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FOR BUYERS
Here are Some Helpful Tips for Buyers from Jackie Maloy's Articles in Local Publications...
Jackie has written articles for the Wimberley Valley News Magazine for over 5 years. She explains real estate related issues, terms, and circumstances that all Buyers and Sellers encounter during the relocation process. Some are more technical than others, this one is for fun---- but still has some truth to it. Enjoy.
"You Gotta Tawk the Tawk"
Where I was raised, anyone who lived 50 miles away from my hometown was a forner. To many people interested in buyin' a piece of the Lone Star State, Texas does seem like a foreign country. Givin directions to a forner is a challenge sometimes. Turn on the caliche road and go past the first cattle guard. You will see a large tank on the right. Forners (buyers) ask if caliche roads are paved roads and why do the cattle have to be guarded? If there are tanks on the property, how safe is the country?
The road in front of your country place may be bordered by what Texans call a bar ditch. Nope, that does not mean there is a tavern within sight. It does protect your property from the intermittent rushing water that results from the frog chokin' gully washin' rainstorms in the country.
I have to be sure and translate when describin the assets of a property. If I tell the buyer there is an all lease on the property that is a good thing. In Texas tawk, all translates as oil. Water descriptions are confusing to the city folks: wet weather creek, spring fed, dry creek bed, stream, or river? I might describe a beautiful tract of bottomland with a stand of pa-KAWN trees on it. In Texas tawk, a tract is an indefinite area of land, maybe a few acres, not a section. (640 acres) Bottomland is low-lying property, probably in the flood plane, and you don't want your place (ranch or farm house) built there. Referring to pa-KAWN trees as PEE-can trees will reveal your non-Texas roots, but its not fatal. Just don't reveal you don't like PEE-can pie!
The most important phrase to understand is:
Yall is singular.All yall is plural. All yall's is plural possessive. (as in all yall's thangs) Real Estate lingo is confusing and communication in a successful real estate deal is important. When youre fixin to buy property, be sure all yall savvy Texan. Better yet, have a native Texan Realtor along to translate.
Mistakes Buyers Make
1. Not knowing how much you can afford before you make an offer. Get pre-approved by a good lender who can help you understand which loan benefits you the most. This information gives you the confidence of knowing how much you can afford. 2. Not realizing that the wrong mortgage can cost thousands of dollars in needless interest and taxes. Check with your accountant before you make your final decision on which mortgage you are going to choose. Your CPA will be able to tell you what the long term effects will be on your income.3. Not knowing how much your credit can affect your ability to buy or refinance a home. Council with your lender on the best way to improve your credit score.4. Not using a professional Realtor as a Buyers Representative to refer you to reputable lenders, inspectors, educate you to the market and guide you in asking the hard questions. 5. Not realizing that unless you have a Buyers Representation agreement signed with the agent you are working with, they represent the Seller. You need your own representation while searching for your home.6. Not having a professional pre-purchase home inspection, septic and well inspection. Take the time and pay the price to learn all you can about the house and surrounding area.7. Not investigating the neighborhood at various times of the day and the drive to work. Location is one thing you cannot change when you go to sell. This list could go on and on. As a Realtor we do not always know, nor can we always find the answers. We can be a resource to refer you to the experts and alert you to the questions that should be asked: What is going to happen to vacant land near the property, the impact of deed restrictions and easements on your future plans, will the Homeowners Association be responsive and responsible for their duties, are there going to be barking dogs, is there crime in the area, what are school statistics? Ultimately it is the Buyers responsibility to do their due diligence to investigate and inspect all aspects of the purchase. In real estate as in life in general, it is the questions you don't ask that get you in trouble. Your Realtor can guide you through the maze.
It All Adds Up
What you pay for something is only a fraction of what it will cost you. Your Mom was right, paying more for a higher-quality item often costs you less in the long run. She was applying the principle of life cycle cost analysis. Another name for this would be learning from suffering the consequences.
The purchase price of the house represents only one factor in the ultimate cost of an item. That premise holds true whether youre talking about a light fixture or an HVAC system in your home or rental property. Other considerations that may determine what you will spend on a home beyond the obvious interest rate you pay for your mortgage over a period of time are: 1.Expenses associated with design of the house (high ceilings, type of doors, large areas of glass, flooring), 2.Installation (wells, septic, roads, drainage), 3.Energy use (direction the house faces, type of exterior construction, insulation, type of windows), 4.Long-term maintenance (life left in appliances, HVAC, roof, cosmetic improvements).
Going House Hunting? Be Sure You Don't Have Credit Glitches.
Credit scores have been used extensively by lenders for about eight years. Once a secret shared between credit-reporting agencies and lenders, the scores are now available to you. For $12.95, anyone can take a look at their FICO score. Scores are determined by weighing several factors in a persons credit record, including payment history, balances, number and types of credit accounts. The results are considered to be more objective than those of humans relying on different criteria. However, there are limitations. For example, a person who always has paid cash for purchases will score low due to a lack of credit history. Scores range from 300 to 850. Most lenders prefer a score in the 700s. Borrowers can improve their scores in numerous ways.
