Source: Windermere

There’s nothing more exciting, rewarding, and fulfilling than buying or selling a home. However, it’s a complex transaction, and there are several steps along the path that can confuse even the most seasoned buyers and sellers. How can you avoid potential selling pitfalls and common buying mistakes? Look to your real estate agent for advice and keep the following guidelines in mind.

Common Buying Mistakes

#1 Review Your Credit Reports Ahead of Time

Review your credit report a few months before you begin searching for homes. You’ll have time to ensure the facts are correct and be able to dispute mistakes before your mortgage lender checks your credit. Get a copy of your credit report from Experian, Equifax, and TransUnion. Why all three? Because, if the scores differ, the bank will typically use the lowest one. Alert the credit bureaus if you see any mistakes, fix any problems you discover, and don’t apply for any new credit until after your home loan closes.

• 10 Important People in the Home Buying Process

#2 Get Pre-Approved for a Mortgage

Before getting serious about your hunt for a new house, you’ll want to choose a lender and get pre-approved for a mortgage (not just pre-qualified—which is a cursory review of your finances—but pre-approved for a loan of a specific amount). Pre-approval lets sellers know you’re serious. Most importantly, pre-approval will help you determine exactly how much you can comfortably afford to spend.

#3 Know What You Want

You and your real estate agent should both be clear about the house you want to buy. Put it in writing. First, make a list of all the features and amenities you really want. Then, number each item and prioritize them. Now, divide the list into must-haves and nice-to-haves.

#4 Account for Hidden Costs

In addition to the purchase price of the home, there are additional costs you need to take into consideration, such as closing costs, appraisal fees, and escrow fees. Once you find a prospective home, you’ll want to:

• Get estimates for any repairs or remodeling it may need
• Estimate how much it will cost to maintain (gas, electricity, utilities, etc.)
• Determine how much you’ll pay in taxes monthly and/or annually.
• Learn whether there are any Homeowners Association (HOA) fees associated with the property.

#5 Get a Home Inspection

Buying a home is emotionally charged—which can make it difficult for buyers to see the house for what it truly is. That’s why you need impartial third parties who can help you logically analyze the condition of the property. Your agent is there to advise you, but you also need a home inspector to assess any hidden flaws, structural damage, or faulty systems.

• Making the Most of a Home Inspection

#6 Research the Neighborhood and Location

When house hunting, it’s easy to get caught up in the details of the home itself—bedrooms, bathrooms, and amenities—while overlooking the subtleties of the surrounding neighborhood. Take time to explore the area at different times of the day, research school options, check crime reports, and visit nearby parks, shops, and restaurants. A great home in the wrong location can quickly become the wrong home.

Common Selling Mistakes

#1 Avoid Getting Too Emotional About the Sale

Once you decide to sell your house, it’s time to strip out the emotion and look at it as a commodity in a business transaction. If you start reminiscing about all the good times you had and the hard work you invested, it will only make it that much harder to price, prepare, and market the home successfully.

• Preparing to Sell Your Home: A Complete Checklist

#2 Make Repairs or Price Accordingly

Homes with deferred maintenance and repair issues can take far longer to sell and can be subject to last-minute sale cancellations. These homes also often sell for less than their legitimate market value. If you simply can’t afford to address critical issues, be prepared to work with your agent to price and market your home accordingly.

#3 Don’t Overprice Your Home

Getting top dollar is the dream of every seller. But it’s essential that you let the market dictate that price, not your emotions or financial situation. Allow your agent to research and prepare a market analysis that factors in the value of similar homes in the area and trust those results. Overpricing your home often spells trouble and can leave significant money on the table.

#4 Use High Quality Photos

Most prospective buyers today search for homes online first. To make a good first impression, you need a wealth of high-quality photos showcasing your home and surrounding grounds. In today’s market, buyers also expect virtual home tours, drone photography, and 3d walkthroughs to get a more immersive look at the home before scheduling an in-person visit. Investing in these visual tools can help your home stand out in a competitive market and attract buyers faster. It’s also critical that you stage your home to generate maximum buyer interest.

