Buying and Selling Tips
Real Estate Agent
At any given time there are anywhere from 50-1000 Real Estate Agents/ REALTORS® around any given Military Installation in the country. Thought at some of the larger bases this number may be substantially larger than that. That number may become quite overwhelming to you, so we have put together a list of questions that can assist you in making an educated decision when choosing a REALTOR® to sell your home. Knowledge is said to open doors. This is literally true when it comes to buying a house. To become a first-time Home buyer, you need to know where and how to begin the home buying process.
Many military families make the decision to purchase a new home at their new duty station. This is a long term decision and should not be taken lightly. Whether this is your first time trying to buy a home or you consider yourself a seasoned veteran, here's a list of things to consider when looking to purchase a home. We have compiled a list of things to consider when making this decision.
- Length of PCSing orders and likelihood of returning to the same duty station or retirement in the area.
- BRAC- Base Realignment and Closure Issues
- Strength of local economy (ex: if I get PCSing orders, can the home be rented or Sold?)
- Home Affordability…. To determine how large a mortgage you can afford, talk to loan office who knows about VA Loans or you can talk to a local lender. They will suggest the best VA loan program for your financial situation. In many cases, they can provide a pre-approved loan. This is an estimated loan amount based on your credit, income, assets, and employment information. This loan bears more weight than a pre-qualification letter when submitting a purchase offer to buy your selected home.
- Location of Home and What Type… When considering the location of your ideal home, think about the following: Type of house (single or two-store home, apartment, condo, etc.). Size of garage, bedrooms, and bathrooms. Yard space requirements. And most of all the distance to the schools, shopping centers, or to your Base/Post from the front or back gate. Make sure before you invest in a home that it's located in a neighborhood where you would feel comfortable. Talk to local neighbors, visit local schools, obtain crime statistics from local police departments, and visit stores in the area to get a feel for what living in the area might be like. IMPORTANT: We suggest that you always drive/or visit the area you're considering during dusk and at night time, or in bad weather (rain, snow, etc.) to get a better feel. Remember: if the first neighbor you try talking with is unresponsive, you can always knock on the next door to find out about the area. These steps allow you to focus on your house hunting needs and will save you and your family valuable time.
- Tax Bracket
- Tolerance for Risk
- Current Interest Rate Trends
- EAS – End of Active Service (Most lenders will require 1 year left of active service.)
The table below is a sample of what your basic principle and interest payment would be at these price points. Please remember that your entire mortgage payment will be made up of principal, interest, taxes, and insurance. The taxes and insurance will vary from location to location. There are multiple loan programs that are available for you to obtain your financing but to keep it simple we used a first time VA home buyer and a fixed 30 year mortgage with an APR of 3.75%.
Principal Interest Payment
30 year fixed rate @ 3.75% APR*
*Principal and Interest rate is based on 3.75 % APR on a VA Loan, Included in the APR is the First Time VA Buyer funding fee. Actual home payment could include taxes and insurance which is known as PITI and will vary depending on the location of the home.
A large part of your home buying experience will be influenced by the people you work with. Always remember the team concept. Here on PCSing.com, we are a part of your team, so use us to help negotiate the best deal for you. Our affiliated Certified Military Relocator agents will also be able to help you with questions you may have about the area, trends in the local housing markets, and home values. Always remember, you and your family are the final decision makers in the buying process. We would suggest using one of our Certified Military Relocator agents in helping you find that home.
Many banking institutions and credit unions will want to refer you to a specific agent or company; this is not always the best practice for you. A home is one of the largest purchases a person will make in their lifetime. Allowing yourself the ability to interview and select the agent that you feel the most comfortable with is one of the critical aspects of purchasing your home. The agent that you allow to represent you can either make it the most profitable and satisfying activity or a terrible experience. So do not allow yourself to be placed with just a name on the list.
