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The buying process for first time home buyers - By Carrie Colby

Now that you’ve decided to take the plunge and purchase your first home, let’s explore what you can expect from the home buying process itself. This is a chaotic time with offers and counter-offers flying furiously, but if you are prepared for the hassle (and the paperwork), you can get through the process with your sanity more-or-less intact. Here is the basic progression you can expect:

1) Find a home.

Make sure to take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online and driving around the neighborhoods that interest you in search of for sale signs. Also put some feelers out there with your friends, family and business contacts. You never know where a good reference or lead on a home might come from.

2) Consider your financing options and secure financing.

First-time homebuyers have a wide variety of options to help them get into a home, including federally-backed loans and loans for homebuyers who don’t have the standard 20 percent minimum down payment. Your mortgage interest rate will also have a major impact on the total price you pay for your home, so shop around. It will really pay off. Again, get referrals for banks and mortgage brokers from your real estate agent, friends and colleagues.

3) Make an offer.

Your real estate agent will help you decide how much money you want to offer for the house along with any conditions you want to ask for, like having the buyer pay for your closing costs. Your agent will then present the offer to the seller’s agent; the seller will either accept your offer or issue a counter-offer. You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits. If you reach an agreement, you’ll make a good-faith deposit and the process then transitions into escrow. Escrow is a short period of time (often about 30 to 60 days) where the seller takes the house off the market with the contractual expectation that you will buy the house - provided you don’t find any serious problems with it when you inspect it. This time frame is based on your obtaining your financing (mostly waiting for an appraisal to be completed) and home inspections.

4) Obtain a home inspection.

Even if the home you plan to purchase appears to be flawless, there’s no substitute for having a trained professional inspect the property for the quality, safety and overall condition of your potential new home. If the home inspection reveals serious defects that the seller did not disclose, you’ll generally be able to rescind your offer and get your deposit back. Negotiating to have the seller make the repairs or discount the selling price are other options if you find yourself in this situation.

5) Close or move on.

If you’re able to work out a deal with the seller, or better yet, if the inspection didn’t reveal any significant problems, you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.

Carrie Colby

Broker/Owner

Premier Properties

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Why did 3 Realtors have such different opinions of my home's value? - By Matt Trudel

This is a question I was asked at an appointment with a potential seller. They had gotten three Comparative Market Analysis from three different local agencies. All three were considerably different in price, one was very low, one very high, and then there was one in the middle. A fair question to ask, and without reviewing the CMAs in detail, a little tricky to answer. The easy and short answer is the realtors just have different opinions, but there is more to it than that.

Let's look at the CMA that came in considerably lower than the tax assessed value by the town. This should be a red flag to any seller. More than likely the realtor did not make appropriate adjustments or was using very poor comparables. Picking homes that are truly comparable in size, style, and age is very important. Occasionally a home's value will be lower than the assessed, but there are solid reasons for that and should be thoroughly discussed. 

Now for the middle CMA which appeared to more in-line with the towns assessment, but a little higher than the towns. That had six sold homes that were similar in age, style and size. Adjustments were made on large items like garage and finished basement area, and some small adjustments on bedrooms and bathrooms. Overall a straight forward CMA with normal adjustments, in my opinion.

The extremely high CMA was not even close in my opinion, it was a pipe dream. Four of the properties used were currently on the market and not under contract. Not to say that there isn't that one person out there that might overpay for a home, but this was a good example of overpricing a home with the hope of being the high bidder and getting chosen as the realtor to list the property because they put the highest value on it. Also known as buying a listing. While I agree that properties on the market currently can influence the listing price because they are the competition, they should not be used in a CMA to determine the value. Sold properties should be used in a CMA when determining value, just like appraisers do.

This is why I always stress that the seller needs to be informed and a part of the process when it comes to preparing and reviewing CMAs. What one realtor values a garage at could be greatly different from another realtor’s opinion. Asking questions until you feel both comfortable and confident about the pricing and how it was arrived at is very important. Realtors are still going to have different opinions about your property's value, but you need to know how they arrived at that value and decide on if you agree with the adjustments they made in the process.

