May 4, 2018 | Real Estate
The closing process for a home purchase is an exciting time. The home is finished, the purchase is ready to be finalized and it’s almost time to move in. The final steps of the closing process ensures both parties are able to meet their requirements and all the paperwork is in place and verified.
The Key Players
There are actually four parties involved in a typical closing: the buyer, the seller, the bank or lender financing the purchase, and the escrow agent. Each has an important role in making sure the closing happens effectively and efficiently.
As is common with most purchases, the buyer is already familiar with the need to have a down payment ready and to be committed to a purchase. Additionally, the buyer will have already worked out the loan approval preliminary reviews and steps with the bank financing the purchase if it is not an all cash purchase.
The Escrow Process
During escrow the purchase is then validated through a number of steps. These include:
- Ensuring the property title is clear of any problems or previous liens (a legal method by which other parties get paid for the seller’s outstanding prior debts).
- Ensuring the property has been appraised and represents the actual worth represented to the bank.
- Ensuring the bank is ready to pay the seller with a payment check and that the buyer has paid any down payment as well. Both payments are put into an escrow account managed by an escrow agent and not to be released until all the purchase requirements are met.
- Ensuring the buyer has been notified, read and has committed by signature to all the purchase documentation necessary to complete the sale. This includes understanding the nature of the home loan, payment responsibilities, and what happens if there is a default.
- Ensuring any property taxes, homeowner’s association fees, and other fees have all been addressed before the seller transfers the property to the escrow agent, which is then transfered to the seller.
- Finally, passing along the keys and title of the property to the buyer, the title lien to the bank financing the deal, and the payments for the property to the buyer.
When all the above happens, a home purchase is closed and the home officially belongs to the buyer. The seller also gets paid and can deposit his income accordingly. The escrow agent files all the paperwork with the bank, the county recorder’s office, and copies are sent to the buyer and the seller for their own records.
Contact your trusted real estate professional if you have any additional questions about the closing process as well as other aspects of acquiring your new home.
May 3, 2018 | Home Buyer Tips
Buying a new home is exciting. Buying a brand new home can be even more so with the realization of being the first owner and possibly being able to choose your own layout and finishes. The prospect of owning new construction is definitely exciting, but it doesn’t come without its own set of questions.
If you’re in the market for a new home, and considering new construction, make note of the questions below when you begin your property search.
What Are The Long Term Plans For The Community?
Unless you’re looking at custom homes on acreage, it’s likely new construction in your area will be located in a new development or in a master planned community. With this in mind, feel free to ask about the plans for the community.
If it’s a large area, find out if any subdivisions are planned. If there are only a few houses built so far, it’s likely to mean lots of construction in the months to come – which means a lot of noise and construction traffic.
Also ask about the builder – if they’re well known and respected, it’s unlikely they’ll lose funding and the community will likely continue on as planned.
What Are The Homeowners Association’s Rules And Regulations?
Many new developments and master planned communities come with a set of rules and regulations set by a homeowners association. If you’ve never lived in a community with an HOA, it’s important to find out the rules before investing in it.
The bylaws and the CC&Rs will let you know what is and isn’t allowed in the community (especially when it comes to the exterior of your home). You’ll also want to find out when the HOA fee begins – in some communities, it can start before the home is even finished.
Are There Any Buyer Or Financial Incentives?
If the community or development is still in the early stages, there might be incentives (like a buyer discount, builder upgrades or other financial incentives or freebies) for buyers.
Sometimes these offers come with a catch – where something is expected from the buyer in return for the incentive – but it’s important to ask about any offers that may be available, especially if the community is still up and coming.
Are Warranties Provided?
New homes often come with different warranties. Ask if a workmanship and structural warranty come with the home.
A workmanship warranty (or builder’s warranty) is a warranty for newly constructed homes that offer limited coverage on workmanship and components of the home like windows, siding, roofs, doors, plumbing, electrical and HVAC. Traditionally, a workmanship warranty will cover a one or two year period; another likely warranty is a structural warranty, which covers the structure of a home.
If a warranty is provided, make sure you know exactly what is and isn’t covered and how much you’re responsible for in case of any issues.
Can you connect me with some current homeowners?
Just as you would check reviews before buying an item online or booking a service, the same can be said for a home builder. Just because the product is a shiny new home doesn’t mean you shouldn’t do your due diligence and check references before making a large investment.
While it’s likely that the builder will provide glowing reviews, checking reference and review websites and even knocking on the doors of current homeowners will provide additional information and give you a wider understanding of the builder and its practices. Talking to current homeowners will provide information about the actual community.
