by Kathe Barge | Apr 3, 2022 | Buyers, Buying Conditions, Helpful Tips, Interest Rates, Investment Properties, Market Trends, Mortgage, Property Value, Real Estate
How are rising interest rates impacting home sales?
Rising interest rates are definitely impacting buyers. Many buyers are having to step down their affordability levels and focus on homes that are less expensive homes than those they might have considered three months ago. If you are a buyer and have been looking for more than a month, it’s a good idea to check in with your lender and request a new pre-approval and cost estimate so that you can be comfortable with what your payments will look like at the higher rates.
For most sellers, however, the rising interest rates are not impacting home prices. We continue to sell homes astonishingly quickly and at record prices. The pool of buyers considering a home may be different, but their number is not less. At the present time, it does not appear that the notable increase in interest rates has impacted our market in the “affordable” ranges at all.
However, the high-end market (over $1.5M) has always been much more susceptible to broader market factors such as interest rate increases. There has been a notable (and hopefully temporary) decrease in high-end activity in recent months and rising interest rates may be playing a key role in that decline (along with the volatile stock market and other concerning world events). If your home falls into our high-end market, you may need to exercise patience with our market as your time on the market will likely be more in line with historic norms as compared to the current “flash sale” market we are experiencing in the $1.3M market and below.
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by Kathe Barge | Mar 30, 2022 | Buyers, Buying Conditions, Contracts, Helpful Tips, Inspections, Listings, Market Trends, Property Updates, Property Value, Real Estate, Sellers
The market is so hot right now and we aren’t having any luck getting a home – should we waive home inspections?
You are correct –the market under $1million is very fast paced right now, and in many instances, the winning bidder has waived home inspections. That does seem to be what it may take to “win” right now but I cannot recommend that you make that choice. Now several months into the “waive inspections” craze we are starting to hear stories about the expected fallout from this hasty decision.
From the seller’s perspective, I highly recommend that you have your home pre-inspected and repair or disclose the relevant items. While an inspection might cost you upwards of $500, it is money well spent toward a smooth closing. If you have pre-inspected your home and provide the report to prospective buyers, you are doing your part to make sure your buyer is well-informed. In the absence of a pre-inspection, I do not recommend that you accept an offer from a buyer who has not inspected your home. I have started hearing from home inspectors that disgruntled buyers are seeking post closing inspections to find problematic items and sue the sellers for failure to disclose. You don’t want that to be you. If you have not pre-inspected, we can discuss strategies to allow a buyer’s inspection and still protect you.
From a buyer’s perspective, as we all imagined would happen, the post-closing stories are starting to mount about buyers who purchased without an inspection and are now having all sorts of forseeable issues – roofs leaking, furnaces failing… If you are going to make this risky choice, you need to do so knowing that you will be assuming the risk of potentially tens of thousands of dollars of issues The contract specifically states that your inspection is your opportunity to find issues – if you waive that, you will be fighting an uphill battle to recover against anyone. Before you make an offer without an inspection contingency, you really do need to ask yourself if you are prepared to absorb those costs!
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by Kathe Barge | Feb 10, 2022 | Blog, Buyers, Buying Conditions, Contracts, Investment Properties, Listings, Market Trends, Mortgage, Property Value, Real Estate
What impact do you think rising interest rates will have on the real estate market?
I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured at rates below 3% fixed. Now they have inched up to 3.75% for conforming loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching upward.
What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.
However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!
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by Kathe Barge | Jan 27, 2022 | Blog, Buyers, Buying Conditions, Contracts, Investment Properties, Market Trends, Mortgage, Property Value, Real Estate
We are interested in diversifying our portfolio and purchasing rental properties – any thoughts?
The first thing to keep in mind when considering a rental property is how you intend to pay for it. Rental properties are investment properties and subject to different lending rules than the home that you live in. Therefore, a lender will expect that you put more down as a down payment on a rental property and you will pay a higher rate of interest. Typically, lenders are looking for no less than 20% down on your purchase. And of course until you establish yourself as a successful landlord, your income is going to need to be sufficient to support the mortgage on your primary residence as well as any debt on your rental investments.
The second thing you need to think about is what kind of tenant you are interested in renting to. If you are hoping to rent to a family who might be in town for a couple of years with a temporary job assignment, then purchasing an apartment building with one and two bedroom apartments is unlikely to attract the type of tenant you hope to find. In that scenario, you would be looking for a single-family home in all likelihood (or possibly a townhome) in a good school district such as Quaker Valley. If you are hoping to find young professionals, you might look for something closer to downtown that has a trendier vibe to it.
You also need to take a look at the return on investment that you are seeking from the property. You will need to consider how much you are putting down on the property, how much you were paying in interest on any mortgage that you take out, your property taxes, maintenance of the building, any homeowners association fees, and any utilities that might be the responsibility of the landlord (these are typically utilities that are not separately divided in the particular structure, such as water). Putting together a spreadsheet with all of the expenses and your expected income will help you to determine whether or not the anticipated net income is worth the risk of investment to you. Be sure to build in some vacancy months – most properties are not leased 100% of the time.
Finally, you need to give some thought to how you will manage the property. Are you going to hire a property management company to handle that for you, or will you be more hands-on? Who is going to handle maintenance requests when something goes wrong? The beauty of being a tenant is that if something breaks, it’s not your responsibility to get it fixed. But as the landlord, are you going to be taking care of the repairs and if not, do you have a reliable handyman on-call that is willing to handle those items for you. If you are planning for others to manage the property on your behalf, you will need to build those costs into your financial projections as well. If investment properties are something you would like to consider, feel free to reach out to me and we can discuss these opportunities further.
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by Kathe Barge | Oct 5, 2020 | Contracts, Inspections, Listings, Real Estate, Sellers
We hear that selling a home can be a trying process. They say forewarned is forearmed. Any annoyances a seller should be expecting?
Below is a short list of many of the “joys” sellers might experience during the listing process. Being aware that these are possibilities will hopefully help you take them in good humor if they happen to you!
- The agent showing your home will miss appointments and not call or show up.
- Appointments will be made and cancelled at the last minute.
- Some showings will last about five minutes and some will last 3 hours.
- Agents showing your home will forget to turn lights off.
- Agents showing your home will let your pets out (best to remove them from your home for showings) or your neighbor’s pet in.
- Agents will provide unhelpful feedback – buyers buy homes when they attach emotionally to a home and when they don’t, their feedback is often nonsensical.
- Agents will not provide any feedback – incredibly annoying, I know.
- Expect lowball offers (at least it is a starting point).
- Things will come up on the inspection that you had no idea were wrong with your home and you will be sure the inspector made a mistake or the buyer will make ridiculous inspection requests. Remember this easy rule of thumb – if the requests total less than 1% of the sales price, its usually best to agree to the requests, regardless of how ridiculous they might be.
- The buyer will ask to bring in contractors for estimates for work they want to do after the closing at the seemingly most inconvenient times.
- The property might not appraise at what you are selling it for – with the hot market we are in and with homes often selling in bidding wars with multiple offers, there is a risk you might have to make a downward adjustment in your sales price.
- The closing date on the contract may change. Again, lenders are overwhelmed right now and \many closings have been delayed, sometimes for a week or more. This does not mean that your buyer cannot buy your home – it just means lenders are overwhelmed and missing deadlines – be prepared to be patient.
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by Kathe Barge | Jun 17, 2019 | Blog, Mortgage
My friend’s closing on her existing home was delayed and she ended up having to delay her closing on her new home, and was stuck with all of her stuff on a moving van and unable to move in to her new home. How can these major inconveniences be avoided?
Back-to-back closings do raise the possibility of delayed closings and moving vans sitting curbside waiting to unload. When there are multiple transactions lined up on top of each other, if one in the line-up fails to close on time, it will affect everything in line behind it. Ideally, transactions would not be back-to-back, but this only works if buyers are paying cash out of existing accounts or have sufficient resources to carry two homes, so that the new home can be closed independently of the closing on the old home. But even if transactions are not stacked, closing delays can still occur, causing unhappy buyers and sellers, because lenders aren’t ready.
So how can these inconveniences be avoided? Selection of your lender and closing agent are absolutely critical. There are a lot of people out there who would like your mortgage and closing business. Many may even be your friends, neighbors or family members. But the relevant question, in addition to rates and fees, is whether they close on time every time. This is where you really need to rely on your agent’s expertise. Even consumers who move frequently only engage in the mortgage process once every few years. A busy agent is dealing with lenders daily. We know who stands behind their word and will not let you down, and who will not. A well-intentioned but poor performing lender can cost you significant unhappy delays – make a careful choice up front.
