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TIPS ON BUYING PROPERTY
Your interests are best served if you have a REALTOR® working for  YOU on YOUR behalf.  If you are the seller, the Listing Agent will represent your interests.  If you're buying a property, you should have a Buyer's Agent representing you.  The issues and "how to's" on both sides will be better explained by clicking on the links below.

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BUYER QUESTION:  Is it possible to get a mortgage for more than the home's value?

ANSWER:  It's generally not possible to buy a home and borrow more than it's worth.  One exception is buying a "fix-up" property.  There are loan programs that allow you to borrow the purchase price plus the cost of the fix-up.  Both you and the property must qualify.  You must have an excellent credit, and must qualify income-wise.  The value of the property after it has been repaired must be higher than the amount of the mortgage.  In other words, you must buy it cheaply enough so that the purchase price plus the cost of the repairs ends up being less than the value of the home after it's completed.  This sounds great, but finding a suitable property is not that easy.  There is a considerable risk involved (what if the repairs end up costing more than planned?), and the inters rates and fees are, of course, higher.

Debo@HomesOfWilkes.com

 

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Copyright © 2004, Homes of Wilkes. All rights reserved.
Updated: 02/28/2011

 

 

 

 

 

 

WHO WILL HELP YOU? 

  • Choose a REALTOR® with whom you feel comfortable. 
    • Do they seem truly concerned about you and your family in this transaction, and not just the sale? 
    • Do you feel they are trustworthy and concerned about your best interests?   Have they presented the brochure, "Working With Real Estate Agents" early in the process and advised you not to tell them any personal information about yourself until you have agreed on your agency relationship?
    • It helps if you feel comfortable talking with each other.  You'll be riding around together quite a bit, so you need to be able to carry on conversations with each other or those are going to be very long trips.

When is a Real Estate Agent a REALTOR®?
The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics.  The Code establishes time-honored and baseline principles that come from the collective experiences of REALTORS® since the Code of Ethics was first established in 1913. Those principles can be loosely defined as:

  • Loyalty to clients;
  • Fiduciary (legal) duty to clients;
  • Cooperation with competitors;
  • Truthfulness in statements and advertising; and non-interference in exclusive relationships that other REALTORS® have with their clients.
    • How is the REALTOR® paid? 
      A REALTOR®, or agent, is paid by their Agency.  Each individual agent and the agency with which they work have a working agreement as to the percentage the agent will receive on each sale of property.  Typically, the seller of property is responsible for paying the commission to be split between the listing agency and selling agency, but the buyer can pay part or all of the commission, depending on the buyer agency agreement.  Commission is always negotiable and the negotiation is between the Listing Agent and the Seller or between the Buyer Agent and the Buyer.  It is not between the Buyer and Seller and is not a part of an Offer to Purchase Contract.
       
    • What can a REALTOR® do?
      • Help you select the best property for your specific needs
      • Present data (CMA) to help you decide on a fair purchase price
      • Suggest lenders, inspectors, attorneys, and other service providers
      • Handle all the paper work
      • Negotiate between the Buyer and Seller
         
  • Select a lender to be pre-qualified and/or pre-approved.  WHY?
    • You'll know what you can afford
    • It shows the sellers you are serious and able to make the sale happen
    • You can make an offer as soon as you find the home you want
    • Documents the lender may need for pre-approval:
      • Pay stubs (2-3 months)
      • W-2 forms (2 years)
      • List of long term debt
      • Recent bank statements
      • Tax returns (2 years)
      • Proof of any additional income
      • What kind of credit do you have?
        • Good (car loans, education loans paid regularly and in timely fashion)
        • Bad (bankruptcy, foreclosure, judgment, collection agency)
        • None.  How can you establish credit?
          • Rent in your name or along with others (have your name on the lease)
          • Set up a bank account with a small credit line in your name
          • Get a credit card with a small limit and use it sparingly, paying the total balance monthly instead of in monthly payments.
            • DO NOT open a credit account everywhere it’s offered to you.  Every time you do, you lower your credit rating.
        • Credit score (Beacon score) – Measures a potential borrower’s likelihood of default.
    • Factors:

