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4 Tips for Buying a HUD Home

by Masha Halpern

A HUD home is nothing more than a house that was purchased with an FHA loan that has since fallen into foreclosure.

(I’m not sure why these homes aren’t called “FHA foreclosures,” which would be more intuitive for home buyers and investors, but the Department of Housing and Urban Development [HUD] is the federal office that takes ultimate responsibility for FHA and its home loans gone wrong.)

Buying a HUD home is different from buying another type of foreclosed property. For starters, HUD homes are sold exclusively online in an auction process known as an “offer period.”

You may make an online offer during the offer period. At the end of the offer period, all offers are opened and considered to be received simultaneously. The highest acceptable net bid is then accepted, and the buyer’s agent is contacted.

If the home isn’t sold in the initial offer period, buyers may submit a bid any day of the week, including weekends and holidays. Bids are opened the next day.

What you probably don’t know is that if no one makes an offer for a HUD home within a certain amount of time, HUD lowers the price. The price of the HUD home continues to drop until an offer is made and accepted.

How do you find out if your bid was accepted? It’s your agent’s responsibility to check the website to see if your bid was accepted and to complete all the necessary paperwork.

Companies like PEMCO Ltd. are direct contractors with the government. They list and sell these homes online from HUD. Only agents who are registered with HUD may represent buyers and investors in the purchase of these properties.

There used to be a different site for different areas of the country, but it’s been consolidated into one website: www.hudhomestore.com.

How can you navigate the website and find the right home to buy? Follow these four tips for buying a HUD home:

  1. Find the right real estate agent. Only real estate agents who are registered with HUD may represent home buyers and investors in the purchase of HUD homes online. But just because an agent is registered with HUD doesn’t mean he or she is going to be the best agent to represent you in the purchase of a HUD home. To find the right agent, you can search through the website that lists HUD homes in your area and find out which agents represented the most winning bids. Interview the top two or three agents. Be sure to ask how long the agent has represented buyers and investors, how the process typically works, whether the agent will accompany you to inspect the property, and what special knowledge the agent has garnered from writing so many winning bids.
  2. Inspect the property before making an offer. The local listing broker (who should be listed on the HUD home website) can gain access to the property and show it to you. However, you don’t need to call the listing broker to see the house with your agent. Any HUD registered agent can gain access to a HUD home. When you’re inspecting the property, take a lot of notes and photos of the property so you can be mindful of any improvements that need to be made when constructing your offer.
  3. Make an offer. The offer process on a HUD home is probably different from what you’re used to. Offers can be cancelled with no earnest money forfeiture. Once an offer is submitted, it can be cancelled before the HUD agent opens the bid electronically, or after by sending an email to the company managing the home. Until the contract is signed, the earnest money is not in jeopardy, so there are a few days after the bid is accepted to cancel.
  4. Be ready to close on your HUD home. Right now you might forty-five to sixty days to close on your HUD home, but HUD is moving toward 30-day contracts so get your financing together ahead of time. You may be able to qualify for FHA financing or special FHA deals, like the $100 Down Payment Incentive program or the Good Neighbor Next Door program, which offers a discount for HUD homes to law enforcement officers, teachers, firefighters, and emergency medical technicians who meet eligibility requirements. But it helps if you get your loan documentation together ahead of time, including your W-2; your paycheck stubs; your tax returns; copies of your savings, investment, and retirement accounts; and documentation of other assets and liabilities. You’ll need to provide copies of your driver’s license and other identifying information. Create a file for these documents so they’re ready when you are. You will also have to submit a prequalification letter with the sales contract in order for it to be accepted. The letter must indicate the buyer is qualified for the amount of the contract, the type of financing and any assets that have been verified for closing.

For more details, check out this HUD home FAQs page, or start your search for a HUD home in your state.

Thanks Ilyce Glink for sharing this information with us.

 

 

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Home Appraisal is a Must in Chapel Hill!

by Masha Halpern

Are you looking to buy or sell a Chapel Hill home? It will be necessary to have the property appraised. The value of the home is a major part in both the buying and selling process. The appraisal has a variety of purposes in a transaction for both the buyer and the seller.  By having an appraisal, it will protect all involved in the sale: the seller, the buyer, the lender and the insurance company.

Most lenders require an appraisal before any financing can be finalized.  So even if the buyer wants to waive the appraisal contingency due to finding a home they want where they have competition, they will still need the appraisal.

