HOUSING MARKET ADVICE (Borrowed from a fellow Realtor)

If you plan on buying a house this year, please pay attention. Sellers aren’t willing to pay a penny towards closing costs and EVERYTHING is selling well over asking price. Please save up and be able to pay your own closing costs. (2-4% of purchase price and will be explained in more detail below ).

Buyers are getting their offers accepted everyday but if you want to be one of them, you have to submit your highest and best offer! Bring your game. So how much money do you need?

Let’s break it down

Earnest money - 1-5% of the purchase price or more if possible. If you want to let a seller know that you’re serious, you have to have some skin in the game.

These funds will be deposited right after the offer is accepted (within 2-3 days) and they will be held in an escrow account.

Upon closing, these funds will go towards what you owe at closing and show as a credit to you on the closing disclosure.

Remember, you’re probably competing against a few 100% cash offers.

Inspection - ($400-$600)

Some buyers are waiving inspections, so the shorter the inspection period the better.

Appraisal - ($500-700)

This is how the bank/lender determines if the house is valued at the purchase price amount.

The lender isn’t going to finance more than a house is worth so if you’re feeling froggy and want to jump well over asking price to win the deal, make sure you have some extra cash to cover an appraisal gap.

Example: home is under contract at $500k but appraises at $485k, the appraisal gap is $15k and you would need to add that to your down payment amount.

Many winning buyers are waiving the appraisal contingency or guaranteeing a dollar amount over a low appraisal and they provide a proof of funds statement to the Seller.

Closing Costs and Prepaids - (2%-4% of the purchase price). These are the fees that are associated with your home purchase. These include lender fees, title and escrow fees, taxes, prepaid homeowners insurance of one full year plus 2 months of payments to be held in an escrow account with your lender.

Down Payment - This amount depends on the type of loan that you have.

3.5%-FHA loans

3%-20%-Conventional loans

VA (Veterans) - ZERO money down

USDA - ZERO money down

Condos/Investments/Second homes are typically 20%+.

And one final point from me: You need to sell to buy? That’s almost impossible in this market. Get the home you're selling under contract first (and the good news is that it will likely sell quickly!)

If you're the seller, use a power move and ask for a 60-90 day close so you have enough time to find and buy your next Home. Note: An alternative would be to negotiate for a post-closing occupancy.

Final Note - If you think it’s not a good time to buy a Home and you want to wait, please don’t wait long. Interest Rates are still historically low (but rising) and Home values are only going up.

Chances are, you will pay a higher interest rate and a higher price if you choose to wait. Which means less Home for your hard-earned money.

Owning a Home is such a great feeling and accomplishment and you will be paying off your OWN mortgage instead of your landlord’s.