February is an excellent time of year to get ready to buy or sell a home. Here are some great real estate articles this month that will help you on your road to buying or selling success. Let’s dive into the best of what February 2022 has to offer.
Pre Offer Home Inspection
2021 was a wild ride for homebuyers and sellers. And 2022 promises much of the same.
Competition is fierce among home buyers. This means multiple offers, homes selling way over asking, and buyers waiving contingencies to make their offer stand out.
In many parts of the country, retaining the right to have a home inspection puts your offer at the bottom of the list and probably won’t be looked at. But, for many home buyers, that is a scary proposition… no home inspection?!! Yet plenty of buyers are willing to waive the home inspection to get the house they desire.
What if you can get a home inspection and waive the home inspection contingency in your offer? You can, with a pre-offer home inspection. Kevin Vitali suggests scheduling a home inspection before writing your proposal. You can then write your offer knowing the home has no serious issues, or if it does, you can write your offer accordingly or even walk away.
The Minimum Credit Score to Buy a House
When buying a home with a mortgage, your credit score is one of the most vital aspects for getting the best rate and terms. Credit scores determine interest rates for houses and most purchases where credit is required.
If you are looking to purchase a home in the coming years, it will be essential to improve your credit score. The credit score needed to buy a house can vary based on the mortgage program you are using.
Instead of worrying about the minimum credit score, most people should strive towards the credit score that will give them the best mortgage interest rate. Take a look at the helpful article at Maximum Real Estate Exposure that walks you through what you should know about credit scores when buying a home.
If becoming a first-time home buyer is on the horizon and you need a bit of credit help, this article is for you!
What Are Days On Market?
As Bill Gassett explains, days on the market or DOM are the number of days a home spends on the market from the time it is listed to the time it is put under agreement. Such a simple metric but an important one for everyone involved.
Real estate agents track average DOM in market segments to determine the direction of the real estate market. As market times rise over a while, it shows a slowing of the market. Or vice versa, as market times wane, it indicates we are headed to a seller’s market. Right now, in 2022, market times are extremely low as we are in an extremes seller’s market in many areas.
Days on Market are important to sellers. It indicates how long they can expect to have their home on the market to get an offer for fair market value on their home. If a house starts to exceed the average days on the market, a seller should consider adjusting.
For buyers, days on the market have a psychological effect. If a home is under the average days on market, they will want to scoop it up before anyone else does. As it sits on the market, they start to wonder what is wrong with the house and why no one wants it.
Days on Market is an essential metric for anyone in the real estate market, and Bill does a great job explaining it.
How To Get Closing Costs Waived
As most homebuyers are aware, you have to save up for a downpayment and have closing costs to fund at the closing table. Closing costs are the hard costs of obtaining a loan and consist of lender fees and third-party fees such as appraisals.
Closing costs can typically run 2-4% of the loan amount.
Eric Jeanette explains how you can get your closing costs waived or paid without using the cash you have on hand. The are three ways to go.
Get the seller to pay your closing costs, get the lender to pay your closing costs, or roll closing costs into the loan. Each way gives you the ability to hang on to your hard-earned cash for repairs and upgrades rather than fund your loan.
Tips To Get Your Offer Accepted In A Bidding War
If you’re entering the real estate market to purchase a home, you will quickly find out that many homes have multiple offers, and there is a high likeliness you will be in a bidding war…. Basically, competing with other buyers for the same house.
One area of your offer that is of great interest to the seller is financing. And, it is hard to compete with offers that waive the mortgage contingency and pay cash. Cash removes some risk for the buyer and makes the deal very easy.
Unfortunately, not everyone can pay cash for a house. Sharon Paxson provides excellent tips to keep your mortgage contingency and compete with cash offers. Show the sellers you are serious, and your financed offer can be as easy as the cash offer with some of Sharon’s tips.
Don’t shy away from writing offers in a bidding war, and don’t be afraid to go up against cash offers. Just be prepared to put your best foot forward.
Square Footage Of A Home
Tom Horn has compiled a brief article on measurement tips for real estate agents. FannieMae has just put out guidelines stating that any loans they purchase should be measured using the ANSI standard for house measurement.
Why would a home seller care? Getting the accurate square footage of your home is vital for a couple of reasons. First, the dimensions of your home are a significant deciding factor in how a home is priced.
Getting your home measured accurately will help provide the proper asking price for your home. Secondly, overstating the size of your home can lead to liability issues after the closing.
Tom points out some common areas of discrepancy in his article.
One area is open floor space. Typically, one would measure the house’s foundation and if it is two stories, double it. Often homes may have an open foyer. The ANSI standard states if you can’t walk on it, you can’t use it as square footage.
The second would be in living spaces under a slanted roof like a cape or attic remodel. Only floor space with at least a height of 5 feet to the roofline can be used in the square footage calculation.
It is crucial to have the accurate square footage of your home during the home selling process.
The Difference Between an Escalation Clause and Highest-and-Best offers.
When in a multiple offer situation, several negotiation strategies are used.
The highest and best strategy is much like being “all-in” during a poker game. You are laying it all on the line and giving your final and best offer. The downside of the highest and best bid coming out of the gate is maybe you are paying a significant amount over the next best offer.
