Below you’ll find some popular real estate questions and answers. Should you have a real estate question not answered please feel free to contact me.
Q. I want to redecorate our living space, but I don’t know where to begin. Do you have any decorating tips?
A. You can makeover your living space with these simple decorating tips:
- Change your color palette. You can choose neutral and earth tones, such as whites, tans, beiges, and golds. A room of monotone decors appears more spacious. And you can dress up a room with white walls, a white sofa, and white or glass coffee tables with accented throw pillows, colorful table runners and placements, and decorative rugs.
- Soften the lighting. Lighting adds warmth and drama to any room. A lamp or sconce lighting will provide more warmth and mood than overhead lighting. In your rooms, place your lamps and lighting arrangements so that they form a triangle of light in the room.
- Rearrange the furniture. Try moving your sofas away from the wall. You can place two sofas in “V” formation with tables behind them. Or you can arrange the sofas so that they’re parallel to each other. Placing a rug between them creates a conversation area.
- Create a focal point. Select a special focal point in your room: a piano, piece of art, picture, or floral arrangement. Make sure to hang your art and pictures at eye level. (Many people hang them too high.)
- Create warmth. You can transform your dining room by adding lamps on each side of the buffet. Be sure to choose tall, sleek lamps to add drama to your dining area.
- Experiment with ideas. Don’t be afraid to experiment with light, color, and furnishings. Use your own personality and charm to create a living space where you’ll enjoy entertaining and spending time with your family.
Q. What’s the purpose of a home inspection?
A. A home inspection is generally performed after the buyer and seller have entered into a written contract. It’s a review of the home’s condition, including the heating system, attic, foundation, and a mold review. The point is to identify any area of the home that needs replacement or repair. Some buyers use the report to negotiate the final price of their purchase.
- You may choose to buy a home and make repairs, or you may walk away from the property if the costs would be too high for your budget and the sellers refuse to lower the price or make the repairs. You can get your earnest money back provided your contract has a “sale contingent on inspection” clause.
- You’ll also need to get an appraisal, which serves to assess a value to the property for financing purposes. You need to know that the property you’ve selected will appraise at or above the amount you’ve contracted to pay/finance for it.
Q. What factors affect the value of my home when I sell it?
- If you’re thinking about putting your home on the market, here are some of the most important factors affecting its value:
- Comparable homes in the area that sold in the past 30-90 days.
If some of the recent sales were short sales or foreclosures, it may affect the value of your home. Also, the more homes currently available for sale, the lower the value your home may have.
- Your location. Access to highways or public transportation, the quality of your school district, and too few (or too many) commercial or residential developments can have an effect on a home’s value.
- Major home systems. If your water heater, electrical, or heating and air-conditioning systems aren’t working properly it can have a significant affect on the price a buyer pays for your home.
Q: Who determines the value of my home?
A: When you’re ready to sell your home, you may be wondering what price to ask and how much you’ll get. There are two main people who determine the initial and final price of a home.
- Real Estate Listing Agents will research comparable sales by looking online and seeing what homes have sold for in the last 6-12 months. Sold prices are a stronger indication than “asking” prices. Important – how similar are the homes that sold to your home in size, features, and condition?
- Buyers will make an offer based on their ability to pay and how much they like your home compared to other homes for sale.
Q. How can I secure a low mortgage interest rate?
A. Securing a low mortgage interest rate helps make your monthly payment more affordable and saves money over the life of your loan. Besides using a larger down payment, here are three things to do to secure a low mortgage interest rate:
- Compare multiple lenders and meet with your top three. Review the application process and your credit report to start working on any issues you may have. The higher your credit score, the better borrower you will become. Lenders will review the various loan programs with you.
- Your debt-to-income ratio should be below 36 percent before you apply for a mortgage. The lower it is, the greater your eligibility for a higher loan amount.
- Don’t make any drastic changes such as changing jobs or making large purchases on credit cards. You want lenders to see you have a stable job history and ability to make the payments.
Q. How can I “stage” my home so it sells quickly for the price I want?
A. Make sure you address both the outside and the inside of the house by cleaning and de-cluttering everything, from the front yard to the garage to the kitchen, bathrooms, and basement. Put away your personal items so buyers can imagine themselves living there.
- One way to take years off your home is with paint. Check the home’s exterior paint job, and don’t forget the front door, mailbox, garage doors, and walkways. In the interior, remove the pictures from the walls (as well as old wallpaper) and paint the walls in a neutral color. Philadelphia’s Paint Quality Institute (PQI) for the 2nd year in a row, is predicting gray to be the most popular hue for home interiors according to a recent post on www.paintquality.com.
