Monday, June 12, 2017

Don't Make These Home Buying Mistakes

Buying a home is a major decision and one that doesn’t come with experience since home buying doesn’t happen often. Many home buyers, whether they are first time buyers or veteran buyers, will make mistakes. Knowing those mistakes up front can help to avoid some of them.
1. Assuming you will be taken advantage of if you don’t act like you know what you’re doing
Many buyers and especially first-time buyers believe they will be taken advantage of if they profess to not knowing the process or understanding the terms or forms in real estate. 
Yes, you can be scammed by dishonest vendors but overall, most real estate professionals are honest.  Chose a professional through referrals if possible.  Knowing someone who worked with a professional and had a positive experience can dispel many misgivings you may have.
Once you have found a professional to work with through a referral, be honest and explain what you do know and let the professional guide you through the process.

2. Not knowing how much house you can afford
Get pre-approved for a mortgage loan. First, this will give you a limit on how much house you can afford. Having the bank turn you down after putting an offer on a house and then finding out you don’t qualify is embarrassing and a waste of everyone’s time.
Second, it lets the sellers and the real estate professionals know you are serious about buying a home.  Many sellers won’t accept offers unless the buyer has already been pre-approved.
Third, if you are turned down after making an offer, you can lose your deposit and other expenses which can cost you thousands of dollars.
3.  Looking for the perfect home
There are no perfect homes unless you build it from the ground up.  Most homes for sell need some repairs or renovations.  Knowing what is needed and how much you can afford is very important.
Look closely at homes that need a lot of repairs. Are they minor or major?  If you don’t have a trusted contractor on your team, ask around and get one through a referral.  Have the contractor look at what is needed to make the home move in ready and consider the costs along with your mortgage payment. Can you afford it?
Also remember that wallpaper, paint, molding, cabinets, flooring, or anything that is not structurally needed, can be replaced or removed. So if the shocking pink walls in the living room are not to your liking, remember you can paint or wallpaper over them.
Don’t waive the inspection contingency in your offer. It’s important to have the house inspected so there are no surprises later. You can lose your deposit money if you find out later that the house needs extensive repairs and you want to back out of the offer.

4. Failing to factor in all the costs of owning a house
Owning a house can be more expensive than most people realize.  This is a long term commitment and costs will increase as the house ages.  When considering buying, factor in all costs. Not only do you need to include the mortgage payment and initial move-in costs (repairs/renovations) but you need to consider long term costs and unexpected costs.
One cost to consider is utility costs. How much will you need to pay for electricity, water, sewer, trash pickup, etc.? If you’ve been renting then expect higher utility costs with home ownership.
Also, don’t forget maintenance or unexpected costs.  The house and the items inside wear down over time.  Roofs may need to be replaced, pipes may burst, appliances will get old and stop working.  Many advise saving a certain percentage of your mortgage to cover future maintenance costs.  If possible, start by saving 5 or 10 percent with your first mortgage payment.
You will also have home insurance to consider. Most insurance companies will have this added to your mortgage payment so you don’t forget to pay. 
Don't forget to consider natural disasters that may occur in the area. Do you need to add flood, earthquake or fire insurance to your policy?
Another cost is annual property taxes which can be in the thousands depending on where you live.
5. Not knowing the neighborhood well
If you are not familiar with the area, talk to people in the neighborhood about the area. Talk to the neighbors, the mailman, shop owners, anyone you see around.  Ask about traffic, crime, schools, parks, shopping, future development plans, anything that may be of concern to you.
Do an internet search for more demographic info or crime statistics.
Also, visit the neighborhood at various times of day. Consider the traffic flow. Will you be able to get to work and get your children to school without too much hassle? Is there enough lighting on the street for you to walk after work?
6. Delaying in submitting an offer
Once you’ve found the home you want and you’re considering making an offer, don’t delay. In today’s market, sellers are receiving multiple offers right away.  It’s common for a seller to receive 10 or more offers in the first open house or even the first day of posting on the MLS. So if you’re serious about a house, don’t delay on making an offer.
7. Submitting an offer that is the exact amount of your pre-approval or that is too low
If you submit an offer with the exact amount of your pre-approval loan, you have no room to negotiate which is very important in today’s market.  You may also lose out if the interest rates rise before you lock in a rate.  Give yourself some wiggle room when making an offer.
Submitting an offer that is too low and is not backed with comparable market data is disrespectful to the sellers and real estate professionals.  The seller will dismiss your offer and you will lose out.

