Negotiate Your Best House Buy

Keep your emotions in check and your eyes on the goal, and you'll pay less when purchasing a home.

Buying a home can be emotional, but negotiating the price shouldn't be. The key to saving money when purchasing a home is sticking to a plan during the turbulence of high-stakes negotiations. A real estate agent who represents you can guide you and offer you advice, but you are the one who must make the final decision during each round of offers and counter offers.

Here are six tips for negotiating the best price on a home.

1. Get prequalified for a mortgage

Getting prequalified for a mortgage proves to sellers that you're serious about buying and capable of affording their home. That will push you to the head of the pack when sellers choose among offers; they'll go with buyers who are a sure financial bet, not those whose financing could flop.

2. Ask questions

Ask your agent for information to help you understand the sellers' financial position and motivation. Are they facing foreclosure or a short sale? Have they already purchased a home or relocated, which may make them eager to accept a lower price to avoid paying two mortgages? Has the home been on the market for a long time, or was it just listed? Have there been other offers? If so, why did they fall through? The more signs that sellers are eager to sell, the lower your offer can reasonably go.

3. Work back from a final price to determine your initial offer

Know in advance the most you're willing to pay, and with your agent work back from that number to determine your initial offer, which can set the tone for the entire negotiation. A too-low bid may offend sellers emotionally invested in the sales price; a too-high bid may lead you to spend more than necessary to close the sale.

Work with your agent to evaluate the sellers' motivation and comparable home sales to arrive at an initial offer that engages the sellers yet keeps money in your wallet.

4. Avoid contingencies

Sellers favor offers that leave little to chance. Keep your bid free of complicated contingencies, such as making the purchase conditional on the sale of your current home. Do keep contingencies for mortgage approval, home inspection, and environmental checks typical in your area, like radon.

5. Remain unemotional

Buying a home is a business transaction, and treating it that way helps you save money. Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating.

Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or pay for a home warranty. If sellers won't budge, make it clear you're willing to walk away; they may get nervous and accept your offer.

6. Don't let competition change your plan

Great homes and those competitively priced can draw multiple offers in any market. Don't let competition propel you to go beyond your predetermined price or agree to concessions-such as waiving an inspection-that aren't in your best interest.

Article From BuyAndSell.HouseLogic.com | By: G. M. Filisko | Published: 6/4/10

How to Assess the Real Cost of a Fixer-Upper House

When you buy a fixer-upper house, you can save a ton of money, or get yourself in a financial fix.

Trying to decide whether to buy a fixer-upper house? Follow these seven steps, and you'll know how much you can afford, how much to offer, and whether a fixer-upper house is right for you.

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don't know how to do will take longer than you think and can lead to less-than-professional results that won't increase the value of your fixer-upper house.

            •Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.

            •Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?

2. Price the cost of repairs and remodeling before you make an offer

            •Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he's going to do.

            •If you're doing the work yourself, price the supplies.

            •Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.

3. Check permit costs

            •Ask local officials if the work you're going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it'll cause problems when you resell your home.

            •Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.

            •Factor the time and aggravation of permits into your plans.

4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you've uncovered and conservatively budgeted for the full extent of the problems.

Get written estimates for repairs before you commit to buying a home with structural issues.

Don't purchase a home that needs major structural work unless:

            •You're getting it at a steep discount

            •You're sure you've uncovered the extent of the problem

            •You know the problem can be fixed

            •You have a binding written estimate for the repairs

5. Check the cost of financing

Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.

If you're planning to fund the repairs with a home equity (http://www.houselogic.com/articles/consider-home-equity-line-of-credit/) or home improvement loan:

            •Get yourself pre-approved for both loans before you make an offer.

            •Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you're not forced to close the sale when you have no loan to fix the house.

            •Consider the Federal Housing Administration's Section 203(k) program (http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm), which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It's a simpler process than obtaining the standard 203(k).

6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

Ask your real estate agent if it's a good idea to share your cost estimates with the sellers, to prove your offer is fair.

 7. Include inspection contingencies in your offer

Don't rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

            •Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.

            •Radon, mold, lead-based paint

            •Septic and well

            •Pest

Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don't want to deal with.

If that happens, this isn't the right fixer-upper house for you. Go back to the top of this list and start again.

Article From BuyAndSell.HouseLogic.com | By: G. M. Filisko | Published: 8/24/10

Insurance Concerns When Purchasing a New Home

Were you aware that your home’s claim history could affect its insurability? For example, if the house had water claims, that would be a red flag to any insurance agency. When purchasing a new home, it’s important to be aware of what factors may lead to insurance issues. Your coverage options should be your most important influence when making a home buying decision, according to the Insurance Information Institute (III).