You are hiring a REALTOR® for their service. So, there needs to be some scrutiny to see how good they have been in their profession. Remember, this is for your welfare and to lower your risk when buying a home. Be firm and take control always of the REALTOR® by interviewing them.
Here are some questions to ask:
- Do you work full time? The answer needs to be – YES!!!!
- Will you be representing me and negotiating on my behalf? Depending on your local board of Realtor's rules, you might sign an agreement stating what type of representation the Realtor will be giving you. Have them explain it to you.
- When was your last transaction? It's important to know how often they are closing their deals. If it is frequent and you are in a market like today which is very slow, then you have an enthusiastic and productive Realtor.
- Do they suggest that you get yourself pre-approved by a lender? It is important to get pre-approved for two reasons - to know if you are going to have any problems qualifying for a specific dollar amount (STAY WITHIN YOUR BAH) and it's a good tool to bring to a seller for negotiations. You can get yourself prequalified by a lender; however, that just means they will assume everything you are saying is in line. When you get pre-approved, you will receive a commitment letter from a lender showing you have gone through the process of being approved by an underwriter. Then, all you need to do is find the house that suits you up to that approved price. Furthermore, check with 3 independent lenders for rates and ask for a "Good Faith Estimate" which is something by law lenders are supposed to give you. A good REALTOR® can help you with the rest.
- What type of extensive training or ongoing education have you had? This doesn't mean they need a lot of training or education because if they have diverse experience it can be just as beneficial as training or education. We would suggest using a Certified Military Relocator Agent who is very familiar with the military.
- What is your schedule like for giving me the necessary attention? You want someone who will allow you to call them even if they are off of work. Timing is everything in real estate. You could find a home before the Realtor does and you want to be able to feel the freedom to call them any time.
- Could you give me 3 references of your most recent buyers or VA Buyer? This is the best way to find out how good they are. And make sure you do follow through and call them.
- Will you be with me all the way from start to finish? Top Realtors could have assistants that help them after they get you on board with them. That is a personal decision for you. If you have a busy Realtor and always have to deal with the assistant, it could become a problem.
Many home buyers will turn to both foreclosed homes and short sells to save money on their home purchases. Though these homes are normally sold below market value it may take some time to close the actual sell of the home. Though there is no set standard timeline for the purchase of a short sell property the national averages run anywhere from 45 days all the way up to 9 months and could actually take longer depending on quite a few number of factors that you as a buyer will have no control over.
Below is a short self-assessment for a potential short sell or foreclosure buyer to look over:
- Are you, as the buyer, in a position where you can wait for the lenders approval? Remember this could take months, meaning months and months of no news.
- Do you have to sell your current home to be able to purchase the short sell property? Remember this could be a very difficult timeline to keep.
- Are you ready to spend money on items including and not limited to: Inspections, Attorney fees, or all or part of your agent’s commission.
- Are you willing to purchase the home as in, with no repairs or improvements, since banks and distressed sellers are unlikely to make any of the needed repairs?
If you are against any of these issues the purchase of a foreclosure or short sell may not be for you.
If you know of anything we should have on PCSing.com to better help you let us know.
There are a million strategies in buying a home and here are only a couple that may help you in your negotiations to buy that dream home!!
- ALWAYS USE A Military Friendly REALTOR….Have the REALTOR® do a Comparative Market Analysis (CMA) on any home in which you are about to make an offer. (What is a CMA?) This way you can see all the other homes in the area and what they sold for, so you have an idea of what to offer. If they don’t want to do one, then find another agent who will.
- Never use the Listing agent for the house you like because, think about this…Whose interests do they have at heart. The sellers…The more they sell it for the more they make!!
- Never make a full price offer unless you’re in a sellers’ market. Ask you agent.
- How long has the house been on the market….This could tell you how much they are overpriced or not willing to negotiate on anything?
- Ask the neighbors if they know why the people are selling the house.
- Ask for the seller to pay all closing cost.
