What to Expect from Virtual House Tours, Staging, and Showings

Link To Original Article From HouseLogic.com

By: Leanne Potts
Published: May 05, 2021


Virtual steps in home buying can save time, but learn how to get the whole picture.

The COVID pandemic hasn't stopped people from buying houses. But it has changed how buyers view homes, with technology sometimes replacing the in-person experience.

To help keep everyone safer and comply with state and local guidance, agents are using virtual home showings, virtual home tours, and virtual staging instead of or along with open houses, in-person showings, and traditional staging. That means you can buy a home without setting foot inside it. But it also means you need to understand what you're seeing - and not seeing. And you need to know what questions to ask.

Here's a look at the virtual options and some of the pluses and minuses of each.


Virtual 3D Home Tours -- Good for a First Look

With a virtual home tour, a seller's agent looks to show off a property's best features. This marketing presentation is what potential buyers see online at a real estate site. It may be a 3D tour or a gallery of retouched photos of staged rooms. Regardless of the format, it shows the property groomed, enhanced, and ready for its closeup. "A virtual tour tends to be roses and wine and all the good things," says Matt Difanis, broker-owner of RE/MAX Realty Associates in Champaign, Ill.

For buyers, virtual property tours have limits. "Space is hard to translate into a 3D tour," says Jill Friedland, an agent with Weichert Realtors in Warren, N.J. "You can't get a feel for home size. You can't get a feel for placement of the home in relationship to a neighborhood. A drone won't take a photo of a traffic light one house away."

Then there's the issue of retouch magic. "Some of these photos are so highly doctored that they look whimsical," Difanis says. "They'll push your emotional buttons, but you get there, and the house isn't what you thought."

The upshot is, don't make an offer based on a virtual tour. That's like proposing to someone based on a photo on Match.com. Instead, use a virtual tour to decide if you want to take a closer look at a property, either in person or via a virtual showing, Friedland says.


Virtual Home Showings -- Look for the Warts

In a virtual home showing, an agent walks a buyer through a property, one on one, on Zoom or Facetime. It's a more informal presentation that gives the buyer a more realistic view of the property. The showing is when buyers should "see the warts," Difanis says.

This is when buyers should ask the hard questions, Friedland says. "Ask, ?Is there something in the room that you are not showing me that would cause me to be unhappy?'" Have your agent check for signs of water damage, cracks in walls, or scratched floors, she says. Make sure your virtual showing includes the basement.

She recommends having your agent shoot videos or photos from the same angle in a room as the images you've seen online, so you can compare how they're different. "You need to see if what you are looking at digitally is the same as what's really there," she says.

Ask tough questions. Friedland has sold to people moving from another country who didn't see the property till they took ownership. "As their agent, it's my job to be their eyes on the ground and point out problems," she says.

Difanis says he points out the flaws when he's doing the virtual showing and representing a buyer. "If there's going to be a buzz kill item, I need to identify it and show it to buyers then," he says. "I don't want them to show up [at the walkthrough] and say, ?That's not what I saw.'"


Virtual Home Staging -- Swap out Interior Design

Decorating a home to showcase its best assets, or staging, has gone virtual, too. It falls into one of two types. One is totally digital. A photographer shoots photos of the house, edits any furniture out of the photos, and replaces it with digitally created images of furniture. It's a digital representation of how the house could look -?not how it does look. These images are then used for a virtual home tour or virtual showing.

The second type mixes digital and analog. A professional stager looks at photos or does a Facetime walkthrough of the home with an agent. The stager creates a detailed plan for how to arrange the existing furniture. The homeowners move the furniture around themselves, executing the pro's instructions. This hybrid form is popular with people who don't want to rent furniture and don't want strangers coming into their homes, Friedland says.

When you're viewing a virtual tour or virtual showing, find out exactly what you're seeing. Most states require agents to disclose if a room shown has been virtually staged, Friedland says. But the info might be in the fine print.

Ask your agent if you're seeing images of real rooms or digitally staged ones. And ask if anything has been retouched. Technology allows photographers to work a lot of magic in post-production. They can change paint colors, trim, or flooring to make these features look very real and very different from what's actually there.

