June 25, 2008

Read what you're getting into before it's too late

You'd be surprised how many people sign real estate documents without ever reading them. Then again, maybe you wouldn't. Perhaps you've even put your signature at the bottom of a contract or form that you merely skimmed over. I strongly advise against this.

What's written counts

From beginning to end, a real estate transaction will present you with more forms, disclosures, contracts and applications than just about any other activity you'll ever undertake. You know the numbers on these documents matter, but so do the words. In fact, if any party disputes who was obligated to do what – and how or when – those words carry more weight than any verbal discussions or agreements. They may even spell out how a dispute gets resolved – like mandatory mediation, for example.

Start off on the right foot

Early in the process, sellers will likely be presented with a listing agreement, and buyers may be asked to sign a buyer's representation agreement. These contracts outline the arrangement between you and your real estate broker. They protect both parties by spelling out what services the broker will provide as well as details about compensation and duration of the agreement.

If there's anything you don't understand about the listing or buyer's representation agreement, ask your Texas Realtor to explain it to you. These agreements are not typically complex, but they do cover many specifics and potential scenarios.

Preview of coming attractions

Whether you're a buyer or seller, you will eventually deal with a contract offer. Most homebuyers and sellers use a contract from the Texas Real Estate Commission. The contract for one- to four-family existing homes runs eight pages. As you might imagine, it covers quite a bit more than just the purchase price.

You may want to go over the contract and discuss it with your Texas Realtor before making or receiving an offer. That way, you can work out any confusion before you find yourself facing an important decision, possibly with a deadline looming.

If you don't read a blank contract beforehand, you'll definitely want to look at it closely with your Realtor when you do fill it out or receive a contract offer from an interested buyer.

The contract is only one of many key documents that go into a transaction. You should never be embarrassed to ask for clarification about the seller's disclosure and other disclosure forms, loan applications and disclosures, appraisals, title commitments, surveys, contract addenda, and other documents. If you can't get a straight answer from a service provider, I recommend you ask your Texas Realtor.

Don't stop reading now

If you've never participated in a real estate closing, come prepared to sign. And sign and sign and sign again. Many people don't look at closing documents until they show up to the closing itself. They may glance at the title on a form and listen to a one-sentence explanation of the document's purpose before signing it. Occasionally, a person will read every page right at the closing table, slowing the process to a crawl.

A better approach is to request the closing documents prior to the day you close. You can then spend time reviewing the materials to make sure that you understand everything and that all facets of the transaction are properly represented. You also should check for accuracy. It's not unheard of for an error to pop up – either in the numbers or some other important aspect of the deal.

When you thoroughly examine the paperwork involved in purchasing or selling a home and rely on your Texas Realtor to assist you along the way, you minimize the chance of future surprises. After all, the documents you fill out and sign form the basis of a decision you will be living with for some time to come. For more information, I invite you to visit TexasRealEstate.com.

June 18, 2008

Back to basics – buying a home

People find themselves in different circumstances throughout their lives, and owning a home might not fit into the plans for a given person at a given time. However, for most folks, buying a home at some point in their lives is the smartest financial decision they will ever make.

If you come to the conclusion that you're ready to invest in your future and buy a home, consider the following advice:

Don't outsmart yourself
Some people are trying to “time the market” and wait for the absolute best prices. This strikes me as risky and a little short-sighted. Good interest rates are currently available, so why not act now and start building equity? If you wait another year, and the price of the home goes down a few thousand dollars, but interest rates are half a point higher, what have you saved? Nothing – in fact, had you purchased, you'd have a year's worth of mortgage-interest tax deductions and a 12-month head start on building equity.

Look for approval
You may hear that you need to get pre-qualified for a loan, and that's a first step, but getting pre-qualified doesn't guarantee you'll be approved for the loan. A pre-approved mortgage assures everyone that your finances have been verified. This lets the seller and his agent know that you're a well-qualified buyer who is serious about purchasing a home and that your offer is to be considered legitimate.

Unfortunately, some borrowers are not completely honest or accurate when they give their financial information to a lender. They falsely inflate their income or savings to qualify for a larger loan amount. This is loan fraud – it's against the law and not to your advantage in the least.

Give me some credit
Your credit score gives lenders a fast, objective measurement of your credit risk. You will benefit by understanding how your credit score is derived and how you can improve it.

Also, you should learn how front- and back-end ratios (the percentage of your monthly income that you spend on housing and debts) affect an institution's willingness to loan you money.

A loan at last
There are many different kinds of loans available. Review all available options and choose the one that's best for you. If you're a first-time borrower, be careful with adjustable rate mortgages … the attraction is strong due to lower initial monthly payments, but make sure you'll have the capacity to make the payments after the interest rate adjusts. I don't believe that those loans are inappropriate. I am simply cautioning you to make sure you understand what you're getting.

