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When I was buying my first house, everything seemed too good to be trueâat least at the start of the process. I found a home within a couple of weeks, the price was fabulously low, it was in a cute lake community with a style I loved, and funding came through quickly and easily. I even received a first-time home buyerâs bonus for tax time. Plus, I didnât need much of a down payment.
But it turned out too good to be true. My smooth path to homeownership suddenly became rocky when the inspection report came back with a big fat failure on it. I immediately panicked. What did it mean? Was I still able to buy the house? And if I did, was it going to fall apart?
After a few calls with my real estate agent (who, at that point, had become more of a home-buying therapist), I learned that a bad inspection isnât that rare. In fact, my new home wasnât in as bad of shape as I initially feared. We were able to make some repairs and, after a second inspection, the house was appraised and the sale was able to go through.
During the process, though, I learned a lot more than I ever expected about home inspections. Whether you’re a first-time or repeat home buyer, hereâs my advice for getting the house you want after a shaky home inspection.
Houses don’t really pass or fail
Though my home inspection appeared to be a failure, homes aren’t actually graded on a pass/fail system.
âThere is no such thing as a failed inspection,â said Karen Kostiw, an agent with Warburg Realty in New York. âThe inspection just points out small and potentially larger issues that you may not be aware of.â
Sure, some houses can sail through the process and others may fare poorly, but itâs not a âYou can never buy thisâ situation if there are problems with the property.
For me, my mortgage hinged on a solid inspectionâso the initial results meant I wouldnât get the loan unless things were fixed. That being said, if I had enough cash on hand or wanted to try a different mortgage lender, I could have continued with the purchase even with a negative inspection report.
So if the house you’re set on buying ends up having issues, donât panic. You still have options.
Most inspection issues are small
Itâs important to remember every home inspection report will come back with something, according to Kate Ziegler, a real estate agent with Arborview Realty in Boston. My inspection report had noted about 40 fixes. But a lot of times, the problems arenât as bad as you think.
Keep in mind that the inspector’s job is to call out any trouble spot. Also, all issues noted in the report aren’t equal: Some problems flagged by an inspector can wait.
âThe inspector will find defectsâsometimes many defectsâbut that does not mean buyers are not purchasing a good home,â Kostiw says. âThe small leak might mean a bolt needs to be tightened, or the dishwasher is not working because the waterline was switched off by accident. These are easy fixes. However, when buyers see a laundry list of items, it can seem as if the home is falling down. This is most often not the case.â
Red flags do exist
Ziegler and Kostiw agree that though most repairs are easy fixes, some items should give you pause if you see them on your report.
Structural problems, antique electrical systems, old windows, unexplained water damage, evidence of termites or wood rot, a bad roof, asbestos, mold, radon, and lead paint are all red flags that can show up during a home inspection. If fixing these problems is impossible or way beyond the means your budget, you may want to reconsider your purchase.
âWhether or not inspection items warrant backing out entirely depends quite a bit on any individual buyer’s experience and bandwidth, as well as personal risk tolerances and financial situation,â Ziegler says. âIt’s true that houses don’t stay in good repair on their own. They require maintenance and care, just like your houseplants and your sourdough starter!â
Donât try to fix things yourself
Unless a repair is something truly minor like caulking a bathroom tub or putting a cabinet door back on its hinges, donât try to fix anything on your own. You could make things worse or even injure yourself. Hire licensed contractors that youâve vetted to handle any problems. And try not to leave it all up to the sellerâthey’re not going to be living in the home. You will be.
âMotivations in this case are not aligned,â Ziegler says. âThe seller wants to spend as little as possible to meet their contractual obligations, but [a] buyer should be more concerned with the quality of the repair.â
Work the costs into the sale
At first I worried I would have to pay to fix everything that was wrong with my house. But itâs important to know you can work the cost of repairsâand how long it should take to make themâinto the sale.
Say you can’t afford to fix the busted water heater but the seller can. You can raise the offer price by that cost, or you can trade off: The seller fixes one thing, and you fix another. In my case, I only had to add a banister to one stairwell. The sellers were particularly motivated to unload the home so they handled everything else.
Hopefully by the end of this process, every issue will be fixed and youâll be ready to purchase your home. And youâll be able to move in with a clear head, knowing everything is really as good as it seems.
The post My House Failed Its First Real Estate InspectionâHere’s What I Did To Get Through Escrow appeared first on Real Estate News & Insights | realtor.comÂ®.
Buying a home often entailsÂ alsoÂ buying various types of insurance to protect your property, and one type you might need to getÂ is called title insurance.
