Should I Buy or Sell on Contingency?

31 Oct 2014 · by Virtual Results PubSub

Should I Buy or Sell on Contingency?While your Loft is on the market, and you find your dream Loft (or at least the perfect “next” Loft), it is tempting to place an offer on the new place to hold it until your Loft sells. Unless you own the Loft you are selling free and clear, or can afford two mortgage payments, selling on contingency is the only option.

Or, you’re the seller and a buyer wants to make a contingency offer on your Loft. Do you accept it?

What is a “contingency”?

A contingent offer means that completion of the sale or purchase does not finalize until a requirement, the contingency, is satisfied. In many cases, the contingency is simply good business practice such as having a Loft inspection or making necessary repairs to the Loft. In other cases, the contingency waits on an appraisal: mortgage companies rely on an appraisal before approving the amount of the mortgage, so if the Loft’s appraisal does not meet the asking price, the buyer could back out due to the inability to get a mortgage approved. This is a “mortgage contingency.”

The more difficult type of contingency for both buyer and seller is the one that relies on the buyer selling his own Loft before completing the purchase of the new Loft.

How does a first Loft sale contingency work?

For buyers, this sort of contingency is mostly a win/win scenario. If their current Loft does not sell, or the sale falls through for any reason, they do not have to complete the purchase of the new Loft. This protects the buyer from having to pay two mortgages at once. Even so, the buyers typically must place earnest money on the purchase of the new Loft that they will lose if the sale falls through. They also forfeit costs of Home inspections and appraisals, bank fees and other expenses. Without a contingency, however, contractually they would be on the hook for the complete sale price.

Conversely, the seller also has some protection in this case since he can continue to market his Loft, and if the contingency falls through, he keeps the earnest money. If, during the contingency period, the seller receives a second offer on the Loft, the original buyers with the contingency have a specified time—typically 24 to 48 hours, or even up to 72 hours in some agreements—to settle the contingency and purchase the new Loft. If they are unable to do so, the seller is free to terminate the contract and accept the new offer.

A Loft sale contingency does pose risk to the seller, however, because a motivated buyer may not be willing to risk having her purchase fall through because of the prior contract. Before accepting a contingency arrangement, the seller’s agent will determine the potential buyers’ actual ability to purchase the Loft:

  • Do they have a preapproval letter from their mortgage company?
  • Do they have a contract in place on the sale Loft?
  • If not, is their current Loft already on the market?
  • If so, has it been on the market a long time and is it priced to sell?

We can investigate the likelihood of the sale completing, so when you do receive a contingency offer you can be confident in your decision whether or not to accept it.

 




Can You Sell Your Loft with Unpermitted Changes?

24 Oct 2014 · by Virtual Results PubSub

Can You Sell Your House with Unpermitted Changes?Often, Loftowners make changes and upgrades to their Loft without securing permit. In some cases, permits are not required, but in many cases they are. When you attempt to sell your Loft, investigations by the buyer’s real estate agent, inspector or legal representation may discover undocumented changes that could hinder the sale. The degree to which this causes difficulties greatly depends on the types of changes made to the original structure, and whether your buyer’s lender will give a loan on property with unpermitted changes.

Sometimes, the changes occurred even before you purchased the Loft. Since laws may have changed in your municipality over the course of your ownership, changes that did not matter when you bought your Loft may be questioned when you try to sell it.

If you believe your Loft has unpermitted construction, there are things you need to know about it:

  • What was constructed? A patio? A second bathroom? A sunroom?
  • When was it constructed? Before you bought the Loft? After?
  • Was a permit required and is a permit in place that you are not aware of?

Grandfathering

A “grandfather clause” is an exception to a requirement, covenant or restriction that allows those already doing or having something to legally continue to so even if the new restriction would not allow them to do or have it. With regard to an unpermitted Loft upgrade, if the upgrade was added prior to the change in the law and the law does not require retroactive compliance, then the exception typically is allowed to remain. An obvious exception to this would be a change that posed a danger to anyone living in the Loft or on the property.

Retroactive permits

If you discover upgrades, retrofits, additions or renovations in your Loft you should check city records to see if a permit was required for that type of work in the year(s) you believe it was completed. Then, search municipality records to see if permits were in place. If a permit was required, but you do not find one in place, you can either request a retroactive permit, or sell your Loft “as is” (see below). Many municipalities have a method in place to obtain retroactive permits. Check to see what the total cost of the permitting process will be. You may have to pay for permits, fines, inspections and other fees. The total cost of obtaining retroactive permits may be greater than the return on your investment.

