What Renters Should Know About Buying !

You've made the decision to take the step into home ownership from renting ! The common questions are easily answered thanks to google and apps like Trulia or Zillow.  What about those less commons questions like what and when should you tell your landlord ? Those  will be the questions that I will answer in this blog ! 

What Should I Tell My Landlord ? 

If your currently in a rental where you are NOT in a lease than you will want to wait until you've found a home and gone to contract on the purchase of your new home.  

If your currently under a lease that will be ending within 2-3 months than I suggest a conversation prior to your lease coming to an end.  

If your currently in a rental that has 4 months or more than again no conversation is needed until you've either A. Found a home (before going to contract) B. When you are 2-3 months from your lease expiring. 

Why Does The Timing Of The End Of Lease Matter ?

Remember just because you've decided it's time to purchase it does not mean you can abandon your lease.  Depending on how particular your wants & needs are will effect how long the shopping process will take.  If you have a few months left in your lease this will allow you some breathing room since your "deadline" typically is by the end of the lease.  Also keep in mind if you find the perfect home and will be leaving before the end of the lease your landlord might ask for additional payment because of you breaking the lease.  

If your lease is ending relatively soon than a conversation with your landlord prior to it ending will be beneficial & appreciated for both you and your landlord.  With the "deadline" being much sooner you should discuss staying in your rental on a month-month basis to give yourself a buffer on time.  Most landlords are open to this if it is discussed prior to the lease actually ending.  

Why Can't They Wait For Me To Leave ! 

This is the most common complaint and stressful for renters who are becoming homeowners.  Keep in mind most rentals are necessary income here on Long Island having a vacant apartment is less than ideal for most landlords.  Be prepared that once you have gone to contract on a home that their is a high chance your rental will be advertised for rent.  

If you have not gone to contract and they ask to begin showing than an honest conversation with you, your buyers agents and landlord is a good idea.  Your agent will be able to explain the timeline and the benefits of waiting for it to be advertised.  Also your agent might be able to handle the showings to make it an easier transaction for everyone.  

You've Gotten Your Mortgage Committment, I'm Outta Here ! 
Not so fast, that on or about closing date you had negotiated ? It is still just that an on or about closing date ! Before you give your landlord notice call and speak with your attorney, make sure that the seller is still on the same target date as you.  If they have a home they will need to close on than you might have to sit tight a bit longer ! Communication as always is key to making this transition go smoothly for everyone involved ! 

Common Questions About Closing

Often times as agents we come across certain questions or situations that are quite common to us, the job of a real estate agent is not only to help you but to educate the public on all things real estate.    These next few blogs I want to address each situation and the common questions or fears that a buyer or seller may encounter.  Each week will be a different topic - if you have a specific question please feel free to comment and I will make sure to either answer you directly or write a blog specifically to answer your question !

How Is The Closing Date Determined ?
Your closing date is determined usually between 4 - 6 weeks from the time you go into contract.  Often times sellers will ask why the date on the sales agreement is different from the date in the contract.  This normally will take place because the date on the sales agreement is 4 - 6 weeks from the day the offer is presented.  If negotiations take a week, or there is a delay in order to perform a home inspection the attorneys will extend the closing date to give the buyer adequate time because of the delay.

What Is The Closing Date VS Commitment Date ?
In all real estate deals that involve a bank there will be a smaller window of time for the buyer to obtain their mortgage commitment - this is generally 30 - 45 days it is the most important part of the transaction.  After the commitment is received there are still additional steps left to be able to get to the closing table including the title report and information they may request.  These are the items that generally take a bit longer to pull together which is why they have 2 dates for these items to be completed.

Why Does The Kind Of Deal Effect Closing Date ? 
All Cash deals tend to move a bit quicker because their is no bank involved so you move straight to simply waiting for a clear title without having to wait for the bank.  Cash deals are still entitled to home inspections but typically the home will be sold as is so their will be no repair requests to be fulfilled.

