Buying a home? What is the process?

Buying a home? What is the process?

Buying a home is one of the most exciting and sometimes horrifying experiences adults Buying a home? What is the process?face. It can be exhilarating in the beginning, labor intensive in the middle and exhausting by the end. Some deals just go that way, but not every deal needs to wear you out by the end. If you are armed with information, buying a home can be a smooth and fun experience. Let me show you how.

Buying a home: Step 1

The first step in buying a home is financial. You need to know where you are financially to make an offer on a home. The process starts by looking at your finances and determining if you’re in a place to buy a home. You may be able to do that with a lender, but you can also talk to a credit counselor to figure out what your financial commitments tell you about a near future home purchase.

Most lenders are happy to sit down with you and talk about what your financial capabilities are when you hope to buy a home. You’ll want to make sure you have enough income available to make your mortgage payment while continuing to pay your utilities, car payments, student loans, etc. A lender can help you find out what is left once you pay your monthly reoccurring debts.

If you keep your steps in order, you’ll end up with a great result, but if you mix them up, you may end up frustrated and disappointed. If you call a Realtor first and the Realtor says you need to talk to a lender first, trust her. You’ve got to know your numbers before you go shopping.

Make sure the lender you work with is a reputable lender with good references. I worked with a young couple in 2016 that had an online lender’s pre-qualification letter when we met. I looked at their pre-qualification letter amount and it seemed a lot higher than a young couple with one income and an entry-level job would have. It was.The letter led them to make an offer on a home that was nearly $100,000 over their credit-worthiness. They were crushed, and I was sad for them because they needed a home to meet their growing family’s needs. I became suspicious of the first lender letter as we worked together and talked about their finances. I asked them talk to a local lender, and they did. Sadly, he discovered a huge discrepancy in their online pre-qualification letter and their reality. You’ve got to know your numbers. Once you know what you can afford in a mortgage, you know what you can offer for a home. THEN it’s time to talk to a Realtor.

Buying a home: Step 2

Now, it’s time to find a Realtor. Once you know what you can spend, you can start searching for a home that meets your wants, needs and desires. Those three criteria may change often throughout the process. Needs weigh heavy on the three, but you don’t want to sideline your wants and desires until you’ve had a good look at the market. You may find that your wants and desires fall into a class that exceeds your budget. At that point, you have a decision to make. Do you continue your search hoping for that needle in a haystack (and they do exist), or do you buy something that meets your needs, but isn’t the dream house you envisioned?

My encouragement is to find a Realtor who will sit with you in his/her office and look at properties online until you narrow your search down to a manageable number. Once you’ve set that number, then you can hop in a car and take a look.

A lot of first-time home-buyers let their enthusiasm for the process take over their logical side. I urge my buyers to do drive-bys before we go out to look at homes. It is not unusual for a buyer to send me 20-30 houses they want to look at over a weekend. That’s difficult in the best circumstances, and it’s even more complicated when they are spread out over two or three communities miles apart. Narrow the search down in the Realtor’s office so that you don’t waste your time looking at homes that really aren’t matches for you.

Buying a home: Step 3

The third step in buying a home is writing a contract. Once you’ve found a home that meets your criteria, it’s time to write a contract. In this phase, you are going to set the limits for your purchase. You will state what price you are offering, how much money (if any) you are putting down as a down payment, the type of loan you will be using and when the appraisal is due to be done, the interest rate you’ll be paying, if you will be requesting closing costs help, whether you’ll be doing a home inspection, who will be closing the sale for you, and when the closing date will be.

There will be a lot of activity that takes place once the contract is ratified, but first, you’ve got to get the seller to agree to your offer. That may mean you and the seller may go back and forth in negotiations until you mutually agree to an acceptable deal for all. Once that’s done, a new phase of the process takes over.

Buying a home: Step 4

Now, it really gets busy. I don’t want to scare you, but getting a contract accepted is the easy part. Once you’ve accomplished that, a whole myriad of things take place. First up, there is a home inspection. A home inspection typically takes place in the first 10-14 days after ratification of you contract. You want to get that out-of-the-way upfront because it may show information that causes you to decide not to buy a particular property. 

Buying a home? What is the process?A home inspection is designed to look at the home from a lot of different perspectives. The inspectors will look at the components and systems, including, but not limited to the plumbing, electrical, heating and cooling, roof, insulation, foundation, construction and appliances. Home inspectors are not code enforcement officers and they should not say things like, “This is a code violation,” when they see things they think might be a modern-day code violation. What they should say is, “You may want to have a licensed professional check this to make sure it is safe.”

