The homebuying process can be overwhelming, but if you go into it prepared, your first purchase can be a good experience. Here are some things to consider before making the plunge.

• Getting a mortgage-Fear of being rejected for a home loan is one of the main concerns for first-time homebuyers. To lessen the stress, you may want to get pre-approved for a loan before looking at prospective homes. This will not only help you feel more confident, it will also give you an advantage when there are multiple offers for a specific home. The fact that your loan has already been approved is of great value to the seller: because it shortens the purchase process and there is less of a chance that the buyer will back out of the sale.

• Mortgage Payments-The costs involved in the purchase of a home can be overwhelming to first-time buyers. However, with the help of a real estate professional, you can calculate out how much they you be able to pay each month in mortgage payments, and from there, what prospective homes offer a feasible payment plan.

• Down-Payment-The down-payment amount varies depending on the value of the home you choose and your mortgage lender. And in some cases, first-time home buyers can purchase a home with no money down. Although it varies from state to state, most offer government-funded programs for first-time buyers that help people buy a home with no down-payment. Your real estate professional will be able to explain the different options available to you.

• Closing Costs- First-time buyers often forget to consider the closing costs when making an offer on a home. Paying closing fees of up to 10 percent of the home sale amount is not unusual. Add that to the down-payment and you’ll have quite a sum to raise before the final papers can be signed. However, a smart first-time buyer takes this into account before making an offer, and with some professional help, the costs can be estimated in advance.

• Making offers- Don’t feel pressured into making an offer on the first home you see. This is a common mistake of many first-time homebuyers. Make sure you view different homes to get a feel for the marketplace. When you do decide on a home to make a bid on, work with your real estate professional to get all of your questions answered first before making an offer. But don’t wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

• Condition of the Home- Buying a “problem” home is another fear of first-timers. A home that needs major repairs can become a costly venture. And, unless the asking price is adjusted to reflect the hidden repairs needed, chances are the home is not worth as much as the seller is asking for it. To avoid unfortunate surprises, your real estate professional may advise you to hire a home inspector before making a serious offer. That way, you know what you are getting into.

Above all, remember that there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction. Your real estate professional can be an invaluable asset in helping you make educated decisions so that your first-home purchase is a rewarding experience.

Michelle Fradella has extensive experience in working with First-Time Homebuyers.  Call Michelle, with Pinnacle Real Estate Services, to start the home buying process.  601-569-0075

Q.  Do I have to be completely moved out of my house before closing day?

A. In most instances, YES.  The seller is required to move out of the house, and have it in the same or better condition than when the buyer submitted the contract.  Prior to closing, the buyer’s agent will take the buyer through the property to do a “final walkthrough” to be certain that they are getting what the seller had agreed to (no missing fixtures, holes in walls, etc).  The buyer will be signing an acceptance at closing stating that they have viewed the property prior to closing and are satisfied.

It IS possible for the seller to do what’s called a “Post-Occupancy Agreement” which allows the seller to remain in the home for a pre-determined length of time, after the closing, with the seller paying the buyer a daily rent until they vacate.  This would have to be agreed upon DURING negotiations of the contract, and not after the fact.

However, the seller needs to be aware that this cannot be a long period of time, because the buyer’s homeowner’s insurance will not cover them, and the insurance company may require the buyer to switch it to “renter’s” insurance if the time is lengthy.

In the event that the buyer agrees to let the seller stay in the house after closing, it is recommended that a “security deposit” be held in escrow by the closing attorney that will not be released until the buyer has inspected the property after the seller has moved out.  Again, this is an amount that is negotiated between the two parties.

Be aware that MOST buyers are not going to be agreeable to this type of arrangement, and will want to take possession of the property at closing.

Q.  What happens if my house doesn’t appraise at or above the contract price?

A. Written within most contracts, there is verbiage that states that the property must appraise at or above the purchase price, or the contract will be null and void.

Should an appraiser value the property at a lower amount than what the buyer and seller have agreed upon, the buyer will now have the option to move forward with the sale (if they are paying cash), or cancel the contract.  If the buyer is depending on financing from a financial institution, their institution will only lend them what the appraisal value is.  If the buyer chooses to move forward, they would have to come up with the difference in order to make it work, or they will have to cancel the contract.

