Posts by : Alan Donald

Higher Interest Rates – Who Cares? 

I have always maintained that buying a home is only one of the “life puzzle”. But recent announcements by the US Federal Reserve Bank caused a quick spike in mortgage interest rates of about 1%, so the 30-year fixed mortgage rate jumped from about 3.5% to 4.5% overnight. This event may signal the beginning of a trend to a period of rising interest rates that may lower housing affordability indices in the months and years to come.  

So, who cares?  The following analysis is intuitive, and based on logic and my own experience in the Charleston, SC real estate market, as no formal research has been done.

Local, First-Time Home Buyers:  These potential b...

THE REAL ESTATE CLOSING

After the buyers have finished their due diligence process, agreed repairs have been done, and the buyers have received their 
final loan approval from their lender, the buyer’s agent will normally schedule a closing with their attorney of choice.

As a seller, you have the right to be represented by a different attorney at the closing, but this will cost you more. Although the 
closing attorney represents the buyers, he/she also has to represent the lenders (discharge your existing mortgages and sign 
the new ones), and can represent the sellers.

In theory, the closing attorney will produce the closing statement (HUD-1) showing the financial balance of the t...

TO "LOCK" OR TO "FLOAT"?

It is very important for home buyers or for those who want to re-finance to be aware that in these volatile financial markets we are living in, interest rates on mortgages can fluctuate substantially in a matter of hours! A case in point: A few hours after the Chairman of the Federal Reserve announced their plan for decreasing the purchasing program of long-term bonds, mortgage interest rates jumped up almost a whole percentage point!

I have heard many stories from mortgage lenders about how they were able to lock a fantastic interest rate for a loan using a 2-3 hour "window of opportunity" that disappeared afterward, or others that missed out because they flo...

Patience is a Virtue (That Helps Get Deals Done)

Buyers may deal with anxiety, especially if they are also selling a home somewhere else and the purchase depends upon the sale of their existing home.

In addition, Buyers may have to deal with the Sellers' anxiety. For example, after a Buyer has reached an agreement with the Sellers and signed (ratified) a contract, the Buyer may notice that the Sellers could begin to behave strangely, getting somewhat agitated and making additional (sometimes unreasonable) demands, like asking you to not access the home during weekends, or making it difficult for your inspections to be scheduled or for your blinds contractor to come in to measure the w...

THE "DRY" CLOSING...

Buyers and Sellers have agreed terms and conditions, the Buyers have done their inspections, all the repairs have been negotiated and agreed, the Sellers have done the repairs, the closing attorney has done the title work, insurance has been ordered, the appraisal has been received and came back OK, everything seems going perfect to close on time...

Enter, the lender's UNDERWRITER/AUDITOR/FINAL CHECK...

During the housing boom that ended a few years ago, underwriters were just an extra check, and they were not really very concerned about confirming every little detail on the loan application, the contract and the origin of the deposit money. Maybe that's one of the...

CLEAN HOUSE - SMOOTH SALE - LOOK AFTER THE LAST DETAIL

Most purchase agreements contain language that requires the seller to hand over a home free of trash and debris and "broom clean" at closing. 
While most times this language is not precise, the general idea is that you should convey a clean house to your buyers, one in the same condition 
that you hope to find your new home.

When the movers leave with your furniture, you may even want to consider hiring a professional cleaning service to thoroughly clean the home, 
steam clean the carpets and get rid of any odors.

It is also important to make sure the yard is looking the same as when the property was on the market. Mow the lawn one...

Home Affordability

Watch this video to hear me discuss the recent increase in interest rates!

Help me buy a home!

Affordability has two components:

        1. Market price for the homes

        2. Interest rate for the mortgage loans

As you know, the Federal Reserve announced last week that they will stop buying long-term bonds and that created almost a one percent hike in interest rates for mortgages.  What does that mean for you? 

In the Real Estate market prices are starting to climb back up again.  With interest rates on the rise buyers across the U.S. should be feeling more pressure to act sooner, rather than later, as the expectation is for home prices to ri...

The Home Inspection: What Are you Really Getting?

When you buy a home (whether new or existing), it is always recommended to perform "buyers' due diligence" by commissioning all the necessary inspections (including home, termite, moisture, mold, structural, etc.).

Always choose licensed, insured and experienced professionals to perform these duties (after all, if you ask your buddy Joe - who has a contractor's license - to do your home inspection and he misses an important issue - it can cost your friendship, and it may also cost you a lot of money in the future!).

After financing, inspections and repair negotiations are some of the most common causes for contracts to fall through! Onc...

Homes on Busy Streets: Plus, or Minus?

Every day when you drive to work you see a beautiful home with a "For Sale" sign on a busy road. Given the size and quality of the home, you think it must be priced well above your price range. After months of thinking about it, you call the sign for information and you find out it is surprisingly affordable, priced much lower than similar homes on quiet streets! You schedule a showing, and you love the home...

Homes located on busy streets may represent great value for the money. Some buyers who are very sensitive to noise, have young children or pets, may automatically rule out homes on busy streets. This means that there are fewer buyers competi...

