Buying a Foreclosure

Buying a foreclosed home is not the easiest real estate purchase you can make.  That said, the rewards for enduring the process might be worth the effort required.  There are certainly deals to be found when looking at foreclosure listings.  Most buyers will have lots of questions for their Summit NJ real estate agent when they are considering buying a foreclosed home.

What is a foreclosure?

Foreclosure occurs when a home owner is unable to pay his mortgage.  The lender takes possession of the home and attempts to recoup as much of its losses as possible.  The selling price may be significantly lower than the actual value of the home.

What help will I need?

A Summit NJ real estate agent who is experienced in dealing with foreclosures will be a huge help to you in this process.  You may also need the assistance of a real estate attorney.  This is not a process to take on alone unless you have a great deal of experience in these matters.

Where do I find one?

There are websites and magazines dedicated to foreclosure listings.  Government agencies like Fannie Mae and HUD advertise foreclosure listings on their websites.  An industrious buyer can also look through public records for the notice of default that a lender must file at the county clerk’s office.

What should I do?

Do the leg work on the property.  Tour it yourself and get an inspection.  Don’t rely on old data.  Foreclosures are sold “as is” so be sure you know what you’re buying.  Take the initiative and pay for your own inspection.  Check everything, especially if the property has been unoccupied.  Test the pipes for leaks from freezing, all the electrical outlets and switches and every other little detail.  Make no assumption of good condition.  Have your agent check the comps to see if the property really is the deal you think it is.  Check for liens and taxes against the home and find out what your liability will be for those costs.  Don’t go into this purchase without knowing every detail.

What should I expect?

Expect paperwork, lots of paperwork.  Buying a foreclosed home may take more time than a typical home purchase.  Be prepared for a no-negotiation situation.  The lender is trying to minimize their losses so there will be no concessions and no bargaining.  Be prepared to pay for any and all repairs needed on the property. 

Buying a foreclosure isn’t easy; it takes work.  But if you can find a great deal in a down economy, it will be worth your time and effort.

The Best Laid Plans

Even the best laid plan can go awry.  This homily holds true for real estate transactions and every Summit NJ real estate agent has a few horror stories they could tell.  Truthfully, every once in a while a transaction can encounter serious problems.  More often, though, it’s the avoidable things that plague us.

Inspection Failures

On the selling side, bad inspections are usually the deal-breakers.  A bad report from a home inspector can sour a deal in a heartbeat.  Unless a buyer is specifically looking for a “fixer-upper”, they will want to see a nearly perfect report. 

Big issues like plumbing or structural problems will scare off potential buyers.  Major repairs can be expensive and might mark your home as a fix-up project.  If your home gets tagged with the “fixer” label, you will be hard pressed to get a full-price offer.  Buyers’ agents will advise their clients to make low offers and you will have little room for negotiation. 

If an offer is already on the table, more problems can arise.  The buyer can opt to reopen negotiations or ask for big concessions.  This will probably delay your closing date.  Some buyers may withdraw their offer entirely, leaving you to start the process over again saddled with a blemished report.

As a seller, you can have an inspection done before you list your home in the MLS database and avoid a nasty surprise.  Ask your Summit NJ real estate agent for a referral to an inspector, especially if your home is older.  Find out what needs to be done and invest in the fixes you can afford.  It may delay selling a bit, but it’s better to start with a top quality product.

Approval Failures

If an issue occurs on the buyer’s side of the table, it is usually stems from a mortgage approval issue.  For one reason or another, the buyer doesn’t get approved or doesn’t get the rate that he needed.  This can cripple a purchase.

If financing falls through or never materializes, the seller is not obligated to wait on you.  If you are lucky, the buyer may wait for you.  He may demand more earnest money to secure the promise of purchase.  However, he can also accept another offer and leave you to find another house once you do have your loans in order.

The best way to avoid this disaster is to get preapproved, not prequalified, by your mortgage lender prior to house hunting.   As a seller, you can require proof of preapproval before accepting an offer. 

