buyers agent

Stand Up and Buy Right!

Stand Up and Buy Right!

If, like all of us, you want to get the best house you can for the least amount of money, you need to make sure you are negotiating from a position of strength. Price is only one element in the negotiations and not necessarily the most important one. Often other things such as the financial strength and your down-payment or the closing date are just as important to a seller. That being said, it’s useless to be “pre- qualified” by a lender. This means that you have spent a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you “pre-qualified” and issues a certificate that you can show to a seller. Sellers agents and their sellers are aware that such certificates are not worth the paper they’re written on because the information has not been verified. The way to make a strong offer today is to get “pre-approved”. This means that all your financial information has been checked and verified by a qualified loan professional and a lender finds that if nothing changes they will lend you the money you need to purchase a home. That’s what you want.

Listing agents place ads to get you to call them – they want to handle both the seller and buyer end of a deal. When reading an ad know that what is not mentioned in the ad is usually more important than what is. For example, many homes have some drawback that any good agent will never mention in an ad, such as traffic noise, power lines, or outdated plumbing and electrics. Remember that the person writing the ad is representing the seller. When you look at a house with the seller’s agent they will not critique the property or point out any drawbacks you should know about – it’s up to you to find them out on your own.

Get a Buyer’s Agent. Your buyer agent looks out for you and your best interests during negotiations on price, inspections and contingencies. In Massachusetts a seller’s agent can work with you as a buyer agent for the property they are listing but they must disclose that in the event of any conflict of interest they work for the seller and look out for the seller’s interests above yours. A buyer’s agent doesn’t cost you anything … and they’ll look out for your interests above the seller’s.

Did you also know that many homes are sold without a sign ever going up or an ad ever being put in the paper? These “pocket listings” or “whisper listings” are often great deals and go to the clients of buyer’s agents who have their finger on the heartbeat of the market. When a buyer’s agent hears a great house will come on the market they call their client who is looking for that type of house and just might get them the exclusive. So in order to get the best buy and to save time not looking at unsuitable properties I always recommend that you hire your own buyer’s agent and if they’re good stick with them. (shameless plug for myself)

Your agent should show you everything available that meets your requirements. Don’t make a decision on any house until you feel that you’ve seen enough to pick the best one. Especially if a town is new to you, it is a good idea to get a feel for the town and its neighborhoods. A good agent has the patience and experience to work with you until you find the right house. Having said that, however, there are two circumstances where you may need to make a fairly quick or bold decision. There are times when a home comes on the market and as your buyer agent, as soon as I see it I know it is what you have been looking for – a reasonably priced house in a good location in great shape. This one won’t last and when I call, if you think you’d like it you should be willing to look at it now and make a decision quickly.

The other situation is that it’s your first or second weekend looking at houses when you find “the one”. It’s great – just what you were looking for. But….you’ve only seen five other houses and what if you find one weeks from now that you like more? Sad to say, I have had clients in this situation and who weeks or months later were saying, “Gosh I wish we had jumped at that house…. it was just what we wanted.” Sometimes the right one is one of the first few you see. Trust your gut if it is.

Here’s a list of my current BEST PRACTICES for BUYERS:

1. Arrange for your mortgage financing up front before you even start to look for a home. Your mortgage broker will help you focus on your ideal price range, your maximum loan and whether there are any credit issues you should correct before buying. They will also prepare a “pre-approval” letter … which you will provide the seller when you are ready to make an offer.

2. Familiarize yourself with the purchase contract details and ask questions. Ask your agent to explain the process of negotiating and counter offers.

3. Use buyer representation. It is important to have an agent who owes his total loyalty to you. Discuss your representation options with your agent. If you are purchasing one of your agent’s company listings  make sure you understand what your agent can and cannot do for you.

4. Review the seller’s disclosure before you make an offer. Your offer should reflect your knowledge of the condition of the property. The seller’s disclosure will tell you of  any known repairs or conditions that would affect what you would be willing to pay. You should know this before you decide on an offering price. If you are unsure go back with the agent and look at the home after you have reviewed the disclosures. Also note, not all brokers use seller’s disclosures … doesn’t make sense to me but there are no state/national laws requiring disclosure. If they don’t use disclosures it doesn’t mean they are hiding anything but you would be wise to assume there are problems not readily visible on a quick walk-through and adjust your offer accordingly.

5. Ask the seller to provide a home warranty when you write the offer. This will cover you for some items that malfunction during the first year of ownership. Cash used for down payment, closing costs, and other home necessities can deplete your cash reserves. A home warranty will reduce the risk of a future drain if a warranted item needs repair that first year.

