Tips for Alert Home Buyers

Are you looking for a home to call your own? In New Bern's current bargain-rich real estate market, you’ll find that you’re not alone! If it’s been a while since you last house-hunted (or if it’s your first time out), it’s important to go over some basics.

A real estate agent or broker who lists a property is working for the seller. Since it takes a buyer to make anything happen, there are also buyer’s agents. Although anyone is free to buy or sell on their own, there are good reasons why most buyers decide to enlist a buyer’s agent to represent their interests exclusively.

A Buyer’s Agent Protects You

Let’s say you stop by a weekend open house, and there it is -- your dream home! The listing agent is very nice and wants to help you to write up an offer to purchase through her.  This is called a “dual agency,” and is not necessarily a great idea (some brokerages even forbid it). The problem is that the seller's agent rightly wants to get the highest price for the property because she represents the owner.  If I were working with you as your buyer’s agent, my job would be to represent your interests, so an offer I wrote could look quite a bit better from your prospective. That’s why it is prudent to find a agent to represent you before even starting your search. 

Loose Lips Sink Ships

Whenever you are house hunting, be careful of what you say to the seller's agent. Resist the temptation to discuss financial matters or to mention that you are in a rush to buy: either could damage your chances of getting the home you want on terms you want. Always bear in mind that the agent is working for the seller, not for you.

Consider Signing a Contract

As soon as you sign a contract with a buyer’s agent, you put a real estate professional to work for you. It is a legally binding agreement in writing that obligates the agent to work to get you the best deal possible. You may also sign an exclusive contract with your buyer’s agent, which gives the agent an extra assurance that his or her work is likely to accomplish what you both want -- a deal that puts you in your new home. 

  

Finding an experienced buyer’s agent for your side – one you feel comfortable with, who listens to your needs and who offers expert suggestions and advice – will be well worth the time it takes. But it doesn’t even have to take much time: I’m right here!  

Bank Owned Homes: Buying Opportunity

These days the words “bank owned homes” have become practically synonymous with a single word: “opportunity.”  With prices and mortgage rates this low, first time home buyers, investors and seasoned property owners alike are looking at a raft of buying options unlike any the New Bern area has seen in a very long time. 

That option of buying a bank owned home has certainly opened a viable route for those looking to own a home at the fraction of what it cost just a few years ago. But not without a price:  the best bank owned home bargains are almost certain to fall into the ‘fixer-upper’ category.

When considering the purchase of one of our bank owned homes, I’ve found that my most successful clients have a few qualities in common:

-          patience – they wait until they’ve found a house that suits all their needs

-          prudence – they resist the temptation to take out too big of a loan

-          realism – they know how much hard work they will be willing to put into the house

Finding the right fixer-upper should be approached as a process: in other words, never buy the first home you see until after you’ve checked out some of its competition. There are more foreclosures on the market than ever – a phenomenon that works to your advantage. When you do find the right home, make sure to take out a loan that makes sense. Often people who are in a hurry to buy a house are tempted to take out a loan without giving enough consideration to its immediate and long-term implications.  Being coolly realistic as you work out the numbers will pay off for a long time.

Once a bank owned home is officially yours, the hard (often fun!) work begins. Buying a home in need of repair has always been the surest way to find a deal, but it is also the way to improve or develop home maintenance skills, bond with family members, and keep a tight rein on the family budget. Here, too, you need to be careful not to get carried away– you don’t want to overbuild or overdevelop beyond what is appropriate for the neighborhood setting. In other words, keep your end goals in mind.  My advice to clients varies depending on their individual needs: Is it an income property?  Or the family home for the next 15 years? 

Foreclosures show no signs of slowing down in the near future, so this summer's buying market is opportune.  If you’re considering buying a bank owned home, call me today to go over your options and to put a plan into action! 

Buying a House in Today’s Mortgage Market

Anyone interested in buying a house in Craven County today has heard that they should expect to find tougher mortgage lending requirements. Sometimes that can seem arbitrary -- or just plain unfair. But unfair or not, the new lending reality is probably here to stay for a while, and the causes are understandable.

The mortgage industry learned a powerful lesson from the past, when it pretty much gave anyone who applied a generous loan – sometimes with practically no questions asked. But this “generosity” created financial problems for both the banking industry and the country as a whole. It's not hard to understand why lending guidelines are stricter.

Reducing Loan Defaults

The overriding reason for tougher lending policies is to reduce the number of loan defaults. In order to qualify for a mortgage, borrowers are finding that lenders now look more closely, may require a higher annual income, better credit score, or a larger down payment. Their high-priority goal is preventing any foreclosure situation where the bank owns a property it has to sell or rent itself.