Q. What advice can you give to first-time homebuyers?
A. The best advice is to learn from the mistakes of others. Here are three common examples:
- Not knowing what you can afford. Examine your budget, get a copy of your credit report, and sit down with a qualified lender to determine how much of a loan you can afford. Feel free to ask me for a list of lender recommendations, then make sure you comparison shop for a mortgage.
- Forgetting to consider the overall costs of home ownership. You can make the monthly payment, but remember to add in the cost for homeowners’ insurance, property taxes, utility costs, plus maintenance.
- Paying too much for a beautifully staged home. The home looks perfect, but will it look that way when you move in your furniture?
- Get more information from this free home buyers guide.
Q. What do buyers really want when looking for a house?
A. Here are ways to tap into what every buyer wants:
- Every buyer wants a place to call “home.” The decision to buy is emotional, not logical. Buyers look at a “house,” but they’re really evaluating it for its potential to become their home. Properly staging your house allows buyers to have an emotional experience – seeing their family living there.
- Every buyer wants a bargain. Subtly influence buyers by using such phrases as “priced to sell” or “a unique bargain at this price.”
- Every buyer wants to claim special discounts. You can motivate a sale by creating a sense of Consider using special terms that expire on a fixed date.
Q. What experts should I talk to if my home is about to go into foreclosure?
A. Avoid scammers, and talk to one or more of these professionals:
- An experienced real estate agent experienced in short sale/foreclosure properties will help you review your options.
- A Tax Expert will advise you if you do a short sale is in your best interest. And provide you with information on if a forgiveness of debt may be considered taxable income.
- A Credit Counselor can help you develop a plan to avoid future financial difficulty as well as help you repair your credit score.
Q. What are some mistakes I should avoid when I invest in real estate?
A. Even smart investors make mistakes. Here are three common mistakes and what you should do instead:
- Not doing your homework. Evaluate your financial situation and understand the right numbers to calculate. Learn the basics about cash flow, appreciation, and loan amortization.
- Not finding the right property. Do a thorough search, including “off MLS” deals and best buys, to find the right property for you. Work with a realtor who is an Investor Specialist. He or she can help find a good investment property.
- Failing to get a professional inspection. You need to know if there have been problems with the property and that they’ve been properly addressed.
Q. What homework should I do before I get a loan to buy a home?
A. Here are three big things many people don’t consider when buying a home:
- Understand how much home you can afford. Calculate the two numbers bankers and mortgage lenders use to determine how much they will loan to you: payment-to-income ratio and debt-to-income ratio (visit Bankrate.com and click “Calculators” at the top for examples).
- Understand the basics of home financing. Your ability to afford a home will be related to its price, your down payment (and the amount you’ll finance), the interest rate, other terms and costs associated with your loan, and the type of loan. Study these items and the relationship between them.
- One way you can save thousands is by making your own mortgage acceleration payment schedule. Take your current monthly mortgage payment of principal and interest and multiply that number by 13. Divide that total by 12 to get your new “accelerated” monthly payment.
Q. What do I need to know about negotiating when I sell my home?
A. Revealing too much information to buyers when you’re negotiating the sale is a common, costly mistake. To get the most for your home:
- Work with a professional realtor who knows questions to ask potential buyers that determine their motivation for buying and what price they can afford.
- Don’t mention the “appraisal” value of your home at a showing to try to persuade a buyer to pay more for it. An appraisal may not be accurate and is not the best indicator of the value of a home.
- Don’t tell a buyer why you’re selling (especially if you need to sell it quickly). Just say your housing needs have changed.
Q. Are there any secrets to finding the right home at the right price with the right financing?
A. Lots of homebuyers waste time and money by not doing their homework before going home shopping. Here’s what you should do:
- Analyze your NEEDS before you start looking. Make a list, including price range, size, general location, number of bedrooms, bathrooms, etc.
- Know what you WANT in your next home. List the features you’d like to have and rank them in terms of importance. If you have a spouse, set your priorities as a couple.
- Understand how much home you can afford. Become familiar with your “payment-to-income ratio” and your “debt-to-income ratio,” two guides bankers and mortgage lenders use to determine how much loan you can afford.
Q. Can I use a financial gift from a friend or relative as a down payment when buying a home?
A. Yes. In fact, 1 out of 4 first-time homebuyers uses a gift to make the down payment. Tax law allows gifts of up to $14,000 a year without tax consequences to the giver or recipient. (The amount is adjusted annually so check IRS.gov publication 950 for the current figure.)
- You could get a gift from two parents or two friends (for $28,000) without the givers paying a gift tax. Using a gift for a down payment helps you buy a home even if it’s not Federal Housing Administration (FHA) approved. The best advice is to contact a knowledgeable realtor and discuss this subject before you start looking for homes.