When you buy a home, you âtake titleâ to it and establish legal ownership. A title insurance policy protects you against the possibility that someone else might have a claim on your home. In essence, it ensures that a homeowner and their lender will be okay in the event that the seller or previous owners didn’t have absolute ownership of the house. (It sounds crazy, but sometimes it turns out that the homeowner is not the only one with rights to a home!)
If you need a mortgage to buy real estate,Â your lender will likely require you to buy a title policy from a title insurance company. Although it’s a cost home buyers incur, getting a title policy from aÂ title insurance company is critical to establishing peace of mind.
Let’s examine the ins and outs of title insurance, why home buyers need it, how much you can expect to pay, and how you can save on a title insurance policy.
What is title insurance?
Holding a title insurance policy means you and your mortgageÂ lender are protected against any financial loss or titleÂ issuesÂ due to liens, disputes between prior owners over wills, clerical problems in courthouse documents, or fraudulent claims against the property or forged signatures.
A title search will be performed by your title or settlement company to uncover any issues with your title that could give you legal troubles down the line.
The title company then insures your claim to the property’s title. If anything is missed during the search or there are lawsuits questioning your legal ownership of the property after closing, your title insurance policy will cover the costs of resolving the problem.
Why a title search is required with a mortgage
When getting a mortgage to buy real estate, you’ll find that most lenders will typically require that you getÂ a title search before you close the deal with your escrow company. Basically this would mean you’ll have to hire a title company to search local records on your property.Â Some of the issues theyâre looking for include the following:
- Disputes between prior owners over wills: If your property was inherited and then sold by the heirs, there could be other heirs contestingÂ the will and claiming ownership of your property.
- LiensÂ for unpaid property taxes.
- Liens forÂ contractorsÂ who worked on the home but wereÂ neverÂ paid.
- Clerical problems in courthouse documents:Â Believe it or not, a simple typo can lead to title claim problems.
- Fraudulent claims against the property or forged signatures: For example, if a group of heirs can’t get a holdout to agree to sell the home, itâs possible that someone will forge a signature on aÂ quit claim deed.
While most homeowners will never need to use their title insurance, its existence offers protection against a potentially aggravatingâand very expensiveâfinancial loss.
Lender’s title insurance vs. owner’s title insurance
There are two types of title insurance: lender’s and owner’s. Almost every lender will require you to pay for a lender’s title insurance policy. This protects the lenderânot youâfrom incurring any costs if a title dispute pops up after closing.
Owner’s title insurance is usually optional, but it’s highly recommended. Without it, you’ll be left footing the bill for all theÂ costs of resolvingÂ aÂ title claim, which could be thousands or even hundreds of thousands of dollars. Even though it can feelÂ like you’re hemorrhaging cash when you’re closing on a house, a title insurance policy is one of those things that can save you money in the long run.
“When you consider the benefits of title insurance and some of the unique aspects of title insurance relative to other kinds of insurance, it is clear why itâs risky and ill-advised to purchase real estate without a title insurance policy,” saysÂ Brian Tormey of TitleVest in New York City.
You can purchase basic or enhanced owner’s title insurance, with the enhanced insurance policy offering more coverage for things like mechanicâs liens or boundary disputes.
While your title insurance covers you for things such as mistakes in theÂ legal description of your propertyÂ or human error, be aware that it will have some exclusionsâparticularly in cases where violations of building codes occur after you bought your home.
How much does title insurance cost?
The average cost of title insurance is around $1,000 per policy, but that amount varies widely from state to state and depends on the price of your home.
Title insurance premiums can vary from a couple of hundred dollars to a couple of thousand dollars. Some factors that can affect the cost of your premium include the title search, examination, and expected cost of any title defects.
“In general, each policy price is based on the purchase amount of the home or the total amount of the loan,” explains Tormey. “Title insurance is a highly regulated industry, so title insurance policy types and costs will vary from state to state. Each stateâs Department of Insurance can provide information on the pricing regulations in their state.”
In some states such as Texas and Florida, title insurance premiums are fixed by the government, so you will pay exactly the same amount no matter what. Other states such as California and New Mexico have unfixed premiums, which means that buyers can shop around. Iowa actually underwrites the insurance itself, resulting in the lowest premiums in the country: $110 for properties costing up to $500,000.
Unlike other types of insurance, a title insurance policy is paid with a single premium during escrow while closing for your mortgage. If youâre buying a real estate resale orÂ refinancing, you may be eligible for a “reissue” rate, which could offer a substantial discount off the regular premiumâbecause the title policy is already in effect, and the title research has already been completed.
Here’s a calculator that can help youÂ figure out the cost for your area and purchase price.