Many home buyers are not aware that a home’s insurance value is based on the cost to rebuild the house, not the market value. Market values may still be down in many areas; however rebuilding costs are on the rise. If you are curious about your potential new home’s rebuilding cost, you can get an estimate at AccuCoverage.com, which asks questions about the size of the house and the building materials and details, then uses the same building-cost database that insurers use.

There are many factors that will impact your insurance, including the house location, the type of construction, and its condition. Home inspectors will also look at how old the house is. Older homes tend to have features such as plaster walls, ceiling moldings, wooden floors, etc. that will be more expensive to replace. In addition, the older the plumbing, heating, and electrical systems are, the more likely it is that fire or water damage will occur.

A few other insurance aspects for you to consider when purchasing a new home are the quality and closeness of the local fire department, your home’s disaster-resistance, and the location. In terms of location, it could cost you more to live near the coast or a river, or in a dense wildfire area. Lastly, you will need a separate policy if you live in an earthquake-prone or flood-prone area.

This information can be somewhat overwhelming for the first time home buyer, but an insurance professional can help you sort through the process of properly insuring your home.

GMG INSURANCE | By nms | Published September 13, 2013
Contact us at (855) 407-4450 or email at info@gmgins.com

Using Your IRA and 401(k) for Purchasing Property or Making Real Estate Investment

An Individual Retirement Account “IRA” is a special type of retirement plan, offered by several financial institutions, which allows tax advantages on the retirement amount savings. Basically, the IRA is an investment tool employed by individuals to make financial provisions for their retired life. There are many types of IRA plans – traditional IRA, Roth IRA, simple IRA, and sep IRA. The 401(k) plan is actually a plan based upon the regulation defined under subsection 401(k) of the Internal Revenue Taxation Code, according to which the retirement savings contributions offered by the employer are to be deducted from the employee’s paycheck before it is subjected to taxation. The employee ends up paying tax on the paycheck amount minus the monthly contribution towards the retirement fund. Both these plans offer tax advantages if one complies with the IRS regulations. Careful planning with these plans results in little or no tax ramifications. In certain cases, the retirement savings provisioned by the IRA and the 401(k) can be used to purchase your home or any other fixed asset(s). However, it is not always the case, and if you are planning to make such a purchase, it is important to know how you stand with the issue.

§  Consult your retirement plan administrator. Most IRA personnel do not allow or support real estate investment on your retirement savings, so it is important to determine whether you are eligible for the purchase. As per the law, 401(k) cannot always be used for real estate investment purposes.

§  Research and find how your loan regulations work. If you are not allowed to borrow against your IRA, chances are you can certainly do so against your 401(k) up to $50,000. Purchasing property with your 401(k) amount is advantageous since you are not required to pay any taxes. If you are eligible, it is advisable to contact a competent chartered account and work out how to go about the investment process.

§  Create a self-directed IRA provision. If your IRA custodian does not allow the investment, it is possible to open a new self-directed IRA account at an employment place that does permit such an investment.

§  Roll over your 401(k) account. If it is not possible to invest directly into real estate using your 401(k) proceeds, converting your 401(k) account into a tax free IRA account and subsequently use the proceeds through the IRA provision to save upon tax during the purchase is a possibility.

§  Supervise your cash flow. If you purchase property through your IRA account, all funds required to buy the property should come directly from the account, and vice versa if you receive any proceeds or profit from the invested property in the form of monthly rentals, the same should be returned back to your IRA account. Following these rules ensures you save upon the tax.

Generally, the retirement provision is very important and one should not take any chances while using the funds. It is one the main reason why the government is too stringent while utilizing the retirement funds before its maturity. However, at times individuals need to use the provision to arrange for the present needs. It is worth considering how you should go about it.

Source: PropertyCluster.com/blog via Rebecca

Fall Maintenance Checklist

You'll be ready for winter's worst and head off expensive repairs when you complete this checklist of 10 essential fall maintenance tasks.

1. Stow the mower.

If you're not familiar with fuel stabilizer, you should be. If your mower sits for months with gas in its tank, the gas will slowly deteriorate, which can damage internal engine parts. Fuel stabilizer ($10 for a 10-oz. bottle) prevents gas from degrading.

Add stabilizer to your gasoline can to keep spare gas in good condition over the winter, and top off your mower tank with stabilized gas before you put it away for the winter. Run the mower for 5 minutes to make sure the stabilizer reaches the carburetor.

