Archive for April, 2010
How to get from “Under Contract” to “Closed” in 11 (sometimes) easy steps. #3.
Step #3 Choosing a Settlement Company:
You’ve made it through the inspection, financing is chugging along smoothly… You’re on your way! So, now what? It’s time to choose a settlement company. In Maryland and DC the buyer gets to choose the settlement attorney- though keep in mind the settlement attorney will end up working for both the buyer AND seller (no taking sides here!). Their job is to insure the successful transfer of title from seller to purchaser.
Settlement takes place on or before (as long as it is mutually agreed to) the date identified on the contract. Small note: 4 parties need to agree on the settlement time (buyer, seller, and both agents)- so start talking timing early, before calendars get filled up.
Sometimes there is a financial incentive to use one settlement attorney over another (typically because your chosen lender has a deal going with a specific attorney). The discount can be substantial and is usually found as a reduction to title insurance fees. (Note: for short sales, foreclosures and the like, sometimes the ability of a “specialty” settlement attorney will far outstrip the savings found at another. I’ve learned this the hard way). Be sure to ask your lender if they have such a deal in place. If there is no affiliation your real estate agent will gladly offer up some competent suggestions.
Most, but not all, settlement companies will have a website where you can easily figure out your settlement costs (I like to suggest that you do this prior to placing an offer… just so that there aren’t any surprises! As a buyer, one should allow for between 2-3% of the purchase price). And, if they don’t, they’ll be very glad to provide you with an estimate.
Important: be on the look-out either via e-mail or snail mail for a packet/questionnaire from the settlement company (both seller and buyer). It’s important to respond promptly to their questions so that the title work can proceed in a timely manner.
A day or two before your scheduled settlement you will be given a preliminary HUD-1. The final HUD-1 won’t be available until the day of when the banks finalize their numbers. The HUD-1 will give you a very good estimate of the money you are to bring to the table, (in the form of a cashier’s check, or a wire), or the money you will receive as a seller. It also breaks down all of the costs involved in the purchase or sale. It can be a little confusing to understand, so if you have any questions ahead of time, fire away.
Last thing. Don’t forget to bring some i.d. with you (drivers license or passport), and a checkbook (to make up for miscalculations in the preliminary HUD-1).
This is an 11-part series. To read the next few articles, click on the attached links for information on:
Title Insurance. Banks make you get it. Probably a good thing. It’ll cost you.
Home Warranties. Like all insurance, it’s a crap shoot. Can add peace of mind to purchase.
Final Walk Through. Don’t skip it. If something comes up, don’t panic. Everyone wants to get through this.
Condo Docs. It’s your responsibility to read them. Boring, but also chock full o’ good information. Avoid special assessment or pending lawsuit properties.
How to get from “Under Contract” to “Closed” in 11 (sometimes) easy steps. #2.
Step #2 Financing
Though I usually request that my buyers get approved for financing before placing an offer, there are occasions when this is not possible. So, let’s say you put in an offer on a new home and everyone has agreed to a loan contingency allowing for 30 days or less to secure financing. Now what? In years past, you could sneeze and qualify for a loan (ever hear of no-doc loans?). These days I’m afraid it’s a lot tougher, regardless of your qualifications. Full document (”full-doc”) loans are the standard now, and will provide ample opportunity for you to become fast friends with your mortgage lender. Why? Because she/he will be asking you for your income, asset and debt information at the beginning of the process, probably in the middle of the process, and quite possibly toward the end of the process. It takes time, patience, and a lot of documentation.
About documentation… Keep copies of what you send… all of it! Not all documents copy well or are easy to read. Send low quality copies, and you will surely hear from the bank requesting new ones. Take a few days to provide these replacement copies and the loan process will take that much longer.
Let’s go into more detail:
Income: You’ll need to collect your most recent pay stubs (30-days worth), and W-2’s/1099’s and tax returns for the last two years.
Debt: Found in your credit report are all the open lines of credit in your name: payment history, late payments, collections and foreclosures. By starting the approval process early (before your offer), mistakes or problems can be remedied, possibly raising your credit score, potentially allowing you to qualify for a better interest rate.
Assets: Here’s where you get to share 2-months’ worth of bank statements (every single page) for each account you have open. Are you receiving gift money in order to make your purchase? Your giver (generally a family member) needs to fill out a form (get one from your lender so you hit on all the right topics) and show his/her ability to give the gift by… you got it… providing a bank statement. I know. It gets tiresome.