How to save on title insurance
In some states, title insurance premiums are the same no matter who you work with, but in the majority of states, you can save money by shopping around. Even in states with highly regulated title insurance industries, there are ways to save. Here are some ways to lower your title insurance costs.
- Shop around.Â If premiums are unregulated in your state, find the company that offers the best deals. Just make sure you’re not sacrificing customer service to save a few dollars: Resolving a title issue can be stressful, and you want a company that will help you through the process. Read reviews and talk to your real estate agent for recommendations.
- Bundle.Â Some companies will offer a discount if you bundle your lender’s and owner’s policies.
- Negotiate add-ons.Â Even if the premium itself is fixed, there are almost always other fees built into your total premium price. See if there is any wiggle room with those items. They may be optional, or the insurance company might be open to discounting them.
- Negotiate with the seller. Closing costs are always open to negotiation, and picking up the tab for the title insurance might be worth it to a seller who’s highly motivated to close the deal. But be wary of using this tactic in a competitive market.
Michele Lerner contributed to this article.
The post What Is Title Insurance, and How Much Does Title Insurance Cost? appeared first on Real Estate News & Insights | realtor.comÂ®.
The local Arizona housing market has been hot nearly all year long. As we get closer and closer to the yearâs end, will the trends continue? We checked out all the stats for Arizonaâs market during November. Check out what we found out!
According to data from the ARMLS Â® from November 1, 2020 to November 30, 2020, monthly sales in the Phoenix metro area rose significantly from where they were at this same time last year. With a +27.4% year-over-year increase, sales landed at 8,886 for the month.
While this number is a slight drop from the previous month of October, the -8.3% month-to-month decrease in sales is in line with the typical slow down in the market as the year starts wrapping up.
At $453.9K, November saw a +6.4% year-over-year increase in average list price. Median prices also rose. With a +10.0% increase from November 2019, the median list price in November was $330K.
Average sale prices increased by +18.0% between November 2019 and November 2020, landing at $418.7K. With a slightly smaller jump, median sale prices still rose significantly with +16.8% year-over-year increase. The November median sale price was $331.0K.
As forecasts predicted, these numbers are slightly lower than sale prices in October of this year. The average sale price was -1.5% lower than that of October and the median sale price was -1% lower. For next month, the average sale price is projected to increase, while the median sale price is expected to have another small decrease. Check back next month to see how these forecasts turn out.
Days on Market (DOM)
While many metrics in the market slowed down this November compared to the previous month, the Average Cumulative Days on Market did not. This number continues to steadily drop, showing homes are being sold more and more quickly. Landing at 41, the Average DOM saw a 2-day decrease from October of this year and a 17-day decrease from November of last year.
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A Message From Sales and Operations Manager, Wayne Graham
Going into December, inventory is 28.2% lower than it was a year ago. In fact, some areas are experiencing record low levels of inventory. However, In contrast to the record low levels of inventory, weâre seeing record-high levels of sales. Demand increased by 27.4% between November 2019 and November 2020. Low supply and high demand are one of the surest guarantees of rising sales prices.
But even though prices are rising, according to the National Association of Realtors Housing Affordability Index it is still very affordable to buy a home in Phoenix compared to historical market trends. This is still possible because of extremely low-interest rates. So overall, home affordability is still in a good historical place in the Phoenix area.
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The post Homieâs Greater Phoenix, AZ Housing Market Update November 2020 appeared first on Homie Blog.
If the dream of owning a home is on your bucket list, you’ve likely combed through listings, narrowed down your home preferences, and even attended a few open houses. But while you might be mentally ready to buy a home, your financial situation might tell a different story.
âRenters who are ready for homeownership should have their financial house in order before contemplating a purchase,â saysÂ Ben Creamer, co-founder and managing broker ofÂ Downtown Realty Company in Chicago. âI tell my clients to approach buying a home as they would for their jobâit requires planning, diligence, and structure to be successful.â
There are a number of monetary factors that can rule you inâor outâas a viable candidate for a mortgage. Here are some signs youâre not ready to be a homeowner.
1. Crummy credit score
Those three little numbers, which are based on your history of financial stability and how responsible you are with your credit, play a big role in the mortgage process.
âA low credit score will directly impact your ability to get a mortgage loan for a home, because it shows that you have not been responsible with managing and paying down consumer debt,â says Creamer. Â
He says a score thatâs basement-level lowâtypically anything below 500âmeans a prospective buyer will likely not qualify for a home loan of any kind. If a credit score is low enough to flag the buyer as a credit risk, a loan may be approved but the terms will be more costly (e.g., having to pay more in loan origination points, a higher cash down payment, a higher interest rate, or all of the above).