It is also crucial that you get your lender all of the documentation that he needs immediately at the time of mortgage application. You don’t want to be part of any delay. Finally, even once you have turned in all of your paperwork, its important to check in with your lender weekly, daily the week before closing, until they tell you that they have the “clear to close.” The old saying “the squeaky wheel gets the grease” is never truer than when it comes to closing your mortgage loan – stay in close touch with your lender!
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by Kathe Barge | Jan 3, 2019 | Blog, Buyers, Contracts, Listings, Market Trends, Mortgage, Real Estate, Sellers
It’s a new year and we’re ready for a new home! What should we do first?
Well, you are asking a Realtor that question, so the answer is probably expected! The first thing you should do is call me! Once you have done that, here is a look at what comes next! First, we will meet and determine the likely value of your home in the current market. The market is quite fluid and values move up and down depending on supply. Currently we have had very low inventory for an extended period of time and buyers are getting very frustrated, so it is possible that we may see an uptick in values again this spring. When we meet we will also review all of the many ways I will be marketing your home and the timetable for rolling out the marketing to optimize your result.
Once we set a timetable that works for you, you will want to spend some time “staging” your home. At the most fundamental level, this would involve you “de-cluttering” your home. It’s amazing how quickly we will our closets, basements and attics! Movers are not cheap – you do not want to move more than you know you will want to keep. So now is the ideal time to start the clean-out. In fact, we sometimes have closings as quickly as 3 weeks after an offer is presented, so it is best to assume that you will not have much time to pack later and do the clean-out up-front. This will also help your home show off its spaciousness and storage capabilities! If you are saving things for others (such as the pile of furniture I have stored in my basement for my adult children who I am sure are going to want my 30 year old furnishings someday!), then it would be advisable to find an off-site storage facility and move those items from your home (or more realistically, I would be happy to connect you to charities to come pick them up and give you a tax deduction in exchange – the reality is that those we save for probably really don’t want our stuff anyhow!) If this all seems incredibly overwhelming to you (and you’re thinking you would rather stay put than face the inevitable clean out), I would be happy to connect you to a home organizer that can take on as little or as much as you don’t want to do!
Once you feel you are “de-cluttered,” the next step toward selling your home would be to determine whether any repairs or improvements are needed or recommended. I am happy to walk through your home with you in advance of your listing date and discuss what you might consider addressing and its likely impact on your bottom line. Not ever seller wants to make repairs and improvements and ultimately that choice is yours, but the market data I will provide to you will help you decide whether its worth it to you to make the additional investment in your home. If repairs are not possible, we will work on using the disclosure to make sure you are sharing the items upfront with the buyer and pricing accordingly. This will protect you later from costly repairs if the inspector is the one to raise the issues.
It’s a lot to do, but together we can make your 2019 real estate goals a reality!
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by Kathe Barge | Nov 26, 2018 | Blog, Buyers, Contracts, For Sale By Owner, Mortgage, Real Estate, Sellers
We were approached by someone who is interested in buying our home. The buyer has provided us with an unsigned sales agreement as their offer. They are offering 1.5% of the purchase price as their hand money and have not included proof of funds (it is a cash offer). Are we wasting our time with these buyers?
The very short answer is yes! For starters, to be a valid offer, it must be in writing and signed. Without a signed writing, you have absolutely nothing to bind the buyer should you decide to proceed. What you received is not an offer at all and you should not give it serious consideration until the paperwork is signed by the buyer. If there are no agents involved, the buyer needs to hire an attorney to prepare an offer and you will need to hire your own attorney to review it.
Hand money equal to 1.5% of the offer may or may not be sufficient depending on the individual circumstances. Sometimes that is all a buyer can afford. However, this buyer is supposedly paying cash so there should be no problem with them providing a more substantial deposit. Look for a minimum of 5% in this type of scenario. The hand money is your consolation prize should the buyer decide not to close after all contingencies have been satisfied – if you have moved out, you will need at least that much to compensate you for all of your moving costs.
As far as proof of funds, I would recommend that you not engage in any substantive negotiations until the buyer has proven that they do have the cash available to close. Talk is cheap, but if they really do have the cash, they will have no problem producing copies of statements showing the cash or a letter from their banker that they have the needed funds.
Your questions address just a few of the hundreds of complexities involved in getting a home sold and highlight why its really important to engage a full-time real estate expert when buying or selling a home. Selling your home yourself may sound like a great idea in the abstract but the “for sale by owner” sellers that I have spoken to have regretted not engaging a Realtor to represent them as selling a home is far more complicated than it looks and most ended up feeling like they got the short end of the stick at the end of the day!
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by Kathe Barge | Jul 2, 2018 | Buyers, Listings, Market Trends, Mortgage, Real Estate
We’ve noticed interest rates are rising on mortgages. What effect do you think that will have on our market?
You are correct – the fed raised the interest rates AGAIN this year, and have indicated that we need to be prepared for two more rate increases in 2018. Those increases are expected in September and December and many forecasters are expecting that rates will be over 5% by 2019. The economy has been incredibly strong and unemployment is lower than it’s been since the 1960s (excepting one month in 2000). With a surging economy, the fed is forced to raise rates in an attempt to keep investors interested in mortgages, control inflation and avoid a possible future economic crash. Rates are ¾ point higher than they were last year. Nonetheless, historically 6% is considered an excellent interest rate and they are still well below that!
With all of that in mind, today is as good as its going to get for years to come for mortgage interest rates. So don’t procrastinate any longer! If you are thinking of a move, there is no better time than now to find a new home and lock in your interest rate. In September you will likely pay more for the same house over the life of your loan than you would if you bought it roday. What impact will these rising rates have on the market? Some buyers will not be able to afford a home that they could have afforded previously – as rates rise all borrowers will qualify to borrow less and that lower number may or may not be enough for you to be able to buy the home of your dreams. All buyers will pay more for their homes over the life of the loan than the could have had they purchased earlier. Ultimately, higher rates could depress home values as buyers can afford less, but I do not see that happening in this market. We just do not have enough inventory for rising rates to depress home prices…yet. But if we ever bring supply in line with demand again, we may see rising rates soften home values.
Of course, as rates rise it becomes very important to shop your loan product. Those who get two lender estimates save on average $1500 upfront and those that get 5 save $3000 upfront on average. Most buyers will take the time to shop around for a new car, so why not take the same approach toward your mortgage. With rising rates, you will appreciate the upfront savings!
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by Kathe Barge | Jun 26, 2018 | Blog, Contracts, Inspections, Sellers
We find the inspection process confusing – do we have to fix everything in the inspection report before we sell our home or just the repairs the buyer requested?
The home inspection report is the document from which your buyer works to make their repair requests of you. Some buyers will ask for everything and others will ask for only those items that they think are important. They may let some things go, for example, if they are planning on renovating an area and anticipate fixing those items as a part of the renovation.
Once you and your buyer agree on a list of repairs, these are memorialized on an addendum. It is that addendum, called a Change in Terms Addendum (“CTA”), from which you work when completing your repairs. You need not refer to the inspection again unless the CTA references it. You do, however, need to make sure that you do everything on the CTA exactly as specified, so be sure to read it carefully and provide a copy to your contractor(s). For example, if the CTA says that you will have GFCI outlets installed by a licensed electrician then you need to make sure you hire a licensed electrician, and not your favorite handyman, to make the repair! If the CTA says you must paint to match existing then you need to take a sample of the existing paint to the paint store and color match it – don’t rely on old paint in cans – paint fades with age and it won’t match. Be very careful to be sure you are complying with the terms of the CTA – if you do not, or if your contractor does not, your closing may be delayed or postponed until the work is done as specified. Along those lines, be sure to review your contactor’s work when complete and make sure that he actually did what you agreed to do on the CTA. If not, request that he return before it becomes a walk-through issue.
And of course, be sure to get paid receipts from all contractors, or if they have not been paid, notify the closing company so that they can be paid at closing. All repairs must be paid for before ownership changes hands so be sure to stay on top of your bills, and provide receipts to the buyers agent.