Matt Trudel- Owner of Five Star Realty.

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How to make money in real estate - By Lisa DiBiase

Investing in real estate a good way to generate steady returns on your investment, and a good way to make your money work for you in the long run. Most people ask with trepidation in their voice, “what do I do?”, “how do I start?”, “can I actually do it?”

Here are some simple thoughts on how to make money in real estate!

1. Single-Family Rental Properties

Buying and renting out single-family homes is one of the most common and simple ways to make money with real estate. When looking, location is essentially the biggest factor in appreciation. Home improvements can also help create appreciation. Putting in a new bathroom or remodeling the kitchen and having an open concept are some ways to try and increase the value of a home.

Whether you have one, two or multiple rentals that you can self-manage, these rentals can provide you with a monthly income and start a fund for retirement ultimately building multigenerational wealth in years to come.

2. Rehab/Flip Properties

“Flipping” houses is the new trend to generating high profits in real estate. The catch to this is before you actually flip the house, you have to renovate the property and that typically requires cash on hand.

There are some properties that simply need cosmetic work and some require substantial work. Depending on your portfolio, you can determine whether to hold the property to rent out or turn around and sell it for a large profit.

3. Multi-Family Rental Homes

Multi-Family homes can be very profitable, especially if you are just starting out and are able to owner occupy the property while the other units produce income. Like any other property, location is still the most important component to influence potential renters to select your rental. Another criteria to consider is to not be close to other multi-family properties because of noise and traffic.

Many tenants pay a fixed amount per month and this goes up with inflation and demand. You can then take out your costs from running the units and claim the remaining portion as rental income. When you have multiple tenants, a single vacancy won't shutoff all the other cash flow.

5. Vacation Rentals

Investing in an area you love to vacation is a great way to build vacation rentals and also provide yourself a place to enjoy while generating income during the rest of the year. A key note, markets for vacations destinations can fluctuate more than the average market, so make sure you do your homework to make sure the properties are fairly priced when making the purchase. It's advised as with all properties, it is important to use a REALTOR® to help assist in the process of purchasing and selling.

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There are many different ways to generate profits from real estate and depending on your goals will determine what types of investing you choose. One thing for certain is that real estate is one of the largest assets to have in your portfolio, choose wisely. As I have said before, please call a local REALTOR® for all your real estate needs no matter how big or small. We are trained professionals here to make your life easier. It's best to surround yourself with the right team of professionals that can continuously give you the right advice for all your circumstances.

Lisa DiBiase is a Broker/Owner. She and her company represent buyers and sellers in the Greater Portland area. For all your real estate needs contact lisa@landinghomesmaine.com.

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First time home buying considerations - By Carrie Colby

The challenge of buying a home for the first time can seem so daunting that it’s tempting to either just go with the first house that falls in your price range or continue to rent. Here are a few things that you will need to consider before you buy, what you can expect from the buying process itself.

Considerations before you buy

The first thing you’ll need to determine is what your long-term goals are and then how home ownership fits in with those plans. It could be that you’re simply looking to transform all those “wasted” rent payments into mortgage payments that actually give you something tangible. Others see home ownership as a sign of their independence and enjoy the idea of being their own landlord. Narrowing down your big-picture homeownership goals will point you in the right direction. Here are a few questions to ask yourself:

What type of home best suits your needs?

You have several options when purchasing a residential property: A traditional single-family home, a townhouse, a condo, or a multi-family building with two to four units. Each option has its pros and cons, depending on your homeownership goals, so you need to decide which type of property will help you reach those goals. You can also save on the purchase price in any category by choosing a fixer-upper, although the amount of time, sweat equity and money involved to turn a fixer-upper into your dream home might be much more than you bargained for

What specific features will your ideal home have?

While it’s good to retain some flexibility in this list, you’re making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trustworthy appliances.

How much mortgage do you qualify for?