- Put in the contract that if the home appraises for less than the asking price, then they will adjusted it to the appraised value. Or if you should back out because the appraisal came in low that you would be refunded your money for the appraisal.
- That all heating material like gas, wood or propane to be included in the offer price. Sometime buyers don’t know that they have to pay for that until closing.
- Don’t make any major purchases for your new home until after you close. This could change your credit score and jeopardize everything.
Although reports can vary, from a two-page list of comparable home sales to a 50-page comprehensive guide, the length and complexity of the report depends on the agent's business practice. However, standard comparative market analysis reports contain the following data:
- Active Listings…..Active listings are homes currently for sale. These listings matter only to the extent that they are your competition for buyers. They are not indicative of market value because sellers can ask whatever they want for their home. It doesn't mean any of the prices are realistic. The offered sales prices do not reflect market value until they sell, and in buyer's markets, for example, most sell for a lot less. Whereas, if in a Seller’s market they could sell for more.
- Pending Listings….Pending sale homes are formerly active listings that are under contract. They have not yet closed, so they are not yet a comparable sale. Unless the listing agent is willing to share information about the pending sale -- and many are not -- you will not know the actual sold price until the transaction closes. However, pending sales do indicate the direction the market is moving. If your home is priced above the list price of these pending sales, you could face longer Days on the Market.
- Sold Listings….Homes that have closed within the past six months are your comparable sales. These are the sales an appraiser will use when appraising your home for the buyer, along with the pending sales (which will likely have closed by the time your home is sold). Look long and hard at the comparable sales because those are your market value.
- Off-Market / Withdrawn / Canceled….These are properties that were taken off the market for a variety of reasons. Usually the reason homes are removed from the market is because the prices were too high. The median prices of this group will almost always be higher than the median prices of comparable sales. However, listings cancel also for the following reasons;
- Seller's remorse…The sellers decided they cannot part with their home and no longer want to sell.
- Priced too high… Nobody made an offer or the only offers received were low-ball offers, which were rejected.
- The Days on the Market too long… Agents sometimes withdraw listings so they can put them back as a new listing and fool buyers.
- Repair requests... The homes were once under contract and after the home inspection, the buyer requested repairs which the seller refused.
- Seller fired the agent. It's not uncommon for unhappy sellers to fire an agent and hire a new agent.
- The Home could have been converted into a rental property for the owner who ran out of time to sell, in some areas it is not uncommon to find a home that is listed for sell or rent.
- Expired Listings….This group will reflect the highest median sales price because they did not sell and were probably unreasonably priced. Some of the expired listings could also show up as an active listing, listed by a new agent at a new price. Listings also expire because they were not aggressively marketed or because the home was in need of repairs.
Comparable sales are those that most closely resemble your home. It is difficult to compare a tri-level home to a single-story home. Select the homes from this list that are mostly identical to your home in size, shape and condition, such as:
- Similar square footage…Appraisers compare homes based on square footage. Larger square-foot homes are worth less per square foot than smaller square-foot homes. The variance among a group of median-priced homes ideally should not exceed more than 200 to 400 square feet, plus or minus.
- Similar age of construction…Ideally, the age of the home -- the year it was built -- should be within a few years of other comparable sold homes. Mixed-age subdivisions are common. For example, in one area of Sacramento, a subdivision consists of homes built in the 1950s, and then they jump a couple decades to the 1970s. Although the homes are located next door to each other, the homes loaded with character from the 1950s sell for more than their newer Brady Bunch counterparts. If your home was built in 1980, say, and brand new homes up the street are selling for more, you cannot command the same price as a new home.
- Similar amenities, upgrades and condition…Appraisers will deduct value from your home if other homes have upgrades and yours does not. A home with a swimming pool will have a different value than a home without a pool. A completely remodeled home is worth more than a fixer. Homes with one bath are worth less than homes with two or more baths. Deferred maintenance will count against you.
