Saturday, April 27, 2013

Real Estate Word of the Day for the First Time Homebuyer is Appraisal

First Time Homebuyer Real Estate Word is Appraisal

On a rerun of the TV game show, Cash Cab, a carload of New Yorkers were stumped when asked  to define the acronym, FSBO. This is a term often used in real estate to describe people who sell their home without an agent or "For Sale By Owner". As a REALTOR® I was a bit surprised they couldn't come up with the correct answer but then I  remembered of all the times a look of confusion came over a buyer’s face when I mentioned escrow funds and earnest money. These terms sound so much alike when being bombarded with new terminology like, mortgage, deed, easement, appraisal, and association dues, etc. It is understandable that a buyer who is more interested in room sizes and kitchen counters to be confused with the everyday real estate jargon like down payment or cash to close. Buyer confusion is totally understandable because most people will only buy a home once or twice in a lifetime.

FSBO is only one of many terms that could possibly confuse a First Time Homebuyer. So I thought a glossary of real estate terms might be helpful. From time to time I present terms often used by REALTORS® in a series of posts for the first time homebuyer with explanations. This way you can skip buying that big “how to buy a house” book or attending that First Time Homebuyer Class and have a quick resource at your fingertips. I am continuing the series with Today’s Real Estate Term:

Appraisal An appraisal is the process of assessing a value to a parcel of real estate. A real estate appraiser is an independent 3rd party who will assess the property and prepare a valuation report. This is most often ordered by the buyer’s lender and paid for by the home buyer to verify the amount the buyer is requesting for the mortgage is not more than the current value of the home. The appraiser will try to find three to six comparable homes that have been sold in the last few months to compare to the subject home. The process involves comparing the size, structure, age and features of the subject home/land to the comparable sold homes to determine an appraised value.

An appraisal is similar to a market analysis performed by a real estate agent but it does differ in several key ways. A real estate agent does a market analysis at the request of a seller to determine the best price to list a home. It will take into account homes that are currently listed for sale but an appraisal will not. Appraisers are often licensed and trained to do a precise, detailed value analysis while the market comparison done by a real estate agent is used to determine a price. While an appraiser will charge a fee of several hundred dollars to appraise a property, most real estate agents do not charge a fee to provide a market analysis of a home. A market analysis can be a cost effective way for a homeowner to get value of their home if offered for sale but this document is not acceptable to verify value for a mortgage.

Copyright 2013

Tuesday, April 23, 2013

Which Comes First, the REALTOR or the Loan Officer?

It is often debated, the philosophical question, “which came first, the chicken or the egg?” There are many ways to address that question. (Though my preferred way is to show a lolcat photo of a cat in a chicken hat and avoid the discussion all together.) But really there is no definitive answer.

When buying a house, there is a much less philosophical but equally confusing dilemma, "Which comes first, the loan officer or the REALTOR®?" Both professionals are equally important in purchasing a home but who should a home buyer contact first?

As a REALTOR® I would prefer for a buyer to contact me first. Whether you are a first time buyer or have a property to sell, contacting an agent is an important first step.

If you have a home to sell, the loan officer will need to know an approximate value of the home you will be selling. Of course, you and the mortgage professional can guesstimate. But if the estimated sales price of your current home does not reflect a realistic selling price, you may find yourself short of funds for a down payment.

But even a home buyer without a house to sell could find it easier to contact an agent first. Recently, I was called by a first time buyer who was preapproved with her bank for a first home. She explained that she was going to be buying with a conventional mortgage and showed me the letter from her lender. Something just didn’t seem right so I had her run the numbers with a different mortgage professional that I know who has years of experience. It was a good thing she did. The first loan officer discounted a dispute on my client’s credit report and her limited credit history. She would have never been able to obtain a conventional mortgage. If she had written an offer using the original preapproval letter, her earnest money could have been put at risk if she didn’t qualify for the mortgage.

