Homebuying Tip: Buy or Sell - Which Comes First?

In our continuing effort to help you be as informed and knowledgable as possible about the home buying process, we offer this important advice.

Buy or Sell… Which Comes First?

If you're looking to move up or down in the real estate market, this is a major concern.  Do you try to sell your current home before you purchase, or should you buy a new home and then sell your current one?  After all, you don't want to be without a place to live, should your present home sell before you find a replacement house.

Research short-term rental and storage options (family, friends, storage facilities, containers).  Talk to school officials in your new neighborhood.  They may allow your children to start the next semester in what will be their new school, if you have an offer pending in the neighborhood.

Finding a new home while you still own your present home could also present some financing issues.  One of those issues could be helped with the use of what is know as "Bridge Financing."

Bridge financing is a loan for the down payment on a new home backed by the equity in your old house, typically at prime plus two percentage points.  While helpful in certain circumstances, bridge financing can be expensive.  If you have good credit but your income isn't high enough for you to qualify to carry a bridge loan plus both mortgage payments, consider a no-ratio mortgage, which doesn't take into account your debt-to-income ratio.  Rates are higher but you can refinance later.

Another alternative would be to draw on a home equity line of credit on your old home.  Rates are often more than a point lower than on bridge loans.  But be careful, you might have to pay a penalty fee if you sell the house less than a year after taking out the line of credit.

If there is any area of the home buying process that you have a question about and would like for us to post a tip about it here, leave us a comment or question below and we'll cover that for you in a future post.

Home Improvements - Consumers Spending Less

The median price of new and existing homes dropped 10%, to $225,000, in the fourth quarter of 2006 over the same period a year before, according to the National Association of Home Builders.  The value of remodeling has been shrinking, too: A homeowner who finished a basement — a $57,000 job on average nationally — got back 79% at resale in 2006.  In 2005 the same job returned 90%, according to the 19th-annual Hanley-Wood's Cost Versus Value survey, published last fall.

Remodeling a bathroom with upscale products like stone countertops and a bidet cost $38,000 and returned 77% in 2006, down from 93% in 2005.

The diminishing returns have dampened spending on remodeling, which grew by 1.5%, to $168.7 billion, in the fourth quarter of 2006 over 2005, according to a report released in January by Harvard's Joint Center for Housing Studies.  In 2004 and 2005, quarterly increases were as high as 20%.

Many homeowners are choosing to "postpone or pass on major home improvements," says Nicholas Retsinas, the director of the center, and that is likely to continue until the housing market picks up.

What about you?  Thinking of a home improvement or remodeling project?  Wonder if you'll re-coup the investment?  Post your thoughts or comments here.

 Modular Homes: What Are They and Do You Want One?

Understanding the differences between housing options when you are searching for a home to purchase is very important. In your search for your dream home, you will encounter housing terms such as stick built, modular, and manufactured (mobile home). Each type of dwelling has their benefits and drawbacks, both temporary and long term. Primarily though, confusion exists about modular home manufacturing.  Also, many are unaware of the benefits of owning one.

The overall production of modular homes is a unique process. However, design begins (as with most floor plans) with an architectural engineer using a CAD (Computer Aided Design) program, and is approved by structural engineers for durability and safety. There are benefits to having your home constructed in the fashion of a modular home. The construction of the modular home sections begins on an enclosed factory floor. Quality control is strictly adhered too for each section of the house. Your home during the building phase is never subjected to inclement weather conditions, and usually the home can be ordered and delivered on site with in two weeks. Also, during this phase your contractor can set a pre - made foundation, and ensure that all necessary permits and grading work is completed in time for your modular home delivery. Finishing work such as crown molding, carpeting and appliance installation is completed once the home is joined and all utilities are hooked up. During this phase you can begin to pack and schedule your date for move in. Note worthy too is the fact that many modular homes can be special ordered from any standard house design on the market.

In a comparison between modular and manufactured homes the differences are quite clear. When comparing them, the potential home owner must think in terms of the long run. It's true manufactured housing does have short term benefits, but over the long haul it might be wise to invest a little more money into a modular home.

