First Time Home Buying Tips And Advice

This week Coldwell Banker has written a series of blog posts in commemoration of first time home buyer week. They have written some great articles and provided the general public with lots of information to help them along buying a home. You can visit the blogs posted about it at blog.coldwellbanker.com #FirstHome. What i wanted to do today in keeping with the theme they ran all week is list the things i noticed and try to help advice my buyers on that are first time home buyers. I sell an extensive amount of homes to first time home buyers and they are definitely different than ones that have purchased homes in the past in terms of knowledge and how the process works. First, I always ask them to put together two lists for me. One list is of the needs in the house. Things they absolutely have to have in a house. Like four bedrooms, 3 bathrooms, 1500+ square feet, garage, back yard, office space, etc.... The second list I ask for is there wish list. Besides the needs what would your ideal home have in it. Granite countertops? Jacuzzi tub? Master suite on the lower level? Updated kitchen? Hardwood floors? etc... You get the idea. the reason i do this is i start out looking for homes for them that fit there wants and needs. I send that list first and start our search that way. At the same time I send them another list fo homes that fits just there needs but may have some or none of the wants in there as well. this allows them to pick out homes and decide if their wish list is to unrealistic or not.... Second, I never ask a potential home buyer what they want to pay for price. I ALWAYS ask them what you comfortable with in regards to monthly payments are. You are not being married to the price for the next 30 years (if you stay that long) but the payment. A few thousand dollars one way or the other will not dramatically alter the payment. but if I know what they want for a payment and the type of loan they are looking to do (FHA, conventional, or VA) then I can back into a maximum price point I know they can comfortably afford that will keep them in their desired payment. the best part of it is i can put in the maximum price (which usually i inflate $5000 to $10,000) to cover negotiations and it will give me everything that is at the highest that price and all the way down to the lowest price. So, I am not taking out any homes for being to low in price but capping them at a price. This way they know looking at all the homes; the most any of them is going to cost them is the max monthly payment they gave me and may be less depending on the house. Third, I tell them that having your parents come along and give you advice is great. But ultimately it is your decision to make and only you can make that decision. Just because your parents may not like the house does not mean it is not a great deal for you. You are the ones that are going to be living there and making the payments. it may sound harsh...I know since I have high schoolers right now that do not listen; but unless I am making that payment for them; all I can tell them is what I think and to make sure they are happy with their decision. Fourth, decide on an area you want to live and look at the neighborhood and style of homes and price points and make sure it is something that you can afford. One thing i ALWAYS tell my buyers that are first time home buying; "Do not overpay for a house based strictly on the neighborhood". Yes you may not be exactly where you want to be. But another three to five minute commute may get you the right house and at the right price.... Too many times I see clients that want to live in one place but it would be stretching their budget and I advise them to look somewhere else for now. In three to five years you can sell and move to the area you want to live (if that is still the area you want to be in). But do not over pay. When you own a home you have additional costs associated with repairs and maintenance you do not have when renting. Fifth, talk to a mortgage professional about your mortgage needs upfront. You may even need to shop around and talk to more than one. Make sure you find one that you are comfortable with and feel is working in your best interest. Just as you would want with your Realtor. You want a Realtor that understands your needs and wants and will help you find the right house. To many times I hear people ask me the question that it may take a while to find a house. My answer is always the same. So? The decision is ultimately yours and I am here to guide and help you along the process and locate some homes that will work for you. I have had clients find homes in a week and others take 6 months and everything in between. I have had clients look at 6 homes and select one to buy and others that literally looked at 100 + homes before making a decision. It does not matter to me as long as you are happy with your decision. I am not in it for the short term but the long term....And I live by one simple rule: "treat others as you would want them to treat you". Dave diCecco Realtor/Broker Coldwell Banker United Cell:704-519-7895 ddicecco@cbunited.com www.davedicecco.com

Negotiating A Home Purchase Without Increasing the Price In Charlotte, NC.