Friedland uses digital staging carefully. She prints out 18 x 24-inch hard-backed images of virtually staged rooms and puts them on an easel in the doorway of each room. When buyers look at the house, they can see the real room and a retouched photo of what the room could look like.

"I just did this recently with a house that looked like early ?90s Boca Raton," she says. "I did a virtual staging and removed the raspberry leather sectional and put in lots of traditional furniture in neutral colors. It sold in two weeks."


The Future of Home Buying Is a Hybrid

Virtual real estate shopping is here to stay, agents say. "In the future, I see it as a hybrid," Friedland says. "Buyers will do their shopping virtually to narrow it down to a few houses. They'll look at 65 houses via 3D video to decide which three they want to see in person."

Kerry Stanley of Baltimore is looking to move to Champaign, Ill., to be closer to her adult daughter. She had Difanis take her on virtual showings of two co-ops she had seen online.

"Virtual showings are great for an out-of-town buyer like me," she says. "Matt did a good job of pointing out flaws in the properties," she says. "I had seen all the good stuff in the online tour. He pointed out the problems: the building's age and that it had surface-mounted electrical outlet boxes.

Stanley will be driving to Illinois to see one of the co-ops in person before making an offer. "I want to drive the neighborhood, and then I'll know for sure," she says.

The hybrid approach may end up being more efficient for buyers. If you ask questions and use virtual viewings to see flaws, features, and potential, you may speed up the process - and still end up with a great house.



Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2022.  All rights reserved.

Common Mistakes When Closing on a Home

Link To Original Article From HouseLogic.com

By: Leanne Potts
Published: May 05, 2021

Hear what title pros say to do -- and not do -- before closing on a house.

Ever notice that when you're unprepared, it heats up stressful situations? Take the preclosing stage of the home buying process. You may keep thinking about the money at stake, while forms, disclosures, and reports fly at you. It's enough to overwhelm anyone. Anyone who isn't well prepared, that is.

You can get a head start, though, by following advice from three title professionals: Cynthia Durham Blair, an attorney at Blair Cato Pickren Casterline in Columbia, S.C., and a past president of the American Land Title Association; Charles J. Esposito, managing attorney at JK Closing Attorneys in Coconut Creek, Fla.; and Cheryl Monahan, an escrow officer at Clark County Title in Vancouver, Wash.


7 Common Mistakes When Closing on a House

Here's a list of the most typical closing-on-a-house problems the title pros see IRL and how you can steer clear of them.


#1 Sprinting Through Documents and Emails

Attention spans are short in the digital age, and you're probably not in the habit of reading thousands of words at a single sitting. That's understandable, but you must read every word in documents and emails your lender, agent, appraiser, and title officer put in front of you. And you must read them carefully.

Yes, it's a lot of reading. But you are making the biggest purchase of your life. The details are important. "Contracts are legal documents, so what they say matters," Esposito says. "Once a contract is signed, it's legally enforceable."


 #2 Paying Too Little Attention to the Paperwork

Monahan describes a buyer who didn't read all the paperwork and was left high and dry - literally. "It was a fast close for out-of-town buyers," she says. The sellers were flippers who had never lived in the house. They checked the "don't know" box in the section of the disclosure form that asks if the home's water system has problems or needs repairs. The buyers didn't read the disclosure form carefully, so they didn't see that the condition of a major system in the home was unknown. The buyers closed on the house, and a few weeks later found out the well had dried up. "They didn't have a drop of drinking water," Monahan says.

Esposito recommends asking your title representative for a copy of as much of the paperwork as you can get before the closing date and reading it a few days in advance. He says you should be able to get everything but the lender documents, which aren't available until the close. "Reading them early gives you time to make notes or ask questions," he says.

That said, it's OK to wait until the closing to read some of the docs, even if it means making everybody wait while you delve into the minutiae of the escrow statement, sales agreement, or deed of trust. "Buying a home is a huge and important decision," Esposito says. "Take your time!"