Another lawn mower care (http://www.houselogic.com/news/lawns/lawn-mower-care-sharpen-blade-clean-cut/) method is to run your mower dry before stowing it.

1. When the mower is cool, remove the spark plug and pour a capful of engine oil into the spark plug hole.
2. Pull the starter cord a couple of times to distribute the oil, which keeps pistons lubricated and ensures an easy start come spring.
3. Turn the mower on its side and clean out accumulated grass and gunk from the mower deck.

2. Don't be a drip.

Remove garden hoses from outdoor faucets. Leaving hoses attached can cause water to back up in the faucets and in the plumbing (http://www.houselogic.com/maintenance-repair/preventative-home-maintenance/plumbing/) pipes just inside your exterior walls. If freezing temps hit, that water could freeze, expand, and crack the faucet or pipes. Make this an early fall priority so a sudden cold snap doesn't sneak up and cause damage.

Turn off any shutoff valves on water supply lines that lead to exterior faucets. That way, you'll guard against minor leaks that may let water enter the faucet.

While you're at it, drain garden hoses and store them in a shed or garage (http://www.houselogic.com/home-improvement/rooms/garages/).

3. Put your sprinkler system to sleep.

Time to drain your irrigation system. Even buried irrigation lines can freeze, leading to busted pipes and broken sprinkler heads.

1. Turn off the water to the system at the main valve.
2. Shut off the automatic controller.
3. Open drain valves to remove water from the system.
4. Remove any above-ground sprinkler heads and shake the water out of them, then replace.

If you don't have drain valves, then hire an irrigation pro to blow out the systems pipes with compressed air. A pro is worth the $75 to $150 charge to make sure the job is done right, and to ensure you don't have busted pipes and sprinkler head repairs to make in the spring.

4. Seal the deal.

Grab a couple of tubes of color-matched exterior caulk ($5 for a 12-oz. tube) and make a journey around your home's exterior, sealing up cracks between trim and siding, around window and door frames, and where pipes and wires enter your house. Preventing moisture from getting inside your walls is one of the least expensive - and most important - of your fall maintenance jobs. You'll also seal air leaks (http://www.houselogic.com/home-advice/insulation/home-air-leak-seal-tips/) that waste energy.

Pick a nice day when temps are above 50 degrees so caulk flows easily.

5. De-gunk your gutters.

Clogged rain gutters can cause ice dams (http://www.houselogic.com/home-advice/seasonal-maintenance/preventing-ice-dams/), which can lead to expensive repairs. After the leaves have fallen, clean your gutters (http://www.houselogic.com/home-advice/roofing-gutters-siding/how-to-clean-rain-gutters/) to remove leaves, twigs, and gunk. Make sure gutters aren't sagging and trapping water (http://www.houselogic.com/home-advice/roofing-gutters-siding/rain-gutters-trap-water-easy-fixes/); tighten gutter hangers and downspout brackets. Replace any worn or damaged gutters and downspouts.

If you find colored grit from asphalt roof shingles in your gutters, beware. That sand-like grit helps protect shingles from the damaging ultraviolet rays of the sun. Look closely for other signs of roof damage (#5, below); it may be time for a roofing replacement (http://www.houselogic.com/home-advice/roofing-gutters-siding/roofing-repair-or-replace/).

Your downspouts should extend at least 5 feet away from your house to prevent foundation problems (http://www.houselogic.com/home-advice/foundations/understanding-foundation-problems/). If they don't, add downspout extensions; $10-$20 each.

6. Eyeball your roof.

If you have a steep roof or a multistory house, stay safe and use binoculars to inspect your roof (http://www.houselogic.com/home-advice/roofing-gutters-siding/inspecting-and-maintaining-your-roof/) from the ground.

Look for warning signs: Shingles that are buckled, cracked, or missing; rust spots on flashing. Any loose, damaged, or missing shingles should be replaced immediately.

Black algae stains are just cosmetic, but masses of moss and lichen could signal roofing that's decayed underneath. Call in a pro roofer for a $50-$100 eval.

A plumbing vent stack usually is flashed with a rubber collar - called a boot -- that may crack or loosen over time. They'll wear out before your roof does, so make sure they're in good shape. A pro roofer will charge $75 to $150 to replace a boot, depending on how steep your roof is.

7. Direct your drainage.

Take a close look at the soil around your foundation (http://www.houselogic.com/maintenance-repair/preventative-home-maintenance/foundations/) and make sure it slopes away from your house at least 6 vertical inches over 10 feet. That way, you'll keep water from soaking the soils around your foundation, which could lead to cracks and leaks.