Upon further inspection  
Buying a home is probably the most expensive purchase you will ever make. Your inspection is no time to cut corners. The cost of a hiring a home inspector is miniscule relative to the overall cost of the home. Don't ever buy a home without getting an inspection.

Pros versus Joes
Real estate transactions have become increasingly complicated. Making wrong decisions can end up costing you money … now and later. While it's not necessary, it's to your advantage to work with a buyer's agent – someone who will act as your advocate and who has a thorough understanding of the real estate business.

An agent you hire has fiduciary obligations to you, which means she is compelled to look out for your best interests. Not only will she help you find the best home and negotiate on your behalf, she may have recommendations for a lender, inspector, or other industry professionals.

Don't assume that all agents are the same
Once you've made the decision to have professional representation, be sure your agent is a Texas Realtor. Many people think that the terms Realtor and real estate agent are synonymous. They're not. Only those agents who belong to the National Association of Realtors and pledge to adhere to a strict code of ethics may call themselves Realtors. Your Texas Realtor will look out for your best interests and help you find the home of your dreams while helping you avoid making mistakes you might later regret.

To learn more about buying and selling real estate in the Lone Star State , or to find a Texas Realtor, I encourage you to visit TexasRealEstate.com.

June 11, 2008

What “days on market” really means

If you were to go car shopping and saw a model you liked, one that drove well, looked great, and was in your price range, would you care how long it had been on the lot? Probably not.  You'd likely feel good about finding it and move forward with the purchase.

What about real estate? When you find the right home, one that fits your needs, does the number of days that house has been for sale make a difference to you?

Some people believe a property that has been on the market for a while must have serious problems. Others believe that a house on the market for a long period means that the seller is desperate and will accept a low offer.

I'm not saying that buying a car and buying a house are the same thing – far from it. I am saying that the time a home has been on the market is not necessarily an indicator of a property's desirability or the seller's state of mind.

Nothing's wrong … honestly

Excluding overpricing, which is the most common reason a home will linger on the market, there are several reasons a quality piece of property may not sell quickly.

The statistic days on market (DOM) is the number of days a property listing has an active status in a listing service. Normally, the property's status is changed to pending during the period between the seller's acceptance of an offer and the actual closing. T he DOM will reset if a contract falls through, but if the agent fails to update the status, the DOM continue to rise, even though the home was ostensibly off the market. This happens, and through no fault of the homeowner, the property may now have a deceptively high DOM.

Some houses are listed before they're 100% ready to sell – perhaps the seller put the house on the market despite the fact that it's undergoing remodeling or repairs. In this case, the home was listed too early and probably won't show well. The days on market will go up, but after weeks of renovations, it's not the same house, and it will show a great deal better.

There are also situations where the sellers are not particularly motivated. Maybe they don't need to sell and are just testing the market. Perhaps they've got a price in mind and are willing to wait for the market to catch up with that number.

A number of properties simply go unnoticed – obviously a roadblock to a successful and timely sale. Maybe the listing price is $149,900 and the seller is missing buyers whose searches range from $150,000 – $200,000. Some homes may be tenant occupied; others may not be marketed well, especially on the Internet.

It's perfect – where do I sign?

Sometimes property is too specific for most buyers. It may have an amenity or quirk that just doesn't work for 99 people out of 100 – you can use your imagination here. When that 100 th person comes along, though, and sees that the house has this unconventional feature she appreciates, she'll probably make an offer.

It's all about you

Just like any statistic, DOM information may be useful for overall market analysis, but in any given case it may have absolutely no significance. The bottom line is that, regardless of the state of the real estate market, there are many reasons a property may linger, and all that really matters is what you think.

A Texas Realtor can help explain why certain homes have spent a lot of time on the market and guide you through the process of buying a home. For more information about buying or selling real estate in the Lone Star state, or to find a Texas Realtor, I encourage you to visit TexasRealEstate.com.

May 28, 2008

What to do when your house no longer meets your needs

Our needs change as we go through various stages of our lives. This is true in so many respects, but in the real estate world, it's especially accurate. When your home no longer ideally serves your lifestyle and you can't stand it anymore, you'll find yourself faced with a choice: pack up your life and move to a more suitable place or undergo a major remodel in your home.

If you honestly evaluate your situation and desires, the end result will be gratifying and you'll be happier about coming home every day.

What do you need

Everyone has different requirements and priorities for housing. T he young couple expecting their first child is going to have substantially different needs than the family with three teenage boys, as will the father whose aging mother needs in-home care, the unmarried person, and the recent retirees.

When trying to decide if a remodel or moving is the better choice, make a list of things you need and want in a home and a list of things you like and dislike about your current home. Then compare the two lists.