6. Get the property inspected by a licensed professional home inspector. They will let you know the true condition of what you are buying. Follow the inspector’s advice if he/she recommends that you have another expert inspect a troublesome item. During the inspection you should also ask your inspector to explain how to work or maintain appliances or systems in the home, they are a wonderful resource to help you learn “how to drive the house”.

7. Ask your buyer’s agent to prepare a market analysis of the property before you make the offer. A seller’s agent cannot do this for you. You should know what similar properties are selling for so that you don’t overbuy. Also, if the seller remains firm on his price, you will be able to tell if the value is really there.”

You Really Want to Buy a Short Sale?

You Really Want to Buy a Short Sale?

Mr. Seller goes to his mortgage company(s) and says, “I want to sell, but I don’t have any equity and the house is worth less than the amount I owe you. I need to sell anyway because based on my current circumstances, continuing to keep the home is a serious hardship and I can’t hold on, so what do I need to do to get out?”

What the Seller has just done is to ask his Mortgage Holders/lienholders to take a loss when his property is sold, this is called a SHORT SALE. Lienholders don’t like to take losses (an understatement) and they are going to be resistant to this request from Mr. Seller. However, the current “perfect storm” of poor market conditions has forced them into a position where they may agree to Mr. Seller’s short sale as long as it is going to be more favorable to them than going to foreclosure – in time, trouble or money lost.

But, (and there is a big, whopping BUT …) the mortgage companies reserve the right to approve EVERY term, condition and cost of the sale. So not only are we in a Buyer’s Market with lots of inventory to choose from, we have a seller who is virtually powerless in the transaction.

ARE THESE NOT THE PERFECT CONDITIONS FOR BEING A BUYER?!!!

There is another short-seller we should discuss, the reluctant seller. While Mr. Seller above is so very motivated, let’s take the case of the family that is forced to sell thanks to their loan being one of those adjustable rate or combination loans that has adjusted and is now beyond the point of their ability to pay. They have to sell, they are going through the short sale process, but they really aren’t motivated. Why? Because they have to move. And where are they going to move? Depending on their situation their credit may be less than stellar because of late payments and the short sale itself may show as a delinquency on their credit report. Who will rent to them?

Let’s say you get into a home to view it and you love it and want to put in an offer. You can do very well by buying a short sale house, but there are some things you need to know about this process. This is the point at which you need to put aside everything you have learned about the sequence of how a home is sold. Below are guidlines to going about it.

GET TO KNOW ALL YOU CAN ABOUT THE HOME

You are advised by your buyer’s agent that this home, typical of most short sales, is being sold “As Is” (see my blog post, “What does ‘As Is’ Mean?”, for more detailed information on this legal term)

The seller might provide you with a seller’s disclosure of property condition if you’re lucky, but that’s about all you’ll get. They may or may not have pulled permits for upgrades or work done on the house – you’ll need to investigate.

They definitely will not negotiate issues you uncover during a home/pest/lead paint/radon/mold/septic inspection.

Do you spend money to have inspections done or wait for the bank’s response? My advice, wait, but be prepared to move forward very quickly once you hear back from the bank.

Also if the property is a condominium or governed by a home owner’s association, your bank/mortgage company will most likely require a full set of condominium documents, meeting minutes, recorded deeds, occupancy rates, tenancy ratios, and more (what’s called a Full Review).

The condominium association can and will charge you money for this. Your mortgage is contingent upon receipt of this, but it’s going to cost you around $400 for copying charges.

What do you do? My advice is to ask your mortgage broker, and don’t do anything to jeopardize your pre-approval/commitment.

You have decided to submit your offer and now the wait is on…

PATIENCE IS A VIRTUE, GET READY TO HURRY UP AND WAIT

A short sale is the sale of a parcel of real estate that is short of the equity needed to sell it and pay off all liens. It is not short “time-wise”. You should plan on at least 120 days from your offer, but the amount of time can vary widely depending on the lenders, and if anyone says you will hear back in “x” number of days, you can’t believe them.

What happens during the wait? Well, besides Mr. Seller getting anxious waiting for his departure, the short sale file/package/request gets in line in the lender’s short sale department (also called the Loss Mitigation Department). This line is long, sometimes very long.

So, what happens during the wait is just that….the wait. Oh, the agent for the seller will be in contact as needed to re-fax lost documents, explain their research, answer questions about the local market, re-fax lost documents, etc. But you, the buyer…you just wait. It’s like the military … hurry up and wait. Or better yet it’s like the hospital … wake up and take this sleeping pill.

