Buying New Construction

But I really want a new house!! Lets talk about the difference between a new home and a "Pre Loved" home. New is great--new everything, roof, heating unit, etc. Pre Loved can have some problems depending on the date it was built. New has much going for it but lets talk about the things people don't think about in a new home. There has to be additional money for window coverings (sheets are ok for the first 6 months but we really can't keep them up forever), landscaping (builders packages and covenants only have a limited amount of landscaping that must be done prior to the sale--limited to about 1 tree and 3 shrubs--ha ha--and you may notice out the window that the neighborhood is lacking in those being big trees), furniture (this home is bigger than the tiny apartment you just left) and misc other things that come up. This is a trade off with a pre loved home in that you may need to redo the roof in time and you may need to get a new furnace or paint or redo a kitchen or bath or update some light fixtures, but you will get more home for the money with a pre loved home. When you purchase new construction, you can get it in many stages of the construction process--before you close it you will do what is called a punch list--you will go through with the builder or their representative and make a list for them to fix, touch up, redo, or finish. You will then go back the day before the closing to make sure they have completed the list. If it is not done, you will need to make adjustments at closing on the hold backs and know for sure what will happen if it doesn't get done. Most builders need to have satisfied customers because they own another lot or two in the neighborhood and need to be able to sell that too. Beware of liens on new construction--it is the latest problem to know about out there--

Why not to be a For Sale By Owner

For Sale By Owner(FSBO)--the ads on TV make it look simple--put a sign in the yard--hold some open houses--get a buyer--close on the house and save thousands of dollars!! Sounds easy but I have not seen a transaction go that smoothly in 25 years in the business. I have a list of 72 things that can go wrong with real estate transactions, and that is just what went on the list probably 10 or more years ago. Now a days, people want to purchase a property and "get a great deal". They will look to the FSBO to get that deal--after all, you are saving the commission of 6% so they want a piece of that savings so they knock 3% right off the top of and then they start to negotiate the price. You are able to negotiate with no emotion in the negotiations--even though it is your money they are taking, and your house they are not paying what you think it is worth. Not to mention, are they there to really see your home or case it, are they OK to let into your house and do they really have money to buy it or are they just "tire kickers" and want to get decorating ideas? Do you know them? Do you trust them? Will they tie your home up with a contract that falls through (and can you take care of the problems that arise) so that you can not move on with your life? Will they show up at closing with no funds and you have all your stuff in the moving truck in the front of the house? Still sound easy? In this financial era with all the problems we are having getting financing, refinancing, and speciality loans, this is not the time to try to save money--not to mention all the short sale problems that are going on and the trials and difficult situations that are happening every day. My advice is to hire a trained professional--like me--and let us take care of the worry of security for you, your family and your home along with making sure that you sell this one and get on to the next one. It may look easy on TV but in real life it is not even close to that easy--trust me on this one--it is the toughest market I have ever worked in in 25 years in this business!!

What is the Sycamore Transfer Tax?

The City of Sycamore has a Sycamore Transfer Tax--some call it the "Welcome to Sycamore" tax. It is .5% so that makes it $500 on every $100,000 of the sales price of a home. It only applies to buyers who are not residents currently or who have not been renters in Sycamore for over one year. To be exempt you will have to prove you have lived in Sycamore for over one year or show rent checks to the landlord for the last 12 months. It is paid to the City of Sycamore prior to closing and you are given a stamp that goes on the deed (DO NOT LOSE THAT STAMP--THEY WILL NOT REPLACE IT). You must take a copy of the front page of the contract with you for them to issue it so they know exactly what the home sold for and there is paperwork, on the City of Sycamore website, you fill out and submit with the contract front page. This tax is for the buyers but can be negotiated with the seller on the contract and the seller is allowed to pay the tax for the buyer but it must be negotiated in the contact for that to happen. A check for the amount of the tax can be taken care of at closing if the buyer or seller does not have the funds for it prior to the closing. Some title companies charge a fee to go get the stamp and sometimes the Realtor will run over to the city building and get the stamp for you and bring it back to the closing or right after the closing.