It is important to understand that waiving the appraisal can be a dangerous way to purchase a home.  Buyers can lose some of their earnest money if the appraisal does not come in high enough for them to secure financing. Sellers can demand that some of the earnest money be used to compensate them for money lost due to financial losses as well as having to put the property back on the market because the buyer wrote a contract they can’t fulfill.

If you are buying a North Carolina home, it is very important to think it through. You wouldn’t purchase a car without knowing the true value of the vehicle. Purchasing a home should be held to even higher standards, and if you don’t follow these standard practices, it could cost you thousands of dollars.

Contact me today if you are interested in buying a Chapel Hill, NC home!

 

 

 

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Is a Home Owners Association Right for You?

by Masha Halpern

If you are looking for a home one thing you'll need to consider is whether or not you would like to live in a community where it is part of a Home Owner's Association.  If you are not familiar, Home Owner Associations or HOA's are a regulatory board found in planned communities, gated communities, condominium complexes and subdivisions. A Homeowners association collects fees or “assessments” from individual home owners to cover certain expenses. For example maintenance of common areas, insurance and health or safety improvements.  A HOA also enforces rules and regulations set forth by the developer or property owner.

The Community Association Institute estimates that nearly one out of every six Americans lives in a community association.  Before purchasing a Chapel Hill home that is regulated by an HOA, it is very important to read their bylaws.  These are laws governed by the association. Always ask questions so that you can make an informed decision. Here are a few to help you get started:

  • Ask the HOA about parking limitations/restrictions, pet limitations/restrictions with respect to quantity, size and type, restrictions related to outdoor decor/furniture/grilling restrictions (for balcony/patio), and if there are any current outstanding assessments the new owner will be responsible for assuming.
  • Be certain to ask if there is any active litigation, as this may affect buyer financing, and also indicates possible red flags with property in general you will want your home inspector to do extra due diligence on.
  • If you don't agree with something in the bylaws/restrictions, do you have any recourse?
  • What do monthly HOA assessments/fees cover? HOA fees typically cover common ground concerns such as landscaping, pest control, pool and fitness center maintenance, guard gate/security services and common area taxes. They sometimes cover utilities such as trash, water or cable television.
  • How often do HOA assessments/fees increase (and at what percentage), so you can be prepared for rising costs down the road?  Also ask, will the members be able to vote on the rising cost?

There are a lot of positives and negatives in becoming a part of a homeowners association.  It may or may not fit into your lifestyle and ideas.  Read the agreement well before you consider a home with a homeowners association.  Ask the homeowners in the community about the services they receive because of the agreement.  The better you understand how all the locals feel about their association, the easier it will be for you to know if it is right for you.  Also you want to know how the association deals with issues that arise. You want to know what you are getting yourself into before you fall in love with the new North Carolina house!

 

 

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Signs That You are Ready to be a Homeowner

by Masha Halpern

It's a buyer's market in Chapel Hill but there is a lot to consider when purchasing a home. For example, how do you know that you are ready to take the leap? Here are a few signs of readiness, ask yourself these questions-are you ready?

  • Do you have your finances in order? Becoming a homeowner, especially in a difficult economy can be financially challenging. If you have created a budget and stick with it you are on the right path. Having good money-management skills are a must-have so that when you do own a home you will be able to have a smooth financial flow for monthly home expenses.
  • Do you have a sizable down payment of at least 20%? While this is a large amount of money to come up with it is important to have as you will start out with having some equity. Just a few years ago, homeowners could obtain a home with little or no money down, but the rules have changed. However, there are options out there for zero or low money down loans but if you have to sell your home before you expect you can potentially loose money and you will also need to pay for PMI (private mortgage insurance).
  • Do you have a steady source of income? Of course in a recession there is no real thing as job security but when you buy a home you are going to be required to have a reliable source of income to cover not only mortgage payments but all the other monthly and unexpected expenses that come along with homeownership. It is important to look at how stable your source of income is as well as having an emergency savings fund where you will have enough funds to cover these expense in case of a loss of a job or other emergency.
  • How does your credit look?  Having a good credit score will help to not only get a home loan but will also get you a lower interest rate on your mortgage. Hold off on any large purchases such as cars before applying for a loan as this could effect your rating. Also review your credit report for free at annualcreditreport.com before even applying for the loan to check for any errors.
  • Are you ready for the responsibility of owing a home? In addition to the financial aspect of homeownership, you need to be sure you are ready for the other things that come along. Things like lawn care, upkeep as well as unexpected repairs need to be considered as part of owing a home. 