The reason I state that, is because codes change. A home constructed in the 60s that passed all standard code compliance inspections in the 60s will not meet code compliance standards in the current day. That doesn’t mean the house is unsafe, it just means that codes change and the house may not have been upgraded to meet more modern codes.

It is fine to ask a seller to bring certain things up to modern codes, but there is a limit to what most people will do. So, if the home seller comes back and say, “It met all applicable codes at the time of construction,” he is likely correct. At that point, you can walk away, or you can accept whatever the seller is willing to do with your requests.

When you ask for home inspection repairs, always request that the seller used licensed professionals to get the repairs done. This is no time to have a sub-par handyman working on the home. Repairs need to be done by professionals.

Home inspections cost different amount based on the property, place, inspecting company and how soon the inspection needs to take place. The fee will be paid at the time of the inspection by you, the buyer. Once you get past the home inspection and the negotiations that follow, you’re ready for step 5.

Buying a home: Step 5

Now, lenders and closing take the lead. Once the home inspection process is over, the lender and the closer to get involved again. The lender is going to start the loan approval process. That means you will need to verify what you originally told the lender by providing evidence of income, debts and credit-worthiness. 

A lender will look at your payment history, your income stream over time and the steadiness of your financial life. The lender wants to know that you can buy a home and that you can pay for a home faithfully. At this point, everything is about verification. Before any lender will loan you money, he wants to know you will pay it back. That’s a simple process and conclusion.

Also at this time, the lender will call for an appraisal on the property you are buying. The appraisal is done to confirm that the property is valued at or above the loan you are applying for. The lender will loan money based on the lower of the offer price or the appraisal.

At the same time, the closing attorney or title company will be looking at the history of the home which is recorded in the courthouse. They will be looking for any issues that need to be addressed before closing. Most closers will check at least 60 years of the property’s history. The goal is to make sure the title to the home can be transferred from the seller to you without any legal hurdles that might present legal liability later. A good closing attorney can save you a lot of headaches in the long run. You want what is called “clear title” before you sign any documents at the day of closing. A clear title means that there are no encumbrances (clouds on) to the title, and you can have that with a good closing attorney.

During this period, your Realtor may seem MIA, but the truth is, there is little for the Realtor to do during the lender underwriting and title search period. He/she will be making sure repairs are done on time, pest inspections and water tests (if necessary) are done, but there is limited need for the Realtor to be heavily involved at this phase.

Buying a Home: Step 6

If you survived the first 5 steps, you’ve made it. It’s time to close. At closing, the work the closing attorney has done, and the reams of paper the lender has generated will all show up. You’ll sign documents for about an hour and the home will be yours.

Just before the closing, a few things will happen. Shortly before closing, your lender will pull your credit one more time to make sure you’re still a credit worthy buyer. You never want to take out a loan, buy anything on credit, skip revolving payments, quit your job or anything else that would negatively affect your credit during this whole process. Once the lender has verified that you are still credit-worthy, he will issue a “clear to close” to the closing attorney.

The funds to buy your home will be transferred, you’ll sign for the loan and you will be given the keys. The entire process take 30-60 days depending on what loan you are using. Government backed loans tend to take a little longer to close, but they are not radically longer.

This is a simple look at buying a home. There are a lot more details in many of these steps, but you get the gist in these six steps. When you’re ready to make that home purchase, be sure to call the Cornerstone Business Group, Inc. We are your local real estate sales pros, and we can help you navigate this process successfully.

 

 

Winchester-Frederick County, VA Mid-Year Real Estate Report – 2017

Winchester-Frederick County, VA Mid-Year Real Estate Report – 2017

The Winchester-Frederick County, VA mid-year real estate market continues to shine. Some numbers are up and some are down, but they’re all good. That is welcome news for buyers, sellers and homeowners in general. The total number of sales in the Winchester-Frederick County, VA mid-year real estate market was 840 compared to 806 in 2016. That is not a major change, but it is a number heading in the right direction. It is consistent with the national average of 6% appreciation.

The one number that is the most impressive is the average sale price. The 2017 mid-Winchester-Frederick County, VA Mid-Year Real Estate Report - 2017year sales price average was $265,500 while 2016 was $255,034. The same period in 2015 was $242,578. That’s a nice consistent progression over the past three years, but the big change is when you look back five years. In 2012, the average sales price for the first six months of 2012 was $209,049. That is a 21% increase over five years. That’s impressive.