Before you start shopping, it’s important to get an idea of how much a lender will actually be willing to give you to purchase your first home. You may think you can afford a $300,000 home, but lenders may think you’re only good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you’ve been at your current job.

How much home can you actually afford?

On the other hand, sometimes a bank will give you a loan for more house than you really want to pay for. Just like with the purchase of a new car, you’ll want to look at the house’s total cost, not just the monthly payment. Of course, looking at the monthly payment is also important, along with how much down payment you can afford, how high the property taxes are in your chosen neighborhood, how much insurance will cost, how much you anticipate spending to maintain or improve the house, and how much your closing costs will be.

Who will help you find a home and guide you through the purchase?

A real estate agent will help you locate homes that meet your needs and are in your price range, then meet with you to view those homes. Once you’ve chosen a home to buy, these professionals can assist you in negotiating the entire purchase process, including making an offer, getting a loan and completing paperwork. A good real estate agent’s expertise can protect you from any pitfalls you might encounter during the process.

Carrie Colby owns Premiere Properties in Raymond.

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Seller's market - what it means to you - By Rick Yost

As the spring market begins, inventory is tight and well-priced homes are selling very quickly. The signs that we are in a seller's market are everywhere. Southern Maine has not experienced a true seller's market since 2006, so a refresher in what to expect in a seller's market and how to be best prepared.

Sellers have the advantage in the market right now, but that advantage can slip away very quickly.

 Preparation is the key to maintaining the advantage and leveraging that advantage to the highest possible sales price. A home is never hotter than when it first hits the market and a "Back on the Market" home always raises questions. People want to know what went wrong. The first buyer is usually the best buyer, so it is important to keep them in the deal.

 

Sellers should use a broker that knows the market and understands the competition.

Understanding the market and knowledge of the other houses for sale in the area will allow your broker to price your home correctly. A well-priced home will draw much attention. Lots of showings in the first week should lead to an attractive offer on a well-priced home.

Sellers should disclose everything about their home that they are aware of. A home inspector will most likely find the issues anyway, but it is always better that a seller discloses the issue. If there is a plumbing issue, a roof issue or a permit issue, it should be disclosed. A buyer can figure the issue into their offer, rather than walk away after inspections and out of the house - Back on the Market.

Sellers should have a discussion about offers with their broker before the house hits the market. A process and a strategy should be in place for all offers, including multiple offers. Buyers in multiple offer situations can range from aggressive to jittery.

It is important to not be forced into making a decision too quickly and missing out on a better offer, but that has to be balanced with not losing a jittery buyer worried about the competition. This is why having a process and strategy in place is so important.

Letting buyers know what to expect can keep the aggressive ones at bay and the jittery ones in the game. That is how the best price is achieved.

Buyers also have to be aware of a seller's market and plan appropriately. A buyer has to be ready to act quickly. If a new home that is priced well hits the market on Tuesday, don't expect it to be available on Saturday. Be prepared to make an offer. Have a mortgage pre-approval ready, have an action plan with your broker, and pull the trigger. If you don't, you may miss out on the house of your dreams.

Buyers also need to be prepared for disappointment. In a multi-offer situation, there are losers and only one winner. No matter how prepared a buyer is, sometimes there is a better offer made. Fewer contingencies, cash offer, higher price, and many other reasons can influence a seller to choose another offer. Buyers need to understand that it is part of the process and not become discouraged.

Buyers also should use a broker that understands the market and knows the competition. After losing out in a multi-offer situation, a buyer can become frustrated and over bid for the next house they like. A good broker can tell a buyer if a house is priced right and may attract multiple offers or if it is over priced and won't solicit as much attention. An experienced broker will also help a buyer put together the most attractive offer possible in multi-offer situations.

It is a seller's market in southern Maine, but buyers and sellers that recognize this, use an experienced broker, and plan ahead can come out on top.

Rick is a realtor, real estate author, and long time Windham resident. You can reach Rick with all of you real estate questions and needs at rickyost@KW.com.