Identity: You’ll need a legible copy of your driver’s license along with a social security card or possibly a passport. The loan officer needs to see that the name on your i.d. matches your documentation and loan application.
Loan Process: During this period you may be asked to provide more documentation (pay-off information, recent bills… whatever the Underwriter deems necessary). Be ready. You might be asked to provide a bank statement hi-lighting the line showing your earnest money deposit exiting the account. Similarly, if you are receiving gift funds, you’ll have to show the funds coming into your account. Why is this all necessary? The law requires that the banks show proof that you are using your funds to purchase a house, and this is how they do it. These laws apply across the board, so don’t feel singled out.
Now, all of this needs to be accomplished in 30 days (give or take, according to your contract). And guess what… they can turn you down. If you have the opportunity to get approved (not just pre-approved… we want you 100% fully approved), please do so. You’ll be saving yourself a lot of time and energy, and … you’ll know exactly how much money you can or cannot spend*. Don’t get caught by surprise. Your realtor will thank you!
*a note of caution. After you’ve been approved for a loan, please don’t run off to Vegas and gamble away all of your savings. Or, have a mid-life crisis and buy a Corvette. Or write a big fat check on that home equity line of credit. If you choose to waive that financing contingency because you’ve been approved, and then you can’t perform on the loan, you’ve just created a really big problem for yourself.
This is an 11-part series. To read the next few articles, click on the attached links for information on:
Settlement Attorneys. Cheaper is not always better. Buyer usually chooses. HUD-1 confusing. Get one. Ask Q’s.
Title Insurance. Banks make you get it. Probably a good thing. It’ll cost you.
Home Warranties. Like all insurance, it’s a crap shoot. Can add peace of mind to purchase.
Final Walk Through. Don’t skip it. If something comes up, don’t panic. Everyone wants to get through this.
How to get from “Under Contract” to “Closed” in 11 (sometimes) easy steps. #1.
Step #1 Home Inspections:
You’re sick of it. For months now you’ve been looking for the elusive perfect place to call home. At long last, an offer sticks, and the house/condo/co-op of your dreams will become yours within a few short weeks (hopefully). Yahoo. Are you done yet? Not quite.
Home Inspections. During the height of the market (the build up to 2005), home inspections were either waived or done prior to presenting an offer. Fast forward to 2010 and the climate has changed. If you’re working with me you absolutely will have an opportunity to inspect your future property, usually within 7 days of contract. By including an inspection contingency you will have the option to either remedy current problems in the home or walk away without penalty.
Why get a home inspection in the first place? Buying a home is probably the single largest purchase you will make in your lifetime. You need to protect yourself from that “investment” before it turns into your own personal nightmare. Would I let my adorable husband tell me what was wrong (or right!) with my car? Are you nuts! I need to Read the rest of this entry »
Moving? Important Telephone Numbers, etc…
DC and Maryland Telephone Numbers, etc:
Pepco (MD/DC) 202-833-7500
Allegheny Power 800-255-3443
Washington Gas 800-752-7520
Frederick Gas 301-662-2151
WSSC (MD water) 301-206-4001
WASA (DC water) 202-787-2000
Poolesville Water 301-428-8927
Rockville Water 240-314-8420
Verizon- MD 301-954-6260
Verizon- DC 202-954-6263
The Washington Post 202-334-6100
The New York Times 800-631-2500
The Wall Street Journal 301-680-2990
US Post Office: Change of Address on-line
U-Haul: click here
Boxes, etc… Used Boxes on-line
Once you are in your new house, give me a call for any other recommendations you might need: carpenters, painters, gardeners, handyman, decorators, architects, etc… I’ve got a long list of tried and true vendors that have been put to the test by Evers & Co. agents. Happy to share.
The fine art of pricing your Chevy Chase home… It’s not what you think!
The fine art of pricing your Chevy Chase home… It’s not what you think!
At Evers & Company, we have a favorite saying. Perhaps I should say, we have a favorite speech. And that is…
The value of your property is not determined by…
- What you paid for it
- What your neighbor thinks
- The amount of cash you need
- How much money you’ve invested in it
- What the appraiser says
- What Zillow, Eppraisal or even your recent tax assessment says
- What any agent says
The value of your property is determined by…
- What a ready, willing and able buyer will pay for it
How can I help you with pricing?
