Having a basic understanding of important real estate concepts before you start the homebuying process will give you peace of mind now and could save you a fortune in the future. Here are ten real estate terms you should know before you start looking for a home. Guess who else can help you navigate the process? Your REALTOR®! Find a REALTOR® here.

    1. Buyer’s Agent vs. Listing Agent

      There are usually two agents involved when you buy a home; the “buyer’s agent,” who represents you, and the “listing agent,” who represents the home seller. Dual agency is when there is only one agent representing both sides of the transaction.

    2. Fixed Rate vs. Adjustable Rate Mortgages

      Conventional loans include “fixed rate” and “adjustable rate” mortgages. A fixed rate mortgage has a predetermined interest rate throughout the life of the loan; the most common are for 30 years. An adjustable rate mortgage has a variable interest rate; the most common are for 5, 7, or 10 years.

    3. Pre-approval Letter

      Before you apply for a mortgage or even start looking for a home, you should get a pre-approval letter from the bank, which is an estimate of how much they’ll lend you. This letter will help you determine what you can afford, and ensures home sellers that you will be able to get a loan when needed.

    4. Listings

      REALTORS® frequently refer to homes for sale as “listings.” A “listing” on a website shows information about the home, like the price and number of bedrooms. 

    5. Inspection

      After you’ve made an offer on a home, you’ll need to schedule an inspection, which costs around $500 – $800, depending on the market. The inspector will go through every nook and cranny, and review things like the plumbing, electrical, foundation, walls, heating, and appliances.

    6. Appraisal

      When you apply for a mortgage, your lender will require an appraisal of the home you want to buy. A licensed appraiser will estimate the home’s value based on comparable homes that have sold in the area and an investigation of the property.

    7. Contingencies

      When you put in an offer on a home, you can specify certain conditions that must be met before the deal will go through – these are called contingencies. You have to make sure you can actually get the loan (a financing contingency), that the inspection doesn’t show anything too crazy (inspection contingency), and that the appraised value is close to what you’re offering to pay (appraisal contingency). Those are just a few common examples; there are several other types of contingencies, which you should discuss with your REALTOR®.

    8. Offers and Contracts

      Once you find the right home, you’ll make an offer on the property with the help of an agent or attorney. If the seller counters your original offer, it’s usually because they want more money or a faster timeline for closing the deal, at which point you’ll have to negotiate. When submitting an offer, it’s a good idea to add a personal touch by including a cover letter that explains why you want to buy the home.

    9. Closing Costs

      Be prepared to pay a lot of fees when you purchase a home. Typically, closing costs will amount to 2-5% of the purchase price of the home, and that doesn’t include the down payment. Common fees include excise tax, loan-processing costs and title insurance. 

    10. Title Insurance

      After all the negotiations are done and the seller has accepted your offer, you should receive a home title report within a week. Most mortgage lenders require you to pay title insurance as part of the closing costs; title insurers search the public records to make sure the home seller actually had rights to the title and that there are no liens on the home (like an unpaid contractor or unpaid taxes).

Sources: Redfin.com and HouseLogic.com 

Why Real Estate Experts Say 2016 is Year to Sell

New housing data released this week for central Indiana paints a great picture for a strong year in housing. Closed sales, pending sales and median and average sale prices were all up in January compared to January of 2015. In fact, closed sales rose 8.2 percent for the month; a month not known for great housing activity in our cold weather market.

Pending sales increased 12.3 percent and this is a key data point because it means that February and March ought to be strong as well. Typically, all those pending sales become closed in the next 30 to 45 days.

Looking at the data, local REALTORS® say it means one thing – if you are thinking of selling, now is the time. Why?

  • Buyers are clearly eager
  • Inventory is at an all-time low which means your property will be attention
  • Interest rates are still low mean your potential buyer has more buying power

Beat the spring rush to market by listing your home now. If you are thinking about selling now, in the spring or even early summer, meet with your REALTOR® now to begin the process. And good luck, happy selling!

May data

Should we do that? Evaluating home improvements/upgrades

In a recent article for My Market Watch, a personal finance editor outlined several renovations that could actually decrease your home’s value. Really? Decrease? Yep – that’s right. Your motivation to make a few changes to your layout, throw some wallpaper on the walls or transform your garage into another living space might be ideal for your family – but it could hurt you when it’s time to sell.

Knock down a wall and create a larger master bedroom? Maybe not. According to Amy, more bedrooms can be better than a bigger master room because they can usually command a higher asking price.

Flip that garage into an extra living space? Think it over… Here in the Midwest, having a garage is a big benefit during inclement weather. The extra storage space is also a plus.

Read the full article here.

We also posed a question on our social media channels asking local REALTORS® their advice on home improvement projects.

MIBOR member Frank McManus suggests, “Generally speaking do not take on any project that isn’t going to be completed, (is) too complicated or you are not using a professional for, and/or is a diminishing return based on the neighborhood or general area.”

MIBOR member Brett Martin encourages you to work with an appraiser first, and really emphasizes that you need to get building permits if needed before doing any work so it is done legally and can be financed. Brett added, “HGTV shows most likely do not apply here. Condition and cleanliness go a long way. Be realistic: have your agent show you your competition and then, seriously consider whether or not you are priced to sell regardless of what you do.”

Do you have tips to share? Email us at miborcommunications@mibor.com.MW-BT330_Remode_20140125181036_MG.jpg

What is Your Home Search Process?

home search

 

Looking for a new home is exhausting and exhilarating all at once. It can be downright fun to imagine yourself in a new space, but let’s be honest – it’s a process. Local REALTORS® engaged in a study called the Home Buyer’s and Sellers Profile and one of the things they learned was how buyers approach the process of looking for that next dream homes.

Let’s talk a look.

Across the country, for 43 percent of recent buyers, the first step that they took in the home buying process was to look online at properties for sale, while 14 percent of buyers first contacted a REALTOR®. In Indianapolis, 50 percent looked online first and 13 percent contacted a REALTOR® as their first step.

Nationwide, buyers typically searched for 10 weeks and looked at a median of 10 homes. In Indianapolis, buyers searched for 8 weeks and looked at 10 homes.

Interestingly, the typical buyer who did not use the internet during their home search spent only five weeks searching and visited five homes, compared to those who did use the internet and searched for 10 weeks and visited 10 homes. In Indianapolis, those who did no search the internet looked at 4 homes over 8 weeks.

Among buyers who used the internet during their home search, 87 percent of buyers found photos and 84 percent found detailed information about properties for sale very useful.

So if you are thinking about moving, make sure to contact a REALTOR® early in the process. Remember, once you start seriously diving in, it could be 8-10 weeks before you make an offer and then another one to two months before closing and moving.

REALTORS® Say Don’t Wait for Spring

When looking at the end of year housing data, REALTORS® agree, sellers should not wait until the spring season to start their process.

Roger Lundy, 2016 MIBOR REALTOR® Association president explained, “Across the region prices were strong all year, but didn’t rise fast enough to hamper buyers. That provides a really solid market for potential spring sellers to get going now. Since inventory is still very low, sellers have the upper hand.”

Housing data released by MIBOR last week showed a strong December to close out 2015. Encouraging growth in Pending and Closed Sales in the region made for an atypical winter month, due in part to a mix of eager buyers and welcome mild weather. In December, Pending Sales grew 19.3 percent for the month while Closed Sales increased 11.5 percent compared to December, 2014.

New Listings in central Indiana increased only slightly by 0.1 percent for the month, further evidence that sellers are in a great position to get started now.spring selling