New construction is exciting, but you want to make sure you have all pertinent information before you go through with a home purchase. Your real estate agent will be able to help navigate the waters of new construction. Reach out to your agent with any questions you may have about buying new construction in your area.
May 2, 2018 | Home Buyer Tips
For many Americans, retirement age is fast approaching or already here: Baby Boomers account for nearly 75 million individuals in the United States.
Retirement can present a lot of opportunities, especially when it comes to relaxation, activities, and the enjoyment of life with those of a similar age. More and more Americans are looking to 55+ communities to fulfill those wants and needs.
Active Adult Communities
55+ communities, also known as an active adult or age-restricted communities, are becoming increasingly popular throughout the U.S. because of what they offer and can provide. Traditionally thought to be only in warmer climates, active adult communities can be found in almost every state, and with more people retiring, new communities are being added every year.
Just like buying in a regular neighborhood or a master-planned community, there are a number of things to know or understand when it comes to investing in an active adult community and lifestyle. If you’re considering selling your current home and relocating to a 55+ community, here are some important things to consider before the big move.
Location
Location is an important consideration. Active adult communities can be found all throughout the U.S. While Florida and Arizona are known for their 55+ communities, it’s very likely there’s a community close to where you currently live.
Location is more than just where the community is located – location includes the proximity to towns or cities. Some may want a community that is cut off from large cities; others may want to be close to large metropolitan areas for what they can offer.
Location also includes things like local taxes – some states are much friendlier to retirees than others when it comes to taxes.
It’s also important to note the community’s location relative to an international airport if you plan on traveling a lot, medical centers, and other amenities that may be frequented daily or weekly.
Size
The size of the community is an important part of the community experience for residents. Communities will range in size, from just a couple hundred residents to thousands. The larger the community, the more residents.
Larger communities may offer more activities and amenities while smaller ones may be able to offer more comfort and relaxation with the reduced number of residents. If you’re interested in maintaining an active lifestyle and making friends, a larger community may be a better choice than a smaller one.
It’s also important to note that a larger community may offer more deals or incentives to those looking to buy within the community.
Amenities
Amenities are incredibly important when considering buying a home in an active adult community. A larger community will likely have a number of amenities and events while a smaller community may be limited in terms of what it can provide to homeowners.
When looking at communities, ask about the amenities provided within the community: is there a golf course, tennis courts, clubhouse, rec center, or arts and crafts studio?
Are there any clubs, group activities, or social events?
Does the community provide ample amenities to maintain an active lifestyle?
It is important to ask whether a membership is required to partake in any activities (especially with things like golf, tennis or the use of a clubhouse or rec center). If so, a membership structure within the community may add extra costs to the community.
HOA
Homeowners Associations have become increasingly popular within planned communities, and 55+ communities are no different. An HOA may have additional say on things within the community than in a regular neighborhood.
While maintaining the general areas, an HOA in an active adult community may also dictate whether a homeowner can grill outside, park a car on the street rather than in a garage, and some may go as far as to dictate the time of day a homeowner can have a conversation on a patio or deck.
While an HOA helps maintain the look and feel of a community as a whole, an overbearing HOA or homeowners board can possibly make living in a retirement community not very enjoyable for some individuals.
Living In Place
Another option to consider is whether the community offers a “living in place” option. This is still a relatively new concept but it is becoming more and more popular.
Living in place options offer homeowners the ability to buy a home in a community when they’re still active and able to live without accommodations. Then, should one’s health change or it becomes more difficult to live independently, the homeowners are able to move to a fully furnished apartment or condo within the community where cleaning, cooking and other services are provided.
These options allow homeowners to stay in one community through each phase of their retirement. More expensive than traditional active adult communities, they are a viable option for those planning for the long run.
Retirement is an exciting time. Finding a community that supports retirees and provides a place for relaxation is important for many people. If you’re looking at active adult communities, reach out to your trusted real estate agent to get more information about local communities in your area.
A 55+ community can be a great choice for those looking to enjoy retirement with other retirees. Happy hunting!
May 1, 2018 | Real Estate
Reality TV shows have inspired people to flip houses for profit. They make it look fun, easy and the type of business anyone with some capital can get into.
Every once in a while, house-flipping episodes show an underperforming sale and a financial loss. That is why people in the flipping business need a cushion in case things don’t pan out.
This brings us to a slightly different approach. Some speculators start out flipping land. Yes, that’s right. Land.
Flipping Land Can Be Less Risky Than Homes
Rough land can be far less expensive to invest in than blighted homes. There are also fewer unknowns in terms of flipping. Investors won’t need to worry about replacing an electric box, mold behind walls or failing a building inspection. Land flippers can also start with a modest out-of-pocket investment and work their way up to short-term lending to finance endeavors.
