First Time Homebuyers and Open Houses

open-house70Open Houses Can Help, or Hurt, First Time Homebuyers

On any given weekend, a first time homebuyer can find a large number of open houses in the Triangle area.  Houses are open from Zebulon to Hillsborough, with Knightdale, Garner and Cary in between.  While they can be fun to visit and get ideas, attending open houses probably isn’t the best way to find the right house for you.  First, remember that the agent on site represents the seller’s best interests, not yours.  So, whatever you say “can, and will, be used against you.”

You cannot always tell if a home meets your criteria by what you can see riding by, or by reading an ad.  Also, only a small percentage of the homes that meet your criteria are going to be open at any time and you will be deciding to look at them with a limited amount of information.  So you can spend a lot of time looking at homes that don’t fit your needs, and miss the ones that do.  Searching the computerized MLS for homes with the features you want, then looking at twelve pictures on the computer screen is a much more efficient way to pick the homes you want to see.

 

It just makes sense to work with a Buyers Agent, one with your best interests in mind and who can identify those homes that meet your criteria.  If you are already working with a broker, it is important to make that clear as you attend open houses.  If your real estate agent cannot attend the open house with you, take along a business card or otherwise let the agent at the house know, so that you will be given the proper respect for being properly represented.

Do You Know Your Credit Score?

young-couple-credit-score70

Credit Score is Important to a First Time Homebuyer

Knowing your credit score is one of the easiest things you can do to help you buy your first home.  Credit scores are used by lenders to decide if you are likely to repay money they loan you.  Credit scores or FICO scores are assigned based on information in your credit report.  Everyone is entitled to one free credit report form each of the three major credit reporting agencies each year.  These agencies are Equifax, Experian and Trans Union.

Before you begin the Raleigh home buying process have your Realtor recommend a lender.  Then, meet with the lender to establish your purchasing power by getting preapproved for a loan.  As a part of this process, the lender will run your credit report and be able to discuss your credit score with you.  The lender cannot give you a copy of the credit report, but you can order your free one at that time.  By the way, Equifax is hard to deal with when you try to get a free credit report, so try the other two first. 

Getting a report from at least one of these credit reporting agencies is recommended for every first time homebuyer.  The mortgage company will use these reports and your credit score to decide if you are an acceptable risk for a mortgage.  Some first time homebuyer loan programs have cut off scores and anyone below that score are not considered. 

Any score over 680 is generally a good score for mortgage purposes.  

It used to be that any score over 620 was considered good, but lenders are being more strict with their approvals.  Scores less then that may still be eligible for a first time homebuyer loan, but may be considered “sub prime” and as such be charges a higher interest rate to offset the “risk” of a less then desirable credit history.

Knowing your score before you start can help you to avoid dissappointment when deciding to by a home.  A low score can be raised with some time and corrective credit behaviours.  So, even if you have a problem with your credit score, if you find out about it early, you can work to improve it. 

Talking to an experienced North Carolina Realtor and a knowledgeable lender can help you develop a plan to increase your credit score if needed.

Get started now investigating your credit score  if you want to buy a home in Raleigh before the December 1, 2009 deadline for the $8,000 incentive that is given to first time homebuyers.

Want to know more?  Ask questions, get educated – get in touch with us!

First Time Homebuyers Using the Internet

internet70First Time Homebuyers Can get Good, and Bad, Information on the Internet

After deciding that you are ready to buy a home the first place most of us turn to is the Internet. The Internet can be a very useful tool to help, especially for first time homebuyers. Home buying is a daunting task and one of the largest purchases most of will make. So, you are looking for answers to a large number of questions.

Almost all the information you can imagine is at our finger tips online. However, the Internet is full of misinformation and advice from people who do not know what they are talking about. Weeding through his information can be overwhelming so using a qualified Realtor to help you is the best and easiest way the slog through all the information out there. For example, your Realtor can recommend websites with accurate information that is organized in an easy to read manner.