The seller does have the ability to accept the price of the appraisal, renegotiating with the buyer, BUT the buyer must still accept the property at that price, and may decide that the house wasn’t the value they thought it was, and can decide to not continue with the contract.

Q. How much Earnest Money is required to put down on the property when making an offer?

A. This amount will depend on the area that you are purchasing property in.  In Pearl River County it is common to have a $500 earnest money deposit for properties under $100,000.  $1,000 would be the common earnest money for a house between $100,000 to $300,000, and then the amount can go up substantially the higher the price of the home is.

Please keep in mind that there is no set amount, and this amount can be negotiated in the contract.  Sometimes, if the seller is being asked to move rather quickly for a quick closing, the buyer may be asked to put down more than the “traditional” amount to give the seller peace of mind that they will follow through with the contract.

Q. What happens to the Earnest Money if the contract falls through?

A. If the contract becomes null and void for any reason spelled out in the contract (ie Home Inspection issues, Financing issues, insurance rates, zoning issues, etc) then the buyer will have the right to receive their earnest money back.

Should the contract be breached by the buyer (they decided after all inspection periods that they don’t really want the house, etc), the seller would have the right to demand that the earnest money be forfeited.

However, Sellers need to understand that they are NOT entitled to ALL of the earnest money, should the buyer breach the contract.  Only half of the earnest money is given to the seller.  The remaining half is split between the Brokers involved in the sale.

Q. Can I move in prior to the closing date?

A. This would have to be negotiated with the seller.  It is possible, by completing a “Pre-occupancy Agreement”, but realize that this might not be favorable to the seller because they are still responsible for the house until closing, and their insurance may not allow them to do that.  Should the seller agree, the buyer would have to be aware that their belongings will not be covered by the seller’s home-owner’s insurance.

Q. What happens if a deficiency is found during a home inspection that the seller was not aware of?

A. Many times a Home Inspection will uncover things that are needing attention that the seller was not aware of.  If there are any deficiencies discovered that were not previously disclosed on the “Property Disclosure Statement”, the buyer has the right to ask the seller to repair/correct the issue, or they can cancel the contract, and receive their earnest money back.  If the buyer still wants the house and the seller is agreeable with making the repairs, then they move forward with the contract.

Q.  What are the typical closing costs for a Seller in Pearl River County, MS?

A. Typically the seller pays for the Deed Preparation, Wood Destroying Insect Report (WDIR), Well Inspection, Septic Inspection (if applicable), Home Warranty, Survey (if required) and Courier Fees related to the release of their mortgage, and Recording fees.

In the event that the buyer is getting FHA or VA financing, there may be what’s called “junk fees” related to these loans that the lender will not allow the buyer to pay for, so these types of financing can create additional fees for the seller.  The amounts would have to be received from the lender, because every loan varies.

Q.  Can the Seller pay closing costs for the buyer?

A. This will all depend on the lender’s requirements, but typically the buyer CAN ask the seller to contribute funds to cover the buyer’s closing costs, pre-paids (ie Homeowner’s Insurance, Lender Fees, Taxes, etc), and attorney’s fees.  Most lenders will only allow the sellers to pay up to a certain % of the loan value (around 3%).

Keep in mind that when you are making an offer on a property and need to ask the seller to pay for these fees, you need to consider making a good offer.  This amount will be subtracted from the seller’s proceeds, and they are in effect taking less for the house than the purchase price shows (because of their contribution to the buyers).  If the amount that the seller agrees to pay, puts the offer above what the appraisal value is, then the contract will be null and void, and the buyer may have to come up with additional funds at closing.

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If you have any questions that are not covered above, please contact Michelle Fradella at michelle(at)prchomes.com

House Hunting Tips when searching for a home in Picayune Mississippi.  What you should know when you are wanting to buy a home in Pearl River County, MS.

A Realtor spends many hours researching financing information, keeping abreast of the current market and market trends, and they also spend time in continuing education studies. This enables them to give you the best service to assure that you are investing your money wisely.

Your Realtor stands ready to help you locate and purchase the home best suited for your family’s needs and financial picture. They know the market and they know the many options of home financing.

