HOW TO FIND THE RIGHT HOME TO PURCHASE

 You want to buy a home but where do you start?  Finding and buying the right home can sometimes feel like a blind person trying to cross the street in rush hour traffic.  It can be exciting but scary.  It is truly one of the biggest investments most people will ever make.  When done right it can bring happiness, security and the American dream! 

 People want to buy a home for different reasons; some want a safe place to raise their family near good schools and friends.  Others want a second home where they can come and vacation and maybe eventually retire to.  Others are looking for a great investment.  But all want to feel good about the home they buy and confident they did the right thing.  They don’t want to feel like they didn’t get a good deal and have a lot of undisclosed problems later on. 

 How does one go about finding the right home to purchase?

 1)  First of all, try to narrow down as much as possible what you want.  What area(s) would like to have the home located.  Do you want a single family home?  Townhouse?  Condominium?  You may want to do some research on-line if you don’t already know. 

 2)  What is your budget?  To save time and energy you will need to be pre-qualified or pre-approved by your bank or finance company.  By doing so, you won’t waste your time looking for properties that you can’t afford and/or won’t get loan approval on.  Now days, most Sellers will not accept any offers unless the offer comes with a letter from your bank saying you are “pre-qualified” or “pre-approved.”  This letter isn’t a firm commitment from a bank that you would definitely be funded and it does not lock you into any contract.  All it does is reassure all concerned that you look good for getting approved for a certain amount and the contract will actually close if your offer is accepted.  If you are paying all cash then instead of a “pre-approval” you would need “proof of funds” when the offer is submitted.   Getting pre-qualified or pre-approved doesn’t commit you to the bank or finance person who gave it to you.  A Buyer should actually have more than one finance source or bank giving them a “good faith estimate” before they sign for the loan.  That way you get more assurance you are getting the best deal on your loan.

 3)  Search for properties to see what is out there at what prices.  You can drive around, look in the paper, ask your friends, etc.  But most people today go on-line at real estate sites to search.  Once you have a Realtor to help you in your search, he/she can also send you properties.  For an Internet search, you can just put in the city name and the words “real estate” and many real estate websites will come up.  For instance, I work in and around Clearwater, Florida.  Go to “Goggle” or “Bing” and put in “Clearwater Real Estate” and you will have lots of websites pop up.  Click on the websites and search. The purpose of this is to give you an idea of what is available in your price range.

 4)  Choose a knowledgeable Realtor to help you.  You want an Agent helping you that will listen to you, that has good communication skills, one that is responsive to you, who knows the market and has purchasing process knowledge.  Contact a couple of real estate agents in the area you are interested in and ask questions.  Find one you like and that meets your needs.  Agents who represent you in the process of finding a home are called “Buyer’s Agents.”  They can take you to any home listed in the MLS (Multiple Listing Service), negotiate for you and write the contract and take you through the entire process.  The good news is a residential real estate agent is paid by the Seller (at least that’s the way it is in Florida). 

 Once you have done the above you are ready to find the right place that meets your needs.  Keep in good communication with your Realtor and let them know what you like and don’t like so they know more about what you are looking for.  Often time’s people don’t totally know what they want in a home.  It takes looking around at several places and areas and then the Buyer finally discovers what they do really want and like.  Be sure and have your Agent get what the “comps” are for the area.  The “comps” are the “comparables” (similar type properties that have sold) surrounding the property you are interested in.  The “comps” will show you what other comparable properties have sold for in the past 6 months.  This helps determine the pricing.  Once you have the property and the price you want to pay then your Agent will put in an offer to the Seller via the Seller’s Agent.  Your Agent can also help negotiate the contract price and terms for you. 

 Once the contract is negotiated and all signed by the Buyer and the Seller you now have an “executed” contract and are off to the finish line, which is the “closing.”  Between then and the day of closing you will get your home inspections done, start the financing approval (unless you are paying cash), the title company does a title search and makes sure you get a free and clear title to the property.  Your Realtor will let you know all these and other time line requirements. 

 Then comes the happy day of closing where all the monies change hands, the title has been cleared and you get the keys.  The home is now yours – Congratulations!

 I hope this has been helpful.  If you have any questions please feel free to email or call me: Sara Goldberg, Residential Real Estate Specialist at Dream Realty, LLC.  You can email me at saragold8@verizon.net or call me 727-512-8088.  Good hunting!

What is a “Short Sale” anyway?

What is a “Short Sale” anyway?