 #3 Leaving People Out of the Loop About Major Life Changes

This deal involves several people: you, the seller, your agent, the seller's agent, the lender, and the title rep. Keep relevant participants in the know about every bit of information, or you could delay your closing. If you have a job change right before closing, let the lender know. If you and the seller do a handshake deal on a credit for a last-minute repair, notify your agent and the lender.

"The paperwork has to reflect any deals," Blair says. If the lender knows about the deal, they'll capture it in the paperwork.

Esposito has seen buyers who were laid off or furloughed during the nation's initial COVID-19 outbreak after being pre-approved for a mortgage but before closing. They didn't tell anyone. "They thought we wouldn't find out," Esposito says.

Lenders always find out, he explains. They do a second check on your employment just before the closing date. Speak up when you have a job change, so that your lender can restructure the deal. It's better than being silent and having the sale fall through at the last minute.


 #4 Using Inconsistent Versions of Your Name in Your Documentation

Have you recently gotten married or divorced but not updated your driver's license with the name change? If so, you could run into trouble at closing.

On closing day, a notary will look at your license to be sure the name matches the name on your paperwork. "If the names don't match, we can't sign the title," Monahan says. You'll either have to get a new ID with a name that matches the one on the paperwork or redo the paperwork to match the name on the ID. "Either way, you're not closing on your house that day," Monahan adds.

To avoid this snafu, make sure your state-issued ID has your current name on it. At the beginning of the deal, tell your lender, agent, and title officer your full legal name - your first, middle, and last name as it appears on your ID. No nicknames or stage names allowed.


 #5 Being in the Dark About the Home Closing Process

A lot of buyers, especially first-timers, don't understand their role in a home closing. Blair, Esposito, and Monahan have seen buyers who:

Spend some time learning about the steps and the players in the home buying transaction. That way, you'll know what's expected of you.


 #6 Forgetting to Line up Your Wire Transfer or Cashier's Check or Not Allowing Enough Time

As mistake #5 indicates, you can't use a personal check to cover the amount you owe at closing, including the down payment. You'll need to pay the balance with a wire transfer or a cashier's check.

You can get a cashier's check at a bank where you hold an account, assuming you have enough money in your account to cover the transaction and all recent deposits have cleared. Keep in mind that some banks require advance notice, so it's not a good idea to plan on a quick stop on the way to closing.

Most banks send wire transfers electronically. You can request the wire transfer in person, over the phone, or sometimes over the internet. Even though this sounds fast, delays can happen. The money might need to be sent to a corresponding bank, or you may miss your bank's cutoff time for sending wire transfers or lose time waiting for an approval.

If you're trying to decide between the two options, consider the fact that some closing agents won't accept cashier's checks at the closing table. "It's a risk," says Esposito. "The funds won't be available in their escrow account until the next business day. So, when [closing agents] accept a cashier's check, they are closing the transaction with insufficient funds. The larger the amount of the cashier's check, the less likely it will be accepted."

With either a wire transfer or a cashier's check, ask questions about payment requirements and be sure to allow enough time.


 #7 Asking Too Few Questions at Closing

If you see an acronym you don't recognize, ask. Is there a word you don't understand? Ask. Do you wonder if the well has been checked? Ask. No question is too big or too small.

Blair suggests calling the title company and asking questions a few days before closing. "If a buyer calls us in advance and asks us to walk them through the transaction, we're happy to do it, either on the phone or in person," Blair says. "It means the process will go smoothly on closing day."

You can ask questions at the closing, too. Remember, your agent and the title officer are there to help. "At some point we were all first-time home buyers," Monahan says. "We were all scared; we understand. Don't be afraid to use us."

You may think the stress of closing is a given. But you can keep your cool if you communicate and ask questions, read the documents, and understand the home closing process.



Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2022.  All rights reserved.

5 Questions To Ask When Buying A House

Link To Original Article From HouseLogic.com

By: HouseLogic
Published: January 08, 2020


There are no dumb questions to ask a real estate agent.

Home buying seems simple enough: Find a house you like that's close to work or school, tell someone you want to buy it, and move in.

