5 Questions to Ask Your Home's Inspector

Most home buyers feel like they are bona fide real estate experts after all the studying up on loans and neighborhoods, online house hunting and open house visiting it takes just to get into contract on a home these days. But for all but the most handy of house hunters, getting into contract and starting the home inspection process only surfaces how little you actually know about the nuts and bolts and brick and mortar of the massive investment you’re about to make: a home!

So, you hire a home inspector, but it seems like they’re speaking an entirely different language - riddled with terms like “serviceable condition” and “conducive to deterioration” - about your dream home! Here are 5 questions you can use to decode your home inspector’s findings into knowledge you can use to make smart decisions as a homebuyer - and homeowner.

1. How bad is it - really? The best home inspectors are pretty even keeled, emotionally speaking. They’re not alarmists that blow little things up into big ones, nor do they try to play down the importance of things. They’re all about the facts. But sometimes, that straightforwardness makes it hard for you, the home’s buyer, to understand what’s a big deal and what isn’t so much - the information you need to know whether to move forward with the deal, whether to renegotiate and what to plan ahead for.

I’ve seen things categorized in home inspection reports under “Health and Safety Hazards” that cost less than $100 to fix, like replacing a faucet that has hot and cold reversed. And I’ve seen one-liners in inspection reports, like “extensive earth-to-wood contact” result, after further inspection, in foundation repair bids pricier than the whole cost of the home!

In many states, home inspectors are not legally able to provide you with a repair bid, but if you attend the inspection and simply ask them whether or not something they say needs fixing is a big deal, nine times out of ten they will verbally give you the information you need to understand the degree to which the issue is a serious problem (or not).

2. Who should I have fix that? I always ask this question of home inspectors, with dual motives. First, very often, the inspector’s response is - “What do you mean? You don’t need to pay someone to fix that. Go down to Home Depot, pick up a ___fill in the blank__, and here’s how you pop it in. Should cost you $15 - tops.” And that’s useful information to know - it eliminates the horror of a laundry list of repairs and maintenance items at the end of an inspection report to know that a number of them are really DIY-type maintenance items. Even buyers who are really uncomfortable doing these things themselves then feel empowered to either (a) watch a few YouTube vids that show them how it’s done, or (b) hire a handyperson to do these small fixes, knowing they shouldn’t be too terribly costly.

And even on the larger repairs, your home inspector might be able to give you a few referrals to the plumbers, electricians or roofers you’ll need to get bids from during your contingency period, which you may be able to use to negotiate with your home’s seller, and to get the work done after you own the place. Dropping the inspector’s name might get you an appointment booked with the urgency you need it in order to get your repair bids and estimates in hand before your contingency or objection period expires.

And same goes for any further inspections they recommend - if neither you nor your agent knows a specialist, as the general home inspector for a few referrals.

3. If this was your house, what would you fix, and when? Your home inspector’s job is to point out everything, within the scope of the inspection, that might need repair, replacement, maintenance or furthe inspection - or seems like it might be on it’s last leg. But they also tend to be experienced enough with homes to know that no home is perfect. Many times, I’ve asked this question about an item the inspector described as “at the end of its serviceable lifetime” and had them say, “I wouldn’t do a thing to it. Just know that it could break in the next 5 months, or in the next 5 years. And keep your home warranty in effect, because that should cover it when it does break.”

This question positions your home inspector to help you:

• understand what does and doesn’t need to be repaired,
• prioritize the work you plan to do to your home (and budget or negotiate with the seller accordingly),
• get used to the constant maintenance that is part and parcel of homeownership, and
• understand the importance of having a home warranty plan.

4. Can you point that out to me? Often, when you attend the home inspection, you’ll be multi-tasking, taking pictures of the interior, measuring for drapes or furniture, even meeting the neighbors, or fielding several inspectors at a time. Worst case scenario is to get home, open up the inspector’s report and have no clue whatsoever what he or she was referring to when they called out the wax ring that needs replacement or the temperature-pressure release valve that is improperly installed.

