Home Inspections

Your 2022 Home Buying Game Plan

Over the past year, the real estate market has been marked by unpredictability and, at times, overheated competition. This has resulted in some buyers bowing out after one too many disappointments while other potential buyers put off their home buying plans, hoping that things would settle down.

Whichever type of buyer you are, you may be thinking ahead to the new year and planning to begin a search for a new home. If so, it’s vital to prepare for the challenges and opportunities that lie ahead.

Financial Preparations

Preparing yourself financially will be one of the most important aspects of your homebuying plan. While many potential buyers have a good grasp of the savings required for a down payment, they may not be prepared for the other expenses associated with home buying, including:

Earnest money deposit (EMD)
Closing costs
Application, origination, and underwriting fees
Home inspection
Appraisal
Moving expenses

Of course, one of the factors that has made the housing market so active over the past year and a half has been the record-low interest rates for home loans. As you prepare to purchase a home in the near future, you’ll want to keep track of those rates. While they are not projected to rise significantly, they are projected to rise, so it’s important to gauge the impact that upcoming changes will have on your bottom line.

Remember, the terms of your mortgage can be highly variable depending on your overall financial history and your creditworthiness. A lower credit score can have a significant impact on your interest rate and chances of approval. Be sure to check your credit report well ahead of time to ensure that there are no surprises and to make any needed adjustments.

In addition, be mindful that a lower down payment mortgage option may result in the need for additional mortgage insurance, raising your monthly payments. Take this into consideration as you plan your homebuying budget.

Market Research

Planning ahead for your home purchase gives you a great chance to do some research on your chosen neighborhoods. While this includes proximity to work and neighborhood amenities, it also includes tracking the prices of comparable properties in your target area.

Talk with a real estate agent or broker to develop a baseline for current comps and historic trends in the neighborhood you’re interested in. Remember that there has been significant market movement over the past year and a half, with home prices rising at a record pace in many communities. Understanding the change in home values over the past several years can give you a more realistic perspective.

In addition, work with a real estate professional now to develop a targeted search based on your neighborhood and property preferences. This will allow you to see when new properties come on the market that fit your criteria so that you can begin to develop a sense of how values are changing over the next few months.

Real estate inventory has been low in many places, driving home prices higher and resulting in multiple offers for most new listings. You may have experienced some of these competitive situations and backed off from your home search temporarily. If you continue to see low inventory levels in the months ahead, talk to a real estate agent about alternatives, including:

Alternative neighborhoods
Adjustments to your wish list
Availability of fixer-upper properties
New construction in your market
Changes to your financing to make your offer more competitive

Wish List Creation

Once you have honed in on your chosen neighborhood and put together your numbers, it’s time to take a look at your wish list for your next home. You may find that your preferences are out of step with homes in your chosen neighborhood or that you are underestimating the cost of some of the bells and whistles you have in mind. It’s important to consult with an agent or broker to make sure that your wish list makes sense for the neighborhood and budget you’ve targeted.

Remember, while you may be hoping for a turnkey situation with no repairs or improvements needed, that may not be realistic in the current market. Consider what changes you might be willing to make either before your move-in date or after. Think about your budget and see if you can stretch it to make some desired updates and upgrades on your own dime.

In the long run, it may be better for you to add some flexibility to your wish list. You don’t want to overlook a great property just because it doesn’t check off every single box. You also don’t want to overpay for a property in lieu of making some minor changes on your own.

Mindset Shifts

The home buying process can be mentally and emotionally draining, especially if you have had some difficulties in the past with a previous offer. Consider the following mindset shifts to set you up for a more positive experience this time around.

Instead of focusing on easy fixes like paint color or appliances, focus on the bones of the house, the location, and other factors that aren’t as easy to change.
Remember to set a budget that makes sense for your lifestyle. You don’t want to overextend your homebuying budget if you normally spend a fair amount of money on travel and entertaining, for example.
Understand that creating your home is a process that can take months or even years. You don’t have to replace all your furniture when you buy your new house or have two new cars in the driveway. Take your time and make changes that are meaningful to you without the financial pressure of a full-scale transformation.
Know that there are always twists and turns on any worthwhile journey, and buying a home is no exception. Delays and setbacks may come. Prepare for them emotionally in advance, and remember that the only thing to expect is the unexpected.

A trusted real estate professional is a valuable resource who will be with you every step of the way to the closing table and beyond. Start early collaborating with an agent or broker so that you are better prepared for your 2022 home purchase.

Filed under: Appraisal, Blog, Brooklyn, Buying, Douglas Elliman Real Estate, Finance, Home Inspections, Interest Rates, Investing, Market Research, Mortgage, Real Estate, Uncategorized by Ryan Roberts
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What To Expect From The Closing Process

When you watch a show on HGTV where an eager young couple is looking for a home, it usually ends when the offer is accepted. In real life, however, that is only the beginning of the story. The closing or escrow process has its own rules and challenges. By being prepared for each step of the process, you’ll be able to stay calm, cool, and collected—even if the unexpected occurs.

Generally, the closing process takes anywhere from 30–60 days. In the case of a cash transaction, it may take less time to close, since much of the timeline is built around a loan approval. By contrast, in the case of a sale with a home sale or purchase contingency, the closing process can take quite a bit longer.

Most escrow periods will include the following steps, though there may be some variability based on market conditions and the type of mortgage for which you are applying.

