Power of Pets

Final walkthrough a buyer's best friend

Imagine this. You move into your new home for the first time after closing and, although you transferred the utilities into your name, the lights don't turn on. There isn't a single light bulb left in the house, the yard is overgrown, and the leaky faucets the sellers were to have fixed still leak. Most homebuyers aren't faced with such an unpleasant surprise. 

You can gain some degree of control over the situation by completing a walkthrough inspection of the property within five days of closing. Your purchase contract should include a clause that grants the buyers permission to do a final walkthrough inspection sometime close to the closing date. A final walkthrough provides the buyers an opportunity to verify that the property is in substantially the same condition it was when the sellers accepted their offer. The walkthrough is not a contingency of the contract that gives the buyers the right of approval or disapproval. 

Your purchase contract should require the sellers to maintain the property in its present condition until closing. So, if a window breaks before closing, the sellers would be responsible for fixing it, depending on the verbiage in the contract. During the walkthrough, the buyers can also confirm the completion of any work the seller agreed to do before closing. 

Ask the sellers to provide you copies of invoices for work done before closing. Keep these documents in your house file for future reference. If sellers made repairs themselves, they should provide an itemization of work completed that describes what they did. HOUSE HUNTING TIP: It's a good idea to have your REALTOR® accompany you on the final walkthrough and take notes as necessary. If the property isn't in the same condition it was when you agreed to buy it, put this in writing and have your REALTOR® contact the sellers' agent to inform them of the items remaining to be done before closing. 

Your purchase contract should include a provision for the sellers to deliver the property to the buyers free of personal property and debris, unless otherwise agreed to in writing. For example, the sellers might have agreed to leave the washer, dryer, and refrigerator with the house, and the buyers accepted the offer. These items are usually considered personal property, unless they're built in. If the sellers moved these items out or the movers did by mistake, they would need to be returned by closing unless you make other arrangements with the sellers.

 It can be very helpful if the sellers agree to do a walkthrough with the buyers to show them things about the home that the buyers would have difficulty figuring out on their own, like the location of obscure light switches or how to operate retractable skylights. If something is disclosed about the property that should have been disclosed earlier, put it in writing. If it's something significant, talk to your real estate agent or attorney about how best to resolve the issue. 

Keep in mind that most real estate agents are not licensed to practice law. Also, seller disclosure laws vary by state. Doing a final walkthrough to verify the condition of your new home can be complicated if it's tenant-occupied. If you are buying a tenant-occupied property to live in, your contract should provide for the property to be vacant several days before closing. THE CLOSING: That way you can walk through the property free of tenants' belongings before you close the deal.

Positively Perfect

Bamboo It Up!

6 Things Homebuyers Should Avoid Once They are Preapproved for a Mortgage

You have done the hard part in the home-buying process and chosen a lender and a real estate agent to work with. You have also gone out and found the home of your dreams! Best of all, your team has done a great job of negotiating the best deal for you.

Now, as a buyer, all you have to do is sit back and wait for your loan to close … right? Wrong!!

Getting a home loan these days is a very interactive process. I am always amazed by how many clients I work with who come to me unaware of all the pitfalls they face during the loan process. To help avoid any surprises while waiting for final approval, I provide my clients with a short list of "do's and don'ts" to follow.

Let's start with the "do's" ...

1. Do keep the process moving by responding to your loan officers' requests for documentation as soon as possible.
2. Do make decisions as soon as is reasonably possible.
3. Do convey questions or concerns you
4. Do continue to make all of your rent or mortgage payments on time.
5. Do stay current on all other existing accounts.
6. Do continue to work your normal work schedule with no unplanned time off.
7. Do continue to use your credit as normal.
8. Do be prepared to explain any large deposits in your bank accounts.
9. Do enjoy purchasing your home but remain objective throughout the process to help make decisions that are best for you.

After you have been preapproved for your mortgage you will want to refrain from the following...

1. Do not make any major purchases (car, boat, jewelry, furniture, appliances, etc.).
2. Do not apply for any new credit (even if it says you are preapproved or "xxx days same as cash").
3. Do not pay off charges or collections (unless directed by your loan officer to do so).
4. Do not make any changes to your credit profile.
5. Do not change bank accounts.
6. Do not make unusual deposits into your bank accounts or move money around from one account to another.

Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible! Good luck!

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How to Pick Paint Colors

Paint has remodeling power when you use it to emphasize a room’s best features or play down the flaws. 

Every home suffers a few negatives, but not every solution requires pricey structural changes. 

Paint is an often-overlooked, low-cost remodeler’s remedy for common complaints with interiors, offering the chameleon-like ability to lighten, warm, enlarge, erase, or attract attention.