But there's more to it than that. You'll have to find and get approved by a lender who will let you borrow a few hundred thousand dollars, lock in a mortgage rate, figure out how much house you can afford, put in an offer that will entice the seller, get an inspection and an appraisal, pay closing costs and sign a whole bunch of paperwork.

Phew! We need a break just thinking about all the questions to ask when buying a house.

Your real estate agent can help you understand the process. But if you don't ask questions or get your agent to clarify something you don't understand, they're not going to know you're confused. And you won't learn anything.

"There are no such things as stupid questions," says REALTOR? Ryan Fitzgerald in Raleigh, N.C. "If you have a question, ask it, no matter how foolish it sounds in your own head."

Don't be afraid. Ask away. You're making one of the biggest financial transactions of your life, so it's a good idea to tap into your agent's expertise.

Here are some questions to ask a real estate agent when buying a house.


1. How Many Clients Have You Helped Purchase Homes?

Before you pick a real estate professional, ask them how many clients they've worked with to find a home. Your real estate agent is supposed to be an expert, so one with a lot of experience will be a big help to a newbie home buyer like you.

That's not to say a newly licensed agent can't be a good one. But agents learn on the job. The more sales they've completed, and the more people they've helped buy a home, the more wisdom they have to share with you.


2. How Old Is The HVAC, Water Heater, And Roof Of This Home?

It's easy to be dazzled by 12-foot ceilings, crown molding, and other aesthetic features, but you need to pay attention to the nuts and bolts of the house. We're talking the unsexy stuff like the HVAC system, water heater, roof, electrical system, and plumbing.

"Knowing the age and condition of the major items will help you gauge how much your home could potentially cost once you move in," Fitzgerald says. "The older the home, the more likely you are to have higher maintenance costs."

These items could have more impact on a home's value than quartz countertops or hardwood floors, because it's expensive when they malfunction. A leaking hot water heater can do thousands of dollars of damage. And replacing an aging HVAC system can start at more than $5,000, putting it in the major expense category.


3. What If The Home Inspection Reveals Major Issues?

We won't lie: The home inspection is one of the most nerve-wracking days of the homebuying process. It's when you find out about every wart on the place you fell in love with at the showing.

Most of the time the inspection goes as expected. But if you aren't expecting a major issue and the inspector discovers something awful like a rusting sewer main or walls full of termites, it can be panic attack time.

Breathe. "What should I do when the inspector has bad news?" is one of the most common questions to ask when buying a house. Talk to your agent.

Your agent can calm you down so you can plan your next move, whether it's "Let's kiss this money pit of a house goodbye" or "Let's negotiate with the seller and get those repairs done so you can close on time."


4. What Happens If The Appraisal Comes Back Low?

In competitive markets where there are more buyers than sellers, it's possible to end up in a bidding war over a house. This can drive the sales price higher than the appraised value of the home. Lenders balk when the price is higher than the value, and this can jam up the deal.

Ask your agent what you should do if the appraisal comes in low. An experienced agent will have been in the situation before and have good advice. You'll have a couple of options, including ordering a second appraisal, covering the difference in cash, or walking away from the deal.

No matter what happens, keep your cool. Just because the appraisal is low doesn't mean the deal will fall through.

"When things don't go as expected, it's important to remain level-headed. You never want to allow your emotions to be too up or too down when buying a home," Fitzgerald says.


3. What Do We Need To Do To Prepare For Closing?

Closing day is essentially the transfer of ownership, but it's not just a formality. It needs to go well. This is when you sign the final paperwork and get the keys to the house.

One of the most important questions to ask a real estate agent is exactly what you need to bring for the big day. You'll probably need your ID, a check for the closing costs, and proof of homeowner's insurance.

Asking in advance will keep you organized and help your first big real estate transaction run smoothly. You don't want to get there and realize you forgot a key piece of paperwork that keeps the deal from closing. Fewer things are as disappointing than not going home from a closing with keys to your new house.

So ask questions. Knowledge is power, so there are no silly questions to ask when buying a house.


Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2022.  All rights reserved.

Hey, Buyers: These Home Appraisal Tips Are for You

Link To Original Article From HouseLogic.com

By: HouseLogic
Published: February 27, 2018


What to expect, when to negotiate, and how to deal when things don't go your way.