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by Kathe Barge | Jun 13, 2018 | Blog, Buyers, Contracts, Inspections, Real Estate, Sellers
We closed on our new home recently and when we went on the walk through, the seller had not completed the inspection repairs that they had agreed to do and didn’t seem to think was an issue. Your thoughts?
I have noticed a trend lately away from respecting contracts. I’m not sure if its because consumers don’t understand what they are signing, are too busy to keep everything straight or just don’t care. Whatever the reason, the real estate contract and its addendums are what makes a real estate transaction work. If you want to sell your home, you need some kind of document that binds the buyer to your home so that they don’t just walk away, leaving you holding a home you just moved out of and unable to close on your new home. It is equally important to the buyer – they need a document by which a seller is actually bound to sell their home so that the buyer is also not sitting on the curb waiting to unload the moving van and unable to get the seller out (and yes, real estate is specific performance – if you sign a contract to sell, you must sell).
There are some basic principles to keep in mind that apply to all contracts. Sellers, if you include something on your disclosure, it is important that you actually leave it behind for the buyer. The stove and dishwasher are obvious, but what about garage door openers? When you are listing your home, take the time to be sure that you correctly list what is included – misplace a garage door opener and you are contractually required to buy a new one for the buyer.
If you agree to fix something during an inspection negotiation, then yes, you must actually get it fixed. Its not ok to have the buyer show up for the walk through and find out you haven’t taken care of the agreed upon repairs. What you signed is legally binding – do what you said you will do or be prepared to give a hefty last minute credit to the buyer. If you do get the items fixed, be sure to pay your bill before closing! These repair bills are not the buyers’ responsibility and its also not ok to agree to make a repair and then stick the buyer with the bill.
And remember, the contract requires that your home be in the same condition it was in when the buyer made you the offer. If you break something, you will need to fix it prior to closing. At 13 pages, it is a lengthy document but it is important that you understand what you have agreed to do. We can’t all be attorneys, so be sure to hire a realtor that you have confidence will thoroughly explain what you have signed and help you to be a good seller and honor all of its terms!
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by Kathe Barge | May 31, 2018 | Buyers, Contracts, Inspections, Listings, Real Estate, Sellers
I’ve heard that agreements on many homes have fallen through lately from home inspections – why is that?
Our market has traditionally been one where buyers know they are buying old homes and allow the seller some leeway in not presenting a “perfect” home from an inspection standpoint. However, in many parts of the country, this is not the case. Sellers are expected to remedy all issues noted by home inspectors prior to closing. As more and more people migrate here from other parts of the country, our prices are going up, but so are the buyers’ expectations as to a seller’s responsibility for concerns discovered on a home inspection. At the same time, inspectors are getting significantly more particular. And so yes, it is absolutely possible to have purchased a home only two years ago and have new concerns arise that clearly existed and were overlooked when you bought your home. And yes, it is equally possible that you will be expected to fix them and if you refuse, your sale might fall through.
This can often leave a seller feeling like they are the unlucky one who got stuck holding the “hot potato.” As the years pass, the list of “hot button” issues mounts and if you are the owner when the issue is discovered, you will be the one paying the bill even though the home was bought and sold many times in advance of your ownership. These hot button issues include items such as radon, mold, damp basements, lead water lines, asbestos (fireplace inserts, duct tape, pipe wrap or flooring) knob and tube wiring and pushmatic electric panels. If your home has any of these issues, you should figure you will be the one footing the bill and address them before they become an issue on a home inspection.
The best way to prevent an inspection fall through or an unexpected bill for defects is to have your home inspected before you put it on the market. A pre-inspection will allow you the opportunity to fix those items that can be fixed and disclose the rest to save yourself from a laundry list of requests. Be sure not to ignore the small stuff that comes up or that you know is wrong. For example, when I list a home, I specifically ask sellers if all of their windows open, stay open, shut and lock, and if any are cracked or have broken seals. Sellers more often than not disclose no issues with their windows and yet it is one of the most frequent inspection deficiencies. Take the time to do your homework – get your home inspected – repair or disclose any possible concerns – and save yourself from a long last-minute repair list and potentially even from losing your sale.
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by Kathe Barge | May 22, 2018 | Blog, Buyers, Inspections, Real Estate, Sellers
Can you explain how Buyer Agency Agreements work?
The State of Pennsylvania does not recognize oral buyer agency – if you want the representation of a Realtor in your real estate transaction, you must sign a written Buyer Agency Agreement with that Realtor. If you do not, the Realtor you are trusting to help you with the purchase of your new home must by law represent the interests of the Seller. This means that the Realtor cannot advise you on anything that could be against the Seller’s interests, including property condition, neighborhood factors, and valuation advice and cannot provide negotiation or inspection strategies. You are on your own! I can’t imagine why any buyer would choose not to enter into a Buyer Agency Agreement – the Seller is still paying the commission and you get a Professional’s advise at no added cost to you! Buyers are well advised to enter into such an Agreement so that they are getting advice on the homes they are seeing, from the perspective of their best interests.
There is one caveat. You an only enter into one Buyer Agency Agreement at a time, or you could end up owing more than one Realtor a commission. Therefore, you need to be sure that you disclose to other Realtors (such as those you meet at open houses) that you have a Buyer’s Agent (so you don’t end up signing more than one Buyer Agency Agreement by accident). As long as you buy a home that is in the MLS, you will not owe a commission at the time you buy your home – that is included in the listing price of the home. Real estate can be a tricky business – in small towns like Sewickley, there is always an undercurrent of “quiet listings.” In these situations, it is important to disclose any “off-the-market” opportunities to your Realtor – most “for sale by owner” (FSBO) sellers are only trying to save the listing side of the commission, acknowledge that qualified buyers are usually working with a Buyer’s Agent and will gladly pay the Buyer’s Agent fee as long as they are approached by your Realtor and this is discussed up-front.
Some Realtor’s require you to sign a Buyer Agency Agreement at an initial meeting, therefore it is important to have done your research up-front and be sure the Realtor you are choosing is a good match for your needs. Check online testimonials, review credentials and even ask to interview past clients if you would find that to be helpful. Other Realtors may give you a “courtesy” day where they will show you homes, you can get to know them and they you before deciding to work together. Once you choose your Realtor, you will sign the Agreement and at that point will be entitled to full Buyer representation.
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by Kathe Barge | May 7, 2018 | Blog, Buyers, Contracts, Market Trends, Mortgage, Real Estate
With all of the bidding wars happening in this hot market, should we put an appraisal contingency in our offer?
Appraisal contingencies are added to agreements when buyers are concerned that their offer may be over market value. If you are getting a mortgage, they really aren’t necessary if you are putting 20% or less down on your home. Your bank will need your new home to appraise so that your debt percentage is not greater than 80%. If it doesn’t appraise, you will either have to throw in more cash or reduce the sales price of the home, or the bank will refuse to fund the loan.
If you are paying cash for your home, or have a small planned mortgage, your only protection from over-paying is to insert an appraisal contingency into your offer. If the home fails to appraise, you will have the option of terminating the agreement if you choose, or possibly re-negotiating the price. While this may sound like a fool-proof option, when we are in a hot market, with limited inventory and limited options for buyers, the goal is to reduce the number of contingencies to make your offer more appealing, not to add more! When evaluating whether they want to take their home off the active market to work with your offer, a seller will weigh all of the components, and an appraisal contingency weakens your offer as it is one more hurdle the seller must overcome before they can proceed to closing.
There is a definite risk that in a hot market you could overpay for a home. Homes are in some circumstances selling for tens of thousands of dollars in excess of the list price. Unfortunately, this may be what it takes to get a home. Inserting an appraisal contingency will only weaken your offer and could cause you to lose a bidding war. The best course of action if you want to win is to ask your agent to prepare an analysis of comparable sales and use that to determine your best offer, leaving out the appraisal contingency and hopefully succeeding in your bid to buy a new home.
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by Kathe Barge | Feb 28, 2018 | Blog, Buyers, Market Trends, Mortgage, Pittsburgh, Sellers, Sewickley
What impact do you think rising interest rates will have on the real estate market?
I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured, on a good day, at rates below 3% fixed. Now they have inched up to 4.25% for conforming loans and 4.75% for jumbo loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching toward 5%.
What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.
However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!
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by Kathe Barge | Dec 6, 2017 | Blog, Buyers, Contracts, Inspections, Listings, Pittsburgh, Real Estate, Sewickley
We are buying a new home. Can we skip the home inspection and save a few bucks?