On the renovation side, get a contractor or an architect to come out and take a look at your house. These folks will be able to tell you what is or is not possible and give you a ballpark estimate. Remember that there are things you can't renovate, like neighborhood, lot size, quality of schools, and other environmental factors. Also bear in mind tha t costs frequently exceed estimates – make sure you're ready to absorb some extra financial burden.

When considering moving, use the information from your lists and work with a Texas Realtor and use the Internet to find a few homes that meet your need, in an area that does the same. Get a ballpark price for a home so you'll have a starting point.

You're going to spend some money either way, so this is a financial decision, but ultimately, your choice should be based on the answer to the following question: Will your current home, when remodeled, make you happy and complement your lifestyle? After all, a house is an investment, but it's a very personal investment – one that you come home to seven days a week.

Tear this down, put a wall there

After your evaluation, you may decide to undergo a major remodel that will bring your current home more in line with your needs. Inhabited remodels can be invasive and frustrating, and going through them may be a small form of torture, but in the end, they typically work out very well.

One piece of advice, as most contractors will even tell you, is to not out-build your neighborhood – you're less likely to get your money back when you do sell. This is a common mistake that remodelers make – they forget that the neighborhood is part of the sales price, too. In other words, identical houses with identical $25,000 upgrades in different neighborhoods may yield a much different return on investment based solely on the area and quality and features of surrounding homes.

Even though you've decided that now isn't the right time to move, you will probably eventually want to sell the house. You may want to get a Texas Realtor to help you evaluate your renovation options. Realtors know what improvements and additions can do for the value of a home, plus, we can pull comps and give insight into how your improvements will affect price per square foot and other valuable data.

Movin' out

If your analysis indicates that it makes the most sense to pack up and move , congratulations and good luck . T here are expenditures associated with moving and getting your home ready to sell, and p reparing to move can be challenging and a bit inconvenient. Despite this, though, getting into a new house is very exciting – it's a chance to start fresh and make new memories.

If you need to sell your current house, I encourage you to hire a Texas Realtor to list the property. A Realtor will relieve you of much of the hassles of marketing and listing your own home.

There are other reasons to hire high-quality, professional representation, as well. Research shows that homes listed with Realtors sell more quickly than FSBOs. Fewer days on market saves you from incurring additional monthly expenses for utilities and the mortgage payment, which means more money in your pocket.

Home sweet home

Remember also that when you're looking for a home, your Texas Realtor will help you find a property that will meet your needs. Let her know your specifications, and she'll find some appropriate places for you. She'll also help you by guiding you through the transaction and negotiating on your behalf.

Change is the only constant

Our needs evolve as we go through different periods in our lives; some changes are good, others bad, some we can see coming, others are unanticipated. The fact remains, though, that change is inevitable and is a driving force in what we look for in one of our most basic necessities – housing.

May 21, 2008

Put yourself in the maintenance mindset

You always hear about all the advantages of homeownership, like tax breaks, accumulation of wealth, and other less tangible, social benefits. But is there a downside, too? Well, that depends on your perspective. I find one the biggest adjustments for renters-turned-homeowners is that you now own the place, so if something breaks or needs some TLC, there is no longer a landlord to lean on and ignoring it doesn't make sense – as a homeowner, you are responsible.

Home maintenance is part of homeownership and can, sometimes, be expensive, frustrating and tedious. Finding a good time to perform even small, routine repairs can be challenging and Murphy's Law seems to apply with big problems – they seem to happen at the most inopportune times. For this reason, it is to your advantage to have a sum of money earmarked for home maintenance. Problems will definitely arise, even in new homes.

Maintaining your home is an ongoing project. But despite the expense and the aggravation, it's worth it to stick to a maintenance schedule and make repairs as needed.

From top to bottom

There's an extensive list of things you must do to protect your investment and keep it looking sharp and in sound condition. Here are just a few ideas:

Do an annual visual inspection on your roof, or pay a reputable company to check it out for you, especially if there's been severe weather. Hail is particularly damaging.

Head up to your attic, or again, hire someone if you're not comfortable with the task, and check for signs of water leakage from the roof. Also look for any sign of termites or rodents. Squirrels or rats nesting in your attic are not particular about what they chew, and they sometimes gnaw electrical wiring, which can lead to damaged infrastructure or fire.

Does the exterior of your home have peeling paint? It seems cosmetic, but paint is a first line of defense against the weathering and aging of wood. You should also know that it's less expensive, less difficult, and less time-consuming to paint before the existing coat begins to peel. Brick, stucco and siding should be inspected as well.

Depending on the level of traffic, hardwood floors should be refinished every five to 10 years. If they get too worn down, you're risking permanent damage to the wood.

You'll want to check for leaks in any room that has lavatories, commodes, showers, or any other water-based amenity – remember to feel around under sinks for dampness.