These are both avoidable issues.  With a little proactive effort, you can help smooth the way to an easy closing.

Advice is never in short supply, especially when you’re selling a home.  There are websites that inform and co-workers who advise, but some of the information you receive will be little more than myth.  Here are a few of the myths you might hear.

Set the price high so you’ve got room to negotiate.
Pricing is one of the toughest points for a Summit NJ real estate agent to discuss with a client.  A good price that is competitive in the market will drive buyers to your home.  A price set too high will drive them away.  If a buyer sees several listings similar to yours with much lower price tags, why would they bother looking at one that is overpriced?  Be a tough negotiator but don’t alienate your buying pool.

It’s the inside that really counts.
The kitchen may sell the home but the curb appeal will get buyers inside to see the kitchen.  Don’t count on a great floor plan and upgraded appliances to do all the work.  The exterior of you home gets buyers’ attention and set the stage for what they will see inside.  Unkempt yards, dated details and peeling paint always make a bad impression.  You’ll be fighting an uphill battle to sell your house.

The next owner will take care of the repairs.
They might be willing to take on a few repairs but they won’t be willing to pay full price.  Buyers looking for “fixer” will typically offer significantly less than asking price.  Make the repairs and you can list your home as “updated.”

You love your décor; so will buyers.
Your taste is just that - yours.  Don’t expect buyers to like the same colors or fabrics that you like, especially if you like to walk on the wild side of the color palette.  Try to neutralize bright colors and keep the décor simple.  Pare down your furnishings to maximize the space and allow the buyer some room to see their own things in the space.

Sell it yourself and you’ll pocket the commission.
You Summit NJ real estate agent will make a commission from selling your home; that much is true.  A good agent will also earn that commission by selling your home fast and for the best possible price.  He will help you set a price, market the home and show it, print all the flyers, place all the ads and generally do the work you don’t want to do.  Your agent is your advocate in this process and he’ll help you sell as quickly as possible.

Of course neither you nor your Summit NJ real estate agent would ever really want to ruin a closing date.  After all that work finding a home, making the offer and negotiating a final price the last thing you’d want to do is make a mistake that could cause a significant delay or even cost you your dream home.  Here’s a short list of a few mistakes that could do just that.

Forget the check.
Your agent will let you know the exact amount you need to bring to the closing table.  This has to be a certified cashier’s check, not a personal check.  Verify when you pick up the check that it is made out for exactly the right amount.  Any discrepancy will likely mean a rescheduled closing date.  And don’t leave the check at home.

Spend all your cash.
Keep some cash in reserve for your closing.  You won’t have the final tally till just a few days ahead so put off buying the new furniture or lawn tractor till after you close. 

Leave the documents at home.
If your Summit NJ real estate agent tells you to bring a piece of paper to the closing, bring it.  If you think you might need it, bring it.  It’s better to have document you didn’t need than to delay your closing by not having the ones you did need.  Some of these may need to be notarized to be sure to check with your agent.

Fail to complete contracted tasks.
As a seller, you and your buyer may have negotiated certain tasks, like repairs, that must be completed prior to closing.  If you fail to complete the list, you have not fulfilled you part of the contract and you could risk losing your buyer.

Show up really late.
Your closing attorney, the real estate agents and the other party to the sale all have other appointments.  Be on time for your closing or your attorney may have to reschedule it.

Change lenders at the last minute.
Arranging financing is not a task that is best left to the last minute.  Give you lender sufficient time to process your applications to ensure you have your financing ready for the closing.  If you make a switch in the middle of the process, you may not have your loan in line when you need it.  A seller may not be willing or able to wait.

Quit your job or get divorced.
Any major life change just prior the purchase of a home can upset your financing.  A divorce or job loss can put a quick end to dreams of home ownership.  If your personal life is not currently stable, it’s best to wait a bit before attempting to buy a house.