You only need ONE Realtor to help you find the home that is right for you.  So, if you meet another Realtor at an Open House or Showing, you can avoid confusion if you indicate that you’re already working with an Realtor.  All Realtor have access to the same information via the MLS (Multiple Listing Service).

While searching for your new home, your Agent will:

• Keep you informed.
• Run frequent computer checks for new listings that meet your criteria.
• Stay up-to-the-minute on changing financial conditions that may affect the housing market.
• Be available to answer your questions or to offer assistance at any time.
• Discuss market trends and values relating to properties which may be of interest to you.
• Show you new homes as well as pre-owned homes, if you desire, including those listed with other companies.
• Introduce you to reliable lenders who can take care of your financial needs.

And once you have chosen a home and have made an accepted offer, your Realtor is there to make sure the loan process runs smoothly, the proper inspections are being done on the home, and that the closing takes place with as little effort from you as possible.  There is no need for that “nightmare” process when buying your home.

If you are looking for a Realtor to assist you, contact Michelle Fradella at Pinnacle Real Estate Services to find out what properties are available that meet your family and financial needs and to get started in the home-buying process.

1. Are you in a position where you can wait for the lender’s approval of the Short Sale?

A Short Sale has no pre-determined time frame, even if your agent writes one into the contract.  Short Sales can take anywhere from 30 days to 6 months, or beyond.  The lender is not in any hurry to accept your offer without certain tasks being completed, and certain factors being accepted.  Many times, when a short sale contract is presented to a lender, it is the first notification that the seller wants to have the lender consider this option, and the lender will have to go through a process to determine if the seller is even eligible for a short sale.   The entire process will also largely be dependent upon the skill of the Realtors involved in the transaction.

2. Do you have a home to sell before you can purchase the short sale?

If you have a home that you have to sell first in order to buy your next home, you will need to have it sold already, before making an offer.  No lender is going to consider you a qualified buyer if you are not financially able to complete the sale within a reasonable time frame.  Making your offer contingent on the sale of your home will most definitely assure you a rejected contract.

3. Will you follow through on feedback regarding, among other things, market value and contract contingencies?

Are you willing to present a reasonable offer based on current market value, or are you looking to lowball a lender in the attempt to ‘steal’ a property?  A lender is going to look at what the best avenue would be for their financial situation, and it could be that your “offer” would not generate the lender more money than if they were to just foreclose on the property and take it into inventory and sell.

4. Are you open to listening to the advice of your Realtor in what terms can or should be included in the contract?

A contract full of contingencies (stipulations about inspections, repairs, financing, etc) will likely get you a rejected contract.  The lender is interested in the bottom line, and the amount that presents to their side of the deal.  When making an offer on a Short Sale property, you will need to consider the property in AS-IS condition – they are not going to consider most repairs.

5. Do you understand that the lender will be making the final call on price and terms?

The lender will make the final call on the terms of the contract.  Unfortunately a buyer is not in a very good position to demand certain terms, because the lender would just as well foreclose on the property.

6. How willing are you to consult an attorney regarding home inspections, earnest money, and the contingency period for third-party approval?

Your Realtor can point you in the right direction in regards to inspections and such, but they are not an attorney, and if you have any doubts about any part of the contract, property condition, or terms, you will need to seek proper legal advice.

7. Are you willing to enter into an Exclusive Buyer Representation Agreement, and be responsible for compensation, should it not be paid by the seller’s side?

A good Realtor that can negotiate your deal, and follow through during the long process of a Short Sale is going to want to make sure they are compensated for their time.  Just as you would expect your boss to pay you for the job you agreed to do, your Realtor will need to be guaranteed compensation for their due diligence throughout the Short Sale process.  This is guaranteed through an Exclusive Buyer Representation Agreement.

There are many obstacles when considering the purchase of a Short Sale property.  Not only are you going to need to negotiate a price and terms with the lender, but you will also need to make sure the contract negotiations and closing run as smoothly as possible, and that no stone is left unturned.  You need to hire a Certified Short Sale Foreclosure Representative (SFR) to lead you through this difficult and often nerve-racking process.