Connor McEvilly throws out the escalation clause strategy. An escalation clause is where you offer a purchase price for a house. But, if your offer is trumped, you agree to pay X amount of dollars over the highest acceptable offer up to a set purchase amount. The advantage is you are not paying way over the next highest offer. The downside is that some sellers find it confusing and want nothing to do with an offer with an escalations clause.
Escalation Clause and Highest and Best Offer…. Which is better? One is not better, but you should discuss with your REALTOR negotiating strategies for the particular circumstances that may get you the house you want.
Features Today’s Home Buyers Want
Features that buyers want in a home change over time. In the 1970s, shag carpeting and wood paneling were in. Today those features would turn away a home buyer very quickly!!
So what are some features 2022 home buyers want in a home? Michelle Gibson shares a handful of home features that will attract buyers today.
Two topping the list are laundry rooms and energy efficiency.
Not everyone can have a slick laundry room on the first or second floor, but knowing the laundry area is essential. Take the time to stage it. Adding storage and a folding table with a place to iron and hang clothes can draw a buyer’s attention.
Many buyers are considered with energy efficiency. They are concerned about utility bills and want to leave a smaller carbon footprint. Features like solar panels, smart thermostats and outlets, energy-efficient appliances, and upgraded insulation are energy-efficient features that can catch a buyer’s attention.
Making home improvements that boost your property value is always intelligent.
Home Essential For Newlyweds
Along with that big wedding comes a lot of changes and for many that also means a new house!!
Luke Skar discusses much of the essentials of buying a home after being married. There are plenty of mortgage and real estate articles discussing the basics of getting a loan and the home buying process. But Luke delves a little deeper.
For the home buyer who has never owned a home, the financial considerations go farther than the downpayment and closing costs. You now have a house to furnish and maintain. The article has a great list of essential items newlyweds may need for their new home.
And, don’t forget to plan for utilities and maintenance!!
What Are Pre-Paids In Real Estate?
When you get a mortgage on a home with less than 20% down, a lender will require you to fund an escrow account for insurance and taxes at the closing table. You will most likely make a full year’s insurance payment and a few additional months. Taxes you will prepay anywhere from 3-6 months or more in advance.
Additionally, when you pay your mortgage, you will also be funding your escrow account every month. By making regular payments into your escrow account, there will be enough money and then some to pay the following insurance or tax bill.
Joe Boylan goes into depth on pre-paids and answers common questions like how much I know to pay and whether I have to pre-pay insurance and taxes.
Pre-paids are just part of getting a mortgage and are often lumped into closing costs in home buyers’ minds. But unlike closing costs which are a hard cost of getting a mortgage, pre-paids are your money until it is spent. When you close out a mortgage, you will receive a check for any funds left in your escrow account.
Dropping Private Mortgage Insurance
If you put less than 20% down on a home when securing a mortgage, you will most likely be required to have Private Mortgage Insurance (or PMI). Mortgage Insurance protects the bank if the homeowner defaults on their payment. Private mortgage insurance allows homeowners with low money down to purchase a home.
But, PMI can cost homeowners several hundred dollars a month in additional payments. So can you drop Private Mortgage Insurance?
Most loans have the provision that will automatically drop PMI when you have paid down the mortgage to a 78% loan to value ratio. That can be a very long time.
With homes appreciating so quickly and if you are an owner that has done significant updating or renovations, your home may have enough equity to drop PMI much earlier. Most banks will allow you to drop your PMI if you provide an appraisal showing you have at least 20% equity stake in your home.
Who wouldn’t love to save a couple of hundred dollars a month?!
What to Know About Buying Commercial Real Estate
Commercial real estate is nothing like buying a single-family home. Honestly, they are night and day on so many levels. A real estate agent who practices residential real estate on a daily basis more than likely has little expertise on the commercial side of the business.
If you are considering a commercial real estate purchase take a look at some excellent tips from Paul Sian. He shares many of the basic considerations when buying a commercial property. Dig in and learn.
First-Time Home Buyer Priorities
Kristen Herhold shares the three top homebuying priorities for first-time home buyers. Being a first-time home buyer can be challenging. But being fully prepared can help guarantee success.
First, start by knowing your financials inside out and backward. Get pre-approved by a mortgage lender and formulate a budget that will work for you. This also means handling what additional costs there might be to owning a home.
Second, take the time to understand your mortgage options fully. Eligibility and payments can vary significantly from program to program. You want to find the right mortgage program to fit your circumstances.
Last, make informed decisions. Partner with the right real estate agent, mortgage broker, and home inspector. They can all be a trusted advisor when it comes to making those tough decisions.
When it comes to buying your first home, you get out of it what you put into it. Happy house hunting!!
Previous Best of Real Estate Articles
- Best Real Estate articles January 2022 – grab last month’s best of real estate featuring numerous helpful articles for buyers and sellers.
- Best Real Estate articles November 2021 – dive into some of the best real estate content from top real estate bloggers last November.
About the author: February 2022 Real Estate Round-Up has been provided by Kevin Vitali. Kevin is a REALTOR based out of Haverhill, MA, and the surrounding areas, including Essex County and Northern Middlesex County.