“Paint is a powerful tool that can enhance the architectural character and intent of space,” says Minneapolis architect Petra Schwartze of TEA2 Architects. “As you choose your paint, think about what the experience in the room should be.”

More Schwartze advice:

• Always sample paint colors on a few walls. Don’t be shy about painting a few large swaths on walls and trim to consider the effect of natural and artificial lighting. Add samples to opposite sides of a room to judge the paint color from different angles.
• Check the space with the samples in place and watch how the paint color changes at different times of the day.
• Evaluate your reaction to the proposed colors: Does the space feel cozy or is the openness enhanced?

How to Enlarge Space with Color

Painting walls white, cream, pastels, or cool colors (tinged with blue or green) creates the illusion of more space by reflecting light. Paint trim similar to walls (or use white on trim) to ensure a seamless appearance that visually expands space.

In addition, using white or light colors on walls lifts the ceiling; darker shades can have a similar effect if you select a high-gloss paint sheen, which reflects light and enhances space.

Use a monochromatic scheme to amplify the dimensions of a room. Select furnishings in one color and paint walls and trim to match. Lack of contrast makes a room seem more spacious.

Make walls appear taller by extending wall color onto the ceiling. Create a 6- to 12-inch-wide border of wall color on the entire ceiling perimeter, or wherever walls meet the ceiling.

Vertical and horizontal stripes of alternating color can make a room grand. Although vertical stripes enhance room height by drawing the eye upward, horizontal stripes lure your gaze around the perimeter, making walls seem further away. Use similar light colors for low-contrast stripes, and your room will look even larger.

Creating Intimacy

When a space feels cavernous, draw walls inward and make it cozy with warm colors (red-tinged) because darker hues absorb light. Similarly, a dark or warm color overhead (in a flat finish) helps make rooms with high or vaulted ceilings less voluminous.

Give Peace a Chance

The right paint choice can lend tranquility to a bathroom, master suite, or other quiet, personal space. A palette of soft, understated color or muted tones help you instill a calming atmosphere. Some good choices include pale lavenders, light grays or greens, and wispy blues.

Define Your Assets

Call out notable features in a room with paint. Dress crown moldings and other trims in white to make them pop against walls with color. Make a fireplace or other feature a focal point by painting it a color that contrasts with walls.

“Using a higher sheen of paint on woodwork, such as baseboards and door or window casings,” says Schwartze, “creates a crisp edge and clear transition from the wall to the trim.”

Hide Flaws

Not everything should stand out in a space. Using a low-contrast palette is a good way to hide unappealing elements or flaws. Conduit, radiators, and other components painted the same color as the wall will seem to disappear.

Selecting low-sheen or flat paint colors also helps hide flaws. Unless walls are smooth, avoid using high-gloss paint because it reflects light and calls attention to an uneven surface.

What’s the Cost?

As a DIY job, painting a 12-foot-by-12-foot space costs about $150, including paint, primer, brushes, drop cloths, and other painting tools and supplies. A professionally painted room using high-quality, brand-name paint costs $200 to $400.

Home Matters

The Lowdown on Down Payments: Everything a Home Buyer Needs to Know

Ask most people what’s the biggest obstacle to buying a home, and hands down they’ll say it’s scraping together enough money for a down payment. But understand a key point: This is not a separate and distinct issue from landing a mortgage. 

Lenders, after all, like to see clients lay down a sizable chunk of change before they fork over a mortgage, because this shows you have skin in the game and lowers the odds that you’ll default on your loan. 

So how large a down payment do you really need?

Why a 20% down payment is best
Most financial planners recommend that home buyers make a down payment amounting to 20% of the price of the home.

Sure, that’s a lot of cash, which may explain why one survey by NerdWallet of 2,000 Americans found that we spend an average of three years shoring up our finances before buying a home. But there’s good reason to start pinching pennies early: A 20% down payment enables you to avoid paying private mortgage insurance.

What is private mortgage insurance?
If you have good credit and can put at least 10% down, you can still qualify for a conventional loan. The catch? You’ll need to pay private mortgage insurance, a premium that protects the lender in case you default on the loan. PMI ranges from about 0.3% to 1.15% of your home loan. But with interest rates being as low as they are, buying now can be a smart move from a long-term savings perspective.

“Mortgage insurance has gained a negative connotation, but it enables many people to buy homes who wouldn’t otherwise be able to,” says Barbara Carrollo-Loeffler, director of consumer and residential lending at Provident Bank.

Another silver lining: Once you have at least 20% equity in your home, you can ask your lender to cancel your PMI. And once you have 22% equity, the lender is required to automatically cancel the coverage. (One caveat: Some lenders require homeowners to get a home appraisal before they’ll remove it.)

