Setting Roots

I wanted to make a quick post and ensure everyone knows that the U.S. Government is NOT offering help to home owners via mail or at any site on the web. All assistance to home owners is in the way of tax rebates, or assistance refinancing and the like. The government is not sending out offers in the mail, and will never send you an offer via e-mail. If you get one of these, please ignore them! They are most likely a scam.

Sadly, these things are popping up more and more, and many people are being taken by them, please do not allow yourself to be one of the victims of these scam artists. If you are curious about what help the U.S. government is offering, the best thing to do would be to contact either the Internal Revenue Service (http://www.irs.gov) or the Federal Housing Administration (http://www.fha.gov) directly. Get your information straight from the source, to avoid being the victim of a scam!

As always, please feel free to leave your comments, and send me your questions! Your feedback so far has been great.

An important part of the home buying process is having an inspection done. Typically, you will have 7-10 business days to have an inspection done once your offer has been accepted. There are several important things you should know about the home inspection.

1. You are entitled to choose your own home inspector. The Real Estate agent may suggest one, but you are NOT obligated to use the one suggested. Choose someone you trust.
2. The seller may have already had an inspection done, but you still have the right to get your own inspection done as well. Do not rely on the inspector that works for the seller, always seek a second opinion.
3. An inspection is NOT an appraisal. The inspector should not tell you what he thinks the home is worth.
4. A good inspector is there just to give you the facts, to find faults, concerns and failures to meet code. He may tell you what needs to be done to correct a deficiency, but a good home inspector should not offer to fix it for you or recommend people to do the work. His job is simply to give you the facts, not refer you to people to correct the deficiencies.

With all that in mind, I would suggest that you accompany the inspector during his inspection. Again, you have the right to be there, and most home inspectors won’t mind having you there or answering your questions. Remember, you get what you pay for, so don’t necessarily rely on the cheapest home inspector. Also, one reason to accompany the home inspector is to trust byt verify. A friend of mine paid $450 for a home inspector to come inspect a prospective purchase. The guy walked through all the rooms, flipped on lights and turned on faucets and said everything was good. Naturally, my friend refused to pay. You want a home inspector to be curious, to dig deep. You WANT the inspector to find faults, so you don’t find them when it is too late… Make sure the inspector tests every electrical outlet, inspects the attic and the roof. If the home you are inspecting includes a pool, be sure that the inspector you choose inspects pools and pool equipment as well.

Finally, remember to take the report with a “grain of salt“. The inspector will find problems with the home. Likely he will find problems that you did not notice… That’s okay. Not all issues are (or should be) deal breakers. You may be willing to over look something minor like a cracked base-board or a leaky faucet. But some thing more serious like improper electrical wiring, or termites should give you pause. If it is correctable, you may ask the seller to have it fixed before you close on the house, or you may decide to call off the deal altogether. Make sure, that when you decide you want to bid on house that you have not “fallen in love with it” to the point that you are willing to over look major defects, shoddy craftsmanship or other problems, because once you buy the home, those problems become YOUR problems.

Wow… so one lesson that I definately learned the hardway is that it is very difficult to work a full-time job, find a house, close on the house and try to keep a blog about it, all at the sam time. Especially when your job involves a good deal of traveling, as mine does. So I decided that I do still want to maintain this blog, but now I will simply back-fill on my experience with buying the house, and what I learned along the way.

I also intend to document my adventures as a first time home-owner, and the projects I undertake along the way. I also would like for people to leave lots of feedback in regards to their own experiences. Advice is also always welcome. So with that in mind, I hope you’ll join me as I continue writing about my experiences, Setting Roots.

OK, so you’ve looked through MLS Listings, and real estate ads, and gone to the open-houses and have done a thourough search, and you have finally found the home you want to buy. So what happens next?

I’ll tell you how it went with me…

My real estate agent (who was simply fantastic) sat down with me and took notes about everything I was looking for in a home. She insisted that nothing was too trivial, after all, this is one of the most major decisions you will make in your life… That night she e-mailed me MLS listings for about 96 houses available in the area I wanted to look in.

I went through that list and sent her back a much shorter list of homes I was interested in seeing, based solely off of the listings. We then began visiting the homes. At each ones I would take notes on the pros and cons, and I would write down any questions I had so my agent could hunt down the answers. After looking at a lot of houses I finally found my dream home, I knew it was the place I wanted to bid on, that’s when the REAL nitty-gritty of Real Estate begins.