Your best bet is to, at the end of the inspection, while you’re all still in the property, just ask the inspector to take 10 or 15 minutes and walk you through the place, pointing out all the items they’ve noted need repair, maintenance or further inspection. When you get the report, then, you’ll know what and where the various items belong. (One more best practice is to choose an inspector who takes digital pictures and inserts them into their reports!)

5. Can you show me how to work that? Many home inspectors are delighted to show you how to operate various mechanical or other systems in your home, and will walk you through the steps of operating everything from your thermostat, to your water heater, to your stove and dishwasher - and especially the emergency shutoffs for your gas, water and electrical utilities. This one single item is such a time and stress saver it alone is worth the lost income of missing a day of work to attend your inspections. 


Contact The Mortgage Mark with any questions!!

www.themortgagemark.com

mwilkins@capitalfmc.com

Five Costly Home Buying Mistakes

Buying a home is a big financial commitment – very likely, the biggest financial investment you’ll ever make. And if you don’t go about it the right way, you could end up making costly mistakes along the way. Here are five costly home buying mistakes:


Trying to time the market bottom

No doubt, the real estate market has been in a tailspin for several years now. As a result, everyone is in limbo — sellers are on the sidelines because many of them owe more on their homes that the home is worth, and buyers are waiting for prices to drop further. Remember, buyers: Home prices are just one factor in how much a home will cost per month. The other consideration is mortgage rates. They’re rising — and that means higher monthly payments. In fact, even if home values fall — and we’re expecting them to drop another 5-7 percent this year — higher mortgage prices could counteract that. For example, say a house was worth $300,000 in November 2010. If you bought it then, got a fixed-rate mortgage of 4.1 percent and put 20 percent down, it would cost you a little over $1,200 a month. If you waited just two months, and values dropped 1.8 percent, it would cost you $63 more per month; if you waited 14 months, when values are projected to be down about 6 percent and mortgage rates are projected to reach 5.7 percent (per Freddie Mac), your payments would be $126 more per month. Ouch.



Not researching loan options

Get this: Borrowers are spending twice as much time researching a car purchase than they are home loans — 5 hours versus 10, respectively — even though homes cost an average of five times more! This disparity can cost you thousands of dollars over the long haul. That’s why it’s important to shop around for different loan options. Contact The Mortgage Mark to compare different loan options.


Buying a house you can’t afford

In addition to getting pre-approved before you house hunt, know that as a general rule of thumb, the total cost of your mortgage payment (including any taxes and insurance) — should not exceed 30 percent of your take-home pay.



Not knowing your credit score

Find out what your FICO score is (or get a ballpark credit score ) and if it’s sub par – in the low 600s, for example – launch a campaign to raise it, keeping in mind that even a 20-point increase could save you thousands of dollars over the life of the loan. What’s ideal? The lowest interest rates are reserved for those with a score of 720 or above.



Falling in love too quickly

Love is blind! Don’t let your emotions get to the best of you. If you do, you may overlook costly flaws, skip an inspection, fail to factor in commute times (gas prices are up there!), property taxes, the location/neighborhood (an important consideration for resale purposes), and more. To ensure you’re getting the best house at the best price, take the time to shop around, comparing at least three homes before you make a decision. You’ll be glad you did.


Contact The Mortgage Mark with any questions!!

Mwilkins@capitalfmc.com  http://www.themortgagemark.com/

5 Insider Secrets For Buying Your First Home

Buying a home is not a discrete event; it's a process - a sequence of events that happens over time, sometimes over as long as several months or even years! While general guides to buying a home are a dime a dozen, I'vm excited to share with you some insider secrets you may not have heard elsewhere - one for each stage involved in buying a home. Here's to helping you make the best decisions at every phase of your homebuying process!

