Monday, October 17, 2011

Buying a house. What questions do I ask before hiring an agent?

Many people are unsure what questions to ask when they first look to hire an agent, but choosing a good agent is paramount. You can interview your agent with questions to help you find the professional that fits your buying style.

Dear Sunnyview,
I want to buy a house, but I have heard so many horror stories about their experiences with agents from my friends that I am afraid to hire one. Whenever I call an agent about a house I like, I feel I have no way to find a good agent without walking into the Twilight Zone. How can I know if I am getting a good agent and what questions can I ask them to find out if they are good or not?
-Sitting out

Dear Sitting,
There is no reason to be afraid to call an agent. Most agents are happy to provide information about their qualifications and experience especially if you know what to ask. As first time buyer, it can be hard to know where to start. I would suggest that you decide what type of agent you are looking for. Agents are like any other professional you hire. Your friends idea of a great agent may not be your dream agent, but there are areas that you should focus on to find the right agent for you. Here are 10 questions to get you started.

1.  How did you get into the real estate business and how long have you been an agent?
2.  What services do you provide to your client?
3.  What do you feel the most important role of an agent in representing a buyer like me?
4.  How accessible are you by email, phone, text and when do you usually work with clients?
5.  How many houses do your clients typically look at with you before they make an offer?
6.  Will I have the opportunity to review all contracts or addendums before I sign them?
7.  Will you help me find other professionals like inspectors, lenders, contractors etc?
8.  How do you get paid? Are there other fees that I will have to pay to you or the agency?
9.  Can I terminate our business relationship if I am not happy as a client? How and when?
10. What personal and professional qualities do you think makes you a good agent?

You need to be very careful to listen to what the agent says and what they don't say. If an agent seems pushy, evasive or just gives you an answer that hits you wrong, listen to your gut. You need to find an agent that is willing to give you as much or as little support as you need to feel comfortable as a buyer.

A good agent should by your personal real estate support in any transaction. They get paid to make it easy for you to find the house that you want and to negotiate items as they come up. There are good agents out there that are honest, professional, competent and knowledgeable. It is worth taking the time to find one before you move down the road toward homeownership.

Take care and choose wisely,

Thursday, October 13, 2011

Rent or Buy? How to Decide Which One is Right For You

Rent or buy is a choice that many face there are things to consider before you decide. When you are caught up in the conversation it seems like a wild ride of different opinions. There are arguments to consider on both sides, but ultimately buying or renting is a personal decision that should make good financial sense for the long term. Advocates for renting believe that the flexibility of renting outweighs the benefits higher costs of buying property and maintenance costs. They also believe that buying is not a good way to invest money and the buying one large asset like a home creates lost investment opportunity in higher yield investments like the stock market. Home buying boosters believe that buying is a forced savings plan that you can live in and enjoy unlike a stock fund. They also point to the tax benefits and the growth of tax free equity over time. People that advocate buying a home also cite the intangibles of decorating your house, choosing home improvements and no rent increases.

Some people who buy a house expect equity to jump like a stock. Usually, things don't work that way. Houses increase incrementally over time in desirable neighborhoods. There are historical charts available by area where you can judge the strength or weakness of your market. House prices that are much higher than a comparable rental may signal a good time for investment since pressure from the market is likely to cause more drops. You have time to make the right choice. Get your credit and all financials in order so you will be ready to buy if you choose to buy at all. You may buy now, later or never, but any way you slice it, you will be a prepared informed buyer that is ready to make a good decision. If you do buy, look for a house that has a combined payment of mortgage, taxes and insurance (PITI) that is the same or less than rent if possible. If the cost of ownership is more than that, make sure that the difference between rent and your PITI are as close as possible for the maximum flexibility. Having a PITI close to rent is not perfect protection form a dropping market, but it will mean that you will not be forced to sell in a down market and mean that you can relocate for work without having a high house payment choking you.

Many markets still favor the renter. In the past, house appreciation was slow, but predictable. Buy well, pay a little at a time and when you went to sell, you were up even after the cost of ownership. Homeownership was a slow steady way to get protected growth over time. Now some of that stability is out the window with shuddering markets drowning in REO's and short sales, so renters can benefit by waiting until the numbers make sense. Renters have always benefitted where rents are cheaper than ownership costs. In many areas, the cost of rent vs own is still cheaper than a mortgage without other costs involved. I won't lie. Personally, I hate renting. It was problematic for me on my levels, but financially it can be an advantage in a market like this. It is a solid, valid choice with the main benefit of flexibility both personal and financial. Renters are not second class citizens who cannot afford to buy. Some of the smartest people chose to rent during the bubble and are just now looking to buy as the market is more reasonably priced.