Q. What should I know when buying my first home?
A. Buying your first home is a big step, and making mistakes can cost you thousands of dollars. Here are three you should avoid:
- Not having a professional home inspection. Review the report carefully so you don’t buy a home with serious issues, such as pests, mold, or water damage.
- Not doing a “walk-through” before closing. Visit the property after all the furnishings have been removed so you won’t have any surprises later and turn on all appliances etc.
- Not understanding the contract. An experienced realtor will help you understand your responsibilities and guide you through the process.
Q. I tried to sell my home but didn’t get any good offers. What should I do differently to get it sold?
A. After re-evaluating your home’s price and condition, you need to revisit your marketing plan.
- Do the pictures of your home on the Internet really show your home to its best advantage? Did your home get seen by as many potential buyers as possible? To help you pump up the plan, you should hire not just a REALTOR® but a home marketing expert who knows how to show your home’s greatest features and how to get your home more exposure. A Home Marketing Expert knows the best strategies to sell homes fast and for the most money possible.
Q. What should I know about owning investment property?
A. You can make a successful investment by avoiding these mistakes:
- Being an absentee owner. Visit the property often and talk to your tenants to get feedback. If you bought a house as a “passive” investment, you may want to hire a property management company.
- Not having adequate insurance. Work with an insurance professional who will see that you are covered.
- Not charging fair rent. A realtor who is an Investor Specialist can help you decide what is reasonable for the property.
- Selecting unreliable tenants. Check all references and credit histories. Good renters will help you generate positive cash flow you can use to reinvest and lower the property payment.
Q. I’m seeking financing to purchase a home. What questions should I ask a mortgage lender to get the best deal on a home loan?
A. Before you meet with the lender, learn important financing terms such as origination fee, discount points, and lock period. This way you’ll be prepared to ask relevant questions. Here are some examples:
- Will I be charged an origination fee? If so, how much?
- Will I be charged separate discount points? If so, how much?
- Will I be charged any of these separate fees: processing, document preparation, underwriting, tax service, or flood certification?
- Will there be additional fees at closing?
- Is there a lock period with this loan? If so, how long?
- Are there any penalties if I pay off the note early?
- What is the interest rate I’ll be charged, and is it fixed or variable?
- What term (length) of loan provides the best payment for my budget?
Q. What big mistakes should I avoid when selling my home?
A. There are plenty of mistakes you can make when you sell your home but most can easily be avoided. Here are three important ones:
- Pricing Your Home Incorrectly. You need to set the right price when you put it on the market. If you start high, you may keep buyers and other real estate agents away. If you lower your price in increments, it may be too late, as the home may already be viewed as “overpriced.”
- Failing To Stage Your Property. You don’t get a second chance to make a first impression! Look at your home from a buyer’s point of view: clean it up, clear the clutter and get it in model-home shape.
- Selecting The Wrong Agent. You need to hire a realtor who understands your goals and will meet your needs.
- Hiring a part-time realtor. Think about it – can a part-timer in your position do a better job than you. Of course not, than don’t expect a part-time realtor to be as experienced, knowledgeable and as focus on what is the biggest purchase in your lifetime than that of a full-time realtor.
Q. I’m wasting money on rent and want to buy a home. How can I get help with a down payment?
A. There are ways to get a down payment, including the following:
- Look into local or federal government programs. They expire or change frequently, so ask your REALTOR® about any programs that may apply to your area and situation.
- Have the seller finance you. Some sellers may be willing to help you buy their homes in something called a “seller take-back.”
- Use a financial gift from a friend or relative. Tax law allows gifts of up to $14,000 a year to be given without tax consequences to the giver or recipient (see IRS publication 950). You can get a gift from each parent or two friends without them having to pay a gift-tax, which brings it up to $28,000.
Q. How can I net more money when selling my home?
A. Here are three important tips:
- Set the right price from the start. Homes that sell for the most money are priced right when they go on the market.
- Create a comprehensive plan to market your home. You can target buyers though flyers and open houses, but your home should be listed in the official MLS database by a realtor so more buyers see it and you get a price closer to what you’re asking.
- Hire an experienced realtor. A realtor who knows how to effectively market your home can net you more money. Plus, they can save you time by assisting you with every aspect of the sale, from pricing your home to coordinating the closing process.
Q. What should I do to find the right home at the right price?
A. The first step is to be financially prepared before you start house hunting. Here are two key points:
- Find a motivated lender. Ask your realtor to refer you to one or two reputable lenders. Study up on basic terms so you’ll be able to choose the loan that will be the best deal for your situation.
- Get pre-APPROVED, not just pre-QUALIFIED for a loan. You’ll have more power to negotiate because the sellers know you can close on the transaction.
Real estate questions and answers is updated monthly. Please check back for next month’s real estate questions and answers addition.