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 ! 

What To Expect At Closing

Once your closing day arrives whether you are the buyer or the seller it can be exciting and emotional experience.  This blog will help “prepare” you for what will be taking place and who you can expect to be there for the occasion.

Who Will Be Attending

• Listing Agent/ Buyers Agent – The realtors during this time are really just there to be assistant to the attorney.  Each realtor is different you may not necessarily see them until the end of the closing and in some cases the attorney will take the realtors checks if they do not attend the closing.
• Seller & Buyers Attorney – The attorneys will be reviewing all credits and debits from the utilities, taxes, and in some cases “rent” if there is not immediate occupancy.  They run through this checklist quickly and then review the numbers with you, do not feel overwhelmed you will get a closing statement at the end reviewing all the numbers again. 
• Title Company – A representative from the title company will be clarifying everything regarding title, and making sure all documents necessary are in the file.
• Bank Attorney – In addition to the buyer & sellers attorney the most important person in the room will be the bank attorney who will be the one writing the checks to all parties and who you will be signing quite a bit of paperwork for !  

         

What Do You Need To Bring With You

• Identification - Both buyers and sellers will need to bring with them 2 forms of identification with their name matching how the home will be titled.  If you will be using a maiden name rather than a married name you need to make sure you have the proper identification and visa versa. 
• Keys - Many homeowners think that bringing every single key to their home is what they bring to closing.  Most buyers will have most of the locks changed after the purchase, rather than dragging all keys and more than likely not remembering which lock they go to there is a better alternative.  I tell my sellers to bring to copies of the keys to the front door of the home, leave the other keys someplace for the buyers in the house and label which door they are for. 
• Checkbook - It is always good to bring your checkbook sometimes their will be smaller adjustments that your attorney may have overlooked.  

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.

What Actually Takes Place During A Bank Appraisal

With many homes going to contract, buyers and sellers are both going to be having their homes appraised.  The biggest question I receive is what actually takes place and when, so this brief blog will give you a general overview of what you should expect to happen and what your agent should be doing !

When Does A Bank Appraisal Take Place ?

• Typically your appraisal will be ordered within a week or so of your buyer applying for the mortgage, your agent whether your the seller or buyer should contact the mortgage representative to check on the procedures of each bank.  Some of the larger banks prefer to do the appraisal after all the documentation requested of the buyer has been submitted.  Most common banks that leave appraisal towards the end are Wells Fargo, Chase, and Continental Home Loans.  If your using a mortgage broker, than you are more likely to see the appraisal done sooner than later.  

Who Should Be At The Bank Appraisal ? 

• Whether I am working as a buyers agent or as a listing agent, I always attend my appraisals.  It is extremely important in my opinion for both agents to be involved to make sure that the appraiser is getting all the information that is needed, because without the home appraising properly it will not sell.  Appraisers are hired as a third party, so you want to take the opportunity to communicate with them and share your knowledge when you can.  
• The homeowners I often will not ask to leave the home during this process, depending on the appraiser and how thorough they are can take from 30 minutes to an hour.  When the homeowners are there for the appraisal we just ask that you allow the appraiser to walk through the home freely.  

What Does The Appraiser To While They Are There ? 

• The appraiser will typically note the numbers of rooms, size of the rooms, and take pictures to show the bank the condition of the property.  They will also take pictures of certain things specifically the heating system, electrical panel and roof.  They will also take measurements of decking or sheds to make sure the proper permits are in place for the home to have those items.  
• Either before or after, they will also scope out other homes in the area that recently sold which they found on MLS.  Once they have seen those homes although they can't go in, they must fill out a large amount of paperwork for the appraisal to be acceptable to the bank.  They will credit and debit for things as need to come up with the value of your home.   This is why real estate agents always insist on using the comparable homes in the area to determine your list price ! 

When Will The Appraisal Be Complete & Who Will See It ?   