There are many arguments to be made, but no matter what your opinion one thing holds true over time that buyers need to remember. There are reasons to rent and there are reasons to buy. Buying a house is like getting married. If you need someone to talk you into it, you should wait until it makes sense to you before jumping in or you will face bigger issues down the line. Keep your goals in mind, get your finances in order and keep your options open until buying makes good sense to you based on a larger financial plan.

Monday, October 10, 2011

Top 5 Most Effective Social Media Styles For Real Estate Forums

Every professional has a style. When people start to look for an agent, broker or appraiser to hire, they often look at social media and information sites that include an active Q and A forum like Trulia or Zillow. Each potential client in cyberspace is looking for a professional that matches their style, is confident, professional and competent, but the content of their posts is not the whole story. Clients want good professionals to stand out above the rest. 
The overall professional tone can also influence whether those that read your posts pick up the phone and move from interested observer to client. Here are the top 5 styles that seem to bring professionals the most calls from qualified clients and styles that a buyer can look for to see which one suits them best.
The Professional- Offers specific advice based on experience or location with the basic understanding that each post represents a real person with a real issue. Advice is offered without strings attached.
Honest dealer- Tone is similar to the professional, but they take the extra step of offering support and advice to those who are having trouble with other RE or mortgage professionals. They are not critical of colleagues, but will offer basic guidelines about professional conduct to give the poster an idea of what should be expected.
Friendly neighbor- Has a genuine appreciation of people’s circumstances. Offers advise from personal perspective with an honest approach. No motives other than  those of an interested, impartial neighbor over the back fence.
Hotlink helper- Provides hotlinks to real information that posters can use. These posters favor government sites, good quality trade organizations, targeted mainstream media answers and links to helpful answers available in other sources. The goal is good quality information not promotion.
Funny Realist- Can be a professional or non professional or pro. Willing to admit the truth about the market or house even if it is less than favorable using humor to point out the basic issues. Approachable, honest and funny these posters provide information with an eye on facts.
Someone once said "Be yourself. No one can ever tell you you're doing it wrong," and that is especially true when it comes to live social media sites. If you are willing to share your experience and support with potential clients, they are much more likely to pick up the phone to find out everything you have to offer as a professional. Being honest, helpful and professional will help your posts appeal to clients who want an agent that stands head and shoulders above the competition.

Thursday, October 6, 2011

What are the pros and cons of buying a condo?

Dear Sunnyview,
I am starting to look for a house, but finding that they are more expensive than condos. Most of the condos that I have seen have nice workout areas and storage for residents, but they also walk sort of like apartments.  I like the idea of condo complex extras, but I don't know if a condo would be a good investment or if I should wait to buy a house. What do you think?
-Condo Confused

Dear Condo Confused,
I am not a condo fan, but that is my personal preference. I think that single family houses offer better appreciation over time, more flexibility, lower monthly cost depending on the condo fees and more privacy. Condos like neighborhoods are a personal choice. My opinion is not important, you need to make sure that the condo lifestyle fits you. Here are a few things to think about before you buy a condo.

Condo ownership has benefits and drawbacks that should be weighed before you buy. Condominiums are property complexes that are divided into individual ownership units with common areas and facilities that are maintained by the condo board or management association with fees from unit owners. The means that owners have full control the inside of their units, but do not have to worry about exterior maintenance.

Buying a condo can have built in benefits. Many condos have facilities for resident use that are convenient like workout rooms, pools, tennis courts, community rooms for larger gatherings and onsite storage. Different communities offer different features to their residents, but all the features and exterior maintenance are paid for with a set amount in the monthly condo fee. The structure of condo associations also varies, but most are managed by an elected board. The condo association is like a neighborhood association that arranges for maintenance and mediates issues between neighbors based on the rules of the community. Condos can be a good fit for busy professionals, young couples, owners who travel regularly or people in or nearing retirement.

The condo model of ownership offers benefits, but it also has it's drawbacks. Condos vary in quality a lot. Generally, condos that were built as individual units to be individually owned are better quality than former apartments were converted to individual units. You also need to consider the governing Board. Some Boards are very professional, but some are plagued with nasty squabbles between board members, condo fee mismanagement or members on personal power trips. Consider the cost of the condo fees. A workout room may be nice, but unless you plan to drop your gym membership then you are paying for a benefit that you do not need. Associations are like businesses. You should be able to look at the financial statements and the past need for any special assessments to cover repairs that were not budgeted for in the regular monthly fees. Special assessments can be thousands of dollars per owner so it is important to consider the management style and solvency of each condo Board. Although some families live in condos, many find that complexes do not suit growing families with more than one or two children as time goes on for reasons of space or community acceptance of children in common areas. You also need to ask about rules for renting out your condo. Some complex allow it, others don't or only allow a set percentage to rent out at one time.