For example, there are a number of lenders who operate online. Some of them will give you a pre-qualification letter to say that you are qualified for a loan with only the slightest amount of information. If you select a Realtor who is not fully aware of the problems that can be created by Internet lenders, you may proceed with a purchase thinking that you can get a certain kind of loan, when you cannot. You need to use lenders that have a proven track record of success, because there are few things worse than getting right up to the time of closing, with all your possessions on a moving van, only to find out that you are not buying anything or that your purchase may be substantially delayed until financing can be obtained.

Some of the best resources to use are mega sites like realtor.com to find homes that are listed on the MLS systems of all areas of the country. Also using a search engine, such as Google, can also be very helpful. If using a search engine be as specific as possible in your search. Decide exactly what information it is you want and use all the key words in your description. Another great resource is to use a Realtor’s website. Often you will need to give some information to access the full site, but a Realtor’s site like www.TeamForYOUrDreams.com , will contain links to every home that is available in the local MLS, and will usually contain other links to information about the area like schools, city and county websites, and many others. Using a site like this will also give you access to a Realtor in the area that will be able to help you answer any questions you may have about home buying in general and about the specific real estate market in the area you are searching.

First time homebuyers can find a great deal of information on the Internet. However, they need to be able to determine what information is reliable and what is not.

First Time Homebuyers Shouldn’t Buy Without A Buyers Agent

protect70Buyers Agents protect first time homebuyers

Anyone who buys real estate should consider having the assistance of a real estate agent. This is especially important when you are buying your first home.  Actually, it is almost a necessity for a first time homebuyer, because they have no experience to guide them.  Contemporary real estate sales usually revolve around the efforts of Realtors—a Seller Agent, who represents the seller of a property; and the Buyer Agent, who represents the buyer of that property. While neither is mandatory, most buyers prefer to have expert representation because purchasing real estate is costly, mistakes can be extremely expensive and surprises can lead to a failed transaction or worse. Since the seller pays the commission, in most cases all the fees of a Buyer Agent are effectively paid for by the seller out of the commission paid by the seller.  So, being represented by a buyers agent costs the first time homebuyer nothing.  Not being represented by a buyers agent can cost the first time home buyer a great deal, because errors in judgment can lead to an expensive education.

Keep in mind that when a buyer enlists a real estate agent to help buy a property, they are really hiring a real estate firm along with all its agents. Of course, the buyer’s main contact is the specific agent they signed with, though other agents within the firm might help as needed. If a Buyer Agent is hired to represent you, they must…

• Promote your best interests
• Be loyal to you
• Follow your lawful instructions
• Provide you with all material facts that could influence your decisions
• Use reasonable skill, care and diligence
• Account for all monies they handle for you

As part of this agreement, a Buyer Agent cannot pass along any confidential information about you to sellers or their agents thereof without your permission—while they represent you. While it is possible to establish either oral or written Buyer Agency, an agent must have the agreement in writing before an offer can be made to purchase a property. If you decided not to sign the agreement then, however, the agent does not owe you a duty of loyalty and is not required to keep your personal information confidential. 

In North Carolina, a buyer should ALWAYS assume a real estate agent is working as a subagent of the seller; and NEVER tell a real estate agent anything personal or confidential until a buyer agency relationship has been established with that agent. 

If you sign a buyers agency agreement, your agent works for you.  If you do not sign a buyers agency agreement, the agent works for the seller.  Since you get all the benefits of full representation without any cost, signing a buyers agency agreement gives a first time homebuyer much better representation.  Also, an agent who knows the buyer is going to be loyal to them can concentrate more time and effort getting that first time homebuyer better properties on better terms.

Buyers agency is an amazing consulting relationship.  The buyers agent has to use every skill available to represent you, dig out all the material facts you might want to know, give you the best advice, and you do not get to pay the agent.  Just try to find that consulting relationship in any other field.