I do not recommend that you skip a home inspection, even with a new home. Please keep in mind if buying a new home that no matter how nice and reassuring the builder or his realtor representative are, they do not represent you! I have on many occasions witnessed a builder trying to gloss over obvious deficiencies with new homes. You need a home inspector to carefully assess your new home so that you aren’t burdened with repair bills later for improper conditions that existed at the time of your closing. While the inspector is there, it’s a good idea to get a pest and radon inspection in addition to a general home inspection. Both pests and radon are commonplace and can be significant – its wise to know what you are dealing with before you move in.
However, do not make the mistake of assuming that all home inspectors are equally skilled at their profession. Some inspectors gloss over many areas of concern and take a VERY big picture approach, which, while generally not alarming, can also be very unhelpful as you plan for your future improvements to the home. Others can be incredibly harsh and point out flaws that are inaccurate or irrelevant, leading you to over-react. Before booking a home inspector, do your due diligence – make sure they are ASHI certified and read their online reviews (as you I am sure you did when you chose your Realtor).
Finally, once you move in, keep in mind that it is recommended that homeowners have their homes professionally inspected once every ten years. The mere passage of time can take a toll on a home, and better that you find problems and correct them before they become big problems. Repeating pest and radon inspections at that time is also a good idea – they are also best addressed sooner rather than later. If you have any questions about whether you should be getting your home inspected, please give me a call! 412.779.6060
RECENTLY SOLD — represented buyers.
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by Kathe Barge | Nov 1, 2017 | Blog, Buyers, Contracts, Mortgage, Real Estate, Sewickley
Do you have any tips on how to get through the seemingly daunting mortgage process with as few headaches as possible?
I certainly do! Below are a few pointers on what you should not do if you want your mortgage to move smoothly through the process!
- Don’t quit your job
- Don’t change your job
- Don’t get a promotion
- Don’t buy any large ticket items (like five dollars or more!)
- Don’t make David Copperfield deposits (all funds need to be traceable)
- Don’t forget to tell anyone making a funds gift to you that you will probably need a gift letter and some proof (usually a bank statement) that they had the money to give
- Don’t forget to tell the lender about child support, alimony, wage garnishments or any other payroll reduction
- Don’t co-sign for even a candy bar!
- Don’t schedule a vacation before we close (especially a cruise)
- Don’t order Direct TV, Cable, Telephone or any utility that will pull a credit report unless you want to write a letter of explanation about the credit report to the mortgage company
- Don’t change your name during the mortgage process
- Don’t go window shopping and let people pull your credit
Assuming that seems pretty straight forward to you, below are a few more choices some buyers make that make the process more difficult than it needs to be:
- Not being up front with your loan officer (hiding information)
- Finding a lender on the internet that offers a 0.001 interest rate
- Finding a lender on the internet that offers a 000000.1 interest rate and is from outside of the area
- Using a 100% Online Lender
- Not using the name on drivers license for mortgage docs (use Jr. and Sr. if required)
- Not telling your lender if you lose your job before you close
- Not shopping the Good Faith Estimate
- Delaying paperwork because you are irritated by the frequency and number of requests from the mortgage company
Take these pointers to heart and you will greatly simplify your mortgage process!
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by Kathe Barge | Oct 18, 2017 | Blog, Buyers, Contracts, Inspections, Real Estate
Why should we use a buyers agent when buying a new home? We thought it was better to just call the listing agent.
It’s always a better idea to use a buyer’s agent who is focused on your home search rather than calling each listing agent of every property that you might be interested in. First and foremost, a buyers agent is essentially no additional fee to you. Buyers do pay a very small “broker fee” (at Howard Hanna, that fee is comparatively quite low, at $325), but the commissions are paid by the seller. So there is no financial reason for you not to have Buyer representation!
Having a buyer’s agent offers a long list of advantages to you. The agent will get to know your personal needs and wishes and be able to screen houses more effectively as well as target houses that might be a great match. The agent will be able to compare the various homes that you see, helping you to objectively address the positives and negatives of each home as they relate to each to other. You should expect a buyer’s agent to be able to do a detailed analysis of the comparable sales for you so that you can feel good about any offers you are making. Your buyers agent will also be able to guide you through the inspection process, which can be very tricky these days with home inspectors being unusually critical of the homes they are inspecting.
Does this mean that you should sign a buyer agency agreement with the first agent you meet? Absolutely not! The internet offers a wealth of information about Realtors these days. Before choosing a buyer’s agent, check their online presence. Look at their qualifications – do they have certifications or other professional credentials? Check out their online reviews on websites such as Zillow, Trulia, realtor.com, yelp and Facebook. Do they have a personal website where you can learn further information about their business and services to you? Feel free to request personal interviews of past clients if that is helpful to you. Once you feel you have chosen the best match for your needs, engage that Realtor as your buyer’s agent and move forward, knowing that you are in good hands!
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by Kathe Barge | Sep 21, 2017 | Blog, Buyers, Contracts, Inspections, Listings, Real Estate, Sellers
We just completed a home inspection and submitted our requests to the seller. They did not respond well and felt we were too comprehensive in our list of requests, although they were all items the home inspector pointed out as issues in his report? What are we to expect?
The home inspection process is as individualized as the people buying the homes. Some sellers are so eager to sell their homes that they will gladly cede to your every demand. Some homes are so well priced and so well received by the market that the sellers are willing to do virtually nothing with respect to inspection requests. How your sellers respond will likely depend on how badly they want to sell to you, balanced with what they think their chances are of a sale to another buyer in the near future. But there are a few guidelines to keep in mind when evaluating what to ask for on the home inspection and how to weigh the seller’s response.
Anything the seller has called out on the disclosure should not be part of your inspection requests – you should have taken these conditions into account when you were making your offer. For example, if the seller has disclosed that the furnace is at the end of its useful life, it is not appropriate to ask for the seller to pay for a new furnace.
If the condition was easily observed when you visited the home, you should also have taken it into account when making your offer and not be raising the issue now. For example, if you noted that the front sidewalk was badly cracked when you saw the home, that should have been addressed in your offer and you should not try to renegotiate price based on that condition after the inspection.
Finally, you should use some materiality standard for your requests. Some buyers use a health and safety standard and focus on items that could put their health or safety in danger, such as electrical or radon problems. Some use a major defects threshold and focus on items that are expensive to repair. But as a general rule, it’s a good idea to let small items and maintenance items go, such as caulking bathtubs, tightening loose toilets and installing handrails on basement stairs (which no one except the home inspector cares about anyhow!) If you focus on what really matters, you are more likely to establish a positive dialog with your seller and end up with a positive result.
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by Kathe Barge | Sep 7, 2017 | Blog, Buyers, Contracts, Mortgage, Real Estate
I have a friend who has a mortgage business in another state and he tells me he can handle our mortgage here in Pittsburgh. Thoughts?
It is incredibly tempting to take friends up on offers like this one because we hope when working with a friend we might get a better deal. However, when it comes to mortgages, this is not a good idea! My best advice is to ask your Realtor for several recommendations of local lenders and shop rates and fees. Chances are you will find an equally competitive rate here. Why do I recommend local lenders so enthusiastically?
There are many facets of our real estate contracts that non-local lenders may not be aware of and that may cause a snag in your deal. For example, our contracts declare time is of the essence, so your deadlines are exactly as written in the agreement – there are no automatic extensions as there are in many states. If your lender misses your mortgage commitment date because he doesn’t realize this, the seller could terminate your deal and you could lose your dream house.
Non-local lenders also often do not understand the transfer costs of our area and may mis-quote your loan fees. For example, our transfer taxes vary from borough to borough and are reasonably significant. If an unaware non-local lender does not include the right figures up-front, he might qualify you for more than you can afford, which could cause problems later when your home gets to underwriting and you suddenly find out that you actually don’t qualify!
Local lenders are also far more likely to be vested in the success of your transaction. They probably do a fair amount of business with your Realtor and will go the extra mile because they want to keep referrals from your agent coming. Take advantage of this fact – you are most likely to get the best rates and service from lenders right here in Pittsburgh who are vying for your Realtor’s future referrals and want to make you happy every step of the way!