Selling “As Is”

If you do choose to sell your Loft “as is,” you do not need to disclose to the city building department that you believe you have unpermitted construction. Therefore, until you are certain that you want to file a request for a retroactive permit, take care in your research not to disclose information when you communicate with municipal offices that might trigger an inspection.

On the other hand, in the selling process, fully disclose to your real estate agent items that you know about for certain—that is, upgrades or additions you initiated during your ownership. You do not want a sale delayed or to fall through because a lender requires a permit, and you want to make sure that an appropriate “as is” clause is written into the sales contract.

We can help you determine which items need permitting, which need disclosure and which are fine as they are.

 




Fearing Buyer’s Remorse?

18 Oct 2014 · by Virtual Results PubSub

Fearing Buyer's Remorse?Buying a Loft is one of the biggest investments you’ll make, and many times new buyers worry that they’ll make a wrong decision and then be sorry when it is too late to change it. What if I paid too much for the Loft? What if the neighborhood isn’t what I thought it was? What if I lose my job and can’t pay the mortgage? What if I hate my neighbors? What if a better Loft becomes available next week/month/year?

What-if? What-if? What-if?

Second-guessing is normal

First, you need to know that questioning your own decisions is normal. Hundreds of doubts and fears can run through your mind as you come up to the closing period during your Loft-buying experience. We know this expression of fear as “buyer’s remorse.” Some people have buyer’s remorse when they buy shoes, or a television, or that outfit they saw in the window. Other folks have buyer’s remorse when they purchase a car. So, if you experience buyer’s remorse for smaller purchases, expect the feeling magnify when purchasing something larger … like a car … or a Loft!

The grass is always greener

If your uncertainty is rooted in the idea that something better may come along next week or next month, you may never find a Loft to purchase. In actuality, if you create a list of your wants and needs, we can review it with you and help you find the Loft that fits the most important things on your list. When the uncertainty strikes, we’ll be able to review that list together to help allay your fears by reconnecting you with the reasons you chose this Loft in the first place. Analyzing both what you fear and what you want can help you sort through the feelings, thoughts and even doubts you’re having about moving forward.

Ways to avoid triggering buyer’s remorse

Sometimes, buyers set themselves up for experiencing doubts by falling into one of these scenarios:

  • Choosing or staying with a real estate agent that does not offer guidance through the process. We answer your questions, walk you through the paperwork, explain the complete process, work out the timeline and myriad other things that help you know what to expect as your Loft closes. You should feel free to call your agent whenever you have concerns. It’s our job to handle those for you.
  • Talking to family or friends. Of course they mean well, but sometimes family and friends can cause unnecessary doubts to creep in when they question the location, the price you’re paying for your Loft, the schools nearby, the type of loan you’ve chosen or any of a dozen other things. Unless they are professionals in the market you’ve chosen, their advice may be useful, but incomplete. So, take their questions to your real estate professional. We can address them based on the current market and location of the Loft you’re purchasing so you can buy with confidence.
  • Keeping your options open. When you’ve made an offer on a Loft, unless there is a real chance that it will fall through (because of seller demands, loans not approved, low appraisal, problems uncovered by inspections, etc.) you should stop looking at other properties to purchase. Continuing to look is like continuing to date others after announcing your engagement.

Dealing with buyer’s remorse?

The best way to handle feelings of buyer’s remorse is to talk with your real estate professional. We can address your concerns and answer your questions. Finally, if we determine together that this isn’t the Loft for you after all, and we can work out the details of cancelling your contract and looking for the right Loft where you and your family will be happy.

 




Become a Fan of Fans

10 Oct 2014 · by Virtual Results PubSub

Types of FansCeiling fans aren’t just about moving air, they are an important part of creating the right atmosphere in your home. Before choosing a fan, consider what you really want it to do.

Smart ceiling fans

Being smart isn’t just for phones. Big Ass Fan company has developed smart residential fans that have motion sensors, can detect ambient air temperature and humidity, and even connect with the Nest Learning Thermostat. These fans are about keeping the temperature and atmosphere in your home at optimum levels using the least amount of energy. With five-ply bamboo blades and an automotive grade paint on its glass-infused composite finish, the Haiku fan works both indoors and outside on patios and gazebos.

Whole house fans

Older homes that don’t have central air-conditioning can be fitted with a whole house fan. These fans, typically installed in ceilings of halls or stairways and venting into attics, draw cool air from open windows throughout the home and can cool skin temperatures by up to 10°F and attic temperatures by as much 40°F. Newer designs offer quiet operation and tremendous energy savings. QuietCool suggests its fans can lower your energy bills and they’re good for the environment.

