest purchase you will make. When you’re dealing with a loan for such a large amount of money, you need to be sure not to do anything that will delay the final approval for your purchase.

In the meantime, you look at houses. You should sit down with your spouse and talk about what you want. Is a certain school district important? How many bedrooms do you need? How many garage stalls do you want? Is the size of the house or the size of the lot important? How old can the house be? Or do you prefer new construction? You should have a basic answer for all of these questions. You should also rank them in order of importance, because as you look you may find that your budget will affect what you can or can’t find available in all of these categories. Also, every house is different, if only because one may be in a separate area from another. You may like the drive to work from one or the drive to school from another. The first one may have a three car garage and the second one only two, but it includes a large back yard for your dog.

I always suggest to my clients that they plan to see a dozen houses in their price range before they decide on one. It still may be the first one you saw but at least you’ll be able to make good comparisons with the others that will confirm your final choice. This is not a hard and fast rule. One of my clients holds the record for looking at houses, which stands somewhere near 60 properties. And he bought the very last one he saw. Another couple looked at three and they were done. Sometimes when you walk inside, you just know.

But whatever the final number is, always use a Real Estate agent. As we discussed in lesson 1, it doesn’t cost you anything to do this. And what you will save in time and aggravation will be of great value to your sanity.

If you’re thinking about buying a home, I can help you. Call me today at 918-809-5199 and we’ll get started!

Next: What do I do now? part 4 – Making an Offer


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10 Terms First-Time Homebuyers Should Know

2014-08-31 12.39.58We’ve been working through the step-by-step process of buying a house. Today I ran across an article on U.S News and World Report by Geoff Williams that is very informative on the subject so we’ll follow a little detour and visit Geoff’s glossary of Real Estate terms that you will run across as you search for your first home.

In about a month, it won’t just be spring. It’ll be home selling and buying season, and you’ll start seeing  “For Sale” signs posted in yards as well as online advertisements beckoning prospective homebuyers.

But before you allow yourself to be beckoned, it would behoove you to familiarize yourself with the following 10 terms, especially if this is your first time making one of the biggest purchases of your life.