Deals that involve the buyer obtaining a mortgage are at the mercy of the bank, unfortunately not even the buyer has any control on how quickly or slowly the wheels will go into motion.  The bank appraiser will also play a role, they are a hired 3rd party and also do not answer to the buyer.  The amount of time it takes for them to complete the appraisal and the bank to receive and approve it can take time.   The larger the bank does not always mean they will move quicker than a smaller bank because they will have many loans that need to be serviced.

How Much Time After The On Or About Date Do You Have ? 
There is a "grace period" from the on or about closing date, the reason why is because sometimes the timing of a move can be tricky.  If the seller is moving into another home it may or may not be available, or buyers could be moving from another state or area.  Because the timing is something that might need to be finessed a bit you are given 30 days from your on or about date to get to the closing table.

Can Either Party Require Closing Before The Closing Date ?
Typically no one can "force" a buyer or seller to close before the on or about date.  Even if buyer and seller agree they want to move quickly getting it on paper involves a few other important parties.  The attorneys of course will need to be available, but the schedule of the bank attorney as well as the title closer need to be available as well.  This can sometime push a closing to a later than one may want - if you need to close quickly giving your agent a realistic date for them to help you navigate if the buyer or the home is right for you is very important.

Can A Seller Simply "Change Their Mind" About Selling ? 
The seller can always change their mind, but often financially it is not recommend.  If the seller defaults you can sue for specific performance forcing them to sell the home.  They will also become responsible for the costs that you had from appraisal/mortgage fees, inspections, and even agents commission.  Once you have hit the "On Or About Closing Date" if they seem to be a bit hesitant on the sale you can & should request a time of the essence letter to be sent out regarding your closing.

Can A Buyer Simply "Change Their Mind" About Buying ? 
Just as a seller can back out with repercussions that same goes for the buyer.  There are a few circumstances though for a buyer where they will not be in breach of the contract.  If they are unable to obtain a mortgage, this is not something that they can just say.  Their must be a letter from the bank which proves that they applied for the mortgage and it was denied.  The buyer also has the right to re-negotiate if the home does not appraise for the sales price - if a new price is not agreed upon they have the right to not purchase.

How Is Your Closing Date Determined ?

Closing dates are often a bit confusing to people, one would think that closing as soon as possible is always the only way to go but there are a few factors you will need to keep in mind.  There are steps to determining the correct closing date for both the buyers and sellers and will be tweaked during the process of getting into full contract.

Presenting An Offer & Your Sales Agreement: - This is when the buyer will be setting the "date" they would like to close, and does specify that is on or about.  However their will be specifics things that should be brought up at this point.

• Does the buyer have something to sell before they would be able to close on the purchase ? 
• Will the buyer be in a position to accommodate a seller whom need to make a purchase ? 

The on or about date can change from the time of your initial offer and contract signing if there was a significant amount of time between the 2 events.  Your attorney will be the one who puts in a "formal" on or about date.  

Contract Signing: Your attorney will be the one who will have the ability to change a closing on or about date if needed.  Typically most buyers and sellers are unaware that their are actually 2 dates in the contracts that will be binding.  

• The mortgage commitment date, is the first aspect of the contract.  This specifies how long the buyer will have to get a mortgage which averages from 30 days - 45 days from the day of fully signed contracts.  
• The true closing date, is what specifies you actually getting the sale finalized.  The reason there are 2 different dates is because not only do you need a mortgage commitment you will also need to obtain a clear title, proper permits, certificate of occupancy, and surveys.  This can sometimes bring some un-expected time delays.

How Long After Your On Or About Do You Actually Have ? 

There are many factors that can come into play during the sale or purchase of a home.  You have a "grace period" from 30 days of your on or about closing date.  There are times where that can be extended past that but clear communication is an absolute must in order for all to go smoothly.  Your attorney and agent should be in touch with one another so that they are aware where in the process all the moving part are.  

Closing Dates On Short Sales: 

Short sales and foreclosures are often a bit unpredictable because although they buyer may have nothing to sell, and the ability to close quickly the paperwork for the sellers is much more involved.  