There is plenty of information to be found on buying a home.  Whether friend or family member, everyone you talk to seems to have a sage word to share about buying a house.  Unfortunately, some of that advice may not be so sound.  While they might mean well, it is a good idea to temper their “wisdom” with the guidance of an expert like your Summit NJ real estate agent.  Here are a few of the most common home buying myths debunked.

Your credit isn’t perfect so you can’t get financing.
Your credit score is the biggest factor in getting a good rate.  That being said, it doesn’t have to be perfect to get financing.  Scores range between 500 and 850, with most buyers’ scores falling in the range of 600 to 700.  The higher your score, the more options you will have for financing.  Buyers with higher scores will be offered lower rates, but lenders do look at other factors besides your score.  Check your credit score and make sure it’s accurate before you apply for a loan.

Owning is too expensive.
How much are you paying in rent?  Owning a home does cost money but renting isn’t exactly free, either.  As a home owner, you have certain tax benefits that you are not entitled to as a renter.  You will be building equity and putting your payments into something you can one day sell, hopefully at a profit.  Rent money will never come back to you like a mortgage payment will.  Rental rates can, and usually do, go up at the end of your lease while a fixed-rate loan payment doesn’t change.  You should also keep less obvious costs like HOA fees and home maintenance in mind as you budget so that you don’t spend too much.  Your Summit NJ real estate agent can help you figure out how much house you can afford.

You don’t need a realtor.
Buying a house isn’t like going the grocery store.  The price must be negotiated, there are legal aspects to wade through and you might not even know how to find newly listed properties.  Most first-time buyers benefit greatly from the expertise of a buyer’s agent.  Your real estate agent will do things like help you figure out the real value of a property by checking the recent sales in the area, which you would be hard pressed to do on your own.

Read up on some of these myths and see if your still believe them.  You might find that you’ve gotten more misinformation and less fact from all that advice.  Seek the help of a real estate pro to get answers to your questions and divide home buying fact from fiction.

As we age, our housing needs change dramatically.  We no longer need so many bedrooms for our children.  A big yard may not get the use it once did.  Upkeep on a large home can become tiresome or even difficult.  Many senior citizens choose to downsize their home to something a little easier to manage.  The recent additions to the tax credit extension have made this choice even more attractive.  Buyers who have lived in their home for at least 5 consecutive years out of the past 8 may qualify for a significant break on their taxes if the close before the end of April.  When seniors go house hunting, there are a few strategies to keep in mind.

Maintaining long-term independence is the primary goal for most seniors.  Most of us want to stay in our own home as long as we can.  Even if a home buyer is in robust good health at 65, a few years or a major illness can bring about serious changes in mobility.  Certain home features can help an owner remain at home despite these changes.  Single-story living is a must for people with limited mobility.  Ranches and ramblers are an excellent choice.  Harwood floors throughout a home make using a cane or walker much easier, as do wide passageways in baths and halls.  A wall over or microwave located around waist or chest height will prevent bending and stooping to retrieve heavy dishes while cooking.  Ask your Summit NJ real estate agent to suggest more ways you can plan for a long future in your next home.

The community surrounding your new home should be considered as well.  Access to excellent health care close to home is an essential ingredient in maintaining wellness.  A clean, safe public transportation system will make getting around easier for seniors who are no longer able or willing to drive.  Look for senior centers or community groups with lots of planned activities to keep retirement from becoming boring.  Find some worthy non-profit organizations that need volunteers and can benefit from your experience.  Some communities offer services to seniors through the local government or faith-based organizations including needed help with meals, snow and leaf removal or handyman assistance.  Make good use of any help that is offered, especially if it will maintain the value of your largest investment – your home.

Thinking about the future can be unnerving.  Moving out of the family home is a daunting prospect.  But it can also be the start of a new adventure.  Plan well and you will live well longer.