• Appraisals will be sent to the bank within 48 hours of it being completed, remember they are hired as a third party.  The bank should notify the mortgage representative within a maximum of 5 business days as to whether the home appraised for.  
• The only one entitled to see the total appraised value is actually the buyer, as the seller your have the right to know if it was appraised high enough for the sale but not the specific number.  If your home does not appraise and did not include any sort of sellers concession than you will need to speak with your attorney to decide what negotiations you would like to go forward with.  

Relocation 101

Relocation can be a bit overwhelming, but with online shopping become much more common it is not surprising how many buyers we see purchasing homes without ever seeing them until move in day.  There is one thing almost all of these buyers have in common is that they relied heavily on their Buyer Broker to be their eyes and ears during the purchase and the search ! If your considering relocation here are some helpful tips to make your relocation a successful one !

Speak To Your Employer:

• If your relocating for work, many employers have a specific division in the company that can help you find all of the necessary parties to help you make the transition.  As well some companies will pay for some of the expenses of that move.  
• Some companies will often work with actual real estate relocation companies, one of the largest being Cactus Relocation, who only works with the best real estate companies.  Coldwell Banker Residential Brokerage is part of their team for information you can check out our Relocation Site Here. 

Decide On Your Must Haves: This is a bit different than a normal home search because we aren't just talking about bedrooms, baths, or style you will need to think about some other important characteristics.  

• Location: You will be relying on a third party to help you find the perfect location, so communicating how close or far away you would like to be to major roadways, transportation, or even schools is very important information for your agent to know.  
• Amenities: Are you looking for an area with an incorporated Village with private pools or marinas, this is also very important for those who are looking to go into Condominiums, and Townhouse Communities. Each community will offer not only different amenities but also different requirements to purchase, you will want to be aware of this before beginning negotiations.  
• Home Characteristics: Of course you will still want to have specific homes "likes" and "must haves".  Be sure to review this list carefully with your realtor so they understand the physical size of the home so that on move-in day all of your items will fit ! I will often go out and preview the home and take video while I am there so my buyers can get a good feel for the homes flow and size.  If your looking to fit specific size furniture such as large bedrooms sets or wall units asking your Realtor to be sure it will fit before committing to the home is a good idea.  

Get Your Finances & Time Management In Order: 

• Finances: Make sure you specify with any mortgage company that the purchase of your home will be taking place with a more than likely job transition to make sure you will be aware of the additional paperwork that your bank might require. 
• Moving Cost: You will also need to prepare for the move a bit different than the normal buyer, speak with numerous moving companies to find out their pricing and the customer satisfaction once their possessions made it to the new home.  
• Time Management: This covers quite a few different aspects because you will want to coordinate with many different parties from making sure your possessions arrive around the same time you will, as well you will want to make sure your utilities will be in working order when you arrive, and give yourself time to unpack before beginning your new job.  

Most Important Choose Someone To Be On Your Side:

• You of course will need a real estate agent to help you find the home for previewing it, but keep in mind you will also be having home inspections, bank appraisals and final walk-thrus without ever stepping foot in the home.  Make sure you interview more than 1 Realtor until you find someone you feel 100% comfortable with.  My recommendation is always see how they are able to communicate with you during the interviewing process that will give you a good idea how you will be communicating during the transaction.  
• You will also need to find a home inspector and a attorney from the area to help you with the process.  If your working with a Full Service Realtor they should be able to recommend you a few different professionals to choose from.  Choosing local professionals will help because they are a bit more familiar with the area, and the laws that go with it.  

These are just some of the important factors when it comes to relocating, if you are interested in finding out more about what Long Island has to offer please take a refer to the Community Information Page for school information and town amenities ! 

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 ! 

What Happens After Your Offer Is Accepted

You have successfully gotten an accepted offer it may have been a quick simple negotiation or it may have been a bit of back and forth, but either way you have officially gotten passed one of the biggest parts of the home buying process !