âIn the end, if you canât manage consumer debt, youâre not ready for mortgage debt,â says Creamer.
On the other hand, having a high credit score (typically above 740) significantly improves your chances of receiving your loan’s lowest possible interest rate, says Lauren Brown, a real estate agent at Keller Williams Realty in San Diego.
âThis way you can save thousands of dollars over the life of your loan,â she says.
2. Patchy job history
Lenders want to see a stable job history, so switching jobs every year or so might not look great.
âJob stability is vital to pre-qualifying for a loan to purchase a home. Most lenders require not only proof of employment but also ask for up to 12 months of financial statements to ensure you are qualified to take on a mortgage,â says Brown.
Creamer says a home purchase is not something that should be done on a whim, since the buyer is responsible for the mortgage payment every month for the next 30 years.Â
âBanks want to see a steady, uninterrupted stream of income from a borrower. A prospective buyer who canât commit to a job might want to rethink committing to a 30-year mortgage payment,â says Creamer.
Watch: 5 Things First-Time Home Buyers Must Know
3. Not enough money saved for a down payment
If you’re looking to buy a home, you should have saved and built a nest egg that can cover a down payment and any unforeseen expenses that may come up during the purchasing process.
“It’d be wise to save enough to cover at least a 20% down payment,â says Brown. This amount is typically recommended since it means the lender won’t require you to also pay for private mortgage insurance.
Of course, 20% down is not always realistic for most buyers. In fact, the average down payment in January 2020 was just 11.4%, according to real estate data firm Optimal Blue.Â That’s why, at the beginning of your home search, you should find an experienced real estate agent or lender that can give you a realistic picture of how much house you can afford and how much of a down payment you’ll need.
4. You can’t get a favorable loan
When shopping for loans you’ll become quite familiar with mortgage interest rates, aka the extra fee you pay your lender (based on your total loan amount) for loaning you the cash you need to buy a home.
Your financial situation determines the type of rates you qualify for, as well as the upfront fees you may have to pay. But if you’re not pleased with the terms of your mortgage, you shouldn’t move forward with the purchase.
“A higher percentage interest rate may not seem like a big deal, but it actually translates to tens or maybe even hundreds of thousands of dollars over the course of the loan. Itâs better to hold off on buying until you can secure a more favorable loan,â says Creamer.
Brown advises speaking with your lender about developing a course of action to improve the terms of your loan.
5. Too much debt
Someone who is drowning in debt should tread carefully before juggling a home mortgage loan.Â
âIf you havenât managed your consumer debt wisely, youâre not ready to take on a sizable mortgage debt,â says Creamer.
Brown says in a lender’s eyes, you probably can’t afford to add a mortgage payment to your budget if your other bills eat up 50% of your monthly income. She says it would be best to pay off any debts before purchasing a home.
The post 5 Telltale SignsÂ That You MayÂ Not Be ReadyÂ To Buy a Home appeared first on Real Estate News & Insights | realtor.comÂ®.
As the Las Vegas fall season comes around, the Las Vegas market keeps on going up. Read below for Homieâs update.
In October, the real estate market saw growth on most fronts including the number of listings, number of units sold, and in terms of median listing price and sales price. However, units available and availability went down year-over-year. With that said, weâre still seeing the market continue to grow month-over-month which might indicate that buyers and sellers are becoming more comfortable in the existing real estate market.
Hereâs the full breakdown:
According to the data from the GLVARÂ® from October 2020, Las Vegas real estate realized a 6.8% increase in the number of single-family units sold compared to 2019.Â
Average new list prices stay strong year over year as October records a 9% increase in new listing prices for single-family units and 8.8% increase for condo/townhouse units.Â
*Data from the GLVARÂ® from October 2020 and October 2019
Property prices continued to grow as this seller market keeps on strong. We saw an 8.8% increase in year-over-year median price for single family units, and also a 14.3% increase in year-over-year median price for condos and townhouses.
*Data from the GLVARÂ® from October 2020 and October 2019
Days on Market (DOM)
We saw the Average Cumulative Days on Market continue to decrease in October 2020, as demand for this market continues to go strong. Now averaging an insanely brief 33 days on market versus 81 Average Cumulative Days on Market in 2019. This is a strong indicator that the real estate market will continue to remain strong.Â
*Data from the GLVARÂ® from October 2020 and October 2019
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The post Homieâs Las Vegas, Nevada Housing Market Update October 2020 appeared first on Homie Blog.
Video tours have quickly become the norm in the COVID-19 era as a safe way to get a closer look at the house you want to see in person. And while no doubt the kitchenÂ andÂ living room are high on your list to check out, the bedroom deserves more than a passing glance.