Most people have deeply personal reasons for wanting to buy a home. Maybe it's the bathroom that feels like a dreamy, modern spa. Or that two-tiered deck just made for parties.

Your lender doesn't care about the freestanding tub. Or the built-in outdoor fire pit. Their only concern is that the house you buy is worth as much as the value of your mortgage.

To them, a house isn't a home. It's collateral. (Harsh, but true.) If someday, for some reason, you can't make your mortgage payments, the lender can foreclose on the home and sell it to recoup all or some of its costs. (Even harsher, but also true.)

For that reason, a home must be valued at, or above, the agreed-upon purchase price, and this has to happen before you can close on a house. That's where a home appraiser comes in.


A Home Appraiser Is Neutral (Like Switzerland)

After you sign a home purchase agreement (the contract between you and the seller about the terms of the pending sale), and before your lender approves your loan, the home you're buying must pass an appraisal -- an assessment of the property's value by an unbiased third party: the appraiser.

An appraiser is a state-licensed or -certified professional. Their job is to assess an opinion of value -- how much a house is worth. The appraiser is not on anyone's side. They don't represent you or the seller; instead, this person is a contractor chosen by your lender through an appraisal management company -- a separate, neutral entity that maintains a roster of appraisers.

Appraisers survey a house in person, using five main criteria to determine the value of a home:

  1. Location
  2. Age
  3. Condition
  4. Additions or renovations
  5. Recent sales of comparable homes

Be Prepared to Pay for the Appraisal -- or to Negotiate

Generally speaking, the home buyer is responsible for paying for the appraisal, and the fee is typically wrapped into your closing costs. However, the party who pays for the appraisal is negotiable. It never hurts to see if the seller is willing to cover it.

How much money are we talking about? The average professional home appraisal will run between $375 and $450, according to estimates by the home-professionals resource HomeAdvisor.com. Costs can vary depending on the square footage and quirks of the house, with higher appraisal prices for larger or more unusual homes.

Appraisals Take a While, So Be Patient


Typically, a purchase agreement has a "home appraisal contingency" requiring that the appraisal be completed within 14 days of the sales contract being signed. Because it takes appraisers some time to visit your house and write a report -- up to a week, or longer in a busy housing market -- your lender will order the appraisal immediately after you sign the purchase agreement.

So, You Have a Valuation. Here's What It Means -- and What to Do Next

When the appraisal is finished, the appraiser issues a written report with his or her opinion of the value of the home. To produce the report, they use their analysis of the property and data from comparable homes, as well as review the purchase offer. The report will outline their methodology and also include photographs that they've taken of the property, inside and out.

You and your lender will both receive a copy of the report. Three things could happen next:

  1. If the appraiser's valuation matches the price you and the seller agreed to for the home: Your lender will proceed to underwrite your loan. Great news: This is the final step in your loan-getting process!
  2. If the appraiser's valuation is higher than what you're paying for the home: Congratulations! You've gained immediate equity. How, you ask? Let's say, for example, you're paying $200,000 for the house. If the appraiser says it's worth $250,000 -- jackpot. That's an instant $50,000 in equity. (Keep in mind, this is very rare.)
  3. If the appraisal is lower than what you've agreed to pay for the home: Your lender won't give you a loan for more than the appraised value. If you and the seller agreed on $200,000, for example, but the appraisal is $190,000, that creates a $10,000 shortfall. So what happens next?

Don't despair -- not yet. If you're faced with a low appraisal, there are several ways the deal can still go through.

If an Appraisal Is Low, You Can Still Make It Work

Before we talk strategy, some reasons why appraisals come in lower than expected:

If the appraisal comes in low, your agent will offer recommendations about how to proceed. In general, your best strategy is to persuade the seller to lower the sales price, or to split the difference between the home's appraised value and the price with you. This is when you can rely on your agent -- and their negotiating skills -- to go to bat for you.

 You can also appeal the appraisal assessment. You'll work with your agent to research comparable homes that support the sales price you agreed upon with the seller and present this information to your lender, who will forward it to the appraiser for a re-evaluation of the home's value. Ultimately, though, it's up to the appraiser to decide whether to revise their valuation of the property.