Now you must know and any reputable Realtor will tell you that just because your offer is accepted, it does not mean that it will stop being shown so you must move quickly thru the next few steps to secure that home !! It is common that anyone else who views the home will be told that their is a first accepted offer, they can still place offers which will be presented to the homeowner.  Lower offers will be held as "back up" offers, but their is always a chance someone will outbid you and their offer may have terms that the owner may prefer.  I will usually recommend to my sellers to stay with the first offer, mainly because sometimes they may have outbid their first buyer to get in, and could drive the price down with concessions or changes.

That is the reason why time is of the essence so your going to want to get things done as quickly as you possibly can, this is not to rush the sellers but to show them that you are serious !! 

Step 1 - Sales Agreement & Attorney Review

This is a very standard form and is very important to your purchase, this is really sometimes the first step, but if you have had to negotiate and make changes to your original offer you will want to fill out a new updated one to send over to the attorneys.  The buyer and the seller will fill this out independently and receive a copy.  You attorney will review this document normally without any changes, because the contract will have the specifics credits or add-ons.

Step 2 - Call Your Mortgage Broker

Your realtor should have already developed a relationship with your mortgage broker to be sure this is a home that you can afford with the sales price/taxes/insurance.  If they have not spoken to them they shouldn't wait any longer to get that relationship going.  I personally like to have a direct line of communication the moment they give you the okay to go out and start looking.

Sometimes the seller will want you to get a 2nd mortgage pre-approval, this is not unusual in my business, because I work for a company who has their own mortgage company.  A seller can not however tell you who to get a mortgage with, they can only request a pre-approval thru a specific company.

This is not to say that using a mortgage broker your agent has not yet worked with will cause a problem,  I have had many deals go perfectly with mortgage companies I had not previously worked with.

Step 3 - Home Inspection

Many companies will have a preferred list of home inspectors, if you already have someone.  You want to have the home inspection as soon as possible, even with a first accepted offer.  A home inspector should check for of course the obvious red flags: mold, mildew, termite damage, but you also want them to check to make sure of some other things you may not think of.  Most will check to make sure that the hot water, actually gets hot, in older home this will take a bit longer but these are things that once you move in can become important.  They will also check things in the attics, basements and crawlspaces.

Homes that are remodeled it usually only takes about an hour for a full inspection, and others usually take about 2 hours. You will get a full copy of the report, and they will talk to you about it before they leave the property.

Step 4 - Sign The Contracts

Now depending on how your home inspection went sometimes you will be just going in to sign contracts with no changes, but sometimes there will have been more changes because of things that came up during your home inspection.  Remember your offer is still accepted, but now you are going to be changing the terms.

I can not stress what I am going to say enough, and it is what I say to not only buyers but to sellers too, BE REASONABLE!

I can understand a seller does not want to have to do work to the home they are moving out of, but you can't expect a buyer to just ignore problems that may have arose during a home inspection.  Try and work with the buyer, because no matter who the buyer is they WILL have a home inspection and you will more than likely be in the same position.

That being said sometimes buyers should be reasonable, don't let fear of losing the house force you to overlook a major problem but don't let a little problem cause you to loose your dream home either.

Step 5 - Bank Appraisal

This again is where a good Realtor is key, because the bank is going to come in and make sure the house is worth the money that in reality the bank is putting up for it.

This is what in today's market really is an asset to the buyer, because banks are not easily giving out money the way they did 10 years ago when the prices were really at its highest point.  The banks are very careful that the home is worth what your paying for it.  

I personally try and make the bank appraisers life as easy as possible, I bring my comps to the appraisal now we can't force them to use those specifically but most appraisers will appreciate it and many times end up using them. This depends on the bank and the appraiser but if they feel  the realtor has done there due diligence to make sure the buyers are not over paying, than they will use them.

Step 6  - THE HOME STRETCH

Your ready to close, you will have not much else to do till about a month before your closing !

I will write another blog outlining the things you will need to get in order prior to your closing separate from this one, and attach the link!