  1. Fixed-rate mortgage. This means the interest rate you pay on your home loan won’t change. Over the years, your mortgage payment will likely change some. Property taxes will likely rise, your homeowners insurance might climb or fall, or you might shed your PMI (a term we’ll come back to). But generally, if you have a fixed-rate mortgage, your monthly mortgage payment won’t change much over the years.
  2. Adjustable-rate mortgage. Also known as an ARM, this is essentially the opposite of a fixed-rate mortgage. You’ll have a fixed rate for several years, maybe five or 10, and then the interest rate adjusts according to the fully indexed interest rate, often the prime rate, which is what banks charge their most credit worthy customers. So while your interest rate and payments will likely be lower in the beginning than those of the homeowner with the fixed-rate mortgage, hope that interest rates remain low throughout the life of your loan. As interest rates climb, so too will your own interest rate and monthly payments.
  3. Prequalified. This can be a confusing term, mostly because homebuyers tend to mix it up with preapproved, says Rick Hogle, chief strategic officer at Supreme Lending, a mortgage company in Dallas. If your lender tells you that you’re prequalified for a house, that’s a good start but you’re still a long way from being a homeowner. “Prequalification requires less documentation,” Hogle says. “It provides a general idea of the loan amount for which a homebuyer might qualify.” This way, you can start looking for a home and have a sense of what type of house you can afford.” Preapprovals are a much bigger deal, Hogle says. These require the submission of many more documents, such as pay stubs, bank statements and tax returns. Preapprovals are really for homeowners who are ready to commit to buying a house. If you’re preapproved, you’ve basically been told that the bank will lend you money for a house, provided you don’t blow things in the meantime while you’re house hunting, like missing a bunch of payments or racking up credit card debt before you’re actually approved.
  4. Conventional loans. These are the typical loans that many people, but not all, apply for when they want a mortgage. “Those with low credit scores usually won’t qualify for conventional loans,” says Passard Dean, associate professor of accounting at Saint Leo University in Saint Leo, Florida. “In the past, you were also required to put a down payment of at least 5 percent. However, with the new guidelines from Fannie Mae and Freddie Mac, you can now put a down payment as low as 3 percent. These loans generally require a credit score of above 650.
  5. Federal Housing Administration loan. Have poor credit? You’ll probably get one of these, also known as FHA loans. “These are excellent for first-time homebuyers with subprime credit scores,” Dean says. “In addition to more relaxed credit scores and lower upfront costs, the down payment can be as low as 3 percent.”
  6. Appraisal. This is an estimate that determines what a property is worth. Banks need homes to be appraised, in part, so they don’t lend you, say, $300,000 for a house that’s only worth $175,000. After all, if you can’t pay the loan, the bank will send you packing and will sell the home. But most people won’t buy a $175,000 home for $300,000, and knowing that, the bank doesn’t want to lend you more than your house is worth.
  7. Private mortgage insurance. This is a monthly insurance payment you’ll have to pay if the down payment on your house is less than 20 percent of the appraised value or sale price. If you don’t want to pay the PMI fee, which often ranges from .03 to 1.15 percent of the original loan, divided into 12 monthly payments, you’ll have to fork over a bigger down payment or buy a cheaper house. Usually, PMI insurance isn’t something you pay forever. It just seems like it, if you have a small down payment. Typically, after your payments reach 20 percent of the value of your home, you stop paying PMI. (My note: this isn’t true if you have an FHA insured loan. The PMI fee will stay on the loan until you pay it off or until you refinance the house. Only standard conventional loans allow for the removal of this fee after your equity hits 20%.)
  8. Closing costs. These are fees related to buying a house that your lender charges you, or you rack up from various third parties, such as a home inspector. Generally, expect your closing costs to be 2 to 5 percent of the purchase price of your home. That may sound like a lot, but there are many costs involved in closing the deal, from buying title insurance to paying for points and attorney and surveyor fees.
  9. Points. One point is a charge equal to 1 percent of the loan amount. So if you’re buying a $200,000 house, and a lender is charging you 2 points, that’s $4,000. Three points, $6,000. And why do you care? Because points are prepaid interest. The more points you pay, the lower your interest rate will be. If you’re planning to live in your house a few years, you could make a good argument for not paying points, but if you believe you’ll go the distance with a 30 year mortgage, it generally makes financial sense to pay as many points as you can afford to snag that lower interest rate, which, in the long run, should save you money. Ask your lender to do the math.
  10. Escrow. When you hear your real estate agent throw this word around, you’ll know you’re probably near the end of the home buying process. The word can be used in a few different ways, but when you think escrow, think of a third, neutral party. For instance, you may have looked at a house, loved it, made an offer and offered a deposit, which would then be put in escrow. That is, it’ll be put in a third-party account, probably set up by your real estate agent. This way you aren’t giving the homeowner your deposit, also sometimes called earnest money. Usually you can’t recoup these deposits if you back out of the contract, but if the seller decides to sell the home to somebody else, you most certainly would get your deposit back. The escrow account keeps your deposit safe so the homeowners don’t inadvertently spend your money and put you through the hassle of having to get them to repay you. You might also hear your lender talking about an escrow account where your property taxes and homeowners insurance go until they’re paid.

Of course, you can buy a house without truly understanding real estate and lender speak. Those professionals will walk you through everything, and you can likely nod your way through it all. But that doesn’t mean you should. After all, some would argue that’s how many homeowners got themselves in trouble before the 2007 recession, making decisions they shouldn’t have, and buying homes they didn’t realize they really couldn’t afford.

This is an excellent article with good information. Some minor edits were made in the original text. If you want to see the original story, go here.

Next: What do I do now? Part 3 – House hunting.

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