Attic fans

Different from whole house fans, attic fans vent hot attic air to the outside, but do not draw air through the living spaces. Typically installed near the gable vent, attic fans can extend the life of your roof by removing trapped moisture from the attic and releasing the buildup of heat that can warp the roof’s structural components. Solar-powered attic fans operate using only solar power and is a green alternative to a standard electric attic fan, but once the sun sets, the fan needs an alternate source of energy. The U.S. Sunlight solar fan compensates for this by allowing the fan to switch between solar and your home’s electrical power when sunlight isn’t available.

Inexpensive fan options

Window fans fit within the window frame similar to a window air conditioner, but use less energy to operate. The most energy efficient way to use them is to use them at night when the outside air is cooler. This method allows for the delay or sometimes eliminates the need to turn on air conditioning during the day. It uses electricity during off-peak night hours too.

Other options include free-standing box, floor, tower or pedestal fans. You can move these portable fans from room to room throughout the day. Hi-end air movers, like the Dyson bladeless fan move air more quietly than traditional fans and consume even less energy, are safer around small children because they have no blades and offer remote control, variable speed and other options.

Fans aren’t just for summer

With winter just around the corner, some homeowners may think they don’t need fans. However, fans can reduce your heating bills just as well as your cooling bills. Make sure your ceiling fans are reversible (look for a switch on the motor housing on traditional ceiling fans). In the winter, operate your ceiling fan clockwise and the blades will push warm air back down into the room reducing the heating requirements. A window fan in lower story windows and be reversed to push cooler air outside and pull warmer air down from the ceiling. Using exhaust fans in bathrooms and laundry rooms during the winter can reduce the buildup of moisture that leads to mold and mildew growth.

When looking at houses, note the locations you can install fans to reduce your energy costs. We can help you find contractors to install whole house and ceiling fans to give your home the best atmosphere for your family.

 




Is It Time to Stop Renting?

4 Oct 2014 · by Virtual Results PubSub

Is It Time to Stop Renting?It’s not your imagination that rent keeps going up. In fact, across the United States, from the end of summer 2013 to the end of summer 2014 rents increased over six percent … and in some housing markets rents increased by as much as 10%. Perhaps now is the time to make the move to home ownership.

Calculating the cost

There are different costs and benefits associated with owning versus renting, so a simple comparison of monthly payments might lead you to believe one is better over the other. To calculate the real differences, and therefore the real cost or benefit, you need to dig a little deeper. For instance, in this New York Times article, they used a $250,000 home as their example with a 9-year tenure, a 30-year fixed 4.34% loan with a 20% down payment. In addition to these basic costs, they factored in taxes, maintenance and fees (including estimated closing costs). Using the resulting monthly cost of $961, you can determine if buying or renting is better if you can rent a similar home for less than $961 (assuming the rent remains static for the nine years.

You can change the amounts in the calculator by moving the sliders so you can put in your own numbers. Remember, however, that there are extra fees associated with renting too: broker fees, security deposits, renters’ insurance and pet fees, among others. Additionally is the potential for rent increases at the end of each lease period.

One benefit of home ownership not taken into account in this model is the potential to reduce your income tax burden. A portion of your mortgage interest may be deductible as well as some of the points and property taxes.

Budgeting for hidden costs

Before buying, talk to us about the additional costs of home ownership. We can help you estimate maintenance expenses such as a new roof or heating and air-conditioning system. When we help you budget for your new house, we can factor in what you’ll need to set aside to cover these expenses.

Tax increases, levies for schools, roads and community improvements and other municipal costs can increase even in your first year of home ownership so when calculating what you can afford, add in a little extra for taxes too.

If you purchase a condominium or a home that is part of an association, you can expect association dues to rise annually unless the bylaws stipulate otherwise. Since one of the factors affecting association costs is insurance, expect your dues to increase, or to have a special assessment if your community suffers storm damage or liability costs. In addition, speaking of insurance, your premiums tend to go up each year as well. Consider these extra items as part of your overall housing cost.

Other expenses to figure into your budget:

  • Lawn and garden care—including extra water costs if you have large grass and flower areas, equipment and fuel or landscaping services, new plants, mulch and fertilizer
  • Insurance deductibles—if a hailstorm damages your roof, your insurance will replace it, but you’ll have to come up with the deductible to get the job done
  • Liability insurance—as the homeowner, if someone is injured on your property you’re responsible. You’ll need to make sure your homeowners’ insurance includes liability.

We want you to be prepared

Buying a home is a long-term commitment. We want to partner with you to make sure you’re able to both keep and enjoy that commitment. Call us today and we’ll help you prepare for that move from renting to owning … eyes wide open, so that your purchase remains a lifelong joy.