I can arrive at the correct price by a review of…
- “Sold” comparables
- Competing “for sale” properties
- The current market conditions
- Buyer statistics for specific price range
- Evaluation of fellow agents’ input
Asking price is the most important factor when selling your home. And what are the perils of overpricing? There are many. “If we set the price high, won’t it allow room for negotiation down to the proper price?” Sadly, this theory has proven again and again not to work. Educated buyers will overlook your house in favor of one which is properly priced to begin with.
High prices signal demanding and certainly unrealistic sellers. Furthermore, you really only get one chance to be new on the market. This is when showings are at their peak and your house has the most sex appeal. Price it too high for the market, especially when there are other houses in the neighborhood that are priced correctly, and your listing will suffer. Overprice your house, and you need to wait another 90 days before the Days-on-Market clock is re-set (at which point it will appear to be a new listing again with “0″ DOM). And there is no telling what kind of shape the market will be in at that time.
I can cite dozens of examples of homes that sold for less than their fair market price because they started off too high. It’s a little bit like clothing you find on a clearance rack. It doesn’t matter how good the quality of the fabric might be, or how nicely it looks on you. As a consumer you are going to wonder what’s wrong with it and why hasn’t it sold. Chances are you won’t buy it anyway unless you have a coupon. Trust me, you don’t want to be that overpriced house on the clearance rack.
If you’re ready to sell your house, I’m here to help.
How to deal with a bad inspection?
Inspections that reveal a lot of issues aren’t fun, particularly when you are on the receiving end of a troublesome report.
One important thing to remember is that most inspectors are independent contractors. No two inspections will reveal exactly the same issues (though you hope for some consistency!), and the weight given to each of the specific issues will depend upon the individual inspector. Some of them are focused on water issues, while others are electronics fanatics. It varies.
What to do if you are a seller?
If you’ve got the time and the money, hire your own inspector prior to listing your house and address the items that are problematic. Not only will it improve your bragging rights (new water heater installed in 2010, bathroom tile re-grouted in 2010, etc…), but it will give you a hint of what might come when the buyer brings their own inspector to your house. Insist on a written report. That way, should there be a difference of opinion, Read the rest of this entry »
Love thy neighbor? 5 tips to help you find a good one!
A lot of my newer buyers are concerned about the “quality” of their new neighbors. Are they nice, mean, carry a big gun, have a bigger dog, play music at night, scare the mailman?, etc…
Here are a few sure fire ways to figure out if they are good guys or complete nimrods … well, you know what I mean.
1. Hang out in the neighborhood.
That’s right. Take some time to hang out around the house/condo that you hope to live in, and see what sort of activity goes on in the area. Is parking a nightmare come 5pm? Does the local bar start blasting thumping Greek (Irish, African…) music from 9pm-2am? Do cars go racing down the street at rush hour? Will street cleaning on Saturday mornings be a problem? Your time to find out is right now.
2. Talk to the neighbors.
Now is not the time to be shy. Hang out in front of the property, or walk around the block 3 or 4 times. See who you run into. Is the neighbor’s lawn mowed. Are there a lot of plastic toys in the front yard (kids)? Yappy dog? Start up many conversations. Say “Hey- I’m considering putting in an offer on “X” property, and I’m wondering what you can tell me about the neighborhood.” Play dumb. Ask them what they like best, like least, etc… Ask what their favorite restaurant might be. The favorite dry cleaner. Dog walker. Citizen’s Association. Local legends. You get what I mean.
3. Check with the police.
Call them up to see if any crime has been happening in the neighborhood, specifically what kind and with what sort of frequency. Ask about your specific block. As a real estate agent, I can’t tell you. I’ll go to real estate jail (really). If you’re buying in Montgomery County you can check with the police, or the Thursday Post prints the local crime report in the paper. In DC you can go to DC Crime Watch.
4. Talk with your friends at work, acquaintances, etc…
I ended up in my neighborhood because it was close to metro and I liked the house, but mostly because my husband’s sister had suggested that we talk with her colleague who happened to live in the neighborhood where we hoped to put in an offer. This guy really raved about the neighborhood and we were 100% hooked. We felt like we had true insider information. As a real estate agent, I can usually come up with a few people who can praise (/complain about) a specific neighborhood… but it’ll feel more authentic if you seek it out yourself (and find it). Ask around.
5. Walk the walk.
In the DC metro area, sometimes it’s all about the commute , or access to a playground. If this is an issue for you, test it out. Walk to the metro, bus, elementary school, Starbucks, and/or local park, before you put in an offer on the place. I try to be pretty specific about walk/commute times when listing a property, but everyone walks at their own speed. If it’s of importance to you, take the time to check it out. One great source for rating the “walkability” of a neighborhood is: http://www.walkscore.com (on the right column of my website… yup, just over there).