- Location…Everybody knows that real estate is valued on "location, location, location," but have you considered what that means. Homes that entail an hour drive every day to and from base may be considered less valuable than ones that are only fifteen minutes from the Base/Post.
- Sellers Concessions…In today’s market there are other factors that should be considered when looking at the final sell price of a home. It is seller's concessions, for instance did the seller contribute to the buyers closing cost. When you are in a buyer's’ market this is something that is commonly seen and can adversely affect your bottom line when selling your home
There are millions of tips when selling a home and here are some we feel are important in the military community, but first look at all the strategies buyers use so you’ll know what you forgot when you bought your house. Also if you should know of some tips to help your fellow service men and women let us know!
- ALWAYS USE A Military friendly REALTOR….Have the REALTOR® do a Comparative Market Analysis (CMA) on your home. (What is a CMA?) This way you can see all the other homes in the area and what they sold for, so you have an idea of what the market will take for your home. If they don’t want to do one, then find another agent who will. Don’t assume you think you know more than the sales price of the market.
- Know your agent’s online marketing. 90% of military homebuyers start their house hunting online before they even PCS. They would never get in the car to come see your home if the online listings aren’t compelling. In real estate, compelling means pictures, pictures and more pictures. Where they find it like here on PCSing.com or REALTOR.com or any other site. Know what the REALTORS® marketing plan is.
- Have your own Marketing Plan as well. Facebook, Twitter, and any other place you can post it. Make a video and post it on YouTube.
- PRICE YOUR HOME TO SELL, AND NOT OVER PRICE IT TO STAY ON THE MARKET!!! YOU HAVE TO TRULY ASK YOURSELF, DO I WANT TO SELL THIS HOME AND IF THE ANSWER IS YES. THEN PRICE IT TO SELL!!! This is where most homeowners think they know what the market will take or that their home is worth more than it really is.
- Time your Sale with the best market. We all know when it’s PCSing season. Always sell based on supply and demand: When there are more buyers than homes for sale (sellers’ market), sellers are able to obtain better prices and terms; (when there are more homes for sale than there are buyers), sellers may have to reduce their price and perhaps make other concessions to sell their home. Also, keep in mind that it is easier to sell in a low interest rate environment when more buyers can qualify for a home loan and it’s PCSing Season.
- A home has only 60 Seconds to make a lasting first impression, so make it a good one! Remember this rule when you place your home on the market , 60% rule” when it comes to the military home buyers decision process, 40% of the actual buying decision is based on “curb appeal”, the first look at a home's exterior from the street, as well as the property’s location and neighborhood. OMG this is me, I can see myself living here. How many times have you driven down a street looking and admiring the home to yourself. Another 20% of the buying decision is determined upon entering the home. In other words, sixty percent of the decision to buy or not to buy a home is made up when the buyer enters that front door! The other 40% is nothing more than wanting to buy and own a home, that’s it.
- Landscaping the front exterior. Trim back all the trees and shrubs that block your windows, plant flowers that are colorful in the front lawn, and paint the exterior and trim, if needed. Pay special attention to the front door with a new coat of fresh paint or stain, front windows and garage door. Be sure that the front yard has the wow factor. Power wash the siding and walkways. Ask your agent for tips to better show.
- Get rid of all the clutter. Really look at your own home. Remove all oversized furniture when possible, they make rooms appear smaller. Rent a storage place until you sell for all the things you want to save. Open up as much of the traffic flow areas and highlight key areas with lighting to accentuate the charm and room of your home.
- Make sure your home is as bright as possible. Turn on all the lights but first change all the light bulbs to the maximum t light. Open all your shades, shutters and drapes and organize your closets. Yes, someone will look in them to see if they can fit all their stuff. If painting the interior, use white or very light shades of color. This creates an “empty canvas” for the buyer to work with. Don’t assume everyone will like your colors. Not everyone like dark colors!