• You will be in contract longer within a short sale because first you must receive bank approval on the price, but you can not get their approval without me in formal contract.  This is a touch thing to estimate because the bank is not able to give you a timeline of when you should expect to hear an answer regarding your offer.  
• Surprisingly to many people the smaller banks tend to respond quicker than the larger banks, this is attributed to less pending short sales.  Certain banks have now been required by law to respond to offers within a period of time to keep buyers from being stuck for months waiting for a response.  
• Once you have gotten the okay from the bank you can safely assume you will be closing within 60-90 days.  You will need to keep in mind the bank will make no representations, so your agent should be as proactive as possible by checking that the home has all proper permits and COs.  You can do this by filing a FOIL request with the local town or village.  

What Buyers Should Know About The Home Inspection Process

You've found the perfect home but now it is time for the most stressful part of purchasing your new home, the home inspection.  This blog will give you the run-down of what a buyer should be doing before and after the inspection !

Step 1: Pick The Right Home Inspector For You 

• You want to make sure that you don't choose your inspector strictly by price, they range from $500 - $800.  The cheapest is more than likely not the best, but that doesn't mean the most expensive is the best either.  Ask them how they document what they find, and what kind of things are included on their report ? (EX: Do they take serial numbers of the appliances, Do they give repair estimates) 

• All homes in NYS that are being purchased with the help of a mortgage will require a termite report, you should ask your prospective inspectors if they are certified for the termite inspection or will you need to hire a 2nd inspector. 

Step 2: Make A List Of Questions

• Before your home inspection you should sit down with all the decision makers that are involved, and have a list of questions you have about the home prior to the inspection.  Once your at your home inspection you will be overwhelmed by the amount of information you will be receiving so making note of your specific questions will help you to get the answers to what is important to you. 

Step 3: Decide Who Will Be Attending Your Home Inspection

• Remember your home inspection is not a showing of the home, if your a first time home buyer you may want to have a relative accompany you who is more knowledgable.  The decision makers are the most important people, and really the only one who should be attending the inspection.  Their are 2 reasons why your home inspection should not be treated as a showing.  First your inspector will be trying to move thru room by room with you, and family/friends tend to distract the buyer from the important process that is going on with other less important cosmetic items in the house.  The 2nd reason is really very simple, you will be living in this home and doing the work - not them, I abide by this same rule during the home inspection although I am their by opinion on the priority of importance of things to myself.  

Step 4: Reviewing The List Of Items From The Home Inspection 

• You will have 3 different options after your home inspection: Option 1: Come up with a list of all items to be fixed, big or small and attempt to have them fixed or given a credit.  This is rarely recommended but price plays a large part if your paying top dollar you will/should expect a big more.  Option 2: Come up with a list of structural/safety items that need to be fixed or credited for.  This is normally what is expected, remember certain things will be required of the sellers for any buyer so it will be their responsibility.  Option 3: Take the home as is and continue with the purchase, this is most common with cash deals or homes priced significantly under market value because the sellers have already made large credits on the price prior to the home inspection.

My best advice to buyers is to remember that every home will have recommendations of things that should be or need to be done.  What you choose is acceptable is entirely up to you, but remember be reasonable at some point you will be selling a home too ! The best way to make it thru a real estate transaction is by being fair and honest with everyone involved !  

Sellers On The Move

I often write blogs for buyers giving the breakdown of what happens during the process, not to leave sellers out I have decided to write this blog reviewing the steps they will be taking to get out of your current home and onto your new home !

Most would think that sellers have the easy part, they just sit back and wait for the closing to be set but their is still a lot to be done ! Homeowners who are buying a new home are usually diligent about getting their search underway before their current home is even in contract.  This is your best plan, if you need the sale of your current home to make the purchase you won't be able to put in any offers until your home is in full contract, but keeping a close eye on the market will allow you a jump start after your home has gone to contract.  

Before your home goes to contract and you begin your search as the buyer these next 3 steps are crucial and the most important ! 

Home Inspections: I did write an entire blog about what sellers and buyers can expect which you can find HERE but I will quickly touch base again on these important factors.