Home buyers do not always know where to find a good loan officer or what questions to ask to determine the experience level he/she has. As an experienced real estate agent, I have a list of  high quality mortgage professionals I have worked with previously. Experience can prevent most situations from becoming big headaches down the road.

The bottom line is, start with someone you can trust. If you find a real estate agent you trust first, then ask for a referral to an experienced, professional loan officer. Conversely, if you know a high quality mortgage professional that you trust and want to work with, start there. Most REALTORS®, myself included, will work with any loan officer that represents their client in a professional manner. The key is to get preapproved before starting to look for a home. Knowing what you qualify for, down payment required and an estimated monthly payment, will ease the stress when you start viewing properties. It’s hard to write an offer, if you do not know what you can afford!

Copyright 2013

Wednesday, April 17, 2013

6 Essential Spring Repairs to get YOUR Minnesota Home Ready to SELL!

It is hard to miss the media reports this spring that REAL ESTATE is back in the Minneapolis/St Paul area!  This good news has many Minnesota homeowners thinking about selling. If you will be listing your home on the market this spring, it will take some preparation and repairs.Even though we seem to be in a never-ending winter this April, it may be time to make the "honey-do" list of spring projects. 

Keeping your home in optimal condition is essential in maintaining property value. Whether you plan to sell your home this summer or not, there are a few essential things to check, repair and or replace after every Minnesota winter. As a REALTOR®, I often have to show properties that have not been properly cared for. Throughout Anoka County, Chisago County and northern Washington County, the areas where I work extensively, I have seen houses with interior ceiling damage from leaking roofs,  cracked driveways and unmaintained decks that can be downright scary to walk on.
Surprisingly, these are not all foreclosure homes. While I understand it can be frustrating to have to make repairs just prior to selling your home, not making the repairs means being priced to compete directly with foreclosure homes for thousands less.
If repairs had been made in a timely manner and the home properly maintained, this expenditures before selling might have been avoided. 

With hindsight being 20/20, I often hear sellers lament about how they wish they had chosen to keep the home in better condition all along and had more of an opportunity to enjoy the benefit of a well maintained home. It is much more beneficial and cost effective to assess your property for required repairs on an annual basis than to be hit with everything at one time when you sell.

Here are 6 spring maintenance tips that will not only beautify your home, but also aid in retaining your home’s value for years to come:

Roof—Walk around the exterior of your home with binoculars if necessary and check for any missing shingles that may have been blown off during a winter storm. If any are missing or you see other concerns, bring in a contractor to assess the damage and make repairs before you have water damage on the interior of your home.
Siding—Power wash debris buildup from vinyl or aluminum siding. Buildup can stain siding overtime.

Deck Settling—Check for any settling or worn boards on your deck especially if it is several feet off of the ground. If the supports of your deck appear to be pulling away from the home or if the boards are weather-worn, have it reviewed by a professional before that first summer barbeque.

Paint and Stain—Did the harsh winter sleet, snow and ice cause the paint or stain on your siding, trim or deck to start to peel? Now is the time to assess th
e damage.

Gutters—Gutters filled with leaves? Take the time to clean out to prevent water backups. Keeping water away from the foundation is the best way to keep water out of your basement. If your gutters are clogged, they cannot do the job and the rains will pour right over the clogged-gutter’s edge near the walls of your home. Consider adding screens or guards to prevent leave buildup in the future.

Driveway—The winter’s freeze and thaw cycle can do damage to an asphalt driveway. Cracks need to be filled or they will get worse. It is recommended that blacktop driveways also be seal-coated every 2 years when there in an open area with extreme sun exposure to extend the life of the driveway.

Copyright 2013

Sunday, April 14, 2013

Almost Speechless Sunday--Waiting their Turn in the Canal!

All though I live Ham Lake in Anoka County about 2 hours south of Duluth, we travel up quite often to see the ships come into the harbor. This was the first time I have witnessed anything quite like this...but then this has not been an ordinary spring for Minnesota. We should have green grass and flowers by now but sadly we are snow covered this year.