Home Maintenance Education for First Time Homebuyers

baby-close-up70Your First Home Needs Your Care

 

One of the easiest ways to preserve the value of your first home is by proper maintenance so it does not deteriorate with age.  For example, it costs very little to keep caulking around the bathtub and sinks.  But if you do not keep the water out of these areas with caulking, the deterioration from water intrusion will be expensive to repair and the appearance will hurt your value.

 

The maintenance on your new first home will be a new experience.  Where do you start?  You can get books or multimedia presentations like Home Improvement 1-2-3 from Home Depot.  You can also look on Lowe’s website or American Home Shield’s maintenance tips.  Another good source for a maintenance education is to followthe home inspector during the inspection before your purchase, as the inspector normally gives maintenance tips.  Many home inspection reports have extensive recommendations for proper maintenance of your home, so read the report with maintenance in mind.  

 

Keeping water out of unwanted spaces is one of  the most important concepts in home maintenance.  Water makes the structure rot and may provide a breeding ground for mold.  So, cleaning gutters, replacing weatherstripping, maintaining the paint, caulking and checking the flashing all prevent water intrusion.

 

Another issue concerning water is to be sure that the rain water flows away from your house, particularly since it rains an average of 48 inches per year in the Triangle area of North Carolina.  Raleigh, Cary, Chapel Hill and Durham are all able to grow rapidly due to the abundant water supply, much of which comes from rain.  If the water puddles around your house, it may affect the foundation or get into the crawl space under the house.  Keeping the downspouts for the gutter system working, and having the ground slope away from the house is important.

 

The mechanical systems also need attention.  Changing the filters in the forced air system will make it easier for the system to work.  Having the HVAC (heating and air conditioning) system serviced will also lower your energy costs and prolong its life.  Drain the hot water heater on occasion to remove sediment build up.  Just like your car needs maintenance, the mechanical systems in your house need attention.

 

One of the things you may easily over look is the vent for the dryer.  The buildup of lint in the vent line is one of the largest causes of home fires.  After extended use, the vent line should be cleaned, or just replace it because the vent lines are inexpensive.  For additional protection from fire, the vent line should be made of flexible metal, not plastic.

 

So, all of the chores on a “honey do” list will make your home more comfortable and more valuable.  

 

 

 

First Time Homebuyers Should Plan for Becoming First Time Homesellers

couple-and-baby702How First Time Homebuyers Build Equity

 

After you buy your first home, you need to look forward to the profit you can make when you sell your first home.   You will frequently hear the term “equity” and I will not bore you with a long winded explanation of how it is derived from the legal term “equity of redemption.”  What it means is the value you have in the house.  In other words, take the money you would get from a sale, subtract the amount necessary to pay off the loans, and the money you have left over is your equity.

 

How do you build equity?  Make the home more valuable, and avoid problems that make it less valuable. 

 

We have discussed home maintenance in another post.  If you keep the home from deteriorating, you will preserve the value. 

 

To make the home more valuable, do some home improvements.  The most cost effective improvements are carpet and paint.  This is why many homes get a fresh coat of paint and have the carpet replaced just before they are placed on the market. 

 

Upgrading the light fixtures and the plumbing fixtures will keep your home looking current.  Just like wearing clothes that are out of fashion gives the wrong impression, light fixtures and plumbing fixtures can make a house feel dated.  If you are handy, these improvements are inexpensive, as most of the cost is labor for a plumber or electrician.

 

The kitchen and master suite are some of the most important parts of the home for adding value because they are the parts of the house that are the focus of the buyers’ attention.  Remodeling the kitchen is one of the biggest improvements in terms of increasing value, but it is also one of the most expensive.   Replacing the cabinets, counters, appliances and floor coverings can get very expensive very quickly.   Similarly, remodeling the master bath involves changing cabinets and lots of plumbing, so it can add up quickly.

