Advice for Buying As-is Homes

As-is homes can become sticky situations. And, as Realtors, we try to avoid working with as-is homes because they are notorious for major problems – not to mention liability. Fortunately, we can say that we’ve never encountered such problems simply because we avoid the situations altogether. But, all Realtors have heard horror stories about an agent who either found himself in a legal suit over the property (which is the worst I’ve heard), or an agent who had such a difficult time working with the seller that he and his client had to back out of the contract.

There are two main cautions with as-is homes. First, the sellers are not willing to make any repairs to the home. That’s where the name comes from, of course – the buyer is getting the home as it is, with no if’s, and’s, or but’s. Sellers who choose to list their home as an as-is are usually inflexible to the point of being stubborn. They just want to sell the home and get out of it.

This is the reason that so many as-is homes become problematic. In these cases, it is crucial for buyers to have a buyers agent – someone who represents them and only them in buying the house. And, this agent needs to have plenty of experience in order to protect the buyer during the buying process. Why? Because a lot of buyers get taken advantage of in as-is sales. They buy a house from a seller who is not willing to work with them to get the home in proper order before closing. Since price is about the only thing that’s negotiable in as-is sales, it’s possible to estimate the costs for repairs and negotiate this amount off the asking price. However, it’s best to get these problems fixed (as you would do in a typical sale) before you officially own the home.

The second caution with as-is homes is that they usually require a lot of work to be done. This problem is also partly because the seller just wants to get rid of the home and doesn’t want to bother with making repairs or updating parts of the home. After all, making these repairs can be expensive and time consuming. It’s understandable why a seller would simply want to sell and not mess with these potential headaches. There’s a reason that these homes are sometimes synonymous with the term “handyman special” – they need a whole lot of work!

And, even if the home doesn’t need major repairs, it’s practically guaranteed that it will need at least some attention. It’s rare to find a home that doesn’t need any work done to it. Even homes that are practically new need some kind of repair before move in. The best way to protect yourself from this caution is to get a good home inspector. Don’t ever rely on just the seller’s disclosure to learn about the condition of the home. And, this tip applies to as-is homes and regular home sales. Your agent should be able to recommend an experienced and thorough inspector so that you can be sure of the repairs that need to be made before you buy.

So, if you’re considering buying an as-is home, there are two things you should know. First, you should go into the situation expecting that the seller is probably not willing to negotiate on anything other than price (and closing date, of course). The best way to protect yourself in an as-is sale is to have an experienced buyers agent. Second, know that the home will probably need a lot of work done to it. The best way to know what needs to be done is to get a detailed home inspection.

by Lee Keadle

What First Time Home Buyers Need To Know About The Mortgage Process

Buying a home for the first time can be confusing. There are so many things to consider and so many things that must be done the right way before you sign your name on the dotted line. Understanding the steps of the mortgage and home buying process can make it much easier to navigate. Here's a brief guide to what first time home buyers need to know about the mortgage process.

Before you look for a home:

* Decide if you're financially ready to buy a home. When you compare rents side by side with mortgage payments, buying a home may seem like a great bargain, but it's important to consider all the costs that come along with owning a home.

* Learn about the different mortgages available and figure out which is best for you. T

* Get your financial information together. In order to be approved for a mortgage, you'll need to document your income, your assets, your employment, your residence and your existing debt.

* Get pre-approved. A pre-approval letter will give you a firm idea of your prospective price range for a new home, and it will tell your real estate agent and home sellers that you are serious about buying a home and financially capable of managing it. Pre-approval is a more formal and in-depth process than pre-qualification. A pre-approval letter is a formal certificate from a lender saying that you are qualified for a mortgage up to a certain amount. While it is not an agreement to give you a mortgage, it is one step closer to having the cash in hand to buy a house.

* Find a real estate agent. Your real estate agent will work in your best interest and help guide you through the rest of the process.

Once you find your house:

* Work with your agent to determine a fair offer price. A written offer will include the price you'll pay, any conditions that must be met, amount of earnest money, complete legal description of the house, down payment and financing details.

Earnest money is included with your offer to show the seller that you are serious. If your offer is accepted, the earnest money becomes part of the down payment. If your offer is rejected, the earnest money is returned to you. If you pull out of the agreement for reasons other than those stated in the offer, you'll forfeit the earnest money.

* Once your offer is accepted, make a formal application for a mortgage. At this point, you will usually have to pay a mortgage application fee. If your mortgage is approved, it generally locks in the mortgage rate you are offered for 30 to 90 days.

* Your lender will arrange for a home appraisal to determine that the house is worth the amount you are asking to borrow in order to purchase it.

* You or the lender will order a home inspection, which is not the same as a home appraisal. A home inspection will point up any problems with the home that may have been missed by a casual inspection.

Insurance Policies that You Will Need

* Get home owners insurance and provide proof of coverage to your lender.

* Private mortgage insurance is a policy that will pay off your mortgage if you should default on the loan under specific circumstances. Most lenders require that you carry PMI if you make a down payment of less than 20%. Generally, the cost of PMI is added to the amount financed.

* Title insurance is a policy that guarantees a clear title to the house. When you purchase title insurance, the insurance company will do their own title search. If any issues of ownership related to title arise after you have taken over the house, the insurance company will pay all legal and other costs related to the title issue.

Closing on Your New Home

* Your lender will let you know in advance how much the closing cost will be. This is generally a "good faith estimate", and may vary slightly from the actual amount when all costs are totaled.

* You will be expected to bring valid identification and certified funds or a cashier's check for the amount of the closing costs.

* The closing costs will include any loan fees, prepayment of interest (points), copying fees and administrative fees charged by the lender.

* You will have a chance to read over all the documents concerning your mortgage and your home. The closing attorney will give you concise explanations of each document that you are asked to sign, but you have the right to read each one over yourself as well.

* Once all the papers are signed, you will endorse the check to the closing attorney, and receive the documents that make the home yours. The closing attorney will see to the disbursement of funds - paying off any remaining mortgage, payment to the current owners, and any other associated costs.

by Shawn Thomas