First time home buyers--benefits

This is your first home and you are both excited and scared. It is natural and smart to be scared. We were the first time we purchased a home--but know that I am a trained professional and can take care of you through the maze that is home ownership! There are lots of programs out there for first time home buyers and the local lenders know all about them. There are income limits on some, but not all, so if you make too much income you are outside of the guidelines and can't get them. The cities have some special criteria for grants they have available and those can be accessed through the lenders too. That is why we ask you to start at the local lenders. They know the rules, and the possible help, and what is and is not there for you. They know the programs that are currently available and will help you fill out the forms for those programs. Ask about the Mortgage Credit Certificates program (The MCC) which can be used in conjunction with any type of mortgage loan and allows first time home buyers to receive a dollar for dollar reduction in federal income taxes of 20% of their mortgage interest for the time they own the property and use it as their principal residence.
There is currently a $7500 credit available for first time home buyers who buy between April 9,2008 and June 30, 2009. It is a loan at 0% interest and paid back over 15 years at $500 per year. (That is the current law subject to change at the whim of the congress) It is single family homes and condos but it must be your principal residence. It must be claimed on the return for the year of the purchase. First time home buyer is defined as one who has not owned a home in the last 3 years so if you owned a home, sold it and got a divorce for instance and have not owned another home in the last 3 years, you are eligible again for the first time home buyers program.
There are other programs pending the congress is considering so keep looking in the papers and on line for more information. Now is a great time to be a first time home buyer--the deals and the rates and the programs are in your favor--there will not be deals and programs like this for a long time to come. People talk about buying at the bottom, but the bottom is about 20 minutes long before it starts up again and then there will be other buyers competing for the same listings that you want--competition breeds higher prices and the home you want will cost you more money and interest rates could go higher so it could cost you more to wait till the bottom is here.

Do I need and attorney?

Buyers have the option to have an attorney or not. Most of the local attorneys are $500 or less. My personal opinion is it is best to have an attorney. They look over the contract and have 8 days to agree to or modify the contract to purchase. They look out for your interest and make sure you are protected, especially when you have a special situation or something out of the norm. They make sure all the documents are correct, that what is included is legal and clearly defined and all parties to the contract understand exactly what is meant. They take care of the closing figures and send them to the title company and take care of any problems that come up at the closing. They are a cool head that can take the emotion out of your home purchase. They are going by the rule of the law and with the size of the investment you are making they are an insurance policy that you should give consideration to. I never close my own transactions without making sure to have my attorney look over the paperwork, to be sure I did not get the emotions in front of the legal footing. We can get you a home without an attorney on the buying side, but I always feel more secure when they are there to protect your interest and make sure all the i's are dotted and the t's crossed. The title companies do a great job but a second safety net is never a bad thing when you are spending this much money.

The Closing--Finally it is OUR home

This is the day you have been waiting and packing for--the closing on your new place!! Usually one hour before the closing we go to the house and do a final walk through to be sure that the sellers left the house clean and empty and that everything is the way it was the last time you looked at it, minus their "stuff". We make sure everything we bought in the contract is there--ie: the refrigerator, stove, chandelier in the dining room, etc. and that it all works--we run the dishwasher, check the burners on the stove, etc. There may be other things we wanted and we need to be sure they are there--curtains in the rooms, etc. If it is included in the contract we negotiated for it and it is to be there in the condition it was agreed on. If not we have a problem, usually it is a small problem and will be worked out at the closing (the brother-in-law was helping them move and did not know they had sold you the bar stools so he put them on the moving truck with the rest of their stuff). They will leave all the directions and warranties to the appliances in one of the drawers with any extra keys (hopefully they have gotten all the extra keys back from the neighbors, their mom and dad, the teenage son and anyone who stayed for the night 3 years ago) and the garage door openers. We will give you at least one key, and usually more, at the closing when we are done signing the papers. If there are things they were to have fixed, or cleaned (usually the furnace) we will check to be sure they work and are done, making sure at the closing that they have been paid for, if necessary.
Most closings take 1-2 hours--one hour is the norm for local lenders but sometimes there is a snag--someone forgot to send the money, there is one piece of paper that is missing, the title company needs one more piece of the closing puzzle that should be easy but the person at the other end (usually the lender) needs just "one more thing". When all is done, and the money has changed hands and the title company has paid out all the money everyone brought in, the buyer brought money for the down payment and some closing costs, the Realtor brought the escrow or earnest money and the lender brought the loan funds, then the home is yours!! (The deed still needs to be recorded and other things like that but you get to move in and call it yours--yours and the banks!!) This is now the time to celebrate and call the brother-in-law to help you move in your "stuff". And they lived happily ever after......