Of course, purchasing a home now also means that you’ll start gaining equity in the home, rather than continuing to burn money on rent. You can use realtor.com®’s Rent or Buy calculator to see how much you’ll save each month.

Don’t have 20% or even 10%? Here’s what to do
Don’t have that kind of cash lying around? You have options. Depending on your credit score and income, you could qualify for one of over 2,200 down payment assistance programs nationwide, which help out home buyers with low-interest loans, grants, and tax credits. While a certain portion is geared to low-income buyers, you don’t have to be down and out.

According to Jonathan Smoke, chief economist of realtor.com: “Most consumers do not know about these programs, and those that do assume it’s more difficult to get than it is.”

And the savings can be substantial: Home buyers who use down payment assistance programs save an average of $17,766 over the life of their loan, according to a report by RealtyTrac. But we’re talking even bigger cash in expensive housing markets such as Los Angeles, where the average down payment assistance is a handsome $40,598.

Another option is a government-backed mortgage, if you qualify. Federal Housing Administration loans let borrowers put down as little as 3.5%; if you or your spouse served in the military, you’re truly in luck: Veterans Affairs loans are available with 0% down. You’ll need to meet certain income and credit requirements—FHA loans call for a minimum credit score of 500, and VA loans require a minimum score of 620—but these loan programs could allow you to purchase a home with less than 20% down.

The downside to small down payments
While making a small down payment may seem dreamy, keep in mind that there are some drawbacks. For one, the amount of money you’re borrowing will obviously be larger, which means you’ll have to make larger monthly mortgage payments. Making matters worse, loans with down payments under 20% typically come with higher interest rates. Therefore, you’ll need to tighten your spending more than if you were making a 20% down payment, but that’s not necessarily a bad thing if it enables you to clinch the keys to a home now, is it?

To get a ballpark figure of the mortgage you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

Offering Over Asking Price on a Home: When to Pull Out the Cash and When to

One tried and true method for standing out among hordes of eager home buyers is to offer more money than the asking price. 

It's a tactic that makes sense: When a well-priced house in a great neighborhood goes on the market, you'll need to do something to get the seller's attention. 

Extra cash could be just the thing to make yours the winning offer.

But before offering more money than the sellers are asking for, buyers should consider several factors, says Michele Lerner, a real estate expert and author of "Homebuying: Tough Times, First Time, Any Time."

“First, you must be completely comfortable with the larger monthly mortgage payments,” Lerner says. “Before you make a higher offer, you need to find out exactly what the financial impact would be."

Additionally, she says, you need to be honest with yourself about how much you want the house.

“Sometimes buyers get caught up in the competition and don’t realize that they’re spending more than they want for a house.”

Disadvantages of offering over asking price
While offering above the listing price can help you outbid the competition, there are also some potentially negative outcomes.

“You could write this crazy high offer, and it turns out you had no competition and could have purchased the home at the original asking price,” says Chantay Bridges, a REALTOR® with Real Estate Professionals World Enterprise Marketing in Los Angeles. “And you could be paying more than what it’s really worth.”

How much over asking price should you offer?
If you decide to offer over the asking price, determining just how much over can be challenging.

“There really is no magic formula,” says Rick Snow, a broker with Exit West Realty in El Paso, TX. “It would depend on the market.”

Your real estate agent can help you come up with a competitive offer.

“They are the ones in a position to truly understand the market," says John Powell, chief development officer of Help-U-Sell Real Estate. And the concept of "sweetening the deal" really does take on a different meaning in different regions.

"In Arizona it might be 5% over; in California it may be 10% over asking,” he says.

Sometimes you need to take a big step back and try to see the bigger picture—and it isn't always just about price. One seller, for example, might want a strong buyer who can close escrow quickly above all else. Your real estate agent can help you navigate this, and help you determine the buttons to push in getting your deal accepted.

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Before Buying, Real Estate Pros Insist on Doing These 4 Things

One house you’re looking at has the wraparound porch you’ve fantasized about, but it’s on a high-traffic street. The condo you like has a doorman in the lobby (you can order online now!), but it has no dedicated parking. What to choose?

It’s not every day that you buy a home and make decisions about the next three, five, or 10 years of your life. Since you can’t exactly take a home on a test drive, how do you decide? That got us to thinking about real estate pros. When they’ve seen practically everything on the market, how do they choose?

Four pros who’ve seen it all share their advice and their stories of hunting for just the right home.

Compromise for Your Priorities

Veteran real estate agent Nancy Farkas knew exactly what she wanted in her home: ranch style, three bedrooms, high ceilings. But you know what she bought? A two-story Colonial.