Many sellers’ agents do not give your buyer agent status updates on what’s happening while you wait…you just wait. When I represent the seller, I email the buyer agent every week to say what I know, even if it’s nothing, just to make sure that you, the buyer, are still there and somewhat paying attention. But as your buyer agent, there’s nothing I can do … if there were, rest assured, I’d be doing it.

Oh, as the buyer’s agent I know what’s going on….the paperwork is collected, the file is assigned to a “negotiator” who “negotiates” the short sale with the seller’s agent/attorney, and once the negotiator has the file’s required documents (exactly what that is varies by the lender) complete, it has to be signed off by their “team leader” or upper management, or a committee of managers. I check with the seller’s agent regularly to ask what is happening but again, often there is nothing happening, just waiting….

KNOW THAT YOU MAY GET “BUMPED”

Here’s the big elephant in the room: you have no guaranteed place “in line.”

If this short sale’s turn in the line comes up on the 120th day after submission, and someone else submits an offer slightly better than yours on day 119, you will be bumped! It is not impossible that a seller’s agent will work with offers one at a time until an acceptance is granted and you won’t get bumped, but this is a rare occasion, hasn’t ever happened to me yet.

It’s not fair, it’s not right, but it is reality. This is because the lienholders are losing money and need the most they can get, and it is the seller’s agent’s fiduciary responsibility to get the highest and best price for their sellers.

AFTER A LONG WAIT YOU MAY BE DISAPPOINTED

If you are willing to be patient, knowing that you could get bumped, and you’re convinced you want to purchase a home that is a short sale, I might advise you to submit multiple offers on multiple short sales. You may get the one you kind of like, and not the one you love, which might be a disappointment. You might not get any one at all, which can be very disappointing. The question then is, how well do you handle disappointment? Can you accept the lost short sale?

YOU JUST MIGHT GET A GREAT HOME AT AN EXCELLENT PRICE THAT MAY MAKE YOU SOME GOOD MONEY SOME DAY WHEN YOU SELL

So why would anyone consider buying a home that is subject to a short sale?

Quite simply – price!

If a seller is not going to make any money on the sale of their home anyway, you can imagine they are much more flexible on terms and price of the sale of their home. If you are the only person making an offer on the home (which it has been my experience you are), the bank will need to take your offer very seriously, even if you offer significantly less than the asking price for the house.

In many Metrowest Boston neighborhoods, short sales represent some of the best deals around.

There is no reason to be afraid of a home that will be subject to a short sale. In fact they may be some of the best values out there.

Just be prepared for a longer timeline, a little more hassle and be sure to use an attorney, mortgage company and if I may be so bold, real estate agent with some experience in short sales.

You may just find that incredible hidden gem at a bargain basement price.

Happy House Hunting!!!

How Hard are Hardwood Floors, Really?

How Hard are Hardwood Floors, Really?

Just  the other day I was at a home inspection (representing the sellers) and the buyer’s home inspector was commenting on the Brazilian Cherry floors in the Study, telling the buyers that “this wood is very soft, so you’ll want to be very careful when you walk on it.”

Having grown up in the household of a high school shop teacher, I’ve had a great education in woodworking and made lots of projects with my Dad.  Over the years I’ve worked with Brazilian Cherry and for a fact I know it is a very, very hard material.  It takes forever to sand and holes for fasteners have to be pre-drilled very accurately and sized correctly. But I kept that knowledge to myself and decided to share it with you instead.

Many woods are used for flooring and although today’s design trends and color schemes often drive the choice of materials, over time the most popular woods for this area of the country, are: Brazilian Cherry, Mahogany, Pecan, Maple, White Oak, Red Oak, Walnut, Teak, Pine, and Fir. Of these, Red Oak is the most commonly used (it’s considered the most color-neutral and affordable of the woods) and thus it is considered the standard or benchmark in wood hardness.

If you Google hardwood hardness you will inevitably encounter the Janka Hardness Scale. It is the industry standard for judging the ability of woods to withstand the beating that wood takes from normal wear and tear: denting, gouging, pet scratches, heavy furniture, etc. Janka measures the amount of force in lbs-force that it takes to push a half-inch diameter (okay it’s really .444 inch) steel ball half of its diameter down into the wood. While this gives a general sense of the wood’s hardness, there are many factors that also contribute to a wood floor’s hardness and durability, including how it is cut from the log and how it is finished.

How the tree is cut has an effect on its hardness and suitability as a floor covering. Hardwood flooring is produced by milling wood from trees. There are three basic ways to cut a tree into lumber, called “plainsawn”, “quartersawn” and “riftsawn”.