For more information on how to make an offer on a Short Sale, call Michelle Fradella at Pinnacle Real Estate Services at 601-569-0075.

Some things to keep in mind when searching for the perfect property for your family:

1. Make your first step the step of locating and hiring a Real Estate Consultant that you are confident has your needs, desires, and best interests at heart.  Your Real Estate Consultant can prove to be a lifesaver when you’ve reached the final hours before closing and the sky looks as though it’s going to fall.  They will also be there to search out the home that fits your needs, negotiate your deal, and advise you on anything that comes up during inspections and the loan process.
2. Next, if you need to get financing for your next home, you will need to talk to a lender to get “pre-approved” for a loan.  There is a difference between being “pre-qualified” and “pre-approved”.  You will be a better-positioned Buyer when you have a pre-approval letter from a lender, stating that it has already been determined that you can get a loan for the amount you are offering.
3. Meet with your Real Estate Consultant to identify the things that are absolute necessities in your search.  Discuss a list of “needs”, and then add to the list the “wants”.  It’s important to realize that not every item on your list is going to exist in one house.  Know what you can’t live without (amount of bedrooms, amount of bathrooms, size of yard, etc), and then add to that the things that you’d like to have, also, if available in the price range you are looking in.
4. Another important factor that must be considered when purchasing a home for your family is the neighborhood. This is more important than many people may realize. It is well worth having a smaller home in a neighborhood that is poised for growth rather than a larger home in a neighborhood that is in the state of decline or on the verge of the state of decline. Crime rates in the neighborhood and the school district are other things that need to be considered as well before deciding to view a potential home.
5. It’s important to look at more than one property before making a decision.  Keep in mind, however, that if you have sat down with your Real Estate Consultant and gone over your needs and wants, then they will have a good idea of what you are looking for.  Your Consultant will pull the properties that meet those needs.  If you are not comfortable with the properties that you are viewing, it’s important to go back to the list and adjust.  Many Buyers tend to start out looking for one thing, and then realize that their expectations may be different than what was discussed.  I’ve had many Buyers tell me that they absolutely have to have one item, and then go in the opposite direction once we start looking.  Keep your Consultant in the loop on your thoughts, and they will be able to tailor the homes they show you to coincide with your list.
6. Rely on the expertise of your Real Estate Consultant to give you advice on making an offer.  There are many more contributing factors to a contract than just price.  How quickly you are able to close, whether or not you have your financing in place, the amount of money you are putting down as earnest money, any request for seller assistance in closing costs, etc, will all be contributing factors.  The truth is, it doesn’t matter how much you offer, it’s the underlying items on a contract that can make or break negotiations.  When you’ve hired an experienced Real Estate Consultant, you will have someone with experience in negotiations to work at getting you the best deal.

You will find many houses along the way but few will reach out and impress themselves upon you as home. Those are the ones you should consider long and hard. Weigh the options, the prices, and your likes and dislikes, and depend on a seasoned Real Estate Consultant to guide you through the process.  If you do all of this you should be well on your way to the home of your dreams.

Considering that the average furnace repair is between $1,250 and $5,000, a home warranty may save you dollars on a repair that pops up after the closing. In addition, the money you save by not having to foot the bill for the policy–which on average can cost between $300-$400–makes a warranty a worthy perk.

You should be mindful, however, of exactly what the home warranty covers. Most sellers only purchase a one-year basic warranty, which will generally cover major built-in appliances and mechanical systems such as heating, electrical and plumbing, and usually it only covers normal wear and tear. For example, if the water heater was not in good working condition when the home was purchased, and it breaks a week or two later, there is no coverage.

If you want more extensive coverage, such as for pool equipment, air conditioning, or even the refrigerator, talk with your real estate professional about negotiating that extra cost with the seller, or consider purchasing your own warranty. Also, remember that although most home warranties provide coverage only for one year, most plans are renewable.

Whether or not you are given the option of selecting your own home warranty provider, here are questions to consider:

• How much is the deductible or per visit cost for repairs?
• Does the plan cover ‘pre-existing conditions’ which weren’t known to the seller?
• Who performs the repairs? Can you choose someone or does the company send a technician in their network?
• What’s the maximum dollar amount for repairs and what are the policy limitations? For example, will the policy pay for a new water heater at no additional cost?