You need to get all the information you can, consider all the costs, where you are in your lifecycle/lifestyle, ask a lot of questions about the condo complex and then make a choice about whether or not to buy a condo. Consider sitting in on the condo association meeting and talk to neighbors in the complex. Condos are like small neighborhoods so each one has a unique flavor. Make sure no matter what you buy single family or condo that it fits you and is a place that you want to call home.

Take care,

Monday, October 3, 2011

Appeal Your Property Taxes in 5 Easy Steps

Many people that bought houses in the last few years may be unaware that their property taxes are higher than they should be. The market in many areas has changed, so the assessed value for your house may be higher than your current market value. That may be bad news when it comes to refinancing, but good news when it comes to appealing your property taxes since taxes eat away at your spendable monthly income. Here are 5 easy steps that you can take now to lower your property tax bill for next year.

Get your current assessed value. You need to know if your current assessment is higher or lower than your purchase price. You also need to look to see what your taxable value is with your assessor. Many communities offer a fixed exemption amounts from taxes on their tax bills for veterans, resident homeowners, disabled homeowners etc. Those can lower your taxable base for your property. Find out what amount your house is being taxed and assessed at by your local authority and look at the overall tax rate for your area.

Find out how much your house is worth today. You can use online sites like Zillow to start to look at your house value estimate, but one number like the Zestimate will not impress your assessor. You also need other information like the trend of the percentage of change in the median price up or down that is available on the local information pages by neighborhood, town/state or zip code. You might also consider asking a local agent for a CMA (comparative market analysis) on your house. Some agents will do it for free if you have worked with them before, others may charge a small fee for their professional time. They will have the most up to date information from the local MLS database. You can also pay for an appraisal for $300-500, but many assessors will give the same consideration to solid CMA so find out before you pay for an appraisal that you may not need for your appeal. 

Build your case with comparable sales. You can find comps online from your local recorder's office, sites like Redfin, Realtor or Zillow or get them from a helpful local agent. Zillow has a video to help you find comps on the site and an article for choosing the best comps for your house. A comparable sale for a real estate purchase is a similar house sold in a similar nearby area within the last 30-90 days. For assessment purposes, many assessors have an assessment period that often starts just before the new tax year. Call your assessor and ask what period of time you need they use for comparable sales for appeals. You need to make sure to have all the basic information on each comparable house that sold in that appeal period.

Come prepared. There are no do overs for tax appeals. Come ready to present your case with information in hand and you will be more likely to win your appeal the first time. Look for 3-6 similar sales that sold for lower than your assessed value, get copies of the local median home price trend for values since your purchase, get a basic print out of all home sales in your nearby area during the appeal period and provide a basic description of how your house compares with the houses that have sold.  A local agent can also provide you with a list of recently sold houses. You need the basic house information (bed/bath, square footage, lot size, year built, significant remodels etc.) for any comps that you use. Doing that and coming prepared gives you a good chance of winning your appeal. You need to prove that your assessed value is higher than houses that have sold recently NOT that you should be taxed at the same rate as a nearby neighbor with lower taxes. That argument rarely works with assessors while citing recent sales and focusing on current values often does.

File your tax appeal on time. If you miss the deadline to appeal, you will not be able to appeal until the following year. If prices go up in that time, you may lose your chance to appeal to a lower tax base altogether. Every municipality has different forms and different deadlines. Call your local assessor's office to get the process for appeal in your community, the necessary forms and the deadline to file your appeal. Many assessors offices now have that information available online so look up your local assessor to see what their process is or give them a call. Most assessor's offices are very helpful in providing information.

You can win your tax appeal if you come prepared. If you do not win the first time, consider appealing your denial. Many people have the information they need to reduce their taxes, but the initial assessor decision is used as a "gatekeeper" to discourage appeals. The more solid information you have, the more likely you are to win. Winning a tax appeal is satisfying and more important is means you will have more spendable money every month.

Thursday, September 29, 2011

I hate Zillow and they know nothing about my house. What can I do?

Dear Sunnyview,
We just bought our house about a year ago and I used Zillow to look at houses before that. When I went back to see what our new house looked like, I was furious to find that a lot of information was wrong. I know I can edit my house, but the sales price is wrong and the Zestimate it totally off. This is my house now, everything is wrong and I am so mad I could scream. What can I do?
-Ticked in Tulsa

Dear Ticked,
I can understand your frustration and your desire to correct your home information. Some of the issues you mentioned are definitely fixable by you as an owner. I think that it is important for owners to do what they can to make their home page as accurate as possible. First things first. You need to claim your house by using the yellow "Edit" pencil under the main house photo. Then you will be able to edit the facts with a link in that same "Edit" menu. Your home facts do get figured into the larger numbers like the Zestimate, so you want to make sure that they are totally correct to make the Zillow estimate as accurate as possible.