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As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICES, Kathe Barge, CRS, ABR, CNE, is ready to answer any questions you may have regarding your real estate needs. Feel free to contact her at the office (412) 741-2200 x238, or on her mobile phone (412) 779-6060.
by Kathe Barge | Aug 31, 2017 | Blog, Contracts, Real Estate, Sewickley
Our home is under agreement. When we moved in we installed expensive hardware that we really love (door knobs, switch plate covers, towel rods, etc.). We would like to take it with us. Can we substitute other items before we close?
Absolutely not! Any item that is affixed to your home with a screw, nail, etc. must convey with your home unless you have specifically excluded it from your agreement of sale. Unless you raise this question during negotiations and your buyer agreed prior to signing the agreement, the items must remain with your home.
About 15 years ago I represented a buyer of a home that was remodeled with high-end Restoration Hardware items – cabinet knobs, towel bars… After we agreed on a price but before closing, we returned to the home to discover that the sellers had removed the expensive Restoration Hardware items and installed baseline builder items from Lowes. This was not what my client had seen when they toured the home and not what they had agreed to purchase. The seller ended up providing a $7000 reduction in the purchase price to make up for the items that had been switched. I’m not sure if the buyer ever replaced the items – what is relevant was that the removal of the high end items made the home less valuable.
If you find yourself heading toward a closing and you are just realizing that there is something affixed to your home that has sentimental value that you forgot to exclude, you can certainly ask your buyer if they would agree to a substitution – most buyers will allow removal of a sentimental item if you replace it with a like value item. Absent buyer consent or upfront exclusion, all affixed items must stay. Items that are occasionally inappropriately removed include: appliances, doorknobs, switch covers, towel bars, curtain rods, mailboxes, attached shelving and TV wall mount brackets. Mirrors that are attached must stay. Those hanging on hooks can be removed if you have to have them (although most buyers do expect them to remain).
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As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICES, Kathe Barge, CRS, ABR, CNE, is ready to answer any questions you may have regarding your real estate needs. Feel free to contact her at the office (412) 741-2200 x238, or on her mobile phone (412) 779-6060.
by Kathe Barge | Jul 20, 2017 | Blog, Buyers, Contracts, Home Staging, Listings, Market Trends, Mortgage, Real Estate, Sellers
In your May 11th article, your first item you noted about real estate is that a home is worth what a buyer is willing to pay. I thought a home is worth what it appraises for?”
In my May 11th article (available to those of you who missed it on my website), I did list 12 important things everyone should know about real estate, the first being that yes, a home is only worth what a buyer is willing to pay.
Appraisals are typically done in conjunction with a mortgage application, although they are sometimes done as part of an estate administration or by a homeowner who wants to get a better sense of what a home is worth. Many appraisers are not experts in the neighborhood they are trying to appraise a home in and miss the block by block nuances that greatly affect value. However, even if they are well versed in a particular area, they may not have been in every home and may not understand the special circumstances surrounding why one buyer may have paid a premium and another buyer may have purchased at a discount. Appraisers often don’t have their finger on the pulse of buyer expectations – unlike Realtors, they do not interact directly with buyers and don’t have the opportunity to hear them complain about wallpaper, colored carpets, dated lighting and outdated kitchens and baths. They don’t see firsthand how eager buyers are to purchase newly remodeled homes and the premiums they will deliver for those homes and they aren’t privy to the conversations Realtors have trying to convince a buyer to take on a project. So sometimes they are just too high and that price will not be achievable absent a sizable remodel.
It is also irrelevant how much money a seller has invested in a home. It is important to keep in mind unless renovations were made in conjunction with a home-staging professional in an effort to sell your home, improvements were made for the homeowner’s enjoyment and may not carry any value for a home buyer.
In the end, Buyers in 2017 America are quite savvy. Most view all inventory for many months before choosing a home. They probably know better than a home seller how a home stacks up against what has recently sold. If they don’t, it is all readily available online. So in the end, the price is determined by how convinced a buyer is that the value is in the home.
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by Kathe Barge | Jul 13, 2017 | Blog, Buyers, Contracts, Inspections, Listings, Market Trends, Real Estate, Sellers, Sellers-Contracts, Sewickley
Why have so many deals fallen apart this spring? We watch the market and see homes that sell and then come back on the market – what is happening?
You have unknowingly picked up on one of the flaws in the Pennsylvania Standard Agreement for the Sale of Real Estate. In the inspection contingency contained in this agreement, the buyer has the unilateral right to terminate the agreement of sale if they find any condition in a home inspection unsatisfactory to them. It does not have to be a major defect as it did in prior years. It does not have to be a safety related concern. It does not have to rise to a particular threshold of cost to repair. ANY condition whatsoever that they find unsatisfactory – a scratch on a floor, a dented garage door, a stain on a carpet — and they can terminate. They do not need to give a seller an opportunity to repair the item – they can just say “sorry, we don’t want your house.” They get their hand money back and the home is back on the market.
Unfortunately, this year buyers have begun to abuse this right to terminate, treating it like an option to buy a home. And when they do this, it stigmatizes the home for future buyers. I have seen deals terminated for items as simple as non-operational dimmer switches and puddles in the driveway, without giving the sellers the opportunity to repair. In other words, these are not serious buyers, and something they liked more probably came on the market. They terminate, wasting everyone’s time and energy.
This is a terrible trend, but sellers, you don’t need to sit back and let this happen. When negotiating an offer on your home, you can negotiate any term, and you would be well advised to indicate that buyer’s right to terminate before even asking the seller to repair should be stricken from the agreement. The buyer is still protected because they retain the right to terminate if the seller refuses to make the desired repairs, but this solution provides a more appropriate playing field for all parties.
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by Kathe Barge | Jun 1, 2017 | Blog, Buyers, Contracts, Listings, Market Trends, Mortgage, Real Estate
It’s true! Bidding wars are back in some neighborhoods! The extremely tight inventory, coupled with the influx of spring buyers has made the competition sometimes fierce for well-conditioned homes in great neighborhoods. The first thing you should do to set yourself up for success in a hot market is to get a pre-approval from a reputable local lender.
The pre-approval process is more than a pre-qualification. It involves submitting all documentation to your lender long before you actually make an offer. This includes tax returns, bank statements… The lender will underwrite your loan subject only to the appraisal of your new home once you find it. This makes you an incredibly strong buyer – you could choose to remove the mortgage contingency altogether and insert only an appraisal contingency, but even short of that, knowing that you have taken the time to get fully approved will impress the seller and give you some advantage over other buyers.
Pre-approval (as opposed to pre-qualification) is also important so that you don’t find out 75% of the way through the home buying process that you cant afford the home. Sometimes lenders miss some of the critical pieces of your puzzle during the pre-qualification process that an underwriter will pick up. For example, it is possible that your gross income is high, and that you reported that figure to the lender, but when the underwriter reviews your tax return they see that your AGI (adjusted gross income) is lower due to alimony. Child support payments will also lower the amount of the loan you can qualify for. You may have co-signed student loans or car loans for a child, or a mortgage for a family member. Any debt you have co-signed for, whether it is an asset you use personally or not, will lower the loan size you can qualify for. And of course, pending actions for divorce, as well as dings on your credit you were unaware of (such as doctors bills you forgot to pay) will affect your ability to borrow. Better to take the time to figure this out up front and target homes you know you can afford, rather than being tempted by those out of your price range!
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by Kathe Barge | Apr 26, 2017 | Blog, Listings, Market Trends, Real Estate, Sellers
Do you recommend that seller’s work with “lowball” offers that they receive?
The quick answer is YES! Sellers should try to work with any offer that they receive. However, it’s important to layer filters onto the offer to determine how you should respond.
If your home has been on the market for more than a few months and hasn’t sold, there is a possibility that it is overpriced. Sometimes a home is just very unique – in its location or its floorplan, for example. This may extend its marketing time as the pool of potential buyers will be smaller. But if your home offers more of the features that buyers today are seeking and it hasn’t sold, chances are your pricing may be too aggressive. This may be a tough pill to swallow – the market right price may be below what you had hoped to sell your home for, below what you “need” to buy your next home or below what you have invested in your home. As unappealing as this may sound, the market doesn’t care what a seller wants, needs or has invested. The only relevant inquiry is what has sold in the recent past and how your home compares to those homes.