Winchester-Frederick County, VA Mid-Year Real Estate: Down Numbers

Another number that is down in the Winchester-Frederick County, VA mid-year report is the days on the market. The days on the market has remained fairly consistent over the past 5 years. The days on the market in 2012 was 87, 85 in 2015, 81 in 2016, but 2017 was down to 63 days. That is a 22% drop between 2016 and 2017. The good news for sellers is that their homes sit on the market fewer days and the sale price is higher.

Another stunning number that is also down is the percentage of distressed properties (short sales and foreclosures). The Winchester-Frederick County, VA distressed property average for the first six months of 2017 was 6%. Foreclosures made up 4.4% and short sales added 1.6%. Here again, historical comparisons show how far the market has come since the recession. The percentage of distressed properties in 2012 was 39%. In 2012, 14% of mid-year sales were short sales and 25% were foreclosures. A 33% improvement is seen in the increase in home prices from 2012 to 2017. The fewer distressed properties on the market means that home values are stable and selling at true market value.

With low-interest rates and a moderate number of homes on the Winchester-Frederick County, VA real estate market, sellers have the upper hand. That can be fragile because a run up in available properties could reverse that benefit in favor of buyers overnight. It happened in July of 2014. But, for now, sellers are in charge of the local real estate market.

When you’re ready to buy or sell in the Winchester-Frederick County, VA real estate market, give the local real estate pros at Cornerstone Business Group, Inc., a call. Let’s talk and make something great happen.

Buying a home in Winchester, VA

When buying a home in Winchester, VA, there certain things you’ll want to consider.  Some things are obvious, and some are easy to overlook in the excitement of a new home purchase.  For instance, your considerations may be,

1. How much can I spend?  That’s something you will need to know before Buying a Home in Winchester, VAyou ever get in the car to look at a property.  There is no sense in looking at a $500,000 house on a $125,000 budget.  How much can you spend?  You will want to talk to a loan officer before you get to far into your search.  He/she can help you determine how much you can afford to spend on a new home.  Your Cornerstone agent will need to know that information when you meet.

2. What do I really need?  Want?  When buying a home in Winchester, VA, you need to know how many bedrooms, bathrooms, etc., will you need?  Then, if you had the option, what do you want that exceeds your needs?  Your Cornerstone Business Group agent can help you discover if the house you need or want is available in your price range.

3. If you have kids, you will want to ask, “What schools will my children attend?”  Go by and take a look.  Are they schools you want your kids to attend?  If they aren’t, that will likely mean more decisions.  If you found the perfect house with a poor school district, you may consider and search out private schools, or you may even consider homeschooling.

4. Do you want neighbors?  When buying a home in Winchester, VA you have a lot of options. Do you want neighbors? If you love the idea of neighborhood get-togethers – you will want to look in town or in the suburbs.  If you really don’t want to see a neighbor every time you walk outside, you will likely need to look at country living.  Both locations have their advantages.

5. Where is the closest shopping?  Do you want to drive 5,10, 20, 30 miles to buy groceries?  Location, location, location.  What’s the best location for you?

6. How close do you need to be to your work?  If your work demands immediate response to a distress call, that may affect your decision.  You can’t afford to be an hour away if that’s the case.

7. Do you have health issues that may be potentially dangerous if you’re not near a hospital?

8. Do you need to be near a major highway? 

9. Would bad weather make it difficult to get to local services, school or work?

Buying a home in Winchester, VA10. Will this be a long term purchase, or are you just looking for a starter home?  If you have a vision of a much bigger home with land or other amenities, but your budget isn’t there yet, you will want to look at homes that are easy to turn around and sell in any economy.  Buy what you can afford that will be easy to sell.

There are a lot more issues that you need to consider when buying a home other than price.  When the time comes to start that process, call the Cornerstone Business Group, Inc., and we will help you get started. We are your local real estate sales pros.

Buying a home in Winchester, VA.

This post was originally posted at www.cornerstonebusinessgroupinc.com: Buying a home in Winchester, VA. 

 

Winchester Distressed Properties Are No Longer Distressing

Winchester Distressed Properties Are No Longer Distressing

The good news for the Winchester-Frederick County, VA real estate market just keeps rolling in. It’s safe to say that Winchester distressed properties are no longer distressing most home-owners. What is a distressed property? A distressed property can be a short sale or a foreclosure (or REO, real estate owned).