Stage One: Deciding Whether It's The Right Time to Buy.

Insider Secret: The market is the least important factor you should consider when deciding whether and when to buy a home.

Why: Everyone knows affordability is at an all-time high. Home prices are low, and so are interest rates. But trying to time the market is a fool's errand; many who get caught up in that game of trying to make sure they buy at the absolute bottom will end up losing out on very, very favorable conditions.



Beyond that, the most important considerations when deciding whether and when you should buy a home are personal, not market driven. On today's market, it only makes sense to buy a place if it's going to be sustainable and work for you for at least the next 4-5 years [if your town's real estate market has been fairly recession-proof] or 7-10 years [if the housing/foreclosure crisis has hit your area pretty hard].


Against this "smart holding period" backdrop, smart buyers decide to buy when it makes sense for:



- Their life plans (i.e., they are comfortable making the commitment to live in the same town, and the commitment to )

- Their family plans (i.e., whether they plan to get married, have children or empty their nest in the time they plan to own the home - and the implications of these plans on their space needs and location priorities)

-Their career plans (including, but not limited to: whether they have job or income security, whether they feel they will be working in the same area for the foreseeable future, and whether they want to work less or start their own business in the months or years to come)

-Their financial plans (including foreseeable changes in income and expenses, e.g., kids going to college or making partner at the firm).



Stage Two: Getting Pre-Approved.   http://www.themortgagemark.com/

When you work with a mortgage banker who has a strong track record of helping your real estate agent's clients out, you end up in a best of all worlds situation, nine times out of ten. First off, your agent will take you much more seriously once a mortgage broker they know and trust has run your credit, checked your income and approved you for a loan, as well as communicated with your real estate pro about your qualifications and what you can afford. Secondly, your agent can help you communicate with your mortgage broker, sometimes helping get past appraisal glitches or facilitating other workarounds, as they come up. Third, you get the assurance of working with a mortgage pro who has been vetted and vouched for by someone you not only trust, but someone who can verify that the mortgage broker has the ability to get transactions closed in the timely manner required of today's real estate sales contract. Otherwise, you may end up working with a competent mortgage broker who has a great track record when it comes to refinancing, but can't keep up with the pace and common obstacles to getting a home financed in the context of a sale.



On top of that, sometimes the relationship can help you negotiate out of a couple of line item loan fees (if your particular mortgage rep has the power to get them down at all), if push comes to shove and cash is tight to close the deal. Assuming you are working with a real estate pro you really trust, working with a mortgage broker they trust can save you, rather than cost you, money.





Stage Three: House Hunting

Insider Secret: "Distressed" doesn't always equal "discounted" - in some cases, a "regular" sale can be a deeper deal.

Why: Short sales and foreclosures have grown to comprise roughly 30 percent of the homes sold on today's market, even higher in some areas. The average sale price of foreclosed homes was 32% lower than the average sale price of non-foreclosed homes, at last count. However, it's not always the case that foreclosed homes or short sales - homes which are being sold for less than what the seller owes on their mortgage(s) - offer the buyer a fabulous discount.



Mortgage servicers and asset managers who make decisions about distressed properties are on the hook to their investors to recoup as close as possible to the current fair market value of every home they sell. Some banks even have a general rule of rejecting offers more than 10 percent or so below the home's list price, preferring instead to reduce the price by that amount and put the home back on the open market to see if any new buyers are activated by the price reduction to make an offer better than the lowball offer that was initially put on the table. On short sales, the bank is trying to get as close as possible to recovering what the seller owes - and may or may not be concerned with what the fair market value of the home is. (Nine times out of ten, there will be a big gap between fair market value and the seller's outstanding mortgage balance. If there wasn't, the seller wouldn't need to do a short sale!)



With so many distressed properties and homes with depressed values on the market, in many areas, the individual, non-distressed home sellers who are putting their homes up for sale right now are those who are very motivated to sell. Further, they are more likely to be flexible with you on everything that is negotiable, from contingency and escrow periods, to price, to repairs and included items.