Questioning Future Value 

For many years, homebuyers never questioned the investment value that seemed to automatically accompany any piece of real estate. Buying a house was like investing in a blue chip stock: certain to rise. The advent of a shrinking Dow Jones Average preceded the phenomenon of ‘upside down’ homeowner equity. But in both cases, long gone is the idea that everyone should expect to find no-brainer investment opportunities. When buying a house can mean exposing the lender to a future where more is owed than a house is worth, they naturally seek a safer place for their money.  Since a smaller loan or larger down payment achieves that goal, that’s what lenders tend to offer.

Lowering Consumer Debt

During 2010, the nation’s ten largest mortgage lenders turned down about 26% of all applications (according to the Wall Street Journal).  In many cases, that could be attributed to lowered credit scores – due in turn to increased debts from credit cards or unpaid student loans. In fact, those heavy debt loads are part of what got homeowners into financial trouble and helped to fuel the housing market crisis.

In the short term, homebuyers denied a loan can’t help but be keenly disappointed. But it can ultimately provide time to let them raise their credit scores, increase their savings, and get their financial affairs onto firm ground. The ultimate effect should be to put the whole housing market there, too.

If you’re considering buying a house, I’d like to help you get pre-qualified under the current mortgage guidelines. Once you see what real values are out there and available to you, I think you’ll be glad you called!

Tax Season is Over...or is it?

This is usually the time of year when home owners have gotten through tax season, heaved a sign of relief, and gone back to working on more important matters – like earning enough to make reducing taxes a goal worth pursuing. 

This year, the latter part of April may be a little different. Because this is an election year, tax matters are already being widely debated, and changes that could affect everyone are more possible than usual. I am bringing these topics up for discussion with the firm caveat that your own planning (including home buying decisions) should always be made after consultation with the financial experts you trust. Currently, federal and NC rules carry tax benefits that can greatly reduce a homeowner’s tax liability. They are very unlikely to be eliminated, but you may want to keep your ear tuned whenever you hear these topics under discussion, because seemingly minor changes can have major impacts.

Mortgage Interest and Points

Many renters found that they were able to use the standard deduction tables to simplify their federal filings.  Homeowners, on the other hand, were usually better off using itemized deductions because of the welcome mortgage interest deduction. Qualifying points paid to obtain a mortgage can also generally be deducted in the year they are paid.

IRA Penalties

Everyone with a standard Individual Retirement Account has heard about the penalties for withdrawing funds before retirement age. But currently there is an exception in some home buying situations. Generally, some IRA funds can be applied to home buying (or building) a first home without those tax penalties. The catch is that you can only withdraw up to $10,000 over your entire lifetime (not annually). Those with Roth IRAs may find additional tax advantages, too.

Real Estate Taxes

Qualifying property taxes can amount to sizeable deductions. If, in the home buying process, you reimbursed a seller for prepaid property taxes, that amount can qualify, too.

As in all financial planning, you should consult your accountant or other tax professional before making any important decisions.  And whenever buying or selling a property makes sense for your family, I’m standing by to answer all of your real estate questions.

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Renting or Owning .....that is the question

Tenant or Owner? With rental rates rising, a lot more tenants in our area are likely to be wondering whether they should be taking a new look at their residence situation.

Conceptually, paying your own mortgage has always seemed more appealing than paying a landlord’s mortgage every month.   Especially this time of year, when tax time puts the whole year’s finances out there on one piece of paper, seeing how thousands of dollars have slipped away for another year can be a little frustrating.  Not surprisingly, then, this is a time of year when, as a buyer’s agent, I begin hear the phone ring a little more often!

Seen from the long term perspective, dollars put toward a home you are buying go toward building a future -- something rent dollars cannot do. But there are more intangible benefits to owning versus renting: control over the title being potentially the most valuable.  Any tenant who has been forced to move because the homeowner needed to sell, or was foreclosed upon, or decided to move back in himself, is someone who has learned the value of controlling when their next family move should happen.

For tenants newly considering becoming a first-time homeowner, consulting a reputable local buyer’s agent is the place to start. As an experienced buyer’s agent I help you determine a practical budget, and then guide the pre-qualifying process to make it happen. 

The next step will be to identify properties that fall within your budget.  Are there neighborhoods you have always wanted to live in, but thought you couldn’t afford?  In today’s market, just about every neighborhood – even the most experienced ones – have experienced some foreclosures.  I can help you identify potential homes at bargain prices.  Some might need a little work, but the long-range payoff can be worth it. 

The bottom line? Everyone has to pay to live somewhere, and in today’s market, owning a home in our area is more attainable than ever.  With mortgage rates still at near-historic lows, if you are on the verge of becoming a former renter, now is the time to consult a reputable local buyer’s agent.  I am always available for questions -- and would be happy to schedule a pre-qualification consultation anytime you decide it is worth exploring.

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252 635 1100