“Plainsawn” wood is just that, the log is sliced lengthwise from one side to the other in a series of parallel cuts, sort of as you’d cut a block of cheese. This gives the best yield from the tree but for flooring it tends to result in a very inconsistent grain pattern and tends to expand and contract in unpredictable ways. Wide-pine floors (found in many Antiques and Antique Reproduction homes) are the typical example of “plainsawn” wood that most of us will encounter.

“Quartersawn” wood is the most common way that flooring material is made. In this method, imagine that the log is cut down the middle, then both halves are cut down the middle, and the boards are then cut from the “quarters” with the point facing straight down (a series of parallel cuts starting perpendicular to the centerpoint of the tree). This gives consistency to the grain of the boards (as consistent as any natural material can be) and a predictable stability that makes it perfect for flooring. For the purposes of this blog, I am using hardness factors derived from “quartersawn” wood.

“Riftsawn” wood is the absolutely ideal material for consistency of grain and stability but is very hard to find because it is so expensive to manufacture. In this method, the log is cut into a series of wedges that are perpendicular to the rings of the tree. The wedges are then sawn into boards and the excess material becomes waste. Because of the low yield per tree the cost per board foot is very high and you will probably never see “riftsawn” flooring unless touring a mansion or a castle. By the way, there are a couple of specialty sawmills in the Sudbury area that will produce “riftsawn” boards for you, but hold onto your wallet.

As mentioned earlier, the finish also has an effect on the hardness. I am not qualified to comment on what finish is harder or better (best to ask a flooring expert) but I can tell you that the typical finish penetrates into the top ¼” of the wood, at most, so logic would have it that finished versus unfinished wood would be harder but much beyond that I can’t really say.

So how hard is my hardwood floor?

Below is a list from softest to hardest:

FIR
  • Latin: Abies sp
  • Other Common Names: White Fir, Balsam Fir, Fraser Fir
  • Janka Hardness: 400

WHITE PINE

  • Latin: Pinus alba
  • Other Common Names: White Pine, Eastern White Pine
  • Janka Hardness: 420
  • Hardness Compared to Fir: 1.05 times harder

SHORTLEAF PINE

  • Latin: Pinus echinata
  • Other Common Names: Southern Yellow Pine, Shortstraw Pine
  • Janka Hardness: 690
  • Hardness Compared to Fir: 1.725 times harder

AMERICAN CHERRY

  • Latin: Prunus serotina
  • Other Common Names: Black Cherry, Cherry, American Cherry
  • Janka Hardness: 950
  • Hardness Compared to Fir: 2.375 times harder

TEAK

  • Latin: Tectona grandis
  • Other Common Names: Plantation Teak, Burmese Teak
  • Janka Hardness: 1000
  • Hardness Compared to Fir: 2.5 times harder

WALNUT

  • Latin: Juglans nigra
  • Other Common Names: Black Walnut, Eastern Black Walnut
  • Janka Hardness: 1010
  • Hardness Compared to Fir: 2.525 times harder

HEART PINE

  • Latin: Pinus palustris
  • Other Common Names: Long Leaf Pine,
  • Also Commonly from: the Center or ‘Heart” of Yellow pine
  • Other Notes: mostly from recycled or underwater harvested, swamp trees
  • Janka Hardness: 1225
  • Hardness Compared to Fir: 3.0625 times harder

RED OAK

  • Latin: Quercus rubra
  • Other Common Names: Northern Red Oak
  • Janka Hardness: 1290
  • Hardness Compared to Fir: 3.225 times harder

WHITE OAK

  • Latin: Quercus alba
  • Other Common Names: Old Oak
  • Janka Hardness: 1360
  • Hardness Compared to Fir: 3.4 times harder

MAPLE

  • Latin: Acer saccharum
  • Other Common Names: Rock Maple, Hard Maple, Hard Rock Maple, Sugar Maple
  • Janka Hardness: 1450
  • Hardness Compared to Fir: 3.625 times harder

PECAN

  • Latin: Carya illinoinensis
  • Other Common Names: Hickory, Satinwood
  • Janka Hardness: 1820
  • Hardness Compared to Fir: 4.55 times harder

 

MAHOGANY

  • Latin: Swietenia mahagoni or Swietenia macrophylla
  • Other Common Names: West Indies Mahogany, Honduras Mahogany, Genuine Mahogany
  • Janka Hardness: 2200
  • Hardness Compared to Fir: 5.5 times harder

BRAZILIAN CHERRY

  • Latin: Hymenaea courbaril
  • Other Common Names: Brazilian Copal, South American Locust,  South American Cherry, Jatobá or Guapinol
  • Janka Hardness: 2350
  • Hardness Compared to Fir: 5.875 times har
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