Can You Still Get a Seller to Pay Your Closing Costs in Today’s Housing Market?

On October 23, 2015   /   Home Buying  
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closing costs

By: Credit.com

Home prices have risen across the country, and in many areas, the hot market has transformed a buyer’s haven into a seller’s market. With that change, buyers may have less leverage than they did during the market’s down years. Despite that, here is how you may still be able to obtain a seller credit for closing costs.

A credit for closing costs involves the seller of the property you’re interested in purchasing receiving less net proceeds in exchange for crediting you monies at closing. For example, if you’re making an offer to buy a home at $450,000 and you’re asking for a $10,000 closing costs credit your offer is really $440,000 as the additional $10,000 transfers from the seller to you. Also known as a seller concession, a credit for closing gets your foot in the door with less of your own funds needed.

Let’s rewind the clock to three years ago for a moment. In 2012 unemployment topped 8%, consumer confidence was bleak, and doom and gloom rattled the housing market. Home buyers were in the driver’s seat, and sellers were practically begging for offers. During this time, obtaining seller credits were not only reasonable, but also very common. Banks holding foreclosed inventory would often offer concessions to offload homes to meet year-end goals for shareholders. Fast-forward to 2015: Unemployment has dropped significantly, and consumers are feeling more optimistic about their financial health. What can you do now?

How to get a seller concession

Buying power is a big factor here. The more house you can qualify for on paper, the more wiggle room you have in supporting a higher price, possibly generating a seller kickback toward your cash to close. Essentially, you are financing the fees by paying more for the home. If successful, you pay more for the home in these areas:

  • Final sales price
  • Loan amount

 

Generally, you will pay less for the house without a seller concession of any kind. This also means your fixed housing costs will be lower in such a scenario, since your mortgage will be smaller.

If you don’t have the cash to get the home, you can debt service the difference with the seller concession strategy, but the cost of that debt servicing can be costly in terms of your monthly payment as well as total interest charges on the life of the loan, especially if funds are tight going in. This is why it is important to be as strong as possible on paper when getting pre-approved. Your credit is a major factor in your borrowing power, and improving your scores even slightly can make a major difference in the loan amount your lender can offer. You can check your credit scores for free on Credit.com to see where you stand.

When to ask for the concession

If you want to ask for a seller credit for closing costs, there are two optimal times to make that request:

1. Upfront

You can request a seller credit upon submitting your offer with the guidance of your real estate agent. This strategy is more effective on homes with longer days on market. If a home has been sitting for a while without offers, the price may be too high. It’s generally more difficult to ask for a concession on brand-new listings as other strong offers may be coming in, possibly exceeding yours.

2. After inspections

Most buyers and sellers are opportunistic by nature. The buyer wants the best deal on the home, while the seller wants the maximum it can obtain for the home. Both objectives are at odds with each other. A seller may be more inclined to pay closing costs than to lower the cost of the home if there’s a “surprise” from the inspection that makes you want to run.

It’s important to understand that while you can ask for a credit for closing costs, you can also request a reduction in the house price. Say you’re in agreement to buy that $400,000 home, and your appraisal comes in at $385,000. You could ask for a credit for closing costs, but asking to reduce the total price to match the appraised value might be a better approach because it will lower your monthly housing payment. The sky is the limit. You can ask for a credit for closing costs and a reduction in the purchase price, but in most cases it’s usually one or the other. Talk to your mortgage and real estate professional about which is the most beneficial for you.

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This article was written by Scott Sheldon and originally published on Credit.com

 

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Getting Married? Skip the Fancy Plates and Ask for a Down Payment Instead

On May 17, 2015   /   Home Buying  
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newlywed couple house

By: Heather Donahoe

They already have the high-powered blender, the 800-thread-count sheets, and the stemless wineglasses. And while they could always register for even more kitchen gadgetry and overstuffed throw pillows, some modern couples have their eyes on a different kind of wedding gift. What many of them want more than anything else is a house—or, more specifically (and reasonably), the down payment that will unlock the front door.

A growing number of altar-bound lovebirds are rethinking the traditional retail-based wedding registry (or registries, in many cases). Some are nudging their wedding guests toward online crowdfunding-style registries, designed to accept contributions to a couple’s down payment goals. Others are quietly suggesting “money for the house” when asked about their preferred present. Either way, plenty of couples are reconsidering altogether this gift-receiving opportunity in light of what they truly need.

A range of factors is at play here, the most obvious of which is the higher average marrying age—27 and 29 for women and men, respectively—than in past generations. It’s hardly a secret that many 20- and 30-somethings are temporarily sidestepping marriage while they establish careers, travel the world, hit up trivia night guilt-free, and, well, search for the right someone to marry.

Then again, even some younger couples seem to think that receiving a mountain of swanky home accessories before owning a home is putting the cart before the horse. After all, you can’t feather a nest if you don’t have a nest to begin with.

Twenty-five-year-old Daniel Barros and his fiancée, Traci Whiting, 24, of Plano, TX, are getting married in October. When they started thinking about setting up a gift registry, they were struck by the reality of their living situation.

“We live in an 800-square-foot apartment,” Barros said. “Even if we wanted a bunch of wedding presents, we wouldn’t have anywhere to put them. Getting that down payment together is our top priority, and we’re grateful for any amount our friends and family are willing to give to make that happen.”

To help achieve their goal of $5,500, Barros and Whiting set up a registry at FeatherTheNest.com, a Florida-based crowdfunding site that allows “nesters” to register for anything from contributions toward a down payment to funds for home improvement projects.Beth Butler, principal at the site, says crowdfunded registries offer couples a way to involve their friends and family in the most important purchase they’ll ever make.

