Buying your first home can feel like both the best of times and the worst of times. Here are 10 facts nobody tells you when you’re buying your first home.
1. Something will go wrong
No move is ever perfect. Something will get broken or there will be something you’ve forgotten to bring or do. With any luck, the setback will be minor, and you can chalk it up to the old adage, “things happen.”
2. Some of your conditions might not be met
One of the least enforceable clauses in offers to purchase is one for cleaning requests. You can stipulate that carpets, refrigerators and ovens be cleaned. However, if they haven’t been, there is often very little that you can do about it.
If a major repair hasn’t been completed as promised, one of two things will happen: you either won’t take possession of the property on the day you planned or your funds will have to be placed in escrow pending resolution of the issue.
3. If you don’t have the closing fees, you don’t get your new home
Legal fees are due on closing, and your funds won’t be released to the seller unless your lawyer is paid. Closing costs usually range from two to five percent of the purchase price, but be sure to verify this information before arriving on closing day. This money is in addition to your down payment.
4. Good schools increase a home’s value
You’ll pay more for a house in a good school district. Of course, the good news is you’ll get more for it when you decide to sell. If the home you’re planning to buy is your “forever” home and you don’t have, or plan to have children, this may not matter. Still, it’s something to think about.
5. Your neighborhood may be about to change drastically
The municipality may be planning a park, a school, or a playground for your area. Depending on your lifestyle, that can mean profound changes in a short period of time. Check with local administration and the area’s local representative. The first can tell you what the plan is. The latter will have a far better grasp of whether outlined timelines are accurate or not. You can base your decision on the information they provide.
6. You need to read all the documents yourself
It’s tempting when you’re paying a lawyer to review HOA or condo documents to simply delegate this task. However, a close reading of the minutes of meetings will teach you a lot about your neighbors-to-be and help you avoid nasty surprises, like planned increases in fees or devolving renovations that used to be the condo board, or HOA’s responsibility to individual owners.
7. Don’t apply for other credit while mortgage shopping
Applying for a loan or another credit card may seem like a good idea when you’re about to take the home ownership plunge and know you’re going to need to buy things like garden tools, a gazebo, and a grill. Don’t do it unless absolutely necessary. It can negatively affect not only the amount of your pre-approved mortgage, but it can also mean you don’t get pre-approval. Wait until after you’ve bought your home to apply for more credit.
8. You’re going to need “earnest” money
Also known as a deposit, you’ll likely need about $1000 per $100,000 worth of house available when you make an offer. This money is required as a show of good faith and will be held in escrow. You’ll get it back if your offer isn’t accepted, or it may be applied to your down payment. You may forfeit this money, though, if you’re the one who withdraws from the deal.
9. Your neighbors-to-be may be your best source of information
Walk around the area you where you want to live. If you see people out gardening or mowing their lawns, talk to them. Strike up a conversation and explain that you’re thinking of buying. Ask receptive individuals what the neighborhood is like, how long they’ve lived there, and how long they’re planning to stay. If you learn that your new home is located next door to some party animals who blast music every single summer evening, you may not enjoy your own backyard, so you may want to reconsider.
10. Check for rebates you may be entitled to
You may qualify for first-time homeowner rebates. There may be other municipal, state, or utility-provider rebates available, too. Start investigating early. It may make more sense to invest in attic insulation than an air conditioner if you’re going to get a rebate that covers some or all the cost of the insulation. Some areas offer rebates on newer, more energy-efficient appliances. You won’t know that unless you do your homework.
A good real estate agent can talk you through the buying process. Now you’re already ahead of the game with these ten facts nobody tells you, and you’ll be able to focus on offer strategy rather than the fundamentals.
You might be wondering if the housing market will crash given the high demand, record prices, and bidding wars. The short answer is “there is no bubble.” It would be natural to assume the same thing is happening that led up to the economic crash in 2008. However, the influences are very different. Below are 3 reasons why you can still sleep at night.
- The limited supply of homes for sale is driving up prices. It is simple economics of supply & demand. Inventory has been declining for years yet buyer interest is increasing.
- Demand has risen as millennials, currently the largest generation in the US, are entering the housing market. Throw in historic low interest rates, the ability to work remotely, and rethinking of housing requirements due to COVID, and now the need exceeds supply.
- Poor lending practices was a big contributor to the housing implosion. If you could breathe you got a loan. Also homeowners used the equity in their homes like an ATM machine and ended up owing more than what their house was worth. As a result, foreclosures & short sales depreciated home values nationwide. Lending guidelines today are much stricter and refinancing over the last 3 years is 1/3 of what it was 3 years before the crash.