• Modular homes appreciate in value, manufactured homes depreciate.
• Modular homes are set on a permanent home foundation, manufactured homes set on a block pier making financing harder if not impossible to obtain.
• Modular homes meet state and local building requirements and are inspected, manufactured homes do not, and structural reliability can be faulty.
• Modular homes meet federal, state and local regulations, while manufactured housing must meet only HUD (Housing and Urban Development) requirements.
• Modular homes are accepted into most communities of stick built homes, but restrictive covenants exist on where a manufactured house may be placed.
• Modular homes are, in comparison, just as energy saving in heating and cooling as any stick built home.

Give us your thoughts or opinions about modular homes. We'd love to hear from you.

Prediction: More Pain for Homeowners

A glut of vacant homes suggests that the U.S. housing market has not yet stabilized and may be poised for another downturn. "Now that oil prices and mortgage rates have stopped falling, we will be back lamenting the downturn in the housing market and its spreading effects on the economy in the second quarter, much as we were in the summer and fall 2006," Merrill Lynch economist David Rosenberg wrote. "Looking at the inventory backlog and still-stretched affordability levels, this story is far from over."

The Federal Reserve's policy-setting Federal Open Market Committee cited "tentative signs of stabilization" in the housing market when it voted unanimously to keep interest rates on hold recently.

Pending home sales jumped a stronger-than-expected 4.9 percent in December, the biggest gain since March 2004, supporting ideas that the worst was over and the housing slowdown would not tank the broader economy.  

Get the full story here…

Then leave us your comment about the article.  We'd love to hear from you.

Real Estate Contract Negotiations Like a Pro

When buying a home you want to get the lowest possible price and close on the house within a reasonable amount of time so you can move in. The seller wants the most for the home he or she can get, so it takes some negotiation to make it all come together for both parties.

1. Let the seller know what you need or expect in a clear and reasonable manner. Sometimes buyers submit letters to sellers depicting why the property is not worth the asking price and pointing out the faults. This is a sure way to start the negotiations off with a defensive seller. It would be best to anchor a reasonable price, while continuing to remain polite and respectful of the sellers' home.
2. Be prepared to solve any repair, title, survey or loan problems fairly so there are no future problems to be addressed at closing.
3. Never respond to offers emotionally. This style of negotiating can turn the seller angry or defensive and can escalate into negative comments, table pounding and threats to walk out on the offer.
4. Keep your cool. Never argue. Arguing can sometimes make the seller want to work against you instead of working with you.
5. Don't be too quick to respond. Don't ignore or respond to the sellers' arguments or statements immediately. Make it known that you are listening carefully and considerately, but don't reject or accept any offers until you have had time to carefully consider them.
6. Have any unclear portions of the proposals clarified completely.
7. Never discuss personal issues which involve the seller or buyer, such as an urgency to move in or some particular financial status.
8. Let trust increase the buyers leverage by; 
   –>listening and understanding what the seller has to say;
   –>convey an appreciation or admiration for the sellers home decorating and gardens;
   –>respond to counter offers within a reasonable time frame.  

    

9. Find a common ground with the seller. This can be a very powerful tool in the event of multiple offers. Sometimes a seller may select a contract for personal reasons, like if the buyer's family reminded the sellers of themselves when they bought a home with their young children, or just by sharing the same religion.
10. Understanding your leverage as the buyer. The more the buyer can find out about the seller's needs, the better chance the buyer has to find solutions in negotiation. The buyer must be able to appeal to the seller's concerns. For instance, if the house has been on the market for over 300 days, the seller will have a lot more leverage than they would have with a brand new listing. If the sellers time frame is forthcoming, then the buyer can meet it with some leverage, unless the sellers have multiple offers.

Most buyers usually offer less than the listed price of a house. So, how much under the listed price should you offer? That all depends if the house is listed in a strong seller's market and the market analysis of the recent sales in the neighborhood from where the house is being sold. The buyers should do their homework before submitting an offer. They might risk offending the seller and have their offer rejected immediately if they don't.

If there are multiple offers on one property, disclosure is favored among all parties. However, the seller or agent representing them will make the final decision as to how the offers will be handled. The seller may disclose the terms of one offer to stimulate another buyer to submit a better offer. Normally the procedure for multiple offers is to notify each party of the multiple offers that have been received. Each of the parties is then given an opportunity to amend their offer and submit it within a certain amount of time. After all offers are on the table, the seller is once again free to review the amended offers and select a buyer to negotiate with. Sellers are in no way obligated to accept the first offer that comes in. Any offer selected may be countered, negotiated, or accepted as is.

Have you ever encountered a bad contract negotiation experience? Tell us about it with your comments. We'd love to hear from you.