After an unseasonable spring snow fall of over nine inches in Duluth, Minnesota this last week, ships coming into port though the canal had to wait for an ice breaking ship to guide them in and avoid damage. The snow in the foreground is chunks of floating ice & snow on the lake. There are two ships waiting in this photo but we could actually see two more waiting further out. The news reported this morning that at one point yesterday, there were NINE ships waiting to pass through the canal under the famous Duluth Lift Bridge.
This never-ending winter continues to frustrate us...Time for spring!

Don't Let this Unusual Spring Snow Keep You From Making a Move to Minnesota...

Copyright 2013

Sunday, April 7, 2013

Rethink the Bridal Registry! A Dream HOME Could Make the Happy Couple VERY Happy!

When I was married we didn't have a fun barcode readers to capture and share our favorite towels, toasters and china patterns but they seem to make life simple for today's bride and groom. But wouldn't it be awesome to point that thing beyond the department store wares and head out to the nearest neighborhood of cozy bungalows and tag something that a the happy couple also needs, their first home? Imagine engaged couples browsing the internet listings on or dropping by an open house and using a scanner to click the QR-type code on their favorite new home so the front door key could be handed over as the bride is carried over the threshold. AWESOME idea, right?

It is an off-the-wall idea but couples getting married this year may have a tough time finding first time buyer financing. Zero down loans have all but disappeared from the landscape and first time buyers need cash in their pockets to put toward a new home. As mortgage programs continue to change and evolve, it is essential to save for that down payment. A forward thinking young couple might want to divert some of their wedding funds and gifts into an investment in a new home, in which they can begin their lives together.

 Buyers wanting to purchase this spring will NEED a down payment for a house. Not just a few bucks either. In most cases a buyer will require a minimum of 3-5% to put down. With an average Minnesota starter home in the $175,000 price range, today's brides and grooms will need to save at least $5,000-$10,000, plus closing costs.

All is not lost for first time buyers, but a little forward thinking is in order. There is a lot of money involved in most weddings; both on the party planning and the gift recipient side. A savvy bride and groom might be able to figure away to have the perfect wedding AND a dream home.

New Home Gift Registry Young couples getting married register for gifts to let their friends and family know exactly what they want and need. If you need a house, why not let your guests know? Maybe the insert in the wedding invitation should read:
“The couple is registered for a small number of necessities at Target, JC Penneys and Macys. If you would prefer not to shop, they are also saving for a down payment for a new home and would a appreciate monetary gift toward their dream.”
I don’t know what
Miss Manner’s would say about but I think a financial wiz like Suze Orman would applaud the idea.

Wedding Budget With the average dream wedding going for over $20,000, maybe a little arranging of the budget is in order. Those saved dollars from the dream wedding can go toward that dream home instead. Now, I am not suggesting "cheaping out" on anything or everything. But it would be prudent to take a look at where you can economize on your budget. Maybe you can go fore go the fancy invitations or select a less expensive dress. Is it possible the honeymoon trip to Hawaii would be a better choice for your fifth anniversary and a road trip to Duluth, MN to create newlywed memories along the north shore of Lake Superior could be considered instead? Whether on wedding details, reception or the honeymoon, if just 25% could be saved on the average wedding, approximately $5000 cash that could go toward your dream home.

So brides and grooms start thinking about your future lives together and create a plan for your dream home. Though those scanners will not work outside of the department stores, I do! As a professional
REALTOR® , I have helped many young couples find the first home of their dreams. I know the north and east Twin Cities housing market and can help you spot a deal whether want a dream home in Maplewood, Forest Lake or Blaine. I will assist you in writing a fair offer and negotiate a deal so your dream can become a reality. And having your OWN agent doesn't cost you any additional fees--The seller pays my commission! Working with an agent to find your first home, takes the stress out of the home buying process so you can focus on making your wedding day special rather than moving in details too. 

Copyright 2013