Nolo’s Real Estate Tips for Home Buyers

by Mark Nash

[Guest blogger Mark Nash, author of four real estate books including the classic 1001 Tips for Buying and Selling a Home, has completed his annual survey of 839 real estate agents in all fifty states in the U.S. and the eight provinces of Canada. Nash's survey is distributed each fall to subscribers through his monthly electronic newsletter, 1001 Real Estate Tips.
 
What's In, What's Out with Home Buyers illuminates what's popular or what sours homebuyers in both the home purchase or sale transaction, and home decor. Compiled annually from the trenches, it offers a spectrum of tips that cover the reality of buying a home, and design no-nos and buyer must-haves for home sellers. More than 450 media outlets in North America utilized Nash's 2008 edition. For interviews, call Mark at 773-610-2074 or email him at Mark.Nash (at) cbexchange (dot) com. --Eds.]
 
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• Sidelined home buyers. Family or lifestyle additions, or changes made in buyers' households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, "It's time for our family to buy the new home that suits our new needs."
• Home uplifts. Not a big renovation, but some new finishes that can visually hold over stay-put home sellers. Not a gut, rehab-to-the-studs new kitchen, but new flooring, countertops, and/or appliances.
  
• Collaborative home pricing. The old days of home sellers configuring a home's price are out. What's new is that the seller, along with their agent, looks at closed comparables, sets a price, then the buyer and their agent can agree or disagree -- but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction.
• Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the "doom and gloom" residential real estate market headlines don't apply to all markets. What's been lost in the foreclosure hype is that there are still stories of homes selling in short market times (as little as 3 days), homes selling at full price, and some selling with multiple contracts on the table. Existing home sales will be 5.02 million for 2008, versus 5.652 million for 2007 -- a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market -- and this realistic view shows that over five million people purchased a home despite the dire headlines of 2008.
• Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease-to-own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market in 2008.
  

Continue reading "What's In, What's Out with Home Buyers in 2009?" »

Many homebuyers are overwhelmed by a sea of paperwork when they sit down at the closing table. Buried in the paperwork is the HUD-1: the settlement statement that summarizes the buyer's (mostly mortgage-related) closing fees.

Buyers should see the HUD-1 before closing, in draft form. But things can and do change before getting to the closing table, and many buyers find new or increased fees tacked on at the last minute. Those anxious to close may not bicker with the higher fees, or even notice them as they deal with everything else. But the Department of Housing and Urban Development (HUD) has noticed the trend. After much debate, HUD has created some new mortgage rules to deal with it, hoping to save homebuyers an average of nearly $700 at the closing table.

The most important change is that now, lenders and brokers are required to provide buyers with a standard Good Faith Estimate (GFE) within three days of receiving a mortgage application. (The GFE was commonly used in the past, but no standard format existed.) On the GFE, brokers must now disclose how they're paid, through the "origination charge."

This is the cost to the borrower for getting the loan, expressed as a percentage of the overall loan amount. The charge may be paid in "discount points" (points the borrower pays upfront in exchange for a lower interest rate) or as part of the interest rate itself.

In addition, lenders and brokers can't increase some costs between the GFE and the HUD-1, and other costs can only go up by up to 10%. For example:

• Origination charge: cannot increase.
• Transfer taxes: cannot increase.
• Appraisal fees: can only increase up to 10%.
• Government recording fees: can only increase up to 10%.
• Title insurance: can only increase up to 10% if borrower uses the title insurer selected by the lender.

The HUD-1 is also revamped to make it easier for borrowers to compare to the GFE. Lenders and brokers aren't required to start using these forms until January 1, 2010 -- but they're allowed to use them immediately. If you don't receive a GFE when you apply for a loan, ask for one -- or better yet, ask the lender to use the new forms together and to agree to be bound by the fee increases on those forms.

Paul A. Rude, retired General Contractor and member of the American Society of Home Inspectors, answers your questions on remodeling, dealing with contractors, and home maintenance.

Dear Paul: What money-saving tips can you offer to homeowners who need to make repairs or would like to start remodeling projects?

Dear Reader:
Because times are tough for everyone, you might actually get some good deals. Here are some of my favorite strategies:

• If you have the time to shop for things to spruce up the ol' homestead, you can find just about anything on Craigslist, EBay, etc.
• Lumber yards often have returned merchandise that is seriously marked down -- sometimes these are top-of-the-line items like custom windows or doors. You just have to be imaginative to think of how to use them.
• Paint stores always have lots of returned paint that's just fine but wasn't the exact color someone else wanted. It's nearly free, and even if it's not what you had in mind for the dining room, it will be fine for the basement, garage, or wherever the exact color is not important. If it's a light color, you may even be able to get it re-tinted closer to what you want.
• In the current economy, lots of contractors will be going out of business and may sell off their stock of materials and tools at cents on the dollar.
• Most larger towns have salvage yards and recycling centers that handle building materials, appliances, and fixtures.
• If you have friends or neighbors whose homes also need sprucing up, put together a cooperative effort -- have a painting bee, share a debris box to get rid of junk, and so on.