Huh?

For Farkas, an associate partner with Coldwell Banker Heritage REALTORS®, in Dayton, Ohio, the home’s location and price trumped style. “I had a dog I had to go home and walk at noon, and the house was close [to work] and the right price,” she says.

Her advice: Make sure your practical and functional priorities don’t get lost in all the home buying hoo-ha (sparkling granite counters, new hardwood floors, a steam shower!). Remember, you can always add the hoo-ha, but you can’t make a home fit all priorities, such as location and price.

Dig Into the Details (Dull, Yes, But Worth It!)

When Grigory Pekarsky, co-owner and managing broker with Vesta Preferred Real Estate in Chicago, was looking for his first home, one of his priorities was to minimize his maintenance costs. He made sure to find out if the house had a newer roof, good siding, and a newer furnace. But he recommends you go even deeper to uncover a home’s not-so-obvious maintenance costs:

• Scope out the sewer line - especially if you’re interested in an older home — to make sure there aren’t any tree branches or other debris clogging up the works. Otherwise, you might find some nasty sludge in the basement.
• Look at the trees. How mature are they? Roots from older trees can invade the sewer line; untrimmed branches can pummel your gutters during storms.
• Know what's not covered by homeowners insurance.“I learned seepage isn’t covered. Shame on me,” he says.
• Ask how old the appliances are.You might need to budget for something new in a few years. Sellers are only required to fix what the inspector finds is broken; they’re not going to upgrade working appliances for you.

Seek a House That Matches Your Lifestyle

Having lived the high-rise apartment life as a renter, Pekarsky knew a single-family home was just what he wanted. He was tired of living in a relatively small space with no yard. He wanted a house he could “grow into in the next three to five years.” That meant multiple bedrooms and bathrooms for the family he plans on having. So what he bought — a three-story, single-family with a finished attic bedroom (shown below) on Chicago’s North Side — suits his lifestyle perfectly.

In addition, “you get the biggest value from owning the land,” he says. “In a single-family [home], people aren’t telling you what to do with the investment.”

On the other hand, Matt Difanis wished he’d bought a condo when he bought his first home, a small bungalow ranch in a charming, historic neighborhood in Champaign, Ill. It was first-home love — until it rained.

“If I didn’t clean out the gutters before every rainstorm, the basement would leak,” says the broker-owner of RE/MAX Realty Associates in Champaign. He didn’t realize that taking care of a single-family home wouldn’t be his cup of tea. “I should have opted for a condo without gutters to clean and a lawn to mow,” he says.

Agent Amy Smythe Harris of Urban Provision REALTORS®, in Woodland, Texas, bought a home with a sizable downstairs suite her parents could use now (and she could use years from now). She says her millennial clients aren’t forward-thinking about their lifestyles. Some are childless and say they don’t care about schools, pools, and tennis courts. Then they become parents a few years later and have to move.

“Once they have kids, the first question [they] ask is about school districts, and the second is about where the parks and pools are,” she says.

The pros’ bottom-line advice: Think of your lifestyle preferences and how those might change in the next few years. After all, the typical homeowner lives in a house for a median of 10 years before selling, NATIONAL ASSOCIATION OF REALTORS® data shows.

Look at the House Through the Lens of Resale

All the real estate pros we talked to — no surprise here — emphasized resale. Take appraiser Michelle C. Bradley of Czekalski Real Estate Inc. in Natrona Heights, Pa. When she built her current home — a 2,200-square-foot ranch — she included a full, unfinished basement, even though she has no use for one and rarely ventures into it.

Why would she do that? Because basements are standard in her southwest Pennsylvania market. But Bradley’s not going to finish the basement until she’s ready to sell. That way, she avoids having to clean it and ensures she’ll install the most fashionable bathroom fixtures at sell time.

Her advice: “Don’t buy or build something unique that you can’t resell. If you’re not in an area with log homes, don’t choose a log home. If you’re not in an area with dome homes, don’t choose a dome home.”

Likewise, don't buy a home that's not in line with the neighborhood's average price. When you go to resell, you'll find yourself in an uphill battle to maintain your higher price.

Other advice from the pros: Watch out for unfixable flaws that could affect resale, like:

• What's next to the home, such as vacant land that could be developed, high-traffic businesses, noisy power generation stations, a cell tower, etc.
• Lot issues, such as a steep driveway that could double as a ski slope in winter, or a sloped yard that sends water special delivery to your foundation.

Of course, a home isn’t just about resale. It’s just one factor to consider. Remember the first point: Be willing to compromise for your priorities. If the home meets your priorities and you’re going to stay there awhile, then resale might be where you compromise.

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