8. Not presenting yourself well
In today’s competitive market, sellers and listing agents want to work with buyers that will make the process easier.  If you come across as complaining and whining, the seller can pass you by and go with another offer.  Being respectful to all people involved will go a long way to getting you the home you want.

Thursday, May 18, 2017

4 Things to Consider When Downsizing

So you’ve made a decision to downsize but you have so much stuff! Downsizing can be daunting.  For some, it’s easier to just put the extra stuff in storage and deal with it later.  You never know you may need that stuff sometime in the future…

Five years later all that stuff is still in storage and you haven’t needed any of it. You’ve spent thousands of dollars for it to sit there and now you’re not sure how to start going through it.
Instead of waiting 5 years, start downsizing before you move. Below are 4 suggestions on how to downsize before you move.
1.  Consider the size of your new place
Consider what furniture will fit into your new space.  Will the dining table, six chairs and china cabinet fit into your new dining area? If not, what can you keep and what needs to go? Will the table and chairs fit? Or do you need a smaller table? 
If you decide not to take certain pieces of furniture, don’t store them unless they are family heirlooms or investment pieces. Think of the money you can get from selling your furniture instead of spending more on storage.
2. Assess your actual needs
Look around and decide what you actually need. Do you need that treadmill? Find out more about your new neighborhood by walking around it instead of using the treadmill.
This can be a difficult step but consider what your daily life is really like. Look at the items you use every day and separate them from the items you want to use everyday.  Look at that treadmill. Do you walk/run on it everyday? Or do you wish you used it everyday? If it’s the latter, sell it or give it to someone else.
3.  Make a decision
Go through every room, cabinet, closet, box, everything you own. Decide what you want to do with each item.  This is the hardest step in downsizing mainly because we have emotional attachments to most of our stuff.
There are various strategies to help you make a decision. One is to hold the object in your hand or look at it intently. Do you remember when you went shopping to find that perfect picture for the living room? Does it invoke happy, positive feelings for you? If so, then keep it.  Or do you try to remember where and when you acquire that item? If so, sell it or give it to someone else.
Another strategy is to go through everything and separate duplicate items.  Do you need 3 whisks? Once you removed the extra items, look at what’s left and decide if you really need those items.  When was the last time you used that juicer? Once in the last 3 years? Then sell it.
Another strategy is to ask yourself what would you replace if you lost everything in a natural disaster? Look at the things you couldn’t replace and put them aside.
If you have items you’re storing and not really using, and you plan on giving them to your kids or other friends and family, then do it now.  Let them enjoy the items now.
Also consider what items can be replace in a smaller version.  For example, can you live with a smaller dining set or a smaller couch or a smaller TV? If so, sell the large stuff and buy smaller versions.
4. Sell, store and give away your stuff
Starting the whole downsizing project early is important so you have time to sell your stuff.  Letting go of your stuff is difficult but selling helps to lessen the pain.  At least you’re getting something in exchange. 
Next, consider how you want to sell. Yard sales are good for large items. Craigslist is good for books, electronics and other stuff.  If you have collectibles you want to sell, try eBay.  Clothing can be sold at consignment stores.
After you move into your smaller home, consider storage by going up and not out.  Put shelves on the walls and get things off the floor.  Also use some of your items as storage containers.  Use a coffee cup to store pens and pencils in. Use a large vase or milk carton to store pictures you need to go through. Store games or blankets inside hollow ottomans.
Go electronic! Instead of books, get a reader. Scan pictures and important papers and keep them in a cloud account. This will also keep them safe in case of fire or a natural disaster. Consider downsizing your DVD/Blu-Ray, CD player, game boxes, radio, and TV into a computer or laptop that has the capability to meet all your electronic needs. This will also help to cut down your utility bill.
A word of caution though. Don’t get caught up buying various boxes, baskets, containers, etc. for storage.  Carefully consider how much room you have and what you really need to corral loose stuff.  You don’t want to overfill your space with storage containers.
As a last resort, if you can’t live without some of your stuff and you don’t have room for it, rent a small storage unit.  However, promise yourself you will revisit your needs in 6 months. Do you really need the stuff you’re storing in a paid unit?
Finally, it you can’t sell, then give it to charity.  Someone will need whatever you’re giving away.

Downsizing is a difficult process but once it’s over, you can relax.  You’re accomplished something important. Also keep in mind why you’re downsizing. If it’s to be closer to family, remember that. If it’s to save money, keep that in mind. If it’s to shorten your commute, which will save you time and money, keep that in mind.  When it gets hard, remember your why and keep going.