Finding out how much a home costs is trickier than it first sounds, especially for potential first-time home owners.  The asking price is easy enough to find.  Your Summit NJ real estate agent can get that to you in an instant.  The value of the home can be determined by checking area comps and comparing features, a service your agent will provide.  The cost of actually living in the home is another matter.  Estimate the hidden costs of home ownership when you are planning you budget, long before making any offers.  There are several areas which can bump your monthly bills out of your budget.

Utilities
The monthly utilities bills should be the first things you budget.  These will likely make the biggest budgetary dent after the mortgage payment.  If you have never owned a home, you’ll want to seek expert help in gauging these costs.  Call your local power and water companies and find out what the average bill is in a particular neighborhood.  Find out if your current usage is considered high compared to others in a similar home.  If you have a property in mind, ask the seller if they will give you an estimate of the utilities.  Keep in mind, your habits will be the biggest factors in your bills so don’t expect a perfect match.  They may set their winter thermostat on 65 while you keep it at 72.  You can also ask your Summit NJ real estate agent for a ballpark figure considering the age of the home and the type of system it employs. 

Exterior Maintenance
Every home needs at least some exterior maintenance.  The type of exterior will dictate how much.  Brick requires only minimal rinsing with an ordinary hose.  Vinyl siding may need pressure washing after 3 to 5 years to prevent mold and mildew formation.  Wood siding and trim may need to be scraped and painted after only a few years, depending on the climate.  The yard will need upkeep as well, so keep the cost of mowing and watering in mind when looking at properties.

Insurance
Talk to your insurance agent about the type of policy you will need as a home owner and how much the premiums will be.  Certain properties, like waterfront homes, may cost more than others to insure.  Do not under-insure your home.

Incidentals  
Cable, phone and internet services vary widely from town to town and owner to owner.  The local providers can easily quote rates by phone or e-mail.  Look for bundled service packages to save money.

Home ownership means more than just paying the mortgage payment.  Budget all your expenses to avoid future financial woes.

Saving money is on everyone’s minds lately.  As the temperatures drop this winter, why not take advantage of the extra time spent indoors to do a thorough energy audit of your home?  A few simple changes here and there can reduce your monthly energy usage and costs.  Employing some energy-saving techniques around the house may also help you increase your home’s resale value.

Conservation simply means using less energy, like turning off lights when not in use.  Energy efficiency means doing a certain job using less energy, like replacing incandescent light bulbs with compact fluorescents.  Both are important to an overall plan to reduce energy costs and improve your home’s value.  Your Summit NJ real estate agent is an excellent source of information for what improvements are most attractive to buyers in your area.  Here are a few ways you can conserve energy and make your home more efficient.

Check the insulation
There are many areas around your home that might need a little extra insulation.  Check the local building codes or ask your Summit NJ real estate agent what you should have in your home.  Check the attic for missing or damaged insulation.  Inspect basement walls for air and moisture leaks.  See if the water heater needs an extra layer of insulation.  Look for gaps around electrical outlets and heating vents that could be letting in cold outside air.  Use a lighted candle to test windows and doors for drafts and replace old weather stripping.

Service your appliances
Check the owner’s manual for instruction on how and when to have maintenance performed on major appliances.  Change the filters routinely and keep any air-intakes clean.  Vacuum the dryer vents at least once or twice a year.  Use power strips on smaller appliances and electronic equipment.  They keep a small current running, even when they are turned off.  A power strip eliminates this power drain.

Look at your lighting
Switch out those old incandescent bulbs for some compact florescent ones.  You’ll save on energy bills and you won’t have to change burned out bulbs nearly as often.  Put exterior lights on timers and interior lights on dimmers.

Automate your thermostat
If you haven’t already replaced your old thermostat with a programmable one, do it soon.  This small investment, usually under $100, can save a ton of money.  This little device allows you to set different temperatures for different times of day or week.  You can choose a comfortable setting for the hours you’re at home and an energy-saving one for the time when you’re at work.

Just a few simple tricks can put a little more money back in your pocket every month and just might give you a lot more when it’s time to sell.