Market Watch

For anyone looking to buy a home, watching the real estate market is a requirement. It can help you make informed decisions and be a better consumer. Here are four variables to monitor once you decide you are in the market for a new home.

1. Use newspapers and the Internet to see where sellers are setting their asking prices. The laws of supply and demand ultimately determine where sellers can set their limits. Knowing what is the ballpark asking price for the type of home you want in a certain neighborhood is key to knowing a good deal when you see one.

2. Monitor the newspaper for legal statements about what homes have sold for. This is different from the asking price. Instead of what the seller wanted to earn, this announcement tells you what did sell for, which could be above or below the asking price.

3. Watch how long homes are staying on the market. In a seller’s market when consumer demand is high or mortgage rates are favorable, homes may sell very quickly. In a buyer’s market, when the supply of homes is greater than consumer demand, properties may linger.

4. Study mortgage rates. Should you find a house you want to make an offer on, you will want to know what a good rate with favorable terms is. Doing your homework ahead of time so that you can “lock in” a rate can save you money in the end.

5. Investigate tax rates. Find out what the tax rate is in the town where you are looking to buy. This can be a sizeable annual bill, so it is important into include it in your budgeting. In addition, a historical perspective is a good idea. When were taxes raised last? By what percent? Is there a municipal project in the works that could boost rates again?

In addition to watching these factors yourself, a good Realtor® follows all these variables as a matter of course and will be able to give you insights and information to help make you a better buyer.

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Insurance Assurance

One of the largest initial expenses when purchasing a home is the down payment. Lenders and banks typically prefer that buyers make an initial down payment of 20 percent of the appraised value or purchase price.

However, lenders also understand that some people cannot accumulate that much savings toward a down payment. In such instances lenders will often apply an additional fee called Private Mortgage Insurance or PMI. This insurance coverage protects the lender should you default.

Here is how PMI works: Say you are purchasing a home valued at $100,000. You want to make a down payment of 5 percent or $5,000. The lender only wants to assume 80 percent or less of the home’s value. The lender will secure an insurance policy for you to cover the 15 percent you cannot provide. In this example that would be $15,000. You pay the PMI premium each month and the lender receives the protection should you fail to make good on your debt. Most borrowers include the PMI payment along with their monthly mortgage payment.

When discussing PMI with your lender, ask about the laws governing when you can stop your PMI payments. There are rules that require PMI to end automatically when you reach 22 percent equity in your home. It is also a good idea to explore other options before deciding if PMI is the right choice for you. Today’s variety of mortgage products makes PMI only one of several options.

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Cosmetic or Warranty Item???

Did you know that fogged windows are now the seller’s responsibility to replace?  Yes this is absolutely true.  Under the new FAR 9 contract fogged windows, torn screens are no longer considered a “cosmetic condition” which allows the condition to be classified as a warranted item. A seller is responsible if reported on inspection report to repair all warranted items with in the agreed contract amount, normally 1.5% of purchase price.

Clothes washing machines and clothes dryers are now considered to be major appliances that, by default, convey to the Buyer with the sale of the real estate.  So sellers, if you plan to take your clothes washer and dryer and your refrigerator, make sure that when you receive that offer, you check it for those items.  This can especially become a problem if the property is occupied when the buyer makes the offer.  They seen a washer, dryer, refrigerator and an extra refrigerator in the garage, unless stated in the contract all convey with the purchase of the property.

Buyers must be aware of appliances in the property.  Sellers be specific if it does not convey, have your listing agent state that on feature cards and post them on the item as well as on the MLS and in the contract.

Be honest up front and there will be less stress at closing!!