If there is something I’ve missed, please let me know by commenting below. I’m always looking for ways to improve my articles! And, if I can be of help in buying or selling your property, I’d love to hear from you.
When the eyes of the beholder belong to a cranky ex-banker
It’s not always about the money. 
During the last over-exuberant market (the build up to 2005), using an escalator clause was the norm. An escalator clause works like this: “I will pay “X” dollars above the highest bid with a cap not to exceed “Y” dollars”. You insist on proof of the other offer, and proceed from there. The “proof” is generally limited to a viewing of the competition’s escalation clause along with the first page of their contract (stating the price and loan terms).
Sometimes in real estate you are simply in the hands of the other agent. Or their opinionated seller.
I was once in a competitive situation where I was up against one other offer. My buyers were, frankly, over qualified financially. If they had cashed in all of their stocks, they could have purchased the home for cash. They did have a house to sell, but this was 2004… houses were selling themselves. We certainly didn’t make our offer contingent upon that sale. Additionally, we pre-inspected the house so we could waive the inspection contingency. It was a darned-near-perfect offer.
I was pretty certain we were going to get the house. The escalation clause went up to a ridiculously high cap in $5,000 increments (again, what one had to do in those days of frenzied real estate, and my clients were prepared and happy to do so). But guess what. We didn’t get it. The listing agent called to say that the other buyers had more money. Rats. This happens.
I followed up when the house closed a few months later and was surprised to learn that it went for considerably less than our escalator cap. So I called the listing agent to see what happened.
It turns out what she meant by “more money” was that the buyers earned more money. Oh, and the sellers, former bankers, were terribly concerned that my buyers wouldn’t be able to sell their house – - in the hottest market of the century! Despite the fact that my sellers had gobs of money in their bank account, just in case that were to happen. Oh, it got my blood boiling.
To their credit, our escalator amount of $5,000 might have been on the small side, but this was in the day when they could have come back to us with a counter and we would have begged them to go higher. It was just that obscene of a market.
You never know what you’re up against when presenting an offer. In this case, the competing bid might have been from a friend of the listing agent. The seller might truly have been concerned about the sale of my buyers house… a fire that could easily have been doused by a competent and learned agent. Or, the listing agent might have hated my guts (though in this case, I don’t think so). And maybe, despite my criticism, they just liked the other offer better than mine. The fact of the matter is, you never know what the other “side” is thinking. And sometimes, no matter how hard you may try, the outcome is beyond your control.
The good news is that my buyers ended up in a house they liked a lot more.
Ups and downs do happen in house hunting. Sometimes you don’t recognize the perfect place until it’s too late (and gone). And at other times you are out bid, out foxed and just out of luck. You just have to pick yourself up, brush yourself off, and get ready for the next one!
If you’re inclined to jump into the housing market, I’d be delighted to help you navigate the waters. Can’t guarantee the outcome (trust me, no one can), but I’ll try to make it fun (and educational) along the way.
BCCDCReal Estate Update: March 2010
At long last, the frozen market is thawing!
A lot of people know that I sell real estate. And I am frequently asked “how is the market doing?” Some of my fellow real estate agents say you should never say anything bad about the market. I find that rather ludicrous.
We are just coming out of a 2-year cycle where selling real estate was really tough. Tough because there was nothing to sell. Tough because money was tight. And tough because a lot of money socked away for the purpose of buying a house magically disappeared (or was greatly reduced, thank you stock market). In 2009 the average volume of sales was down 50% when compared to the height of the market (2005-2007). Fifty percent!
That’s not to say that people have given up. But sometimes finding the perfect house is like looking for a needle in a haystack. And, not only can you not find a house, but the folks that might think your house is rather dandy can’t buy until you get out of it. See the vicious cycle?
Fast track to Spring 2010. I’m happy to say that the thaw has begun. Things are hopping. I don’t know if there was some pent up demand for housing after a record-breaking 56″ of snow, but houses are moving very quickly. Finally, there are houses to buy! We’re seeing a few competitive situations and the return of the multiple bid. Interest rates remain around 5% for a 30-year-fixed rate. A lot of first-time buyers are taking advantage of the $8,000 tax break (which expires at the end of April). Combine all of this with housing prices that are lower (some say at 2003 levels), and it all makes for an active market.
If you are in the market for a new home, or are gearing up to sell, give me a call. I specialize in the Bethesda, Chevy Chase and DC marketplace.
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