Alternately, you can ask your lender for a second appraisal, though there are caveats:

The last option: You can come up with the cash yourself to cover the difference between the home's price and the appraised value.

If you don't want to take that route (and who could blame you?), a purchase agreement's home appraisal contingency gives you the ability to walk away from the deal scot-free, and with your earnest money deposit in hand.

But today, let's assume it all works out. With the appraisal behind you, you'll be one step closer to closing on that house.



Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2022.  All rights reserved.

How to Shop Around for a Mortgage Loan

Link To Original Article From HouseLogic.com

By: Lynn Ettinger
Published: July 14, 2021

Home buyers who do mortgage loan shopping can avoid leaving money on the table.

Whether you're shopping for new bed sheets or a new car, the drill is usually the same. Hit the reviews, check with friends, and scope out the best deal. After all, who wants to buy a car that racks up repair bills right away? Yet when picking a mortgage loan, borrowers don't always think about comparison shopping.

In a Bankrate survey of recent home buyers, 12% of millennials said they believe their mortgage rates were too high. Some buyers may think that when mortgage rates are low, they don't need to shop for the best offer. But even a few basis points can make a difference of thousands of dollars over the life of a loan, according to Bankrate, the Consumer Financial Protection Bureau, and the Federal Trade Commission.

You may think mortgage shopping is about as much fun as prepping for a tax audit. It's true that comparing home mortgages can get complicated. But you don't need a finance degree to make an informed decision. Here are some steps to get there.


Find a Few Lenders

When looking for lenders to consider, loan officers recommend going to a few sources:

Have an Intro Mortgage Loan Meeting

During a meet and greet, you and the loan officer will usually ask each other questions, and the loan officer will use that information to assess your qualifications. That may sound cut and dried, but the meeting should be fluid based on what you're ready to do.

Typically, the loan officer would schedule a meeting focused on comparison shopping separately. If that sounds painful to borrowers who want to (literally) get moving. No worries, Koch says. "The borrower may be well versed and want to get right to what's most relevant for them, which are the financial and comparison details. But a lot of people need to go over their own questions or cover key topics first."

Want to meet virtually? "Some folks are just more comfortable virtually, and that's OK," DeMarco says. "I've closed loans with people I've never talked to on the phone. It's all via text."


 Interview the Mortgage Loan Officer

Whichever way you choose, this meeting is prime time to interview the loan officer. Borrowers need to find someone who will be in there with them and can problem solve. "We call unanticipated problems ?icebergs,'" DeMarco says. "You think there's smooth sailing. And then, suddenly, you smack into an iceberg."

Check out the lender's communication strategy and their process for delivering on time. "The process is highly complex, and you'd think professional lenders all would have mastered it. That's not the case," says Koch. "When a loan isn't delivered on time, people's finances and lives are basically balanced on the head of a pin, which is the closing date."

To avoid problems, ask questions like these:

Fact finding about the process:

Compatibility with the loan officer or mortgage banker or broker:

Track record of loan officer and lender:

Use the Meeting to Learn

You can also use the meeting to clarify general info you've picked up online and talk about your concerns. DeMarco gives a couple of examples. "You may have switched careers or industries in the last year or started having bonus or commission income. Your research may have shown you can just divide your salary by 12 to figure monthly income. But it may not be as simple as that."

You'll also want to bring up concerns like the impact on your credit score. Thirty-eight percent of buyers think comparing multiple mortgage offers in a short time will hurt their credit rating, according to a 2020 LendingTree survey. "As long as the lenders all pull the borrower's credit within a couple of weeks, it's counted as a single credit inquiry. So, it's not a problem if they do it within a narrow band of time," Koch explains.

Get and Compare Financial Information

Whether you're looking at a federal form called a loan estimate or a precursor form called the fees worksheet, you'll see a breakout of closing costs, explains Koch. "To compare the lender financials, you'll want to drill down to origination charges in the lender section. Make sure you're comparing apples to apples. If one lender is offering a 30-year fixed rate at 2.875% with no lender fees and another is offering 2. 75% with $1,500 in lender fees, those are unlike products. Get the fees at the same rate to find out which is less expensive."