“When you’re choosing a gift from a traditional retail registry, you’re pretty much bound to the prices of the items the couple has chosen, and even then, you’re likely giving them something they may forget about at some point in their marriage,” Butler said. “But helping a couple get into their first home, that’s a contribution they won’t ever forget.”

Butler said that her site, which launched in May 2014, now sees 15 to 20 “nests” (as each fund is called) per month.

Other similarly functioning sites—such as HatchMyHouse.com andDownPaymentDreams.com—offer comparable services, typically for the cost of a small percentage of the couple’s gift total.

Rieve MacEwen, president and co-founder of Hatch My House, estimates that the monetary value of the average U.S. wedding registry hovers between $8,000 and $8,500—an amount that, if applied to a down payment (generally at least 20% of a home’s price), could certainly give a significant boost to a couple’s savings efforts.

But not everyone is so enthusiastic. Teresa Krebs, who started Down Payment Dreams in 2009 and has since hosted some 800 registries, said that a handful of users have reported a lukewarm response from family members, some of whom felt that asking for money was tacky. But, as Krebs points out, “a registry is just a suggestion, and a down payment registry is no different. It’s a couple’s way of saying, ‘We’d like your presence at the wedding, and if you choose to bring a gift, this is what would be most helpful to us.’”

Just how helpful? When Sally and Yann Sauvignon married in 2010, they set up a registry at Hatch My House, along with two traditional retail registries. About a year after their 200-guest wedding, the couple was able to use their down payment gifts to cover the closing costs on their new home in the San Francisco Bay Area.

“We weren’t quite sure how it would be received, but I think about a third of our gifts were given through the Hatch My House site,” Sally Sauvignon said. “It was a really neat way to connect our friends and families to a goal that was really important to us.”

To be sure, the concept of a down payment as a wedding gift is still a bit of an outlier. The majority of engaged couples are still filling their conventional registries with flatware and “good” china. But MacEwen—who says Hatch My House has hosted roughly 2,600 registries since its founding in 2009—is confident that the next decade will see a more pronounced shift in the wedding gift tradition altogether.

“What will really change the way people use gift registries is when they look beyond the idea of purchasing an item, and decide they want to be a part of someone’s overall life experience instead,” MacEwen said. “Buying a home and getting married are two of life’s biggest events. Over time, I think people will realize that it makes a lot of sense to connect the two.”

How to crowdfund your dream home

Don’t be sheepish. Wedding registries of any variety are simply a series of gift ideas for wedding guests who are already planning to buy a present. A down payment registry is no different—it’s just a suggestion.

Spread the word. Share the specifics of your down payment registry on your wedding website, on any wedding shower invitations, and when friends and family ask where you’re registered.

Be grateful. In addition to the thank-you notes that you’ll send promptly after the wedding, consider sharing periodic updates about your home-buying adventures with the people who helped make it possible. It’s just another way to show your gratitude.

Leave a paper trail. When applying for a home loan, you’ll need to verify that your down payment is yours, free and clear, and not the result of another loan. Most down payment crowdfunding sites will  document the nature of the monetary gift.

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89 Hawks Point Dadeville AL

On April 26, 2015   /   Home Buying, Lake Martin Real Estate  
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89 hawks point dadeville al

89 Hawks Point : Dadeville, AL

Beautiful lake home with fantastic view and deep water. Home features 4 bedrooms, 3.5 baths, a huge greatroom, lots of covered decks on both levels, second den in basement, large floating dock with lift and plenty of parking. Breath taking view in an area of very nice homes.

Click Here for Details

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What Does an Appraiser Do?

On March 21, 2015   /   Home Buying  
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appraiser

By: Angela Colley

When you’re considering buying a house, there are two sides to the story: the seller’s asking price and the actual value of the property. This is where an appraiser steps in.

What is the job of an appraiser?

An appraiser’s job is to determine the current value of a property. Most of the work is done on-site where the appraiser will:

  • Conduct a room-by-room walk-through to determine interior condition.
  • Walk the length of the property to determine exterior condition.
  • Evaluate any amenities such as a swimming pool, finished basement, or built-in bar.
  • Note any health or safety code violations.
  • Record the layout of the property.

Off-site, the appraiser may also evaluate the current real estate market in the neighborhood to help determine the value of the property.

How do you know if an appraiser is qualified?

Typically, your lender will choose an appraiser. The appraiser should be state-licensed or have other certification. If the appraiser is a member of a professional organization such as the Appraisal Foundation, he or she most likely will adhere to certain ethics codes and rules of conduct. However, not all states require certification, so do some research before you start.

Who hires the appraiser?

Usually, the lender or financing organization will hire the appraiser. Because it’s in the best interest for the lender to get a good appraisal, the lender will have a list of reputable appraisers whom they have hired in the past.

Who pays?

The loan agreement normally contains a set value for the appraisal of property. Whoever takes out the loan pays for the appraisal, unless the contract specifies otherwise. Then the buyer pays the fee in the closing costs. If a seller is motivated, he may pay for the appraisal himself to back his asking price, which benefits the buyer by reducing closing costs.

The lender may not adjust the fee after hiring the appraiser. Expect an average range of $300 to $600 depending on the size, property value, and location. Different appraisal report types take various amounts of effort, which may affect the price.

How long does it take?

One or two hours is the average time spent for most appraisals of property. You should most likely receive the report in three to seven business days on average. The amount of time it takes can depend on the type of report, size of property, and other factors.

What are the benefits?

Think of the appraisal as an investment of your time, money, and effort. It is important to know what your house is worth, and it will help you get your loan approval. Hopefully, this step and the rest of the house-buying process will go smoothly.

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