If you are ready to buy a home contact me today to help you find the perfect house for you and your family! 

 

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Top 10 Reasons Why Now Is The Time To Buy!

by Masha Halpern

You may be hesitant to buy because of all the talk of a poor economy, but now is actually the best time to buy! For many North Carolina residents, it can actually be more cost effective to own than to rent!

Here are ten great reasons that NOW is the time to buy!

10. You'll get a better home. In different parts of the country, it's hard to find a good rental.

9. The National Association of Realtors puts the current inventory at around 4 million homes. That's enough for a years worth of sales. That means a lot of choices as well as great prices.

8. Sooner of later, the market will improve. There will be more demand than supply. The population is supposed to grow by more than 100 million people over the next 40 years. That means a lot of people will be looking for new homes in the future.

7. Your home isn't the stock market and it shouldn't be viewed as a way to get rich. Real Estate prices will go up again. Equity in your home is another way of investing in your future.

6. If offers some inflation protection, especially if you are young and raising a family.

5. It will be yours. You can have the kitchen and bathrooms you want, you can move walls or build an extension. You can even paint your home bright red. Few landlords will allow you to do that.

4. It's a buyer's market. We all like a good deal, we feel a sense of satisfaction after negotiating.

3. It's forced savings.  If you rent an apartment for $2000/month instead of buying one for $2400/month, renting seems like a good idea but will you save the $400 for the future? Most people won't and since part of that monthly payment as an owner is tax deductible, you do the math.  You are just paying yourself by building equity in your home.

2. You'll save on taxes. You can deduct mortgage interest and real estate taxes from your income taxes.

1. Mortgages are cheap. Interest rates are at historic lows. Two years ago they were around 6.3%. Now they are around 4.3% for a 30 year fixed loan. That's a big difference in your monthly payment.  When inflation goes up, interest rates will go up.

Questions and not sure who to ask? Need help finding your dream home? This market we are facing poses challenges but also opportunities.  Contact us to help you find the best home in this buyers' market for your family!

 

 

 

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Tips for Pre-qualifying in Today’s Market

by Masha Halpern

When starting the hunt for your dream home you first must know how much home you can truly afford.  The first step in buying your home is to have a budget and figure out how much you can actually afford. Your real estate agent or mortgage lender can assist you with this in a couple different ways: 

  •  Pre-qualifying process This process will give you a general "estimate" of what you will be able to afford.
  • Pre-approval process This process will allow your lender to review your finances in more detail in order to determine the amount of money they agree to loan you for your home purchase.

Your lender will review your finances and focus on a few main areas such as:

  • Gross monthly income
  • Credit history
  • Amount of outstanding debts
  • Source and amount of money available for down payment and closing costs
  • Interest rates, etc.

All these things put together will help your lender determine two important qualifying ratios.

1. Debt-to-Income Ratio Generally the amount of debt you pay each month should not exceed 36 percent of your gross monthly income

2. Housing Expense Ratio Most lenders will not approve your loan if the mortgage payment exceeds 28 to 33 percent of your gross monthly income

Determining how much you can afford to spend when purchasing a new home is your first step. For more information please feel free to contact me!

 

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How to Negotiate When Purchasing A Home

by Masha Halpern

Though negotiating is a big part of the whole process when purchasing a North Carolina home, there are some factors that remain true for all.

You’re in a strong bargaining position if: 

  • You’re an all-cash buyer
  • You’re already preapproved for a mortgage
  • You don’t have a home that needs to be sold before you can buy

These circumstances give you a little more power while you are negotiating. However, even if you are in a strong position, in a "hot" market, you may want to make your offer more desirable by offering more than asking price. When the market is "soft," homes tend to sell more slowly, creating a larger pool of homes from which to choose. On the other hand, when the market is "hot," there may be a limited number of homes to visit and the demand for them may be high.

Overall, here are some suggestions: 

  • Enter into negotiations with the maximum amount you are willing to spend firmly in mind.
  • Keep in mind (and add to the contract) some terms you can live without – then you can make concessions without compromising the items that are important to you.
  • Always have a few alternative homes in mind – knowing you have other options will help you stay objective during bargaining and may encourage the seller to be more reasonable.
  • Try to determine what the seller wants and needs. If, for example, the seller’s new home is not ready by the closing date, you might consider allowing the seller to rent back the home for a short time as long as your own schedule allows it.