- Take down that “Military I Love Me Wall” No one wants to see that. Clean the walls and put up a mirror to show depth in rooms if needed. How can a buyer look at a house that has pictures and military plaques all over it and see himself on the walls. De-personalize. Take down all the things that make your home your personal sanctuary (family photos, religious décor), pack them up and put them in storage. Buyers want to visualize your house being their house – and it’s difficult for them to do that with all your personal items marking the territory as yours.
- Empty the closets of all the coats, Remove out-of-season clothes from clothes closets, games, toys or boxes and put them in the storage rental.
- Make the most of your kitchen and dining room. Make kitchen look as spacious possible by removing everything from the counter like the coffeemaker, toaster, container, etc. Remove any extra leaves from your kitchen or dining room table to make the rooms look even larger. Set the tables or counter bar to help buyers envision the room. Make sure the inside of your cabinets are clean and organized. Store all your non-essential items elsewhere to make the cabinets look more spacious.
- MAKE YOUR BED, MAKE YOUR BED. Nothing a new home buyer likes to see more in a house is an unmade bed. The same thing with your kid’s rooms!!
- Sellers Concessions In today’s market there are other factors that should be considered when looking at the final sell price of your home. It is sellers concessions, for instance are you contributing to the buyers closing cost. When you are in a buyers’ market this is something that is commonly seen and can adversely affect your bottom line when selling your home. So think about it.
Last but not least…
We’re in a new world regarding real estate disclosures, unlike any other time in real estate.
Until recently, it has always been a "Caveat Emptor - let the buyer beware” Real Estate market.. It’s more today than not a “Let the sellers beware!” If and when you sell your home, you don’t need an open-ended liabilities that can come back to haunt you long after the sale of your home is completed. Here are some simple guides you should follow in completing all your disclosure forms when selling:
- Be as complete and accurate as possible with your answers to each disclosure question. Tell everything you know.
- Make accurate disclosures regarding all dampness and moisture areas. Disclose all known roof leaks and drainage problems, including your property draining over a neighbor’s property or a neighbor’s property draining over yours or any standing water.
- Disclose details of any corrections and repairs you have made, or others have made for you, even when you believe the problem has been fixed. Provide the dates and work done with receipts if you still have them.
- If you believe work needs to be done on your home and you have obtained written estimates for the work, provide those estimates to the buyer with an explanation of why the estimates were obtained and the work not done.
- Disclose all recurring problems such as sewage backups, other plumbing problems, roof leaks, electrical shorts or failures, basement leaks, cracks in walls, mildew and anything you can think of.
- Be sure to disclose all known environmental issues, such as the presence of asbestos, radon, soil contamination, expansive soil conditions, if known..etc.
- Disclose all known agreements between neighbors including encroachments, easements or variances. Often property lines and boundary issues come up regarding fences, patios and decks not within the required setback lines.
- Disclose any neighbor problems, arguments, disputes; barking dogs; loud music and party issues; parking problems; law enforcement issues, and so on.
- Disclose all known non-permitted improvements.
- Disclose any known slippage, sliding or soil problems, even if currently stabilized.
- Disclose known skylight leaks and windows that permit moisture encroachment.
- Disclose known fireplace and chimney cracks or other fireplace problems.
- Disclose any known acts of violence that have occurred in the house or on your street. A death in the house in the last five years should be disclosed.
- Disclose any known potential health and safety issues, such as poisonous plants, trip or slip hazards, cracked shower doors, steep and slippery steps, and so on.
The basic premise for disclosure is to disclose anything that might have a negative influence on a purchasers desire to own your property or be a negative influence on the price that a purchaser might be willing to pay for your property. Show all repairs that have been done, whether or not permits were obtained, and note any work that is not guaranteed by the seller.
Your objective is to finalize your sale and not have a judge be persuaded later on that, had the purchaser known of the issues in question, they would not have chosen to pay as much for the property. It could end up costing you! REMEMBER, DISCLOSE! DISCLOSE! DISCLOSE!!
If you should know of some tips to help you fellow service families let us know!