Home Inspection

One of the first things that will happen after your offer is accepted is the home inspection. At that time, your inspector will conduct a thorough review of the home’s condition, including systems, appliances, finishes, and structural issues. If he or she identifies potential problems, you may ask for a secondary inspection from a specialist.

You will receive a report after the home inspection, usually within 24 hours. You will then use this to determine whether or not you wish to continue with the transaction, ask for repairs from the homeowners, or plan to make repairs yourself after you move in.

In some low inventory, high demand markets, you may choose an “information only” home inspection at the outset. That way the homeowner knows that you will not be seeking additional repairs based on the inspection report, though you’ll still have the option of exercising your home inspection contingency and discontinuing the purchase in the case of unacceptable structural or system conditions.

Appraisal

The appraisal is designed to reassure both the buyer and lender that the home is worth the price you’re paying. This protects the lender from loaning money that cannot be recouped in the event of a foreclosure. It protects the buyer from making a bad decision and overpaying for a property that will not retain its value.

If the appraisal comes back lower than the purchase price you have already agreed to, you have a number of options:

You may choose to discontinue the purchase based on the appraisal contingency that was part of your offer.
You may choose to add your personal funds to the loan in order to make up the shortfall from the lender.
You may choose to ask the seller to renegotiate based on the lower appraised value.
You may choose to ask for a reappraisal or provide information to the appraiser to justify the purchase price.

If you choose to add funds to make up the shortfall, check with your lender to ensure that it doesn’t create problems with your loan underwriting.

Loan Underwriting and Approval

During the underwriting phase of your mortgage approval process, you will be required to gather and submit documentation to support your application and facilitate your approval. It is important that you do not take on any new credit or make any major purchase decisions during this time, as a significant change to your financial or employment situation could result in a denial of your mortgage loan.

In addition, your loan officer may ask for repair receipts, proof of homeowner’s insurance, and other documentation before the loan receives final approval. All of this is done to ensure that the house is in good condition and properly protected since it is essentially serving as the collateral for the loan.

Homeowner’s Insurance

You will need to obtain a homeowner’s insurance policy before you can close on your house. Check with your current insurance company to see if you can bundle this with your auto or life insurance policy or check with your real estate professional if you need a referral to a reliable insurance agent or company.

Clear to Close

This is the indication that your loan has received final approval and that you are now able to schedule your closing. Once you have received the clear to close, you will also find out how much money you need to bring to the closing table and how you will provide that money, whether through a certified check or a wire transfer.

Remember to communicate directly with your real estate attorney in order to ensure that any wiring instructions you receive are legitimate. Hackers frequently access emails regarding home sales and send fraudulent wiring instructions. It is essential to exercise caution during this process and double-check any unexpected communication that you receive.

Final Walkthrough

Either the day before closing or earlier on closing day you will walk through your soon-to-be new home with your real estate agent or broker. At that time you will check to ensure that the house is in the same condition as agreed upon in your sales contract and that any negotiated repairs have been properly completed.

Should you find that there is damage to the home or that repairs have not been completed, you can still negotiate to have funds withheld at closing from the sellers in order to complete these items. Alternatively, the sellers can pre-schedule and pre-pay a contractor or repair professional of your choosing in order to ensure that the repairs will be completed after closing.

Closing Day

While closing day is exciting, you will probably find that it is a surprisingly relaxing part of the process. You may meet in the office of a real estate attorney, title company, or lender’s office. If for some reason you are unable to attend the closing in person, you may designate a proxy to sign for you. In some cases, you can conduct a remote closing as well.

Filed under: Appraisal, Blog, Brooklyn, Buying, Douglas Elliman Real Estate, Home Inspections, Mortgage, Real Estate, Selling by Ryan Roberts
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Should You Ever Buy A House That Is An “AS IS” Property?

It really depends on the house and the situation. There may be two reasons a house is marketed as an “As Is” Property. The first may be because the seller just doesn’t have the money to make the necessary repairs, and wants to get out from under the cost of repairing the property.

The second reason is much more difficult. A word of caution is in order. The house may have serious problems! Something serious may be defective…so buyers beware. Generally speaking, an “As Is” property tends could have a major structural or functionally obsolete (i.e. expensive!) problem. Typical problems may range from a faulty roof, termite damage, problems with the foundation, leaking pipes or other plumbing problems, to problems with the electrical or mechanical systems to name a few.

It is in the buyer’s best interest to have a full home inspection completed and all the problems documented, so that the buyer is aware of any potential problems with the property.

Filed under: Blog, Electrical, Home Inspections, Investing, Real Estate, Roof, Uncategorized by Ryan Roberts
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Home inspections…what’s involved and are they mandatory when buying a home?

A home inspection is not mandatory when you purchase a house, but it is strongly recommended that you have any home you’re planning on buying inspected by a licensed inspector. It is important to know the current condition of the property. A home inspector has the training and expertise to provide an objective opinion about the condition of the home. The inspector will carefully examine the home’s structure, roof, plumbing, electrical wiring, heating and cooling system, and appliances.

He or she will also provide a written assessment of the house’s condition. The inspection will tell you what repairs might need to be made to the home. The inspection can also alert you to any serious problems the house may have – before you buy the house. Fees are paid to the inspector by the buyer. If there are problems or repairs that need to be made, you can request during your negotiation that these repairs be made as a condition of the sale. Home inspections are an important part of the purchasing process that should not be overlooked.

Filed under: Blog, Buying, Electrical, Heating and Cooling, Home Inspections, Roof by Ryan Roberts
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