In some older homes, cast iron was used for the wastewater lines. These pipes eventually corrode and leak. If the seepage is under the foundation, you'll probably never notice, but it may be worth it to have a professional plumber come check it out. If the leak gets bad enough, it can cause your foundation to dome, which can definitely lead to big problems.

Speaking of foundation issues, maybe your house isn't showing signs of problems, but are you taking steps to keep it that way? The main cause of foundation problems, whether pier and beam or slab, is fluctuations in the moisture content of the soil. If all soils beneath a foundation swells uniformly or shrinks uniformly it is unlikely to cause a problem.  When only part of the foundation moves, though, you're likely to see signs of damage.

Reputable foundation repair companies will evaluate your problem and let you know your best course of action. If you don't see cracks in walls, door frames askew, ceiling separated from walls or floors that slope, you probably do not have a problem. Even so, they may recommend some preventative measures to maintain the moisture content of the ground, like gutters, downspouts, or watering around the perimeter of the home, especially if there are some large shrubs or trees growing next to the house.

This is just a partial list, and perhaps every single thing I mention doesn't necessarily apply to your house. That doesn't change the fact that all homes need maintenance. I encourage you to perform your own research on home maintenance and to come up with a list of priorities for your situation.

Your efforts pay off

One of the best things about homeownership is that your investment typically appreciates over time. In order to support that appreciation, though, the home must be well-maintained.

If you plan on selling the house at any point, you need to face reality. Defer repairs and maintenance for whatever reason, and sooner or later you're going to have to deal with it – either by actually doing significant work prior to sale or by reducing your asking price to compensate for the needed work. At that point, it's better to have just kept up with the repairs – at least that way you'd have gotten some enjoyment out of the work.

My advice to you is this: Don't ignore little problems. They tend to grow bigger and get more expensive to fix due to the damages that may result. Protect your biggest asset by diligently maintaining your home.

Maintenance and repairs are like a trip to the dentist – not many of us really look forward to it, but it's necessary, it pays off, and not doing it will definitely cost you in the long run.

May 14, 2008

Finding the right agent … for you

Real estate transactions can be stressful and are full of nuances, subtleties and loads of paperwork. Aside from that, every transaction is different because every single one involves the ultimate variable – people.

Well, here's a shock … real estate agents are people, too. I'm not trying to be funny – all I mean is that every agent is unique. We've all had different experiences and have various specializations and interests.

Looking for an agent can be tricky and confusing, too. Don't let that stop you—your needs are important and you should take time to assess your situation and find the right representation for you.

Who are you?

Are you a first-time homebuyer who needs a little extra attention? Many agents enjoy thorough involvement in the transaction and enthusiastically educate their clients about each step of the homebuying process.

Has it been a while since you bought or sold real estate? If you've got some experience but are unsettled about real estate in today's world, I can hardly blame you – there's so much information out there that it's easy to get overloaded. There's an agent for you.

Are you technologically adept and expecting to heavily rely on the Internet, Web-based tools and instant communications? You likely want someone who is equally adept and willing to communicate with you quickly, correct? When you're interviewing your agent, make sure she knows these considerations are of high importance to you.

Do you live out of town and need a local representative to completely handle the transaction? Some agents work mostly with people who relocate from out of town.

Maybe you're looking for the perfect commercial space to build your family business. You can hire someone who deals exclusively with commercial real estate. There are even sub-specialties within commercial real estate.

Perhaps a vacation home is in your plans. Guess what? There are agents who make this their niche.

What if you prefer to handle most of the legwork yourself, but need an agent to help with the marketing or contract negotiation? Rest assured – there's an agent for you.

A difference that matters

It's important for you to know that not every real estate broker or salesperson in Texas can call himself a Realtor. Only those agents who are members in the National Association of Realtors, the Texas Association of Realtors and one of the local associations around the state may use the term “Realtor” on their business cards and in their marketing materials.

Hiring a Texas Realtor means you've retained someone who is committed to continuing education, professionalism and integrity. In addition, Realtors are sworn to uphold a strict code of ethics and to treat all parties fairly.

It's a difference that matters.

Specializations and professionalism

Many Texas Realtors hold one or more certifications or designations, each one indicated by an acronym behind the agent's name. These letters signify that the holder has not only undergone advanced or specialized training in real estate, but is also committed to his own professional development.

Some of us specialize in residential listings, buyer representation or investment property. Others concentrate on international or commercial real estate.

Find your match

There are all kinds of real estate agents out there, and there's one for you, no matter what your situation or what level of service you seek. There are lots of ways to find agents these days – the Internet, print advertising and good old fashioned referrals, to name a few. Regardless of how you find your agent, though, if you're looking for a higher level of professionalism, I strongly recommend that you make sure whoever you hire is a Texas Realtor.

To learn more about real estate in Texas and to find a Texas Realtor, I invite you to visit TexasRealEstate.com.