1. Get current on your debt payments and stay current.
2. Wait a year after any credit mistakes to apply for a home loan.
3. Don't close out unused credit accounts. Your debt-to-available-credit ratio will rise and your average
length of credit history may decrease.
4. Don't open credit accounts simply to create a credit history.
5. Don't shift credit card balances to a new card.
6. Hold off on furniture, appliance, car and other large purchases until after you buy your home.
7. Get a report from all three major credit bureaus to have any errors removed from your credit report. This takes time and diligence, but it's worth it. To access your FICO score, visit MyFico.com or Equifax.com. You will receive your score (850 no doubt) and a summary of the positive and negative factors affecting your score. MyFico.com provides an online calculator, so you can run simulations to determine how specific actions, such as paying off a credit card, will affect your score.
How Long do Credit Mistakes Stick Around?
Late payments and debts turned over to collection agencies drop off after 7 years. Notations of lost credit cards disappear in 2 years if you don't have any delinquencies, 7 years if you do. Even bankruptcies cycle off your report in 7 or 10 years depending on the type of bankruptcy. Tax liens, child-support judgments, civil and small-claims judgments also come off your report after 7 years. Once you understand what goes into the credit-scoring process, you will be able to use your knowledge to become a homeowner.
Home Insurance Not so Easy. Buyer Beware!
When purchasing a home, it is very important that you acquire your homeowners insurance during your Option Period due to many insurance companies having new stringent property condition requirements. The Option Period is a contractually negotiated period of time (usually 10-14 days) when the Buyer pays a non-refundable fee for the unrestricted right to inspect the property and the right to terminate the contract for any reason.
During this time period, required repairs are negotiated. Recently, some insurance companies have requested the inspection reports to review. Indication of water damage, roof or electrical malfunctions may trigger requirements for repairs before they issue a policy.
These requirements are most likely to occur when homes are over 10 years old or if the property has a history of water damage claims.If you have already negotiated all of your repairs and the Option Period has expired, you, the buyer, may not have contractual recourse to negotiate additional repairs required by the insurance company. In my experience compromises between buyer and seller often have been reached.
As a seller, you need to have your home in insurable condition. Insurance Commissioner Jose Motemayor warns homeowners and buyers to read renewal notices and new policies carefully. Unless endorsements are added, the HOA policy excludes coverage for such losses as frozen pipes, water discharges and damage from falling tree limbs. The unendorsed HOA policy also pays only actual cash value, not replacement cost, for damaged household contents and damaged building components, such as roof coverings.
Beginning January 1, 2003 insurers may use the revised HOB policy that no longer covers the testing, treating, containing and disposal of mold. However, insurance companies must offer homeowners the opportunity to buy back mold remediation coverage. For more information:
A. www.tde.state.tx.us
B. Call 1-800-599-7476 to request a Guide for Texas Consumers.
C. Call your insurance agent for their company's policy requirements.
Going Green May Be Easier Than You Think
Green Building is a broad term that encompasses a number of movements, including the drive for better indoor air quality and the use of environmentally friendly building design and materials. A significant percentage of consumers will pay more for an environmentally friendly home. Richard Morgan, manager of The Austin Energy Green Building Program, the oldest residential program in the country, estimates 23% of new construction starts last year in the area that his program serves were Green. Even Congress is motivated toward Green. The Energy Policy Act of 2005 encourages energy efficiency with tax credits to those who make green improvements to their homes in 2006 and 2007. Fannie Mae's energy efficient mortgage program, available on loans under $359,650, lets borrowers qualify for a bigger loan than they might otherwise and allow energy improvements to be financed up to 15% of the appraised value of the existing home and up to 5% equity credit on new construction. Check with your lender for information on energy efficient mortgages. Some examples of remodeling projects that would qualify as Green: Install a gas fireplace in an addition, such as a den or sunroom, replace appliances with Energy Star rated versions, invest in new, more efficient heating and cooling systems, seal leaks and save more than 10% on energy bills, install double-glazed windows with low-emission glass that allows maximum light while keeping out heat and cold, plant strategic trees for shade, paint your exterior a light color. What's the cost of eco-friendly living? Building Green may cost you up to 2%-5% more to build, but the energy savings appear immediately. Examples of Green Building are: Stepped up insulation such as spray foam, a home design to respond to its site orientation means you can install smaller, more efficient, and less expensive furnace and AC units, radiant barriers in the roof, and a light colored roof. Peter Pfeiffer, Austin green architect, says, Green-built homes dont have to cost so much more, they just have to be better thought out. Homes built by today's green standards are likely to capture greater value at resale. Think about it, you might want to Go Green, whether you are remodeling or building.
- For more information go to www.ci.austin.tx.us/greenbuilder.com
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