6 Tips to Get Mortgage Loan Information

Comparison shopping can get complicated. Here are six ways to keep it simple:

 1. Keep Your Pool Manageable

Mortgage shopping "depends on the borrower and the personality type and how they're wired," Koch says. "The process can seem overwhelming. That's why it makes sense to have a select few options to compare so borrowers can process and assimilate them."

 2. Get a Fees Worksheet

The best way to compare effectively is to zero in on the fees worksheet, which the loan officer should provide. "You'll be able to figure out just what the lender's direct fees are, and you can make a nice, simple comparison."

 3. Understand a Fees Worksheet Versus a Loan Estimate

The numbers on the worksheet are estimates and not locked in. Interest rates are fluid and change daily or even more often, DeMarco says. On the other hand, after you have a contract with a seller, "the loan estimate and loan application are where the information is binding, barring structural changes to the loan," Koch says. Make sure the information reflects previous discussions with and disclosures by the loan officer.

 4. Be Careful Interpreting Third-Party Fees

Third-party fee estimates are included on the worksheet. Two lenders could each come up with different estimates for title, escrow, or appraisal fees, Koch explains. But not all are negotiable. For instance, the seller chooses the title company, so the lender doesn't control the choice or the fees. The lender could be choosing the high or low end of a range, but it's only an estimate.

 5. Think About Timing

Make sure lenders are using the same time frame for locking in pricing and that it will extend through the closing, Koch notes. "A lender might offer a rate that's a lock for three weeks, but if you anticipate or know your closing date will be five or six weeks out, that's a problem."

 6. Consider Applying for Loan Approval Before Finding a Property

"Many lenders will not do this," Koch says. "But some will allow borrowers to go through the formal underwriting process -- not just pre-approval -- without having a property. The borrowers can get a bona fide mortgage commitment with all of the major buyer financials truly underwritten at that point. Then when borrowers make an offer, they can close more quickly."

You'll have to invest some time and effort into comparison shopping for a mortgage loan and selecting a lender and a loan officer. But your return on investment can pay off over the long haul.


Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2022.  All rights reserved.

8 Simple Rules for Negotiating Your Offer and Getting That House

Link To Original Article From HouseLogic.com

By: HouseLogic
Published: February 27, 2018



You and your agent are going to use everything you’ve learned to seal the deal.

Here’s the dream: Your offer is perfect, you don’t need to negotiate, and you can spend the next few weeks addressing more pressing home ownership questions like, “Why is it called wainscoting?” and “Do I want a new couch in blush or emerald green?”

And it could happen. Many sellers accept the best offer they receive, for a variety of reasons.

But sellers are also known to reject offers for a variety of reasons. Or make counteroffers. This is especially likely if you bid low or you’re up against multiple competing offers.

If you do receive a counteroffer, you’ll need to decide whether you want to accept the new contract, negotiate the terms, or walk away.

In cases like these, look to your agent. They are your spirit guide. If you decide you want to negotiate — that is, make a counteroffer to the seller’s counteroffer — your agent will use their negotiating skills to help get you the best deal. This is what agents do every day.

But you’re not just going to sit there. If you understand what negotiating tactics your agent may deploy — they depend on the local market and your position — you can back them up. And cheer them on.

Here are eight rules every buyer should know before they — and their agent — start negotiating:

#1 Act Fast — Like, Now

When you receive a counteroffer, you should respond quickly — ideally within 24 hours. The longer you wait, the more space you leave for another buyer to swoop in and nab the property. Also, if a seller senses hesitation, they may decide to withdraw their counteroffer before you even have a chance to respond.

#2 Raise Your Price (Within Reason)

While you obviously don’t want to overpay for a house, you may have to up the ante — especially if you initially made a low-ball offer. Lean on your agent’s expertise to determine how much money you should add to the sales price to make it more enticing to the seller.

Then, through their powers of persuasion, your agent can make the counteroffer look even more attractive by pointing out similarly priced “comps” — recently sold homes in your area that are comparable in square footage and features.