Be sure soil doesn't touch your siding.

8. Get your furnace in tune.

Schedule an appointment with a heating and cooling pro to get your heating system checked (http://www.houselogic.com/home-advice/heating-cooling/essential-heating-system-maintenance/) and tuned up for the coming heating season. You'll pay $50-$100 for a checkup.

An annual maintenance contract ensures you're at the top of the list for checks and shaves 20% off the cost of a single visit.

Change your furnace filters, too. This is a job you should do every 2 months anyway, but if you haven't, now's the time. If your HVAC includes a built-in humidifier, make sure the contractor replaces that filter.

9. Prune plants.

Late fall is the best time to prune plants and trees (http://www.houselogic.com/outdoors/landscaping-gardening/plants-trees/) - when the summer growth cycle is over. Your goal is to keep limbs and branches at least 3 feet from your house so moisture won't drip onto roofing and siding (http://www.houselogic.com/maintenance-repair/preventative-home-maintenance/roofing-gutters-siding/), and to prevent damage to your house exterior during high winds.

For advice on pruning specific plants in your region, check with your state extension service (http://www.csrees.usda.gov/Extension/).

10. Give your fireplace a once-over.

To make sure your fireplace is safe (http://www.houselogic.com/home-advice/fireplaces-chimneys/how-make-sure-your-fireplace-safe/), grab a flashlight and look up inside your fireplace flue to make sure the damper opens and closes properly. Open the damper and look up into the flue to make sure it's free of birds' nests, branches and leaves, or other obstructions. You should see daylight at the top of the chimney.

Check the firebox for cracked or missing bricks and mortar. If you spot any damage, order a professional fireplace and chimney inspection (http://www.houselogic.com/home-advice/fireplaces-chimneys/chimney-inspection-facts/). An inspection costs $79-$500.

You fireplace flue should be cleaned of creosote buildup every other year. A professional chimney sweep will charge $150-$250 for the service.

Article From HouseLogic.com

By: John Riha
Published: October 01, 2012

4 Big Money Mistakes of First-Time Home Buyers

Dreaming about your first home? As any first time homebuyer will tell you, buying a home is an exciting and overwhelming experience. Before you start viewing listings, it pays to learn about your different home financing options. As a first-time home buyer, there’s a good chance that your first purchase won’t be your “forever” home, but instead a temporary starter home. Developing a short-term and long-term perspective on your home purchase can help prevent buyer’s remorse. Here are four common mistakes made by first-time home buyers—and four money management tips to avoid making these same errors.

Mistake #1: Overcommitting

Home loan lenders qualify potential homeowners based on their debt-to-income ratio. Lenders don’t take into account fixed expenses such as commuting costs, childcare, food or utilities. Consequently, many first-time buyers overcommit—borrowing the entire amount for which they are approved. Unfortunately, this can lead to serious payment shock down the road if there’s no flexibility built into the budget. Prior to meeting with a lender, determine how much you can comfortably afford to borrow and still meet your fixed income requirements, build your savings account, and adjust for future changes, like children.

Mistake #2: Failing to be prequalified

Once you run the numbers and determine your housing budget, visit your home loan lender and become prequalified. Even if you’re several months or a year away from purchasing a home, a prequalification meeting is essential to getting your financial affairs in order. You may also realize that an extra year of saving for a down payment or improving your credit score could significantly improve your loan terms. Then, when you find the perfect home, you’ll be in strong position to make your best offer.

Mistake #3: Not knowing your credit score

As a prospective homeowner, you likely realize that a 620 is the minimum credit score necessary to be qualified to purchase a home. However, thousands of dollars in potential savings stand between a 620 and a 720. Do you know your credit score? If you don’t, get a copy of your FICO score from each of the three major credit bureaus. A score between 680 and 720 will land you the best home financing options. Is your score lower than you’d like? Websites like bankrate.com offer free tips for improving your credit score.

Mistake #4: Not understanding home financing options

Thanks to the recent housing crisis, many first time homebuyers are opting for a conservative, 30-year fixed rate mortgage. However, if you plan to sell your home in the next five years, a 30-year fixed rate mortgage is actually a bad deal. You’ll be paying a premium for a product that you don’t need. A five-year adjustable rate mortgage may give you better terms now, while also making it easier to meet your other financial obligations. Understand the pros and cons for each home financing option rather than simply picking the most conservative option.

Source:  The Allstate Blog / http://blog.allstate.com/4-big-money-mistakes-of-first-time-homeowners/
The Allstate Blog » Brendan