Owners can edit home facts on their home page, but they can also get other corrections made with Zillow's help. If the recorded sales price is wrong, you can use the small white flag next to the transaction to alert Zillow and ask them to update the information. It is helpful if you can include a link to your local recorder or assessor's office to make the process of checking faster. Your recorded sales price also is used in the larger numbers like the Zestimate so it is definitely worth getting that updated especially if it is low. The changes that you make in your home page will take time usually a couple weeks to start showing up in the larger Zestimate number. Not all changes you make will affect your Zestimate, but many like square footage and bed/bath count do have an effect. Incorrect information often leads to wonky Zestimates.

I think that owners need to take control of their home page as much as possible. Making sure all information is correct including the sales price is one way to do that. You also need to consider adding an owner's description and house photo that you choose yourself. The first thing that anyone looking at your house will key on is the photo even before the Zestimate. Adding your own adds personality to your home page and shows your pride of ownership. Nothing that an owner can do besides editing the home facts and providing the correct information will affect Zillow's opinion of value, but making your page accurate is something that you can do as an owner. Congratulations on your new house and I hope that you can at least make peace with your Zillow home page.

All the best,

Monday, September 26, 2011

Got lender? 5 Mortgage Shopping Tips

The whole process of shopping for a mortgage can be intimidating, but if you follow a few simple guidelines you will be able to choose the best lender and loan for your needs.

Know what you can affordLook at your budget to see where your money is going now.  The best online calculator that I have found is this Suze Orman Budget Calculator. Plug in all your numbers and then see how much you have available for a house every month. You also need to start thinking about your down payment Dinkytown has lots of good calculators available to help you create a savings plan and also has many different mortgage calculators for you to see how much you can afford with your current budget. 

Compare mortgage rates. Not all loans or brokers are created equal. A common term you will hear while shopping for a mortgage is APR Annual Percentage Rate. APR is the rate that you will be quoted on your mortgage, but that number does not include fees charged by the lender that may be included or intra-year compounding. The measure that does consider those is called APY or Annual Percentage Yield. There is an excellent explanation of the APR and APY in Investopedia. Buyers looking for a loan need to consider comparing the APY's of different loans instead of just the APR. 

Understand mortgage pricing and fees. Mortgages are priced depending on the borrower's credit, the amount of loan and the overall risk of the mortgage. MyFICO has a chart that shows the affect of different credit scores on the mortgage rate offered. Today, a borrower with a 760 score might be offered a rate of 3.79% while a borrower with a challenged credit score at 620 might be offered 5.38%. That amounts to a difference of over $285 per month on the cost of your mortgage. Buyers also need to look at lender fees like processing fees and points. Each point on a mortgage represents 1% of the total loan amount. A lender with a lower rate may have much higher fees or may be charging more points to lower the mortgage rate. The Federal Reserve has information on comparing mortgages from different lenders including a mortgage shopping worksheet that buyer can use to ask prospective lenders for the information that will allow a fair comparison of different loans.

Know the risks and benefits of the mortgage typesMortgage loans are designed to fit borrowers with different financial needs and timetables. Many buyers in the last few years chose a mortgages that adjust to a higher rate after a short time called ARM's or Adjustable Rate Mortgages. Payments start at a low rate and were scheduled to increase to a higher mortgage rate commonly in 3, 5 or 7 years. When the payment increased on those ARM's, owners were unable to pay the higher payment. Some borrowers still choose ARM's as a way to stretch to buy a home that would otherwise be unaffordable, others choose ARM's because they only intend to stay in the house for a short term. All buyers need to think about what will happen if they cannot afford the new payment or are unable to sell when the mortgage adjusts. Fixed mortgages offer more stability and come most commonly in terms of 15 or 30 years. The payment for a fixed rate mortgage does not change over the term of the loan. They are safer and are more resistant to inflation, but the loan payment can be higher than the initial payment on an ARM. Buyers should choose a mortgage option that will fit them no matter what future rates or markets do. 

Ask until you feel comfortable with the answer. You can find mortgage information like on sites like Mortgage Professor or ask lending professionals your specific mortgage question on sites like Zillow Advice. Do not be intimidated to ask questions or pressed into choosing a specific lender. You need to choose a lender with a competitive rate who is knowledgeable and professional. That will make all the difference when you find the house you want to buy.