          • Past payment history
          • Amount of credit available
          • Amount of borrowing relative to amount available to borrow
          • Number of recent credit inquiries
          • Recent delinquency
          • A Beacon score of 580 is bad, 620 is OK and 680 is good.
      • What is your record of employment?
        • Job stability (more than a year)
        • Changes in employment (bouncing around from job to job)
        • Self-employed or work on commission (requires tax returns for 2 yrs.)
        • Types of income (base pay, overtime, bonus, child support, alimony)
        • Ratios (29/36 – housing costs should be no more than 29% of gross income and housing costs plus monthly debts should be no more than 36%) 
        • What are your current debts (child support, co-signed loans, credit cards, car loans, education loans, etc.)?
           
      • The lender will required the property to have certain requirements:
        • Must be valued at least the amount of the loan
        • Must be liveable, have running water, a built-in heating source and power source – not typically a “fixer-upper”
           

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SELECTING PROPERTIES TO VIEW:

  • How many bedrooms and baths do you need?
  • What style (2-story, split level, ranch, mobile (single/double), etc.)
  • What part of the county do you want to live?  This is often determined by the school district.  There are 6 areas in Wilkes (See attached map).  Visit the School System's Website
  • Approximate square footage (first time homes ave. 800 – 1200 sq. ft)
  • Lot size (acreage) (ave. subdivision lot size .5  - 1 acre)
  • Price range (this is where the pre-qualification by a lender will be very important)
  • Preferences (examples)
    • Garage/carport (single/double, attached/detached)
    • Basement (finished/unfinished, crawl space, inside/outside entrances)
    • Extra land (how many acres?)
    • Fenced yard
    • Paved street
    • Paved driveway
    • Central Air
    • Heat source
    • Den
    • Formal areas
    • Master bedroom on main floor
  • A REALTOR® will start searching the local MLS (Multiple Listing Service) for houses fitting your criteria.  They may set you up on a "hot list" which will automatically send you new listings that fit your specific criteria as they are added to the MLS.  That saves YOU a lot of time by not having to sift through all the listings in the county.
  • Appointments to visit properties – made by REALTOR®
    • Respect sellers (ask the REALTOR® to make appointments at least 24 hours in advance.  Always make sure you enter a property with clean feet (during inclement weather).  Make sure you lock back all doors and turn off all lights before leaving – leave it as you found it)
    • Take notes as you walk through the property (positive and negative aspects, particularly any repairs needed).  The REALTOR® can supply you with a copy of the listing with particulars about the property for reference as you walk through.

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MAKING THE OFFER:

  • List price is what seller wants to receive – offer is what you’re willing to pay (negotiating room)
  • REALTOR® will supply you with a CMA (Comparative Market Analysis) to give you a range of prices of similar houses in similar area.  
  • Property Disclosure Statement 
  • Earnest Money (typically between 1-5% of purchase price)
    • If offer accepted, earnest money becomes part of purchase price
    • If offer rejected, earnest money returned to buyer
    • If offer accepted and buyer backs out, earnest money is forfeited
  • Offer may include:
    • Request for seller to pay a portion of closing costs (usually near list price)
    • Request for seller to complete repairs (list)
    • Contingencies
      • Home inspections
      • Buyer securing loan
  • Accepted or countered
    • Counteroffer rejects original offer
    • Several counters may be made before agreement to accept or reject

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WHAT HAPPENS AFTER THE OFFER IS ACCEPTED?

  • Time frame (45 – 60 days due diligence)
    • Loan application
    • Inspections
    • Attorney
  • WATCH YOUR SPENDING UNTIL AFTER CLOSING! – charge cards/equity lines
  • Closing costs (typically between $2000 - $4000)
    • A down payment (if required)
    • Prepaid homeowners insurance (1 year)
    • Money for escrows (insurance and taxes – county/city)
    • Loan origination fee by lender (typically 1% of loan amount)
    • Attorney fee ($400 - $600.  Can be as much as 1% of loan amount)
    • Title Insurance ($2/$1000 value)

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