• Take the time during your home inspection to leave the premises, allow your agent to be at the home during the inspection as your representative.  By allowing your agent to be there you give the buyers a bit of space to ask questions they may have, but still gives you a set of eyes and ears on the premises.  You will want to stay in communication with your Realtor in case any questions come up.  

• Be reasonable, if one home inspector finds it than another home inspector most likely find the same thing.  In order to prevent any unexpected issues arise I have a pre-home inspection done when I first list the home this way you can make small repairs if needed and in the worst case scenario get estimates for any larger issues you might uncover.  

Signing Your Contract: 

• Many buyers and sellers don't realize that their are actually two very important dates that are specified in the contract signing.  First it specifies the amount of time your buyer will have to obtain a mortgage commitment, and secondly it gives you the on or about date.  Normally your buyer is given 30-45 days to obtain the commitment and 30 days for the on or about date to close.  This should only amount in total to 6 weeks from contract signing, the reason they do not strictly base the closing date on the mortgage commitment is because the tittle will still need to be cleared. Any issues that come up are usually fixed by sellers providing paperwork to clear any of the imperfections on the title, so doing a preliminary title report can also give sellers a heads up of any potential issues.  

Closing: 

• If your purchasing another home you will need to make sure that as soon as you went to contract that you found your new home.  It is always important to use a Full Service Brokerage, but it is even more important when you will be selling and than buying this way your agent will be able to help you with all the services you will need from them.  Your full service agent will be able to communicate with everyone about the progress of all of your deals to make sure the dates are coinciding and that no one will be left homeless after any of the closings take place.  This may seem like it could never happen but unfortunately I have seen agents lacking in one area cause a domino effect that causes headaches for all involved including the other agents, since they are often the ones left to break the bad news.  

• You must respect that your buyers have given someone notice that they are leaving, and their will be a domino affect for them as well.  Keep in mind they will also have locked in a rate and a commitment date based on your on or about closing date.  Just like they can not expect you to just up and leave because they want in, you can't push the date to the limit because they have had to make many arrangements and spend money on lock-ins to be able to purchase your home.  

You will notice I mentioned communication, fairness, and respect quite a bit in this blog, which I normally do not push onto my readers but these are the 3 things that can help prevent ripples from turning into tidal waves of frustration for everyone !  

Why Should I Use A Real Estate Attorney ?

There are a lot of important decisions that come with any real estate transaction, after you decide on a real estate agent next you should begin looking into real estate attorneys.

Notice that I did not say "attorney", there is a saying and it is "You can only do one job well" and that goes for attorneys as well! Their are many areas of law that an attorney can go into divorce, elder law, criminal, family ect. for any real estate transaction you want to use a real estate attorney.

There are 3 circumstances that you absolutely, positively must use a real estate attorney:

• Cash Deals: These deals can be tricky because they have very specific terms as far as what is being represented and your closing date.  The perk of these deals are that they move very quickly so you will want to make sure your attorney moves at the same pace, which only a real estate attorney will understand.  

• Short Sale/Foreclosure: Banks are hard to deal with, and in this case it is who you are not only buying your house from, but it also who is financing your loan.  There must be a direct line of communication to all parties, in a timely manner and with someone who is well versed in what is or is not to be expected.  

• Estate Sales: This is where it gets tricky because there is usually more than one seller, it usually involves family members who may not be aware of what the condition of the house is and what was not legally or not.  There are potential title complications from how the home is deeded or how many beneficiaries there might be.  You will want to have the real estate attorney also have open communication with the attorney who did the estate filing as well.  

I happen to be very lucky and work for a company that our clients experience is top priority.  We have had our clients refer us the attorneys that they felt gave them the best representation in their transactions.  Our company also knows that keeping the agents up to date and informed is also important so we have attorneys come in to keep us educated and answers any question we may have, which of course helps us better represent our clients.

There are of course plenty of real estate transactions that have not involved a real estate attorney, and have gone to closing with no issues.  In my opinion whether your buying or selling it is an important process and you would want it to go as smoothly as possible, so using a real estate attorney will be your best option.