The First thing we did was to go back to her office and look at what they were asking, and discuss what a reasonable offer would be. This would be the amount we deliniated in the bid contract, which in and of itself wound up being nearly 50 pages! Aside from the offer, this contract also specifies how much (if anything) you want the seller to pay towards closing, how much you want them to cover in repairs (if needed), or that you accept the house “as is”. This is also the point at which you pay your “binder fee” (more on that later). Then we sent the bid-contract over to the selling agent. This is when the lengthy negotiation process began.  This seemed to continue for days, tweaking the details here and there. Once both parties had reached an offer we could agree on, we began the closing process.

For me the closing process involved all of the following:

• I received a copy of the selling agent’s home inspection
• I arranged to have my own home inspection done, and my own WDO (Wood Destroying Organism) inspection done. Both of these were completed by the same inspector on the same day. He was VERY thorough.
• My bank arranged to have the home appraisal completed (you will get a copy of the appraisal at or after closing)
• My bank had me sign some final paperwork, lock in my final interest rate and sent my package off to “Underwriting”. Underwriting took longer than anything else in this process.

Tragic Mistake #1: Thinking you can’t afford it. Today, buying the home of your dreams is easier than ever before. Many people who thought that buying the home they wanted was simply out of their reach are now enjoying a new lifestyle in their very own new home. Buying a home is the smartest financial decision you will ever make. In fact, most American and Canadian home owners would be financially broke at retirement if it wasn’t for one saving grace – the equity in their home. Furthermore, mortgage rates are more flexible today than ever and tax allowances favor home ownership. Real estate values have always risen steadily. Of course there are peaks and valleys, but the long term the trend is a consistent increase. This means that every month when you make a mortgage payment the amount that you owe on the home goes down and the value typically increases. This owe less-worth more situation is called equity build-up and is the reason you can’t afford not to buy. Even if you have little money for a down payment or credit problems, chances are that you can still buy that new home. It just comes down to knowing the right strategies, and working with the right people. See below.

Tragic Mistake #2: Not hiring a buyer’s agent to represent you. Buying property is a complex and stressful task. In fact, it is often the biggest single investment you will make in your lifetime. At the same time, real estate transactions have become increasingly complicated. New technology, laws, procedures and competition from other buyers require buyer agents to perform at an ever-increasing level of professionalism. For many homebuyers, the process turns into a terrible, stressful ordeal. In addition, making the wrong decisions can end up costing you thousands of dollars. It does not have to be this way! Work with a buyer’s agent who has a keen understanding of the real estate business and who is on your side. Buyer’s agents have a fiduciary duty to you. That means they are loyal to only you and are obligated to look out for your best interests. Buyer’s agents can help you find the best home, the best lender and the best inspector. Best of all, in most cases, the buyer’s agent is paid out of the seller’s commission, even though he/she works for you.

Tragic Mistake #3: Getting a cheap inspection. Again, buying a home is probably the most expensive purchase you will ever make. This is no time to shop for a cheap inspection. The cost of a home inspection is very small relative to the home being inspected. The additional cost of hiring a certified inspector is almost insignificant. As a homebuyer, you have recently been crunching the numbers, negotiating offers, adding up closing costs, shopping for mortgages and trying to get the best deals. Do not stop now. Do not let your real estate agent, a patty-cake inspector or anyone else talk you into skimping here. Ask the inspector what certifications he has and what proffessional organizations he is a part of. Remember that education and training isn’t cheap, so getting a well-qualified inspector won’t be either. Additionally, there is no monetary value that can be placed on experience, but clearly a more experienced inspector will likely provide you with better service. Do yourself a favor…and pay a little more for the quality inspection you deserve.

First-time home-buyers face an unfamiliar road and risk purchasing the wrong place at the wrong time. Here’s a guide to the potholes.

By Liz Pulliam Weston

Buying your first home is an exercise in faith. You don’t really know what you’re getting into, you’re awash in unfamiliar terminology and everyone you meet seems to have strong (and utterly contradictory) ideas about which way the housing market is headed.

You may not be able to avoid every home-purchase mistake, but you can keep your regrets to a minimum by avoiding the following traps:
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