Whether a warranty is offered by the seller or not, no buyer should forgo a home inspection. An inspection may uncover defects or potential problems that won’t be covered by the warranty – and may give you the opportunity to request the seller to make any major repairs before the closing.

But, warranties definitely have a place when it comes to protection and peace of mind. If you are looking in the Pearl River County, MS, area for a home, give Michelle Fradella a call for more information on home warranties and providers.

SELLER’S AGENT

A seller can enter into a “listing agreement” with a real estate firm authorizing the firm and its agent(s) to represent the seller in finding a buyer for his property. A licensee who is engaged by and acts as the agent of the Seller only is known as a Seller’s Agent. A Seller’s Agent has the following duties and obligations: To the Seller: * The fiduciary duties of loyalty, confidentiality, obedience, disclosure, full accounting and the duty to use skill, care and diligence. To the Buyer and Seller: * A duty of honesty and fair dealing. * A duty to disclose all facts known to the Seller’s Agent materially affecting the value of the property which are not known to, or readily observable by, the parties in a transaction.

BUYER’S AGENT

Buyer’s Agreement A buyer may contract with an agent or firm to represent him. A licensee who is engaged by and acts as the agent of the Buyer only is known as the Buyer’s Agent. If a Buyer wants an agent to represent him in purchasing a property, the buyer can enter into a Buyer’s Agency Agreement with the agent. A Buyer’s Agent has the following duties and obligations: To the Buyer: * The fiduciary duties of loyalty, confidentiality, obedience, disclosure, full accounting and the duty to use skill, care and diligence. To the Seller and Buyer: * A duty of honesty and fair dealing.

DISCLOSED DUAL AGENT

A real estate agent or firm may represent more than one party in the same transaction. A Disclosed Dual Agent is a licensee who, with the informed written consent of the Seller and Buyer is engaged as an agent for both Seller and Buyer. As a disclosed dual agent, the licensee shall not represent the interests of one party to the exclusion or detriment of the interests of the other party. A disclosed dual agent has all the fiduciary duties to the Seller and Buyer that a Seller’s or Buyer’s Agent has except the duties of full disclosure and undivided loyalty.

A Disclosed Dual Agent may not disclose: (a) To the Buyer that the Seller will accept less than the asking or listed price, unless otherwise instructed in writing by the Seller. (b) To the Seller that the Buyer will pay a price greater than the price submitted in a written offer to the Seller, unless otherwise instructed in writing by the Buyer. (c) The motivation of any party for selling, buying, or leasing a property, unless otherwise instructed in writing by the respective party, or (d) That a Seller or Buyer will agree to financing terms other than those offered, unless otherwise instructed in writing by the respective party.

CUSTOMER

“Customer” shall mean that person not represented in a real estate transaction. It may be the buyer, seller, landlord or tenant. A Buyer may decide to work with a firm that is acting as agent for the Seller (a Seller”s Agent or Subagent). If a Buyer does not enter into a Buyer Agency Agreement with the firm that shows him properties, that firm and its agents may show the Buyer properties as an agent or subagent working on the Seller’s behalf. Such a firm represents the Seller, (not the Buyer) and must disclose that fact to the Buyer. When it comes to the price and terms of an offer, the Seller’s Agent will ask you to decide how much to offer for any property and upon what terms and conditions. They can explain your options to you, but the final decision is yours, as they cannot give you legal or financial advice. They will attempt to show you property in the price range and category you desire so that you will have information on which to base your decision.

The Seller’s Agent will present to the Seller any written offer that you ask them to present. You should keep to yourself any information that you do not want the Seller to know (i.e. the price you are willing to pay, other terms your are willing to accept, and your motivation for buying). The Seller’s agent is required to tell all such information to the Seller. You should not furnish the Seller’s agent anything you do not want the Seller to know. If you desire, you may obtain the representation of an attorney or another real estate agent, or both.

If you have any questions about these catagories, when looing for a home in Pearl River County, MS, please call Michelle Fradella at 601-799-1848, or email her at PRCHomes