Can you negotiate the home purchase with a seller without raising the price and still work out a deal with them? This was a question posed to me by a buyer where we were at the maximum we could go on the loan amount and they wanted the house. The answer is YES. There are other variables the seller is considering with your offer besides the price. And those other factors could be what are driving the price up. First, due diligence fee. This is an ugly word for buyers. Because when you agree to terms with the seller you are basically writing them a check for a certain amount of money so they can take the house off the market while you go through your inspections, loan proceeds and appraisal. Most Realtors for the buyers (me included) look to minimize that dollar amount as much as possible as to reduce the buyer risk of losing money. But, a good negotiation tool if you really want the house is to offer more money upfront. Nothing speaks louder than money. Giving the seller more money upfront can help them swallow the fact they are taking less money for the house; because they know you are really interested in the house and now have more at stake. I have used this before; transferring some of the earnest money into due diligence fee to get a deal done without raising the price. The seller realized they have an advantage now because the buyer has more at stake to lose if they cancel the deal. Second, Shorten the due diligence period. I, like most of the Realtors, try to extend the due diligence period out to a week or a few days before closing. Some even go as far as to make it the day before closing. By shortening the time frame to maybe three weeks or less you are asking the seller to remove the house off the market for a shorter period of time while you go through your process and decipher the information to make a decision. it also shows you want the house and will push to have inspections and the loan process move along quicker and get the appraisal done as fast as you can....All positives for the seller. Third, Increase your earnest money deposit. It may not seem like a lot. but in the eyes of the seller an increase in earnest money (even though it is refundable during the due diligence period for no reason if you cancel) shows you are really interested in the house and increases your likelihood of closing on the house. Fourth, remove any contingencies form the contract. By this it could mean you need to sell a house, get a job transfer or anything that is contingent on you buying the house. By putting an offer with that on there the likelihood of you cancelling on the transaction increases dramatically. By removing such items form the approval you increase your buying power. Some sellers will not even entertain an offer in this market now with a contingency clause and if they do you is most likely paying a premium for it. I had a buyer that wanted to purchase one of my listings that had a house to sell out of state. They offered full price and minimal closing costs to sweeten the deal knowing the contingency was out there. The seller turned the offer down and actually sold the house a few days later to someone else for what will amount to a $9,000 less money to him. But he did not want to tie the house up while the buyer was waiting to get a solid offer on his. Fifth, shorted the closing date or extend it out. A lot of times the seller has to find a place to move to. if you have a close date that is to short; they may feel they are not going to have enough time to find a place and want more money in case they have to rent while they look for a place to live. Of course it cold also be the opposite as well and they may have a place and want to close sooner. I always talk to the listing agent about the sellers move when I am negotiating an offer in order to best advice my buyer of the close date to use in negotiating the transaction. It has helped me put deals together that i normally would not have because the listing agent was not forthcoming with the information or did not ask their seller. Sixth, repair requests and inspections. I am a believer that the buyer is entitled to inspections and the seller should repair certain items in the house regardless. But, I am also not an advocate of nit picking there seller for everything that is wrong in the house. Agree up front to limit the scope of repairs to structural, electric, and plumbing issues and not small things like loose toilet seats and broken outlet covers to name a few.... Nothing turns a seller off more than thinking they are going to be nit picked for every little item in the house and have to pay that money out. Seventh, Instead of going in with a pre-qualification talk to your mortgage lender and get a pre-approval letter. Spend the extra time and get the necessary documents to the mortgage lender it increase your buying power and solidly that you are a serious buyer ready to close on the house by getting a pre-approval letter upfront or during the negotiations. This will show the seller that a potentially major obstacle is cleared. Eighth, If you have a high enough credit score you can qualify today for a conventional loan with as little as 3% down payment. Even though FHA loans are prevalent today the underwriting guidelines for them seems to be getting stricter. Coming in or changing to a conventional loan type increases in the eyes of the seller that you are more committed to buying the house and have more to put down on the house. it also increases the chances you can get approved and close on the loan better than a FHA loan type can. Last, remove items you may be asking for in a house. Certain appliances are considered built in and stay with a house. But if you are asking for the refrigerator, lawn mower washing machine and dryer consider removing those in a negotiating tool. By you asking for them it is just another thing the seller has to buy when they move and to them it is money. by taking them off the list you increase the money without giving up any money in the sellers eyes. These nine things you can do to help you purchase a home today without increasing the sale price of the house and I have used each and every one of them in the past to help negotiate and close transactions for a buyer...They do work. Dave diCecco Realtor/Broker Coldwell Banker United- Cell: 704-519-7895 ddicecco@cbunited.com www.davedicecco.com