You may be able to negotiate the terms as well a the price. These changes can help you financially in the long run.

 

 

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Home Appraisal Is A Must!

by Masha Halpern

If you are looking to buy or sell a Chapel Hill home it will be necessary to have the property appraised. The value of the home is a major part in both the buying and selling process. The appraisal has a variety of purposes in a transaction for both the buyer and the seller.  By having an appraisal, it will protect all involved in the sale: the seller, the buyer, the lender and the insurance company.

Most lenders require an appraisal before any financing can be finalized.  So even if the buyer wants to waive the appraisal contingency due to finding a home they want where they have competition, they will still need the appraisal.

It is important to understand that waiving the appraisal can be a dangerous way to purchase a home.  Buyers can lose some of their earnest money if the appraisal does not come in high enough for them to secure financing. Sellers can demand that some of the earnest money be used to compensate them for money lost due to financial losses as well as having to put the property back on the market because the buyer wrote a contract they can’t fulfill.

If you are buying a North Carolina home, it is very important to think it through. You wouldn’t purchase a car without knowing the true value of the vehicle. Purchasing a home should be held to even higher standards, and if you don’t follow these standard practices, it could cost you thousands of dollars.

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The Carolina's Rated The Best Place To Retire!

by Masha Halpern

When it comes to places to retire, for many Florida comes to mind. But for the 1st time ever, the Carolinas have become the #1 retirement choice for Baby Boomers according to newly released “2010 Baby Boomer Survey” conducted by Del Webb. This is a sign of how the Boomer generation is making their lifestyle choices and planning for their retirement.

 
Though Florida and Arizona still remain high on the list of retirement choices, the Carolinas have have moved up on the list as the preferred destination for retirement. Both the younger and older Baby Boomers ranked either South or North Carolina first as their favored location in retirement and indicated the other Carolina ranking as their second choice.

Baby Boomers are not only the current and upcoming generation of retirees but their numbers are huge. This year alone in America there are 3300 people per day turning 65. Next year the Boomer Wave triples this number: 10,000 people per day turning 65! 

This generation has spoken and they have decided on where they want to spend their golden years after many decades of hard work. What better place to be for the best beaches, award wining golf and so many other recreational activites and to call home!

 If you are planning to retire in the Carolina's we would love to know where! Share your comments!

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Tips For Fall Home Sellers

by Masha Halpern

Do you watch HGTV? Annalisa Burgos of HGTV's FrontDoor.com and Masha Halpern of Keller Williams Realty both suggest these tips to sell your home in the fall:

Be competitive-price your home 5-15% below comparable homes on the market.  In this tough economic climate, you want your home to stand out in some way. 

Fall is a hard time of year to maintain your home but it's also a beautiful time of year. Make sure your yard is clear of leaves, clean out your gutters, and touch up paint.  A few simples maintenance tips can go a long way.

Buyers like a bargain, don't be discouraged by low-ball offers. Look at it as an opportunity to negotiate. I live by the quote: "Don't take anything personally."   If you don't want to come down on price, offer to pay for closing costs or repairs.

Most of all, be patient. Your house will sell, it just will take more time.

Has your home been on the market for a while? What are you doing now to help it sell faster that you didnt do before? Share your tips!  

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Masha Halpern - Boutique Real Estate
Keller Williams Realty
101 Cosgrove Avenue, Suite 200
Chapel Hill NC 27514
Direct 919-951-1780
Toll Free 877-478-4669
Fax: 919-928-9030




Masha Halpern of Keller Williams Realty provides real estate services in the Chapel Hill, Carrboro and Durham, North Carolina area including real estate services for buyer, sellers and those relocating to the surrounding areas of Apex, Bahama,Cary, Efland, Hillsborough, Holly Springs, Mebane, Raleigh, and Wake Forest. Search for homes in Chapel Hill, Carrboro, Durham or the surrounding communities.  Request a market analysis for your North Carolina property.  I list and sell residential real estate, investment property, vacant land, lots for sale in Chapel Hill, Carrboro and Durham, North Carolina area.

Chapel Hill, Carrboro and Durham, North Carolina real estate and homes for sale in North Carolina - Masha Halpern & The Smart Move Team