The Realtors Job--earning their commission

Once we have written the contract, your job is to finish up with the lender and all the information they need and start packing. (It will take you longer and it will take more boxes to pack than you think it will. So start early and pack what you don't need every day as soon as you get a chance to start. Sort out the stuff you no longer need to move or can't afford to move--give it away or trash it).
During this time, I will be ordering the inspections, (like the termite inspection, radon if it is not done with the home inspection and any other items the home inspection brought up) coordinating with the attorney on the title work, making sure that all the rest of the items are taken care of so we can have a successful closing. I will make sure that the lender is on top of your file and that the appraisal (they determine the value of your property for the bank) came back OK. I will take care of the problems that arise and be sure that all goes smoothly. You have enough to do to pack all that stuff you have while living your regular everyday life. I have the experience to take care of problems that arise and the vendors I use know that they need to let me know right away when they need help with a problem that needs to be solved. We will then go to the closing with your attorney if you have one and after the papers are signed and we are given the go ahead, you get the keys and the garage door openers and then you go and live happily ever after.....in your new home!

The Contract--Clear Title

I get the question all the time about making sure that we get a "clear title". That means that they can transfer the ownership of the house to you with no problems. It has not had work done to it that has not been paid for (liens) or taxes that have not been paid (tax liens) or judgements that have not been satisfied, etc. There is what we call "title work". It is a document that is ordered on the new house and when it comes from the title company it tells us (you, me, your attorney and lender) what the parcel number for your house is, what the legal discription is (so we don't buy the house next door!!) where the current mortgage(s) are from (so we can be sure to know about all of them and be sure to get the amounts to pay them off from the proceeds) if the taxes are currently paid, what easements are on the property (most of them are for utility companies to run their wires etc.) who owns the property currently (we want to be sure all the sellers are selling) and any other information that is important to the sale. If all of this information is OK and we are sure that none of it is "clouded" then we can proceed with the sale. Our contracts say the seller must provide you with a clear title. That means you can own the property and have the right, with certain provisions, (like the easements, etc.) to sell it to someone else in the future. If there are problems, we want to know so that the attorneys can get them cleared up so you can live happily ever after in the home of your dreams!!

The contract--Home sale contingency

You have a home to sell--do you sell or buy first? Yes, no, maybe!! This is a market where some homes take forever to sell and others sell right away--we have no magic way to tell what will happen in your situation. We start by looking at your home and helping you "stage" it--that means we help you declutter your stuff--pack it up, you are moving and you need to sort what you are taking to the new place and what you are getting rid of. We have professional stagers too that come in and can bring items to make your home look like a model home, or just change things around and give it a new vision or eye (they are very reasonable for the time they spend and well worth the money!!). We then price your home to sell. That seems like a crap shoot at this time too--we want to price it low enough to get buyers to come through but we don't want to make it so low because you may--probably will--get low ball offers. (We will negotiate the low ball offers and hopefully get to a price you can live with.) We can always go out and find a home you love and put in an offer "subject to the sale of your current home". Some sellers will take it that way and some will reject it and hope they get a non-contingent home sale buyer. We can always put yours on the market with a clause that you get the home you want or have time to find suitable housing. Buyers would have to honor that and hopefully you would have 30 days or so to find a home and/or a place to live--and then another 30 or so days before closing. It always seems to work out--it is in the overall plan. So lets look at yours and I will give you my best advice and we can go from there with all the options presented to you at that time so you know what the best plan is and we can go forward from there. It is not an exact science and I am sorry for that but that is part of the challenge of this business. It is OK--I am a trained professional and for the most part, know what I am doing and you can trust me that it will be OK!!