Also, individual sellers can be emotionally motivated to sell to move on with their lives, get into their bigger (or smaller) house, or move on to their next job; banks, on the other hand, aren't people (!), so lack that emotional sense of urgency to get the properties sold, no matter how urgently you may think they should be trying to get rid of the foreclosed properties they own. (If you've heard the old advice that banks don't want to be in the home-owning business, I can tell you this. That is true, in a very general sense, but now they are and will be - for a long time to come. They have no emotions, have no urgent need to sell or move, and are not willing to give houses away at pennies on the dollar to get out of it, no matter what those infomercial folks say.)



Long story short: you can sometimes negotiate a better deal with an individual seller on a "regular" sale than with a bank on a distressed home sale. So, don't limit your house hunt to foreclosures and short sales, if you're looking for a good deal on your home.



Stage Four: Negotiations

Insider Secret: Your family and friends can cause you to lose your dream home.

Why: With so much information on the web and the news every day about the recession and the buyer's market, everyone seems to be an armchair economist/real estate savant. But much of that news is national and based on medians, averages and trends. That is, it might not necessarily apply to every home on the market in every city, and more importantly, it might have nothing to do with "your" particular home.



When I was a little girl, my best friend's grandfather would very carefully hand each of us a quarter, always doling it out with the sage admonition: "Don't spend it all in one place." We'd always smile, look at each other, then go ask our Moms for ten bucks apiece. In the same vein, people who are not currently in the market for a home have no idea what an individual home should "go for." If you tell your parents, church pals, or colleagues at work the blow-by-blow details of your offer, counteroffers, etc., you should expect to hear things like, "Oh, you're paying way too much!", "I think you should push them down another $10K," or "You know, you're in a better bargaining position than that." And sometimes, taking that sort of advice will end up blowing your deal. Work with your trusty real estate broker or agent to develop a smart strategy - with their experience in your local market - about what price and terms to offer. Then keep working with them to manage and maintain realistic expectations as you proceed through negotiating the contract to buy your home.



Stage Five: Escrow, Inspections and Underwriting

Insider Secret: It's critical that you attend your home inspections.

Why: When it comes to inspections, many first-time buyers expect that a home will either pass or fail. Except in a few jurisdictions where the government imposes certain condition requirements for a home to be sold, the home inspection is more about educating you, the buyer, as to the details and nuances of the home's condition than about seeing if the place hits a particular target for "good" or "bad" condition.



Home inspectors don't just look for things that need fixing, they also look to understand the home's systems and features, as well as to point out areas that will require your ongoing maintenance, highlight emergency shutoffs and other need-to-knows, and indicating where you should have specialists further inspect items of concern. Many home inspectors create vivid, detailed electronic reports - some, complete with color photos. But that's not enough!



If you're physically onsite at the home during the inspections, the inspector can physically show you the shutoffs for water, gas and electric - and how to use them. They can also point out, in person, any things that need repair, and give you some tips for maintaining the place in tip-top shape. Also, in many states, the general home inspector is legally prohibited (vs. the pest, roof or other "specialty" inspectors) from issuing a written quote or bid for repairs, to avoid a conflict of interest where they'd try to fabricate flaws in the home to get the repair job. However, the repair costs are one of the most important things a smart buyer wants to know!



If you show up, many inspectors will give you a rough range it would cost you to do various repairs, or otherwise indicate to you whether the needed repairs are "big deal" or "$10 home improvement store" fixes; some will even give you a few references to contractors they trust.



All around, you'll get much more of the detailed information you need to know whether and how to move forward with the transaction if you should up in person to the home inspections, rather than just waiting for a copy of the report to come to your email.



Contact The Mortgag Mark with any questions!
 
http://www.themortgagemark.com/   mwilkins@capitalfmc.com