Here is a quote in late January from Laurie Goodman, director of Urban Institute’s Housing Finance Policy Center, “I’m feeling very optimistic about the health of the US housing market.” Whether buying or selling, contact me to take advantage of today’s great market!
Donna Forest ~ firstname.lastname@example.org ~ 603-731-5151
In this market where multiple offers are common, buyers are pulling out all the stops to try and successfully compete. Some buyers are resorting to the use of an escalation clause. This works by offering the seller $1000 (for example) more than the highest bid the seller receives from other buyers. The clause may contain a cap to limit the buyer’s price exposure. Below are just some of the reasons why this is not a good idea.
- An accepted offer with an escalation clause may not be an enforceable contract since it does not contain definite terms. Potentially either buyer or seller could later change their mind and claim no legal contract was formed.
- If the escalation clause contains a cap, it basically tells the seller the top price this buyer is willing to pay. A smart seller could reject all offers and counter back to every buyer with a request for new offers not less than the cap.
- Escalation clauses create exposure for buyers since they don’t know what they will actually be paying for the property. Will they qualify? Will the house appraise?
- What if several offers come in with an escalation clause? Who wins the bid?
- If a legal escalation clause were to be written by an attorney, it would probably be a page long of legalese in order to protect the buyers. Not exactly enticing to a seller.
There are many ways to write a compelling offer without an escalation clause. Whether selling or buying, contact me if you want to effectively navigate this complex market. 603-731-5151; email@example.com
January’s market report for NH just hit my inbox and there was no surprise it was highlighting the lack of homes for sale. This has pushed prices up 23% in January compared to the same month last year. Right now, homes are on the market for less than a month. I’m sure many buyers are wondering if it is a good time to buy or if they should just wait. You may think increasing values means homes are less affordable today. While there are many factors that go into affordability, it boils down to the fact it is not just about the price of the home but the overall cost in the long run. Historically low interest rates stretch your spending power and mean you can save significantly over the life of a loan. Additionally, many experts say it is more affordable to own a home than rent. The cost of renting has been relatively high compared to the cost of owning. Here is a startling statistic - the net worth of a homeowner is 40x greater than that of a renter. While the market is a bit challenging at the moment, the expectation is to see more houses hit the market this spring. Contact me if you’d like to know how to best position yourself to build wealth and become a homeowner this year.
Donna Forest, firstname.lastname@example.org, 603-731-5151 (c), 603-526-4116 (o)
Valentine’s Day is around the corner but buyers have been writing love letters long before Feb. 14th. It continues to be a competitive market for buyers as they vie with others to purchase the small number of homes for sale. To help sway sellers, buyers may write a letter to them explaining why they love their house, complete with photos. While the purpose is innocent, love letters can unintentionally lead to bias and housing discrimination. Offers accepted on any basis beyond price, terms, and merit might violate fair housing laws (and it doesn’t matter if there was no discriminatory intent). Letters can convey information resulting in implicit bias favoring one buyer over the other. For example: “The large backyard will be perfect for our 3 children.” “We look forward to being close to our church.” Letters can also backfire by unknowingly offending a seller based on some personal comment.
The Fair Housing Act prohibits the denial of housing based on race, color, religion, national origin, sex, familial status, and disability. The act was created so every American would have an equal opportunity to seek a place to live, without being afraid of discrimination. While love letters are not illegal, they could lead to legal issues. I do understand why letters are written, and that most sellers are very receptive to them; however, given the potential for problems, maybe it’s best to avoid letters all together. Buyers should focus on writing the best offer possible and sellers should review offers based on their terms and conditions.
email@example.com - (603) 731 5151
Despite everything that happened this past year, most economists are predicting 2021 to continue to be a hot market with high demand and low inventory. Home sales and prices are expected to continue to rise. The 20-plus housing and economic experts participating in NAR’s annual Real Estate Forecast Summit predicted housing prices to increase 8% in 2021 and 5.5% in 2022. Danielle Hale, chief economist for realtor.com expects home sales to jump 7% with home prices up 5.7%. Mortgage rates are expected to remain low with a slight uptick in the 30-year fixed rate to 3.0%.