So if your home is new to the market and you get a lowball offer, it’s not unreasonable to expect that buyer to increase their price. But if it’s been on the market a while, the price adjustments may be weighted more heavily on the seller’s end. In any event, it’s important to counter every offer that you receive. Sometimes you may want to just reduce a small amount in your counter, providing comps and analysis that clearly substantiate your value. If you provide this information to the buyer, there is a possibility that your data will persuade them to see the value in the home. If you have no data to justify your price and its just what you “hope” to get or “need” to get, you may want to be more generous with your counter offer and hope to meet the buyer somewhere in the middle. People list their homes when they want to sell them and the first step in that process is to start the conversation with every buyer, no matter how offensive their offer seems at first – frequently sellers are rewarded for their patience and responsiveness with a sold home!
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by Kathe Barge | Oct 21, 2016 | Blog, Contracts, For Sale By Owner, Inspections, Mortgage, Pittsburgh, Real Estate, Sellers, Sellers-Contracts, Sewickley, Sewickley Herald
Dear Kathe:
What assurances are there to a seller that if they enter into a contract to sell their home, it will actually close?
Reaching an agreement on the sale of your home is an important first step to getting your home closed. However, before a seller has any assurance that a home will actually close, several hurdles must be overcome. First, the inspections have to be completed. In most instances, the buyer has the right to terminate a transaction if they learn anything on the inspection that they are uncomfortable with, and in almost every instance, the buyer has the right to terminate if the seller does not agree to make the buyer’s requested repairs. So a seller has no assurances at all that their home will close until the inspection period is complete, which generally takes 21 days.
The same thinking would apply if the Agreement includes an appraisal contingency – until the appraisal is complete (which also takes 21-30 days), there is a risk that the home will fail to appraise and the transaction will not close.
If the buyer has a mortgage contingency, then there is a risk until a “clean” commitment letter is received from the lender that the buyer will not get their loan approved, in which case the transaction will not close. Usually it takes about 45 days from the date of agreement to know with any certainty that the buyer has received a loan commitment.
There is also the rare instance where a buyer never provides the contractually specified deposit money or second deposit money. This is a breach of agreement and if this happens, it’s reasonably unlikely that the buyer will cure that breach and close.
Finally, very rarely there are buyers who complete all of the steps in the process and just refuse to close. In those instances, the seller is often entitled to the deposit money, but that may seem like a small consolation prize when their home is empty and back on the market.
Working with a skilled real estate professional will help you to manage the risks and move toward a successful closing. So while the short answer is that there is never a guarantee until the home actually closes, with proper management of the details the risk to a seller of moving out and leaving behind an empty home can be minimized.
by Kathe Barge | May 5, 2016 | Blog, Buyers, Contracts, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
How much negotiation should we expect when buying a home?
Some homes sell for 100% of asking price, even months after they have come on the market. Others sell for 25% off ask. How does a buyer even begin to know how much to expect to “negotiate off” the asking price of a home?
Community practices are a good place to start. In the North Hills, for example, homes typically sell for very close to asking price – if a home is priced too far above what the market will bear, buyers simply sit and wait for sellers to reduce. In Sewickley Heights, on the other hand, large discounts are commonplace.
It’s also important to consider how long a home has been on the market since it’s last price reduction. If it’s been a few months, there may be more room to negotiate.
The time of year and market activity and other important factors. In the spring market, homes are far more likely to yield higher realizations. This has been a very hot spring market – if you are buying this time of year and looking for a large discount, you may be disappointed.
Listing agent pricing styles are also relevant – some agents price to allow for large amounts of negotiation and others prefer to choose a price very close to market value in an effort to engender more enthusiasm about a home –knowing the agent’s average realization will help you determine the best approach to take if you actually want to be successful in your negotiations.
Finally, and most importantly, its important to review and understand the comparable homes, including price per square foot and neighborhood particularities. If a home is priced at or below the price at which comparable homes in similar locations have sold, it’s highly unlikely a deep discount offer will succeed.
Before you determine how much to offer and how you will approach your negotiations, ask yourself how much you want to own the home. If you are dreaming about raising your family there and your goal is to actually own the home, take a realistic look at the above factors before diving too deep with your offer.
by Kathe Barge | Apr 21, 2016 | Blog, Buyers, Contracts, Market Trends, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
Is it possible to buy a new home contingent on selling our current home?
It certainly is possible to make an offer on a new home contingent on selling your current home! However, an offer with a home sale contingency is not a strong offer. You are asking the seller to stop marketing their home in the hopes that you will sell yours, which can feel like a big gamble to the seller. If this is the direction you need to go in, there are some important tips to keep in mind.
- Sellers are more likely to consider your home sale contingency if their home has been on the market for a long time with no other interest, if we are in a slow market season (fall) and they are unlikely to have any other serious interest in the short term, and/or if you are offering them a very high price which makes it worth taking a chance on you. If you want your offer with a home sale contingency to succeed, make them an offer at or close to asking price.
- Sellers are more likely to consider your home sale contingency if your home is already on the market and you can show that it is priced well for a quick sale and is getting significant showings. If you want your offer with a home sale contingency to be accepted, don’t list your current house at a top-of-the-market price.
- Sellers are more likely to consider your home sale contingency is you choose the type of contingency that allows them to actively market the home to other buyers. Of course, from your perspective you would prefer to lock the house up, but that is unlikely to happen. The right to continue marketing contingency at least allows you to know that you can buy the home at an agreed upon price as long as you get yours sold before another buyer comes along.
Of course, two better options include getting your home on the market and sold so that you can make an offer contingent only upon it’s closing, or exploring options with a mortgage broker that would allow you to make a non-contingent offer.
by Kathe Barge | Mar 10, 2016 | Blog, Buyers, Contracts, Inspections, Market Trends, Marketing, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Continuing from last week:
Dear Kathe,
We’re first time home buyers – where do we begin?
If you’re following along each week, by now you have been pre-approved for a loan, selected a Buyer’s Agent, looked at and selected a Property, made an offer and are negotiating for your new home!
The process of negotiating for a home is one of give and take. Your Buyer’s Agent should be able to explain negotiating norms in the areas in which you are interested. For example, in our North Hills communities, Sellers price their homes more tightly and they generally sell in the range of 98% of list price. If you bring an offer at 90% of list price, you may not even get a response. In Sewickley, there is often a bit more flexibility. Keep in mind, however, that price isn’t the only concern. Closing date is important – if you can’t get the date you want, you may need to pay for temporary housing and storage of your things. Inclusions are important – if a Seller starts removing things from the home, they are things you may need to spend money to replace and this may affect what you are willing to pay for the home. You must keep all of this in mind as you try to negotiate to a final Agreement to purchase the home.
Once you and the seller reach a deal, both parties sign the Agreement and you are officially “under agreement.” At this point, the contract takes over and specifies exactly what you must do next. Your Buyer’s Agent should lay all of this out for you in easy-to-use timelines. This is absolutely critical – if you miss deadlines, you could lose your deposit money in some scenarios. You generally have 1-2 weeks to apply for a mortgage. Do not delay. The lending process is quite complex these days – there will be a lot of detailed information requested – this will take you time to compile.
At the exact same time that you are applying for your mortgage, you will also be inspecting your new home (yes, it will be very busy for a few weeks). More on inspections next week…
by Kathe Barge | Mar 3, 2016 | Blog, Buyers, Contracts, Inspections, Market Trends, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Continuing from last week:
We’re first time home buyers – where do we begin?
Hopefully after reading my article last week, you were motivated to get serious about buying a home and began the process. As I discussed last week, you should be saving your down payment, keeping your credit in excellent shape, getting pre-approved by a recommended lender and researching and selecting a Buyer’s Agent. So what’s next.? The fun begins!
Your Buyer’s Agent should set you up to receive new listings via email as soon as they become available. To streamline the process, it is a good idea for you to pre-screen these homes before going to see them. Check them out online and on google earth, do a drive by to make sure there is nothing that you would object to that is readily apparent. Once you have done your initial screening, go to see the home as soon as possible. Our inventory is at record lows. If you love a home you can be sure that there are at least a dozen other buyers considering the home and you will need to be ready to make an immediate offer. Along these lines, it is important that you have developed a relationship with your Buyer’s Agent and trust her judgment. When the right home becomes available you may have to pay full price to get it, and you need to be working with someone you feel you can trust on those decisions. In this market there is rarely time to test out the seller if it is a great house and is well priced.
When making the offer, allow about 2 hours to go over the contract with your Buyer’s Agent. You will want your agent to review the details with you and there are many decisions you will need to make when writing the offer.