The Basic Considerations
There are a few things to keep in mind when selecting a parcel. Property that abuts a street with sewer and water are preferable to scrub land in areas without services. It is not uncommon to run into difficulty drilling an artesian well or getting a permit for a septic system. Developers know this and will jump at street-ready parcels first.
Make certain the parcel qualifies as a buildable lot with the town or city. Then, hire an excavation team or clear the brush and trees yourself. The goal will be to create an open area where a home can be built while leaving suitable greenery.
The next step is to call a real estate agent and list the property. Quick land turnovers can earn several thousand dollars in profit with minimal effort. Remember to factor in hidden costs such as taxes, interest, and recording fees, among others.
Upping The Ante To Spec Homes
After gaining experience in the land flipping business, take that knowledge and apply it to homes. Rather than scoop up a dilapidated structure, employ that land development acumen and take the next step.
Select a parcel that is in a prime residential location. What a surprise it would be to find a wooded lot at the end of a desirable neighborhood that can be developed.
Create A Budget and Obtain Financing
Work closely with a real estate agent to understand the types of homes that are trending and the average sale prices. With that information in hand, come to an agreement with a general contractor who can oversee the spec house project.
Decide on a design and calculate the total costs. Don’t forget to add 15 percent for overruns. Take that number to the bank for a building loan and put the team to work.
Get The Listing On The Market
Spec home projects can be listed with real estate agents even before the first nail is driven into a 2X4. A savvy real estate agent can get a property up online with design information, an artful rendition of the finished home and key selling points. In a perfect world, a new home buyer may be found before construction begins.
It’s important to realize that it doesn’t require significant wealth to get into the home buying and selling industry. By starting with modest, low-risk land deals and working up to spec homes, a solid living can be earned in the real estate industry. If this idea intrigues you, contact your trusted real estate agent to help you find just the right piece of land for inspiration.
Apr 30, 2018 | Financial Reports
Last week’s economic reports included readings from Case-Shiller Home Price Indices, new and existing home sales and weekly readings on mortgage rates and first-time jobless claims.
Case-Shiller: Home Prices Rise to Near Four-Year High
February home prices rose 6.30 percent year-over-year and 0.50 percent month-to-month. Home prices rose just shy of a record set in 2014. The 20-City Home Price Index reported home prices were 6.80 percent higher year-over-year and rose 0.80 percent month-to-month in February. The year-over-year reading surpassed the peak reading in 2006. Home prices accelerated in contrast to analyst expectations that they nay slow as buyers deal with a short supply of homes for sale.
Cities with the three highest readings in year-over-year home price growth were Seattle, Washington with 12.70 percent growth, Las Vegas, Nevada home prices rose 11.60 percent, and San Francisco, California home prices rose by 10.10 percent according to Case-Shiller’s 20-City Home Price Index for February.
Severe shortages of homes and high demand in the west and in areas impacted by the housing bubble burst are driving the rapid rise of home prices; while it appears that homebuyers may be sidelined by high home prices, increasing home sales suggest that buyers may be buying before higher prices cut them out of the market.
Sales of New and Existing Homes Surpass Expectations in March
Sales of pre-owned homes rose to 5.60 million sales on a seasonally-adjusted year-over-year basis. Analysts expected a reading of 5.52 million sales based on February’s reading of5.54 million pre-owned homes sold. Sales of new homes also exceeded expectations with a sales rate 0f 694,000 sales on a seasonally-adjusted annual basis. Analysts expected a reading of 634,000 new hone sales. February’s reading was 667,000 new home sales. As with the boost in sales of pre-owned homes, analysts said that buyers are anxious to buy before they’re priced out of the market or cannot qualify for mortgage loans.
Mortgage Rates Rise, New Jobless Claims Fall
Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage averaged 4.58 percent and were 11 basis points higher. The average rate for a 15-year fixed rate mortgage was 8 basis points higher at 4.02 percent; The average rate for a 5/1 adjustable rate mortgage was seven basis points higher at 3.74 percent. Rising Treasury yields were driven by higher commodity prices drove mortgage rates higher.
Economic indicators have steadily strengthened, which traditionally boosts home prices. While analysts have shown concerns over rapidly rising home prices and mortgage rates, the Mortgage Bankers Association reported mortgage applications were 11 percent higher year-over-year.
New jobless claims fell to 209,000 first-time claims filed as compared to expectations of 230,000 new claims, and the prior week’s reading of 233,000 new claims filed. Lower jobless claims indicate fewer layoffs and strengthening labor markets.
What’s Ahead
This week’s economic releases include readings on inflation, job growth, and national unemployment. Weekly readings on mortgage rates and new jobless claims will also be released.