Svenja Gudell, chief economist for Zillow, stated “there are millions of millennials aging into their prime home buying years, and millions more Gen Zers behind them that all will want and need homes of their own, keeping demand at a boil for years to come.” Also, the ability to work remotely for many now means people can live where they want versus where their workplace is located. With a thriving real estate market in 2021, buyers should take advantage of the historically low interest rates. Sellers will continue to benefit from the high buyer demand. Whether buying or selling, contact me for more information on how this hot market impacts you. Donna@DonnaForest.com; 603-526-4116 (O); 603-731-5151 (C).
Here are some common misconceptions when purchasing a home.
We can find a loan AFTER we find a house.
- The first step in the home buying process is to get pre-qualified so you know how much you can afford. A letter from the lender should be submitted with any offer.
We get a better price if we work directly with the listing agent.
- By definition, listing agents represent the sellers’ interests. Not yours. A buyer’s agent’s duty is to help you through the whole transaction.
Zillow’s “Zestimates” are an accurate estimate of market value.
- Zillow uses an automated system to compute values of homes. It can’t take into account many other factors such as superior workmanship, recent upgrades or even major structural issues.
The lower we offer the more the seller will come off their asking price.
- In this very competitive market, low offers will most likely be ignored or rejected by sellers. Buyers are competing with other buyers for homes. Properties are selling at or over their asking price in most cases.
You need a 20% down payment.
- There are many loan programs available with financing up to 90-95%. If you qualify for an FHA loan, you only need 3.5%.
As an accredited buyer’s representative, I can help you successfully navigate the home-buying process. If you want to achieve your home ownership goals, give me a call. 603-526-4116; www.DonnaForest.com; Donna @DonnaForest.com
Purchasing a home is one of the largest financial investments you’ll probably make. It also can be a very emotional one as well. Here are some tips to help take the stress out.
- Work with a Realtor that not only is knowledgeable but also is comfortable fit with your personality.
- Don’t look for perfection. Every house has tradeoffs; focus on the most important features.
- Get pre-approved for a mortgage before you start looking.
- Don’t nickel & dime when it comes to negotiations. Yes, negotiating is part of the process but over-negotiating can kill the deal.
- Keep in mind that there is no “right” time to buy. Second-guessing interest rates or trying to time the market is next to impossible.
- Don’t ask for too many opinions. Some input from friends or family can be helpful. Too much – it’s confusing. Listen to the advice of your Realtor.
Give me a call if you are looking for a knowledgeable Realtor to help guide you through the home buying process! 603-526-4116; www.DonnaForest.com; Donna @DonnaForest.com
On the eve of July 31st, 2020, the sun set on a record-breaking month for residential home sales in New Hampshire. NH REALTORS® reported 2,012 residential sales, the most in the state's recorded history for July---which even in slower years is a terrifically busy month for real estate transactions. The month's median selling price also coincided with New Hampshire's highest ever, at $340,000.
This recent summer boom comes on the heels of five consecutive months of declining sales in the New Hampshire residential housing market. Ever since January 2020, sale volumes had been falling...but July swiftly reversed that trend. Not only that, but it soared ahead to achieve a 6.4% increase over 2019's July sales. July 2020 ushered in a strong seller's market, with sales prices increasing by 22%, and pending sales increasing by 19%. At the same time, the market supply dwindled: homes for sale decreased by a staggering 54%.
July has come and gone, but this trend continues. We're now in the the final golden days of summer, in August, and "healthy buyer demand and constrained supply continue to be the story," reports NH REALTORS®. "A competitive market for buyers...is expected to continue into the late summer and early fall market."
Read more in-depth about this trend: https://www.nhar.org/assets/docs/NHAR_MMI_2020-07.pdf
Today’s market is a bit on the crazy side right now as we don’t have many homes for sale and buyer demand is high. Sellers receiving multiple offers seems to be the new normal. Here is some advice for sellers when they are considering more than one offer.
- With multiple offers, sellers can ask for “best and final” from all buyers, accept one offer if it is outstanding, or pick one offer to negotiate with and set the others aside.
- Be sure to note all the terms of the offers. Closing dates, down payments, financing, inspections, and type of loan can be impactful.
- Be aware if an offer is significantly over asking; there is an increased risk the house will not appraise if the buyer is getting financing. Which means the buyer can’t get the amount needed to purchase.
- Cash is king. Even if the offer is for a little less money, it might be worth accepting as you skip all the steps required with a loan.
- Offers should come with a pre-qualification or pre-approval letter from the buyers’ lenders or they are not worth considering.
Offers have many variables so discussion with your listing agent on how to choose the right one for you is vital. If you are thinking of selling, contact me and put my 26 yrs. of experience to work for you. 603-526-4116; www.DonnaForest.com; Donna @DonnaForest.com