Rent or Buy?

My husband and I have been renting since we got married a few years ago.  Our landlord is not renewing our lease so we need to find another rental.  When searching, we have not found anything decent for an affordable price.  A friend of ours recently purchased a home and suggested we do the same.  Why are rentals so high and is buying a better idea? 

Rental properties have increased in price in the last few years because of supply and demand.  More people are renting for several reasons:

1 – Those who have foreclosed or short saled their properties are not able to purchase because they cannot get a mortgage for a time.

2 – With home values plunging in 2008, some are not convinced that purchasing is a good financial decision.

3 – With mortgage companies tightening up on who qualifies for financing, it is more difficult to get a mortgage.

I suggest if you plan to stay in the area a few years,  that you look into purchasing. If you have good jobs and credit, contact a reputable real estate agent in the area you want to live to discuss the process.  Before you know it, you will be unpacking boxes in your own home (instead of someone else’s) and building equity instead of financing your landlord’s property.

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Appraisal Problems

We put our home up for sale and had a buyer within two weeks with a price close to what we were asking.  About four weeks later, we found that, because the appraisal came in lower than the purchase price, the buyers were not interested in paying what they said they would pay on the contract.  How can someone sign a contract agreeing to a certain amount and then change their mind? 

Most home buyers are purchasing with a mortgage because they don’t have the money to buy without borrowing from the bank. If this is the case, the contract will be contingent on a mortgage which means, if your buyers are not able to get the mortgage, they are not able to buy your home.

Part of the mortgage process is an appraisal, a value given to your home by a licensed appraiser.  He makes an appointment to come by your house, measures, evaluates and finds other properties similar which have sold in the last year.  His report places a value on your home which the bank uses to determine what they will lend you.  If that value is less than what you agreed to pay for the house, your buyers have the right to offer less or purchase elsewhere.

As the seller, you can hold to your price and hope the buyers see the value and have money to pay the difference.  However, if you do this, you risk losing your buyers which means you’re back to square one with showings, hoping for another buyer.  And, unless higher valued homes are scheduled to settle in the near future, this scenario may be repeated.

In this market of lower values, appraisals can get in the way of contracts, especially if homes which have sold in your area are not of the quality or location of yours.  A good agent will guide you through the process, working hard to bring you the most value for your property with the least headaches.  Then, before you know it, you will be packing and moving on, with the appraisal issue only a faint memory.

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Buyer Agency

We recently met with a real estate agent who discussed what she called “buyer agency” with us.  The contract she wanted us to sign committed us to using her as our agent if we buy a house.  If we sign the contract, does this mean if we find a home we want to buy that is not listed with a real estate agent , that we need to pay her? 

The contract you’re referring to is called a “Buyer Agency Contract” and the answer to your question is “yes.”  If you sign a buyer agency contract with a real estate agent, you are agreeing to use that agent and pay her for any home you purchase during the contract dates, no exceptions.  Signing it makes sense if you’re sure of the area you want to purchase in and have found a buyer’s agent who you feel comfortable with, who will work hard for you and who knows the area.

However, if you have not decided where you want to live, you may want to wait until you have narrowed down your search.  Any agent who shows you a home can serve as your buyer’s agent. Without a contract, you have the latitude to look for homes in different areas and use the agent you feel knows the most and works the best with you for the particular home you chose to purchase.

If a home is listed with a real estate agent, it is customary for the listing agent to split her commission with the buyer’s agent.  In that situation, the buyer’s agent gets paid by the commission promised to the listing agent (which comes from the seller).  However, if a home is being sold by the owner who is not using an agent, the buyer who has signed a buyer agency contract must either agree to pay his agent out of pocket or convince the owner to pay her.

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Homeowner’s Associations Are Not All The Same

My wife and I are looking at homes in communities that have homeowner’s associations because we like the idea of not having to take care of our property.  We have found a huge difference in, not only the dues, but what they pay for.  Can you explain?

Many communities are governed by homeowner’s associations which provide bylaws, rules and regulations that buyers agree to when owning a property in that community.  These associations vary greatly in the amount of rules, the dues charged and what the dues include.

Some communities have rules many pages long, listing items such as a date to put away your grill or discard your potted plants, details concerning what kind of holiday decorations are permitted and the number of bird feeders allowed.  Others paint with broad strokes, allowing residents to work out the details.