After all, a bedroom isn’t just a place to catch some zzz’s; it’s also a place that can function as a retreat or a quiet workspace. For your kids, it’s a room to play, do homework, and host sleepovers. And sure, a bedroom’s size and closet space are importantâbut they’re not the only things you should ask to see during a video tour. In fact, glossing over the bedroom could mean huge peeves after you buyâor worse, real problems that cost you money.
Here are some potential issues you might find hiding in the boudoir.
1. It might not actually be a bedroom
“Many listings will call a bonus room a bedroom even if it does not have a closet and a window, which is technically not correct, ” says John Gluch, founder of the Gluch Group in Scottsdale, AZ.
The legal requirements for classifying a room as a bedroom vary by state. Still, while taking the video tour, you should verify that bedrooms have a door and a window as two means of escape in an emergency.
The ceiling should be tall enough for a person to comfortably stand, and the square footage sufficient to accommodate a bed.
Be sure to ask your agent if the room is legally considered a bedroom.
2. There’s no privacy
Have your agent scan the windows and sills to check their condition. Take note of features such as triple-pane or tilt-and-turn windows.
Finally, check the view.
“You’ll want to know if a large, beautiful window in the master bedroom lacks privacy and looks right into a neighbor’s yard,” says Jennifer Smith, a RealtorÂ® with Southern Dream Homes in Wake Forest, NC.
3. The fixtures and outlets are dated or in bad shape
“Buyers’ eyes tend to naturally go toward the beautifully made bed with lots of accent pillows and the art hanging on the walls,” Smith says. “But it’s important to remember to look at the more permanent features of the room that you’ll have to live with day to day.”
Ask your agent to zoom in on things like the flooring, ceiling fan, light fixtures, smoke and carbon monoxide detectors, and heating and cooling vents. Is there a radiator hiding behind the headboard or an air conditioner in the window?
Be sure to find out how many outlets are in the room. Older houses often have fewer outlets, and they may be the outdated, two-prong variety, which isn’t grounded.
4. The early morning sun will wake you up
Oodles ofÂ natural light is a coveted featureâunless the morning sunlight wakes you up hours before your alarm goes off.
“Many Realtors and home buyers who visit a property at varying times throughout the day unintentionally fail to consider what the exposure is like at 5:30 a.m. with the sunrise,” says Gluch.
Curtains and blinds are obvious solutions, but you may not want to cover windows that showcase a beautiful view or are placed high in a vaulted ceiling.
5. Your furniture won’t fit
Whether it’s a large master suite or a children’s bedroom, pay attention to how much furniture is in the room and how it’s arranged, Smith says.
“Staging declutters and depersonalizes a space as much as possible, so buyers should think about how their current belongings will fit or if they’d have to buy all-new furniture,” says Smith.
Ask the listing agent for the dimensions of the bed and/or dresser for comparison. But if the dresser is missing, it could mean the bedroom has a large closet with organizational options.
Ask to see inside all the closets, and make note of the size, shelves, and other organizational components.
6. The bedrooms are in an inconvenient location
It’s easy to get disoriented when you’re taking a live video tour, so “buyers shouldn’t forget to pay attention to where bedrooms are located in the house,” Smith advises.
Ask yourself how the locations of the bedroom will suit your lifestyle. Will you be more comfortable with the kids’ bedrooms on the same floor? Is the master suite adjacent to a busy living room or kitchen? Where are the bathrooms in reference to the bedrooms?
7. The master bathroom doesn’t offer separation
A spacious master suite isn’t just a place to rest your weary head at night. It’s your future dream retreat, where you can sink into a soothing bath or luxuriate in a rainfall shower. But if you want a bit of privacy, be mindful of how the master suite is laid out.
“Many people overlook the fact that there is not a door between the bedroom and the bathroom,” says Gluch. “Likewise, many floor plans now have a water closetâa small toilet room with a doorâbut do not have a door separating the bedroom from the rest of the bath.”
8. There might be potential safety hazards
If you’re looking at a multilevel home or a house with a bedroom in the basement, verify fire escape routes.
“Consider potential safety hazards such as how difficult it might be to drop a fire escape ladder out of an upstairs bedroom window or a ladder up from a basement bedroom,” says Gluch.
Basement bedrooms should have an egress window, and upper-floor windows should be clear of obstructions like trees or sections of the house that would make an emergency exit difficult.
The post 8 Hidden Problems in the Bedroom You Might Not Spot in a Home Video Tour appeared first on Real Estate News & Insights | realtor.comÂ®.