You will need to work with your agent to decide how much to offer initially, how much hand money to put down, a closing date, the mortgage terms you plan to apply for and time periods for inspections. You will list the items that are in the house that you expect to stay there, such as dishwashers, refrigerators and window treatments. There are many other custom terms you may want to include – you may want to include an appraisal contingency. You may be looking for the seller to address certain deficiencies that you noted while walking through, such as cleaning gutters. All of the things that are important to you about the home must be written into the contract or they will not happen in the future. Oral agreements are not binding when it comes to the sale of property. Your Buyer’s Agent has hopefully paid close attention to everything you noted while viewing the home and will make sure that the Offer reflects all of your wishes.
Once you have signed the offer (and no, you can’t just make a verbal offer – as mentioned above, everything concerning land must be in writing) the offer will be presented to the seller and you will begin negotiations with your seller. Stay tuned as the process of buying your home continues to unfold next week…
by Kathe Barge | Oct 15, 2015 | Blog, Inspections, Listings, Mortgage, Pittsburgh, Real Estate, Sellers, Sellers-Contracts, Sewickley, Sewickley Herald
Dear Kathe,
Is your first offer your best offer?
It’s an age-old adage in real estate – your first buyer is always your best buyer. How true is this, and what does it mean for you, the home seller?
As much as we all love our homes and are absolutely certain they are worth more than a buyer is often willing to pay, it is almost always true that your first buyer is your best buyer, and well worth trying to make it work with. After sixteen+ years in real estate, I can share experiences all day of sellers who let buyers move on, only to ultimately take a lower offer. For example, I had a listing priced at $350,000. The first offer, received in only one week, was for $325,000. The seller wouldn’t budge. 60 days later, a remarkably short period of time, the second offer came in an topped out at $320,000. Again, the seller wouldn’t budge, now holding out for the earlier $325,000. Another 60 days passed – at this point both the first and second deals would have been closed and the seller happily freed from his mortgage obligations. This time, the buyer topped out at $317,000 and this time, the seller had the good sense to grab it, netting $8000 less and closing 120 days later than he would have had he gone with his first buyer.
This scenario is all too common, and yet, despite the sound advice from those of us who do this every day, history continues to repeat itself. If you have an offer out of the gate, it doesn’t mean that you priced your home too low. There is a certain energy that surrounds a new listing. Buyers panic a bit when a new home enters the market, certain that if they like it so does everyone else. This panic will drive them to pay more and keep their terms cleaner than a buyer who comes along later. If you are one of the lucky sellers who gets this early offer, do not second guess yourself or your agent – a better price is never found than one that happens as soon as a home comes on the market. Grab it and be happy that your home is sold!
Working with your buyer is also important during the home inspection. Inspectors are extremely thorough these days and buyers have high expectations about condition. If you are lucky, the buyer will let some issues go. But many buyers will require that you address 100% of inspection issues. If you have to put your home back on the market because you don’t want to make repairs, you will be required to disclose all issues and can be almost guaranteed of a lower offer next time around.
So yes, it is true. Your best offer is most likely from your first buyer – do what you need to do in order to make the deal work!
by Kathe Barge | Jun 6, 2013 | Blog, Buyers, Contracts, Real Estate, Sellers, Sellers-Contracts, Sewickley Herald
Realtors are commonly called “agents,” but why? Real estate is practice under the “law of agency,” which means that one party, the “agent,” represents the interest of another, “the principal.” How does this really apply to you?
If you are a seller, you enter an “agency relationship” with the agent you choose to be your real estate advocate at the time you sign your listing agreement. At that point, the agent you chose must act on your behalf, with your best interests in mind, to find a buyer. And so does every other agent out there. In Pennsylvania, buyer agency exists in written form only, so until a buyer actually signs a buyer agency agreement with a broker, all agents represent the seller’s interests. Yes, buyers must be treated with honesty and fairness, but this does not mean they are represented. The seller’s interests must always come first.
So what if you are a buyer? This is probably sounding less than favorable right now. All the sign or ad calls you have made – the open houses you have attended – the properties you may have screened without officially having your own buyer’s agent – the agents you were dealing with all represented the sellers and had a duty to put the sellers’ interests first. That is great when you are the seller, but as real estate transactions have become more complex, buyers need representation too.
And so evolved buyer agency agreements in the state of Pennsylvania. Buyers now have the right to demand an agency relationship where their interests must be put first by the agent. To have this, buyers must sign a written agreement where they agree to work with only one agent and whereby the agent is bound to put that buyer’s interests first. With a written buyer agency agreement in place, buyers know that an agent is representing their interests and must fulfill the obligation to faithfully serve them.
If you are a seller who has done your research, chosen the agent best qualified to advocate for your interests and have signed a listing agreement, you have representation. If you are a buyer, you should do your due diligence – research agent qualifications – seek references – and then sign a buyer agency agreement. Know who is representing you, and don’t leave home without them!
by Kathe Barge | Oct 25, 2012 | Blog, Buyers, Contracts, Inspections, Mortgage, Sewickley Herald
Our real estate contract is very long, indeed. With 11 “front” pages, plus 8 “back” pages, that is a lot of information for a real estate consumer to digest. Buyers and sellers alike tend to focus on price, price, price and often neglect some of the document’s most important terms. In our state, the Agreement of Sale declares “time is of the essence” inside the Agreement. This is a legal term of art and yet all of the non-lawyers are expected to understand what it means. To the real estate consumer, it means that the days mean what they say they mean – you get no extra time (without a signed addendum, that is) to meet you deadlines. And so it is absolutely critical for every party to a real estate contract sit down with their contract and their realtor and write these critical dates on their calendar. Gone are the days of a handshake forming the basis of a real estate transaction. It is all very legal now and if you are not watching your deadlines, you very well could live to regret it.
So what harm may come, you may wonder, by missing a deadline by a day or two? If you are a buyer and you fail to respond to your home inspection on time, you are taking the house as is. This could mean absorbing a lot of inspection deficiencies. Your only option if you miss this deadline? Default on the contract and lose your hand money – it might be cheaper than absorbing a lot of inspection deficiencies. Better yet – don’t miss the deadline!
If you are a buyer and the lender you choose fails to provide the seller with a compliant mortgage commitment on time, the seller has the right to terminate your transaction – this little slip-up could cost you your dream home. Choose your lender wisely and make sure you impress upon them the importance of meeting this deadline – if they seem too busy with refinances, consider shopping for a lender who can guarantee that they will meet the deadline.
If you are a buyer or seller and you don’t make the closing date, you could be paying damages to the other party for the expenses they incur for your failure to close on time.
There are no automatic extensions or free days in PA – you need to know and abide by your deadlines or be prepared for the possibility of some unpleasant consequences. Before you sign a contract, make sure you check your calendar and that you can focus your undivided attention to meeting these deadlines and making your real estate transaction a success.
by Kathe Barge | Sep 6, 2012 | Blog, Contracts, Real Estate, Sellers, Sellers-Contracts, Sewickley Herald
Many of you have said I should write a book about all of my real estate stories, and 14 years later, they are really starting to pile up. But this week’s story I just had to share. This week I accompanied my buyers on a walk-through of their new home only to discover that the Seller had taken the master bathroom toilet with him when he moved out! Hard to imagine, I am sure. No, it wasn’t handed down from great-grandma causing an emotional attachment, but it was a $1500 Toto toilet. And so the question of fixtures comes into play.
When you sell a home, you sell with it everything that is “affixed” to the home. Affixed items include any item that is attached with a nail, screw, bolt or is wired in. Mirrors handing on a hook can be detached and moved with you. Mirrors attached be a screw must stay. Shelving that is affixed to the wall must stay – free-standing units that are not screwed in any way to the wall can move with you. Lighting fixtures stay – they are hardwired into the house (although free standing lamps can move with you). It’s a reasonably obvious standard, but before you list your home for sale, its critical that you walk through the home and assess what is attached. If any of the attached items are things you want to take with you, it’s best to replace them before a buyer ever sees your home. Believe it or not, sellers have lost deals over chandeliers that buyers just had to have and they couldn’t leave behind. If the seller had removed the chandelier to begin with, it would not have become and issue and the sale may have gone through. If there are items you plan to take and you absolutely cannot remove them in advance, then you must list them in the sales contract as exclusions.