Buying a home these days can be confusing with “short sales” and “bank owned.”  Did you ever wonder what that means?  Simply put, a short sale occurs when the home owner owes more to the mortgage holder than what the home is worth.  The bank agrees to discount the loan amount (which means they allow it to be sold for less than what is owed).  This usually occurs when the home owner cannot afford to continue to make the payments on the home and the bank figures it is better to take a lower amount for the property than it would cost them to foreclose.  When a bank forecloses they take the property back from the owners and they then auction the property.  If they don’t successfully auction it then the bank keeps it (bank owned) and sell it themselves through their realtors.

Foreclosure usually hurts the home owners’ credit more than a short sale does.  It is also more costly to the bank to foreclose as they have to pay lots of legal fees.   Also, just because the bank agrees to allow the short sale does not mean that the bank won’t also try to collect more of the debt from the seller/owner who is doing the short sale.

Short sales can be really good!  Some lucky buyer’s have gotten great deals.  BUT, want to be short-sale buyers must have patience as short sales are unpredictable.  The average short sale can take from two to six months and sometimes much longer.  So, you have to be willing to wait it out.   I have observed that short sales are moving faster this year in many cases, compared to 2009.

When the Buyer submits an offer on a short sale, the Seller/owner of the property must first approve the offer and then it is sent to the bank for their approval.  That is where you wait, and wait and wait some more.

The bank will assign a negotiator who will get all the information on the property, the market value and financials from the seller.  It is this negotiator who in the end will make a recommendation to the “powers-that-be” in the bank or finance company on whether to accept the offer, reject the offer or make a counter-offer to the Buyer’s offer.  Your Agent (the Real Estate agent who represents you) will then let you know what the bank has or has not agreed to.  There are a number of things that could happen and it isn’t always cut and dry.  For instance, the bank may accept your offer but they may want the seller to come to the table with more money.  So, in order for the deal to be finalized, the bank, the seller of the property and the buyer must all agree to the terms.

Once you have a price agreed upon and the closing date set then that is when the Buyer will usually be advised to get the home inspection done, financing approved, and any other contingencies to contract approval done in a timely manner.  I say “usually” as sometimes a buyer may do the inspections and so forth prior to bank approval, but if the bank does not accept your offer you have just wasted your money on the inspections.

If the bank should respond to your offer with a counter-offer, wanting a higher amount (which they often do) then at that point you can say “no” and walk away from the deal, agree to pay more or, counter offer the bank’s counter-offer.  I can tell you from experience that the bank almost never will negotiate at that point.  They have gotten a “BPO” (Broker’s Price Opinion)* and they have determined what they feel the property is worth and what they feel they must clear in terms of money in their pockets when the deal is done.  Your Agent can advise you further on this at that point if it should occur.

A lot of times you will see short sales advertised as “Bank Approved price.”  What this means is there was an offer in on the property and the Buyer got tired of waiting and walked away or, the bank countered and wanted a higher amount which the Buyer wouldn’t agree to.  This price the bank “agreed” to will usually be good for a couple of months.  If there are still no buyers coming with an offer which the bank likes, then after a couple of months the bank will more likely consider and accept lower offers.  If getting a new offer in on the property goes longer than 2 or 3 months, then any new offer coming in starts the process over again.  The bank will usually want a new BPO and new financials from the seller of the property to re-determine what the price should then be.

Then there is that happy day when the bank accepts the short sale offer and it goes to closing.  The Title Company is there to makes sure the title is cleared so that the new Buyer gets the property free and clear of liens and has title insurance for that added assurance.

Although there are professionals helping the sellers and buyers all along the way, never lose sight of the fact that you as a buyer are also responsible.  You need to read the contracts and what you are signing, ask questions and look for yourself.  You can always get legal advise from an attorney as well when you feel the need.

This is not meant to be all-inclusive about what a short sale encompasses but it is a general over-view of what happens much of the time.  You can check with your Realtor who will be happy to answer any other questions specific to your circumstances.  If you have any further questions please feel free to contact me:  Sara Goldberg, Realtor with Dream Realty in Dunedin, Florida.  727-512-8088 or by email at Sara@DreamRealty.com

© Dream Realty, LLC 2010

*BPO -  The Broker Price Opinion of a residential property is conducted by a local, licensed real estate professional. The report combines information from a drive-by exterior examination, external data sources, previous sale data, property assessment data, recent comparable sales and current neighborhood listings. The BPO includes estimate of repairs to obtain fair market value and neighborhood information.  The BPO is not an appraisal and does not include an inspection of the interior of the property.