Here is an example of what could happen if a real estate attorney was not involved:

Buyer and Seller agree on the price, and conditions of the home and contracts are sent out:

1. The agreement was the home would close 45 days from contract signing, and the home inspection did not show any structural or safety issues.  
2. Buyers attorney receives contracts and makes the following changes, closing date has been changed to 60 days - a heater is required in the den/family room - down payment has been reduced from $30,000 to $10,000 - termite treatment is required.  
3. Sellers attorney receives this information, and the deal comes to a stand still because of the extreme changes.  

Now if your not using a real estate attorney this can very quickly end the deal, these seems very extreme but the most important reason a real estate attorney is needed for this is because: 

•  The real estate attorney would have been aware that you receive a standard 30 day commitment, with the additional 15 days is standard.  Attorneys will be willing to provide extensions if need be after the fact.  
• The real estate attorney would also be aware that only "live termites" are required to be taken care of, or if their is extensive damage that has caused structural damage to the home.  
• The real estate attorney would have been aware that the den/family room was a converted garage in which no heat is present or required, as long as the garage conversion was done legally.  
• Down payment amount could also change the loan amount, a real estate attorney would be aware of the change in financing and the possible stricter restrictions of the lender.  
• Lastly but most importantly if both attorneys had been real estate attorneys, they would have spoken to both the listing agent and buyers agent before adding or removing anything from contracts so they would have all the information available to them ! 

Deciding To Buy Or Rent What You Need To Know

It's that time of year again where we see renters deciding whether or not they will continue renting, or will consider being a new homeowner ! This blog is to help all those considering purchasing answer that most common question "Should I Buy Or Should I Rent?" 

Why Should I Buy A Home Instead Of Rent ? 

It's a fact that in most markets, buying a home is significantly cheaper than renting.  Renting is money you will never get back, but buying a home is an investment in your future.  In most areas, if you can afford to rent, you can afford to buy! For more information on this topic you can refer to my blog, here it will give you both the pros and cons for both buying and renting, as well as offer you alternative options.  

How Do I Know I'm Ready To Buy A Home? 
The best way to know if you're ready to purchase a home is to look at your current situation.  You don't need to be employed with the same place for 2 years, you just need to have had a steady income in one field for the past 2-3 years.  You will want to run your credit and take a good look and make sure everything that is on the report is correct, if not you will want to have it corrected! You will also want to make sure you have money saved up for a down payment, in some cases you can withdraw from an IRA penalty free for a first time home purchase.  For more information on this topic you can refer to my article, here.

How Much Money Will I Have To Pay Upfront To Buy A Home? 
This is not an easy answer, because there are two factors depending on what kind of loan you take and the amount of the loan is what will decide your down payment.  For an FHA Loan you will need to put down 3.5% where a Conventional Loan you will need to put down atleast 20%.  The average cost of a home in Suffolk County is about $325,000 which would require a FHA down payment of $11,375.  

You will also need to factor in closing costs, but you can also ask for a sellers concession or have the money "gifted" to you from a friend or family member.  This ranges again by the loan amount, and any mortgage broker is required by law to give you a good faith estimate of closing costs, this is why you should always choose a reputable bank Of course, Coldwell Banker Mortgage is more than happy to help and you will always be given all of your loan options.

Once you have decided that you are in a financial position that you would like to go ahead and begin searching for your new home there are a few things you should look into.  You will want to learn the difference between what kind of homes are on the market, who you should have working for you, and what happens once you have found that "perfect home".  Because each of these topics are best explained in detail I will list each topic below with a direct link to blogs to help you get informed ! 

• Why You Should Work With A Buyer Broker
• What Kinds Of Home Are On The Market
• Benefits Of New Construction
• Short Sale VS Foreclosure
• What To Offer For That House 
• What Happens After Your Offer Is Accepted 
• What It REALLY Means To Be In A Buyers Market 
• Tips To Finding The Perfect Home