Winchester Distressed Properties Are No Longer DistressingA short sale is a property the lender gives the home-owner permission to sell below the current loan balance. Many homeowners who bought in the pre-recession years, bought their homes at a premium price. For instance, a home that sold for $400,000 in 2006 lost value during the recession, and owners who carried those mortgages found themselves in trouble in 2008 and beyond.

Winchester distressed properties: What are they?

The Winchester real estate market lost an average of 33% in the fall of 2008, and soon after, Winchester distressed properties shot up. That $400,000 home was now worth $280,000 – $300,000. That left the home-owner with a debt of up to $100,000 beyond his home’s value which was no longer backed by his real estate. That scenario is where the often used real estate term, “under-water” originated. In that case, the owner was drowning in his mortgage debt because he owned more than the home was worth.

Distressed properties came in waves. The first wave of distressed properties came by way of foreclosure. Many families who were dependent on two incomes were reduced to one income as the economy and the real estate values contracted. They were followed by investors who over-extended themselves, and finally, those owners who were hanging on by their fingernails lost their battle in 2009 through 2013. That opened the door to a wave of short sales.

All Winchester-Frederick County distressed properties have declined over the past three years, but the most recent news is the best. Of the current pending sales (homes under contract), only 8.7% are distressed properties. This is a place where an interesting phenomena has taken place. Up until this year, foreclosures have always been the primary source of distressed properties, but in June of 2017, short sales are leading that group of Winchester distressed properties at 6.2% of that total. Foreclosures make up the rest at 2.5%. That number is likely to return to higher foreclosures as short sales continue to fall, but both categories are on the decline.

Winchester distressed properties: By the numbers

There are 289 pending sales in the Winchester-Frederick County, VA real estate market. Of those, there are 15 short sales and 7 foreclosures. If you know how the numbers unfold, you can decide whether this is a time to panic or is it the natural progression of a market on the move.

Of the 15 short sales that are pending, 77% (13) were homes purchased before 2008. Winchester Distressed Properties Are No Longer DistressingBecause of the inflated home values before the recession, those properties would be prime candidates for an under-water mortgage. The highest number of short sales also corresponds to highest home sale prices immediately before the recession (2007). The remaining 13% of Winchester distressed properties (2) were purchased after the recession began.

The reason there so many short sales pending in June 2017 is because of the way short sales progress. Before a home-owner can qualify to do a short sale, she must communicate with her bank that she can no longer afford her home and she needs to do something. The home-owner has a few options. None are very good, but she can allow the home to be foreclosed, or offer a deed in lieu of foreclosure or she can begin a short sale.

Winchester distressed properties: How short sales work

A short sale is only possible if the bank agrees to allow the home-owner to sell the property below the loan balance. When the bank agrees, the home is listed and buyers can make offers. Once a buyer makes an offer, the seller can accept the offer, but that does not mean that the property will ever go to closing. The bank also has to agree to the offer. This is where the third part approval is needed a second time in the sale. It’s also traditional real estate sale practices and timelines disappear.

A bank may take 3 months to 6 months to 18 months to accept the buyer’s offer. Even though the seller has already said, “Yes,” to the buyer’s offer, the bank has to sign off on it. Of the pending short sales, 6 of those properties were listed in 2016. Only 9 were listed this year (2017). Some of those short sales have been under contract for months waiting for “third-party approval.”

The bank will hire local real estate agents to assess the property to make sure the list price is a fair price, and they will compare the buyer offer to that assessment. If there is a large gap, they bank will likely turn it down, and that can come after 90 days, or more, of waiting. A short sale is not a good property for someone who has to move quickly. Once the bank has accepted the buyer’s offer, then the process of a traditional sale begins. Home inspections are scheduled, earnest money deposits are deposited, title searches are conducted and the process begins to move toward closing.

Winchester Distressed Properties Are No Longer DistressingThere are 15 short sales pending in June 2017, but they are more likely a sign that the market is doing a little housekeeping after the recession. If the balance of the homes under short sale contracts had been purchased in 2013 and beyond, I would be concerned. Since they are pre-recession purchases, they’re showing that real estate prices were over-inflated, buyers were over extended and the market was in deep need of a correction.

Another reason not to panic over the June 2017 numbers is that there are 535 active listings on the Winchester-Frederick County, VA real estate market. Of that number, only 3.8% are distressed properties. That’s a negligible number compared to where the market has been in the past decade. Only .01% of those distressed properties are short sales. The Winchester distressed properties are no longer distressing home-owners, and that’s good news for everyone in the Winchester-Frederick County, VA real estate market.