Many communities require a flat fee when purchasing in addition to monthly or annual dues to provide for reserves. Neighborhoods with pools or those with dues that cover all exterior maintenance are substantially more.  If the association was involved in litigation, fees are higher as attorneys need to be paid.

A good agent will help you understand exactly what the dues and fees are and what they cover.  She is familiar with the Uniform Condominium Act of PA which requires that the association documents, financials and insurance be provided to you as part of the purchase process.  This protects you against buying a home without knowledge of what you’re committing to.

Paying attention to this will offset any surprises when the boxes are unpacked.  And if it’s the dead of winter and the dues include snow removal to your garage door, enjoy the warmth of the indoors while others do the work.

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Septic System Inspections

I am planning to sell my home but have heard nightmare stories from coworkers concerning septic inspections.  My home is about 40 years old but I have had no problems with my septic system.  Should I be concerned about this?

It is true that older septic systems have more difficulty passing inspections because standards have become more stringent.  In addition, results of inspections vary according to what inspectors feel is important.  Some will consider your system satisfactory but add a number of concerns which creates worry in the minds of your buyers.

No one wants to own a home with a nonworking septic system.  If a report shows it’s working now, but because of this or that, it may not be working in the future, you suddenly have created doubt in the minds of those interested in your home.   In addition, some inspectors will go so far as to add recommended work with costs, just in case you want to hire them to do the work, creating a conflict of interest.

This sounds like doom and gloom but it doesn’t have to be.  When meeting with a real estate agent to discuss listing your home, the concerns about a septic inspection should be part of the conversation.  One way to offset a negative septic inspection report would be to get your own inspection before you put your home on the market, using a septic inspector who is reasonable and fair, especially one who is not profiting from projected problems.

Like many other facets of selling, a passing septic inspection report is not guaranteed. But working with your agent to offset problems will many times result in an easier, more profitable sale.

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Should I Wait to Sell Until Spring?

I would like to sell my home but the outside looks so drab in the winter and who is looking this time of year anyway?  I’m wondering if it makes sense to wait to sell until the spring when flowers are blooming and things are green.  What do you think?

The question, “Should I wait to sell until the spring?” is asked by many folks this time of year. The perennials they worked long and hard at planting will go unnoticed.  Trees which provide privacy in the warmer months are without leaves, exposing neighbor’s properties.  And who wants to be looking at houses in the cold?  There seem to be good reasons to wait until the spring.

I think the best reason to sell now instead of waiting is because most folks have bought into these reasons and have decided to wait.  This means, if you wait until the spring, there will be many more houses for sale, giving buyers more choices when the warmer weather arrives. More choices are more competition for you which makes selling more difficult.

Although fewer people are looking at homes in the winter, the ones who are looking are more serious about purchasing.  The winter weeds out the “window shoppers”, those who enjoy spending their free time looking at homes.  Instead, you’re preparing a show ready home for people who are more committed to purchasing.

If you feel your home is ready to list and the only reason you’re waiting is because it is winter, I suggest putting it on the market now.  Your chances of your home being the only one like yours for sale is much greater than if you wait ( like most others)  for the spring.  Then, when warmer weather arrives, you’re packing and moving on, perhaps enjoying flowers blooming in your new home.

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Can I Afford to Sell?

My wife and I had our 3rd child this year so our 3 bedroom home is becoming cramped.  Because of our mortgage, I’m not sure if we can afford to sell. How can we find out what we can get for our home?

The best way to get a good idea of what your home is worth is to meet with a real estate agent.  A good agent will schedule a time with you at your house to review comparables which are simply properties similar to yours in location, condition, size and age which have sold recently.  A meeting at your home gives her an opportunity to compare your home with these properties to intelligently price yours.

She will take some time to walk through your home with you to look at the interior features (you may or may not have) which attract buyers, such as granite counters, hardwood floors, large closets, garage space, and if your basement is finished and/or a walk out.  She will also observe the location and views your home affords.  Do you have privacy?  Nice views?  Traffic noise?  She will ask about the age of the roof, heating/cooling system, and windows and if you’ve improved on the home by adding and/or finishing out space.

Pricing a home is not an exact science since conditions vary and no two homes are alike.  Knowing this, she will do her best to find a few homes as similar as possible to yours, adjusting the price if necessary to accommodate differences.

It is important to meet with an agent who is familiar with the area and has a track record of success in selling in the neighborhood you live in.  With her experience, she will generate an estimated seller’s cost sheet so you have the numbers you need to help you decide if you can afford to sell and move on.

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