ADDITIONS AND REMODELING

When lenders toughen their standards and the housing market is challenging for sellers, many homeowners will choose to either add or remodel their existing home, instead of changing it for a new one to satisfy their needs. Many builders have chosen not to build any new "spec" homes and focus on remodeling and additions instead.

Many homeowners are unaware that of the zoning laws, building codes and neighborhood restrictions governing renovations and additions. Most projects will require permits and official inspections to satisfy federal/state/county/city regulations and neighborhood covenants and restrictions.  Failure to comply with due process may result in...

THE VALUE OF A HOME...

When markets shift from one cycle to another (i.e. sellers' market to Buyers' market)  it is difficult to assess the appropriate value of a home. Everyone will have a different opinion about the "market value" of your home. Your neighbor, the bank, the appraiser, you and your agent will all come up with different opinions of value. Keep in mind that it is the market what sets the price (a house is only worth what a willing and able Buyer will pay for it).

So how can a Seller arrive at the ideal list price for their home? And how can they price a home in the "sweet spot" to entice the maximum number of offers and get the highest market price?

Buyers (and appraiser...

BE PREPARED - EXTRA COSTS TO CONSIDER WHEN YOU ARE BUYING A HOME!

Property Taxes - paid in arrears and prorated at closing. Your lender will normally collect an initial amount plus 1/12 of the annual tax estimate monthly to place in an escrow account, and will pay the taxes for you at the end of the year. Don't forget to request the Primary Residence and Homes...

The Importance of Establishing Solid Buying Criteria

In a housing market with abundant supply, buyers sometimes get overwhelmed trying to find the PERFECT home, at the LOWEST price. There may be so many options, that buyers often get confused and avoid making a buying decision for fear of finding a home that is marginally better that the one they chose, right after they have signed the contract!

We ask our buyer clients to sit down with us for a no-obligation BUYER CONSULTATION in a relaxing environment, and openly discuss their NEEDS and their WANTS, to form a basis of their BUYING CRITERIA, ranked by importance. Write down two lists of criteria: The first list are the "MUST-HAVE" (nee...

 Negotiating skills from a seller's perspective:

Traditionally people think of a good negotiator as a person that crushes the competition and gets the last dollar out of the transaction for their clients.  However, negotiating skills and tactics need to be adjusted according to the client's long-term objectives and according to market dynamics.  

For example, in a buyers market where there are lots of listings around and all the listings are competing for very few buyers the objective of a good negotiator should be to get that first market price offer under contract and soon as possible because you know that prices are declining and the likelihood is that the next offer is going t...

Moving Up: Buy First or Sell First?

Many people are looking at real estate prices and thinking it’s a great time to buy a bigger or better home, or to move to their ideal location. And they are right. The problem is – they may need to sell their existing home first to complete their down payment (or avoid paying two mortgages), and this sometimes can be a challenge.

It is important that you sit down with your REALTOR® and explore all the options available to you. Here are some of them:

1. Buy first, sell later. 
Advantages: You can take advantage of current buying opportunities and low interest rates. Disadvantages: You may not qualify for both loans, and if you do, you may have to pay...

SHOPPING FOR A MORTGAGE LOAN

Before you start shopping for a home, it is essential to get pre-approved by a lender. This does not mean that you cannot keep “shopping around” for the best loan while you look at homes. Once you have a signed (or “ratified”) contract, you will need to choose a lender, submit a formal application and many times pay a fee (usually the cost of the appraisal) to the lender.

So, how do you choose the right lender?

It is important to choose a reputable lender, but also one that has the right loan program to fit your particular situation. It is important to carefully compare rates, origination and processing fees, terms, conditions and restrictions before making...

LEGAL JARGON OVERLOAD

When you buy a home, the closing attorney (SC is an attorney state for real estate) will make you sign stacks of papers, affidavits and documents filled with legal jargon. Most of these documents relate to establishing your identity (for legal and tax purposes), transferring the deed, making sure you are not a terrorist and formalizing any loans and mortages.

Depending on personality, some buyers are anxious to get out of there and get their keys (so they sign all the paperwork as fast as they can without even reading it) while others are extremely cautious, detail-oriented and want to read every sentence before signing (and find it very frustrating to have to read...

Tips for Buying Fixer-Uppers

1. Avoid homes that need major spending on basics that are expected by buyers (i.e. "unprofitable repairs"): The home you choose needs to be structurally sound, up-to-code in electrical wiring, have sound major plumbing (no polybutilene pipes), and must not need foundation repairs. Correcting these issues may cost you a fortune and do not add value to the buyer.
2. Prefer homes that need only cosmetic or updating ...

HOW TO GET THE HOME YOU WANT (MAKING "CLEAN" OFFERS)

You are in the market to buy a home and you found a house that's ideal for you - it is in the right location and meets all your "needs" and "wants". The price is the only thing that is keeping you from making an offer, because you feel that it is more than you can afford.

How can you improve your odds of the owners accepting an offer that is much lower than their asking price?

In addition to a market justification for a low offer (your Buyer's Agent can provide the comparable sales) an important strategy you should use is to make your offer as "clean" as possible by not ask for special conditions or contingencies.

• Avoid making dem...