Should I have A Pre-Qualification Letter or A Pre-Approval Letter Before Looking At homes?

This week Coldwell Banker is writing a series of articles on First Time Home buying. You can find them at #firsthome on their corporate website. So, in conjunction with them I decided to write with them and give my take on the first time home buying experience as well. The first in their series is the question always comes up on what the difference is between a pre-qualification letter and a pre-approval letter in the offer process when buying a home. Which is better? Why one over the other? The biggest difference between a pre-qualification letter and a pre-approval letter is verification of income and assets. When you call the mortgage lender and ask them to qualify you for a house they ask you a series of questions to establish if you are credit worthy and have the income to support the loan amount you are looking for. Part of the process is them taking your personal information and pulling your credit score to see if you have the necessary credit. If you have the credit then they base the approval on the information you provide them in terms of money for a down payment and income you state to make. Based on that, they put it into a system and generate a pre-qualification letter. Now, a pre-approval letter is a step farther along in the process. here they may have pre underwritten you on the loan and have paystubs or tax returns to verify your income is what you stated and to ensure that there is nothing that would hinder you from qualifying for the loan you are looking for. It has taken out some of the questionable things from the loan process like income and verification of money down to qualify and has had an underwriter look at it preliminary. Neither one will guarantee you can purchase the home since there are other variables involved in the process; like appraisal, taxes and home owners insurance. But a pre-approval letter has a significant amount of more weight than a pre-qualification letter and gives you a better leverage when negotiating a home. I know when i am presenting an offer to the seller i discuss the pre-qualification versus the pre-approval letter to see which one they have and to explain to my seller the advantages of one over the other. In multiple offer situations it is always better to have a pre-approval letter because you are farther along in the loan process and have a better understanding that they can be approved or the loan based on their income and money down. I have negotiated better with buyers on a pre-approval letter than i have on a pre-qualification letter because when I represent the buyer I am talking up the fact that my buyer is PRE-APPROVED. This means that the seller can rest assured that the buyer has qualified for the mortgage they are looking for because the mortgage lender has reviewed their paystubs and w-2's to ensure they can get the mortgage. Another benefit to it is that the mortgage person can tell you if you can comfortably afford the payment or not and lower the approval letters to an amount that you are comfortable paying a month. Just because you are pre-approved for $300,000 you may not want to go that high based on the monthly payments. You may feel better going only $250,000. But at least you will know better what your monthly payment will be approximately before you go out and look at homes. it takes a little longer but it is better to know up front than to find out at the end of the process that the payment is greater than you want or you cannot qualify because what you told him and what the documents you provided can prove are two different things..... I prefer to err on the side of caution since it protects the buyer and minimizes their out of pocket expenses in cases where they could not get approved.... So, you are looking for a home. Start with getting a prequalification and ask them to do a pre-approval letter for you. If the mortgage lender says wait and see what you find insist on getting it up front. It could be the difference in moving into a home now or starting the process all over again 30 to 60 days later after you find out what you can actually qualify for based on your verifiable income. Dave diCecco Realtor/Broker Coldwell Banker United Cell:704-519-7895 ddicecco@cbunited.com www.davedicecco.com