As your agent negotiates, it can feel like things are escalating quickly. It’s stressful. You may feel a sudden urge to do whatever it takes to win.

Before you go overboard, keep in mind these two guidelines:

You can’t exceed the monetary confines of the pre-approved mortgage you received from your lender.
You shouldn’t overextend your budget.
Because your counteroffer has to be an amount you’re comfortable spending on a home. You want that new house and to keep living your life. Plus: You’re not out of options yet.

#3 Increase Your Earnest Money Deposit

Increasing your earnest money deposit — the sum of money you put down to prove to the seller you’re serious (i.e., “earnest”) about buying the house — is another way to show the seller you have more skin in the game. A standard EMD is typically 1% to 2% of the sales price of the home, although it’s negotiable between the buyer and seller and can go as high as 10%. Making a counteroffer with a 3% to 4% deposit could be what you need to persuade the seller to side with you.

#4 Demonstrate Patience About Taking Possession

Depending on the seller’s timetable, changing your proposed possession date — the date you take over the property — could butter them up, too. If the seller wants to stay in the home for a few days after closing, try offering a later possession date. You could also draw up a “rent-back” agreement, meaning the seller pays you rent for staying in the home for a set period of time after the closing date.

#5 Let Go of a Few Contingencies — With Care

Want to give your counteroffer an even bigger boost?

Reduce the number of contingencies you’re asking for. It’s your way of saying, “Hey, look, I have fewer ways to back out,” which gives the seller more reassurance that the deal will close.

But be selective: Some contingencies are too important to give up. A home-inspection contingency — the right to have a home inspection and request repairs — gives you an out if you spot major problems with the home (and protects you from buying a total money pit).

You might waive a termite inspection if you’re in a state where the risk is lower.

But ultimately, waiving contingencies depends on your market, your loan program requirements, your risk tolerance, and the circumstances of the house in question. And if you waive contingencies and then you find a problem, the seller isn’t responsible for fixing it.

#6 Ask for Fewer Concessions

At a mortgage settlement, home buyers have to pay closing costs for taxes, lender’s fees, and title company fees. Closing costs vary by location, but you can expect to shell out between 3% and 4% of the home’s sales price. The seller pays an additional 1% to 3%. (Smart Asset and Nerdwallet have simple calculators you can use to get a rough idea of what your closing costs might be.)

When making an initial offer, you have the option to ask the seller for concessions — a settlement paid in cash to help you offset your share of the closing costs. (This move is less feasible if you’re going up against multiple offers.)

Concessions effectively lower the seller’s net proceeds from the sale. Making a counteroffer that removes the concessions you would have otherwise received at settlement puts cash back in the seller’s pocket — and can improve your bid.

#7 Pick Up the Cost of the Home Warranty

Sometimes sellers offer prospective buyers a home warranty. This is a plan that covers the cost of repairing major home appliances and systems, like the air conditioner or hot water heater, if they break down within a certain period (typically a year after closing).

A basic home warranty costs about $300 to $600 a year, according to Angie’s List. If it seems like waiving the home warranty can sweeten negotiations, but you still want the peace of mind of having one, tell the seller they don’t need to cover it — then buy it yourself.

Just keep in mind, whether you or the seller buy the warranty, you’ll need to pay the service fee (typically between $50 and $100) if something does, indeed, need to be repaired while under warranty.

Also, FYI: A home warranty is entirely separate from homeowners insurance. Homeowners insurance — the security blanket that covers your home’s structure and possessions in the event of a fire, storm, flood, or other accident — is required if you take out a mortgage. It can cost anywhere from $300 to $1,000 per year.

#8 Know When to Walk

When negotiating with a seller, trust your gut — and your agent. If he or she says a deal is bad for you: Listen.

And if you don’t want to make any more trade-offs — and the seller won’t budge — it’s smart to walk. That can be a tough decision to make, and rightfully so! Negotiating is tough. It’s draining.

And losing something you’ve worked hard to get can be disappointing. But don’t worry. There’s a better deal for you out there. And after those strong feelings of frustration pass, you’ll realize: Now I know how to do this.



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