Thursday, July 27, 2006

Market Cooling: Is It Time to Buy?

It is still the American dream to own a home but with the market cooling and the Fed increase interest rates, is it really time to purchase a home? Amy Hoak of MarketWatch says in answer to this question:
Of course it is -- if you're buying it for a place to live, not as a speculative investment, and can afford to take the leap.
A cooling market is generally a buyer’s market. In a buyer’s market the number of houses available to purchase tends to be larger – the variety greater – asking prices diminish over time. Sellers tend to make more concessions than any other time. Sounds like a win win for buyers right?

Not so fast. There was an important point that bares a closer look. Can you afford to take the leap and if so how big of a leap can you take? If in doing the calculations you determine you can take the leap, then the next question to find the answer to is how much house can you afford? A house that meets your specific needs will also take into consideration the taxes on the property, the utility costs, and time to save for major repairs. Getting that combination correct may make difference in enjoying your new home and having to work hard to keep your new home.

The property tax records can shed some light on part of the answer. The seller can help with answers on utilities. Sellers willing answer these questions for prospective buyers. If you are working with a real estate professional they consider post sale budget in their research on properties to present to you – at least that is what I do. There is nothing worse than helping a buyer purchase a home only to have them have to turn around and sell it a few years later to prevent foreclosure.

A buyer’s market is a good time to buy, if you remember keeping the home five or six years is the goal.



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To Disclose... or Not

During the home buying and selling process there comes a time when the seller must disclose facts about the property for sale. In New Jersey the Disclosure Statement is about six pages and gets signed but the seller, the buyer, and the agents involved. It asks question about the house from the roof to the soil surrounding the property and the neighborhood looking to get information on age, maintenance, and repair of big ticket items, any hazards on the property.

Understanding that houses have quirks the question becomes do I disclose quirky things or risk a lawsuit down the road for nondisclosure of material facts?
Ward Lowe recommends in his article: Hazardous Duty:
“It’s probably best to strive for full and complete disclosure rather than attempting to determine if a particular buyer would find the information important in deciding whether to buy the property.” New Jersey Realtor (July 2006)

Assuming a seller intends to fully disclose the condition of the property is a seller qualified to answer question on things like dry rot, wood destroying insect infestation, aluminum wiring, or underground storage tanks? If the home was built before 1978, it is fairly safe to assume at sometime the home had lead-based paint applied to it. Since 1992 the federal government requires that all sellers disclose the presence of lead-based paint. Disclosure of the presence of lead-based paint in houses built before 1978 makes sense even if the seller is unaware of exact locations.

Disclosure is designed to protect the seller by putting in writing exactly what the buyer can expect in his or her new home. Major repair surprises generally end up in court and could prove costly if the nondisclosure claim finds the seller culpable. Disclosure helps the buyer plan for the maintenance and upkeep of the home. It is much easier knowing one has to prepare for a new roof in ten years then it is to have no idea when the roof had attention. Full disclosure makes the buyer aware of just what he or she is getting for their investment dollars and leaves the seller unconcerned about future nondisclosure culpability.


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Tuesday, July 25, 2006

Tip of the Day

Since January 2006, the Federal Housing Administration (FHA) has given home buyers and sellers a reason to reconsider FHA loans. In the past the FHA process tended to be slower and less flexible than conventional and even some non-prime loans. In an effort to help borrowers, who get stuck with hidden fees, penalties, higher mortgage insurance premiums and higher interest rates, and sellers who often ended up paying more of the closing costs with FHA borrowers, the FHA changed it requirement to ones similar to its competition. These changes make FHA loans expands the options available to both buyer and seller. Learn more.



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