 

If you want to get seriously involved in changing the house, you can add on a bonus room, additional bedrooms or additional baths.  If you finish off a basement or an attic, you might think that the value goes up by the same cost per square foot as the rest of the house.  However, appraisers are not kind when valuing finished attics or finished basements, and they sometimes get as little as $50 per square foot while the rest of the square footage in your house gets two to three times that value. 

 

If you are adding bedrooms and bathrooms to a home on a septic system, be sure to check the capacity of the septic system, because it is sized for a certain number of bedrooms.  You may have a house that physically has five bedrooms, but it can only be sold as a three bedroom house if the septic system is sized for only three bedrooms.   If your home is connected to the sewer, you will not have this problem.

 

Overbuilding the neighborhood is a concern if you are increasing the size of your home.  If all the other homes in your area are around 1,800 square feet, and you are increasing the size of your home to 4,000 square feet, you will have a hard time getting the money back for your improvement.  The little homes in your neighborhood will be riding your coat tails to hold back your value.  If the entire neighborhood is changing to much larger homes, you may be alright, but it is hard to count on all the neighbors remodel their homes. 

 

If you are going to live in the home for an extended period of time, and you are going to really enjoy the improvement, you may not care if it adds equity.  For example, adding a swimming pool rarely gets even a fourth of the money back from the cost of the improvement.  But, if you swim as often as the weather permits, your health and enjoyment may make the investment worth it to you.

 

If you are thinking of adding value to your home, give our team a call at 919-812-5111 or send an email to tim@TimBurrell.com and we will be happy to guide you.

Warning to First Time Homebuyers: Don’t Make These Bad Moves!

Bad Location for Your First HomeWhile it is almost always true that owning a home is better for your financial health than renting, that is only true if you buy a home that can be sold again, when you choose to sell it. Some homes are a lot harder to sell than others. Here are some key things to avoid when selecting your first home – homes that may look like great deals but really are not.

1. Homes on busy roads. Keep in mind that traffic will likely increase, not decrease, and roads may need to be widened in the future. Many buyers will not consider homes directly on busy roads due to noise or safety concerns, and these homes will typically not appreciate as fast as similar homes nearby that are not affected by the traffic. Families with small children will not want their toddlers to be close to busy roads for fear of the little ones wandering into the street, so the house will go up in value much less than homes away from the traffic. The same is true for homes on the planned path for new roads – major interstates that may be extended years from now, but take its planned path into consideration.

2. Homes close to industrial or commercial facilities. Some are definitely worse than others – homes within walking distance of shopping may actually be a great investment. Being next to hazardous waste sites might be the worst. But having a great view of a water tower, a cell tower, a gas station, or dealing with constant large truck traffic such as from a quarry can be a real problem. So check out the surrounding area, don’t just look at the home.

3. Flood zones. It is not always obvious by looking at a home – have your Realtor confirm whether or not the home is in a flood zone. The Army Corps of Engineers has established flood zones that are shown on survey maps. If the zone is just a small part of the lot, that may not be a concern, but if the home itself likely to be invaded by flood waters, that will be a major issue.

4. Flat out ugly homes. I’m sorry, but we’ve all seen them. You look, and your first reaction is negative. You look again, and it’s still bad. If you can’t fix it with paint or landscaping, think a third time. If your reaction now is “what was the builder thinking?”, it probably won’t get more attractive, or easier to sell, with age.

5. Most expensive home in the neighborhood. This may not turn out to be a big problem if the neighborhood might catch up over time – people adding on or even tearing down and building new. But if the home you like is clearly going to overwhelm the neighbors for a long time, recognize that the sales price is determined by “location, location, location” (i.e., the neighborhood) as much as it is by the house. So, if you have the mansion in a neighborhood of tiny homes, the tiny homes will drag your value down

There are other issues that affect resale value that you and your Realtor should consider.  The ones mentioned hear are bad moves, so don’t do them.

Poor Location For Your First Home

Poor Location For Your First Home

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