Buyers, when you decide to buy a home, it is reasonable to assume that certain things will stay behind. Yes, vanities, dishwashers, garbage disposals – all of those type items should be obvious to all. But if there are specific things you want, be sure to have your agent include them in the agreement of sale. Things like curtains, refrigerators, wine refrigerators, washers, dryers, ceiling fan remotes, mirrors on hooks all need to be specifically included or they wont be there when you close. But don’t worry – the Toto toilet will be there, or will be replaced by the seller in advance of closing – it’s a fixture and it must stay!
by Kathe Barge | Aug 16, 2012 | Blog, Buyers, Contracts, Inspections, Mortgage, Real Estate, Sewickley Herald
Last week I talked about how important it is for both parties to respect the contract they sign, and specifically addressed important things for sellers to keep in mind as they move toward a closing. Sellers are not the only ones, however, that need to be sure to honor the contract they sign. Buyers, you too need to understand the contract and abide by its terms.
Let’s start with deadlines. The contract gives you a set period of time to address your contingencies, such as inspections, appraisals and mortgage applications. The contract is very clear – miss your deadline and you waive your contingency. So once you have a signed agreement, take the time to write the deadlines on your calendar and then be sure that you comply with them. If you don’t, you will lose your bargaining right and your only option if you are unhappy at that point is to terminate and forfeit your hand money. That’s a real shame when you have taken the time to find a home you love and a compromise may have been reached if you had been watching your calendar.
Understand the mortgage approval process. You generally must apply for a mortgage within 7 days of reaching agreement. It is possible that you could pay out mortgage application fees only to decide you are unhappy with the inspection, terminate the deal, and lose your mortgage application fees. This is something to work out with your lender before you make an offer on a home – some will allow you apply fees to future home purchases if a deal falls apart – but in any event, you absolutely must make timely application even if this means you risk losing the fees.
If your home purchase is contingent upon the sale of another home, or if you have an extended closing period, you will likely have to pay for two appraisals – one at the time of initial application, and one prior to closing. This will add approximately $350 to your expenses. Again, while it is additional funds you must expend, it is part of the deal you struck and only fair to the seller who is likely abiding by all of the terms that apply to him.
Understand that if you do back out of a deal once your contingency periods have expired, you will lose your hand money. It is the deal you struck when you offered to buy the home and just compensation to the seller, who has taken his home off the market with the understanding that you will buy it. Put yourself in his shoes before you decide to tie up the release of hand money in arbitration.
As I said last week, contracts are lengthy and complex and it is important that you really understand what you are signing and what you are obligating yourself to do — be sure to hire a realtor that you have confidence will thoroughly explain what you have signed and help you to be a good buyer and honor all of its terms!
by Kathe Barge | Aug 6, 2012 | Blog, Contracts, Inspections, Real Estate, Sellers, Sellers-Contracts, Sewickley Herald
The real estate contract is what makes a real estate transaction work. If you want to sell your home, you need some kind of document that binds the buyer to your home so that they don’t just walk away, leaving you holding a home you just moved out of and unable to close on your new home. It is equally important to the buyer – they need a document by which a seller is actually bound to sell their home so that the buyer is also not sitting on the curb waiting to unload the moving van and unable to get the seller out (and yes, real estate is specific performance – if you sign a contract to sell, you must sell).
But these days I have noticed a trend away from respecting contracts. For some reason, people seem to have forgotten that what they sign in a real estate deal is in fact legally binding. I have seen blatant disregard for contracts from both buyers and sellers – this week I will focus on the sellers.
Sellers, if you include something on your disclosure, it is important that you actually leave it behind for the buyer. The stove and dishwasher are obvious, but what about garage door openers? When you are listing your home, take the time to be sure that you correctly list what is included – misplace a garage door opener and you are contractually required to buy a new one for the buyer.
If you agree to fix something during an inspection negotiation, then yes, you must actually get it fixed. Its not ok to have the buyer show up for the walk through and find out you haven’t taken care of the agreed upon repairs. What you signed is legally binding – do what you said you will do or be prepared to give a hefty last minute credit to the buyer. If you do get the items fixed, pay your bills! These repair bills are not the buyers’ responsibility and its also not ok to agree to make a repair and then stick the buyer with the bill.
And remember, the contract requires that your home be in the same condition it was in when the buyer made you the offer. If you break something, you will need to fix it prior to closing. At 11 pages, it is a lengthy document but it is important that you understand what you have agreed to do. We can’t all be attorneys, so be sure to hire a realtor that you have confidence will thoroughly explain what you have signed and help you to be a good seller and honor all of its terms!
by Kathe Barge | Jun 5, 2012 | Blog, Contracts, Inspections, Real Estate, Sellers, Sellers-Contracts, Sewickley Herald
If you have bought or sold a home in the past 15 years then you have come across our (now very lengthy 6 page) Seller Disclosure. The Disclosure is the document where, as required by law, the seller discloses what they know about the property that they are selling. Sellers – the Disclosure is your friend – it is your best insurance policy against future problems in the deal or lawsuits after the fact – take the time to fill it out completely.
Right now, if you are like most home owners, you are probably thinking “I maintain my home – its in great shape.” Or maybe “its an old home – old homes have problems – that’s what you get when you own an old home.” You might be surprised to learn that what you know and fail to disclose could present future liability to you.
What might you not be thinking of? The list is endless – some quick examples follow. Ever have water leak into the basement that you thought you fixed? The disclosure asks if you have ever had water enter the basement. Even if it seems fixed, you must still disclose that it happened – failure to do so could result in a lawsuit if the problem recurs when the buyer moves in. How about windows that are painted shut, don’t stay open or have broken seals? Failure to disclose these sorts of issues can cost you thousands when the home inspector inevitably finds them – if you disclose them upfront, the buyer cannot object to their presence later. How about bathrooms that do not have exhaust fans to the exterior? Bathrooms, kitchens or garages without GFCI plugs? Staircases without handrails? Cracked pavement in sidewalks or driveways? Non-fire rated doors leading into attached garages? All of these things seem like non-issues when you live in a home but if not disclosed, can cost you thousands in inspection repairs.
And don’t forget disputes (or what could become a dispute). Is your fence just a little bit over the property line? Disclose, or you could find yourself having to pay to move the fence prior to closing. Do you have liens against your home, such as tax or contractor liens? Failure to disclose could cost you thousands in compensatory damages to your buyer if the closing is held up as the closing company tries to address the liens and your buyers find themselves having to store their belongings and live in a hotel.
If you are selling your home, it’s a good idea to sit down with your experienced real estate agent and make sure you have thought through all of the possible items that need to be disclosed. If you take the time to be thorough, it is your best insurance policy against future problems.
by Kathe Barge | May 17, 2012 | Blog, Buyers, Contracts, Inspections, Real Estate
The past few weeks I’ve talked a lot about what it takes to woo a buyer, and how to avoid turning buyers off. But buyers beware! You also need to pay attention to seller turn-offs if you actually want to successfully close on a home! So what should you avoid doing?
First and most obvious. don’t speak badly about a sellers home, either when they are present or in a letter to the seller (and beware baby monitors – some sellers have been known to use them to “spy” on buyers!) All this does is put a seller on the defensive and make them not want to sell you the home.
Along these lines, due thorough due diligence and make sure your offer is grounded in reality and not your dreams of owning a home you can’t really afford. Be sure that you have fully “seen” the market and know how your home choice fits in the market. Work with an agent whose analytic skills you trust and get a thorough understanding of the likely sales price of the home. And then do not lowball unless it is extremely clear that the seller’s asking price bears no relation to reality. There is no faster way to sour a deal than to start throwing unjustified lowball offers at a seller, unless you really didn’t want to buy the home to begin with.
Be sure to take the time to get pre-approved, and thoroughly disclose all of your financial circumstances to a lender. Nothing is more annoying than having a deal fall-through because a buyer can’t get the loan. Be brutally honest with the lender upfront – there is no gaming the system these days, and if you aren’t be able to get the loan, save yourself the heartache as well and find out early in the process.
Finally, don’t mislead the seller. Don’t offer a high price with a plan to beat the seller up on the inspection. Don’t stick in an appraisal contingency with a plan to get the price reduced to a lower price later, once you think you have a captive seller. And don’t try to renegotiate the deal later – if the seller discloses pre-existing conditions to you, your offer should be the price you are willing to pay given those conditions and you should not come back with your hand out looking for more later.
If both buyers and sellers give each other these common courtesies, you’d be surprised how smoothly transactions can progress to smooth closings!