The process of buying or selling a home can have plenty of twists and turns, but with some wise decision-making, you can avoid the most common mistakes and pitfalls. Lean on your agent for guidance throughout the process. Connect with a local Windermere agent to begin your buying or selling journey.

Source: Windermere

SOURCE: Windermere

One of the best ways prospective home buyers can empower themselves when purchasing a home is to improve their buying power. The numbers may seem daunting but identifying ways to strengthen your financial standing will help you each step of the way.

When visualizing your dream home, it’s common for buyers to focus on the physical characteristics. But to mortgage lenders, a home is a numbers game. The following categories related to your buying power demonstrate how lenders identify your financial standing and determine your eligibility for a home purchase. Improvements in these areas will increase your buying power, propelling the strength of your offer when you’re ready to put it on the table.

How to Increase Your Buying Power

Increase Savings For Your Down Payment

As the saying goes, cash is king. The down payment—often 20% of the home’s sale price—can sometimes be the deciding factor between competing offers for a particular home.

Try stashing away a little of each paycheck to build up your savings over time. Set a savings goal, commit a dedicated amount to each pay period, and watch the savings build as time goes on. If you prefer to keep your money separate, open a new account to which you can dedicate the added savings. Another way to save for your down payment is to generate additional income. If you have interest or experience in an area outside of your current job, explore opportunities for part-time work and dedicate the income earned to your down payment savings.

There are numerous benefits to offering a serious down payment. Putting 20% or more down can help your offer stand out, it may allow you to negotiate a lower interest rate on your mortgage and could remove the need for private mortgage insurance (PMI).

Improve Your Credit Score

Plain and simple—a better credit score leads to better interest rate on your mortgage. Your payment history, amounts owed, length of credit history, credit mix, and new credit all factor into your credit score. Although improving it will not happen overnight, a higher credit score will pay dividends in the long run.

To improve your credit score, focus on paying down your credit cards, especially those with high interest. Refrain from opening new lines of credit that aren’t necessary and stay away from large purchases leading up to the time when you are preparing to make an offer. Keep in mind that student loans factor into your financial picture. Paying them off consistently will improve your financial standing in the eyes of lenders.

Stabilize Your Debt to Increase Buying Power

When assessing what you can afford, banks will examine your debt-to-income ratio. Lenders want to know that you’ll be able to pay your mortgage on top of your remaining debt.

They do this by looking at your housing ratio, or front-end ratio, to determine what portion of your income will go to paying your mortgage. Your front-end ratio is calculated by taking your monthly mortgage payment and dividing by your monthly gross income. The higher the ratio, the higher risk of default.

Next, your back-end ratio, or debt-to-income ratio, is used to determine how much of your monthly income goes toward paying your debts. Your back-end ratio is calculated by taking your monthly debt expense (the principal, interest, taxes, and insurance of your mortgage payments, credit card payments, student loans, and any other loan payments), and dividing it by your gross monthly income.

Similar to your credit score, paying off credit cards, and making steady, consistent progress on your loans will help to decrease your debt and improve your debt-to-income ratios, which will increase your buying power.

Although these aspects of your finances don’t cover everything that goes into the purchase of a home, they do play a significant role in how lenders assess your financial standing and thereby eligibility for approval. Increasing your buying power takes time and strategy. Plan accordingly so that when you find your dream home, you’re in the best position possible to buy it.

SOURCE: Windermere

SOURCE: Windermere

If you’re shopping for a new home, there are a number of factors you need to consider in order to narrow down your search criteria. Because before you can get too deep into your home search, you need to identify your needs, figure out your wants, and decide if there are any deal breakers that don’t work for you, such as the age, style, and location of your dream house. As you weigh the option between a new build or an older resale, here are six differences to note.

The Neighborhood

Surprisingly, one of the biggest factors in choosing a new home isn’t the property itself, but rather the surrounding neighborhood. While new homes occasionally spring up in established communities, most are built in new developments. The settings are quite different, each with their own unique benefits.

Older neighborhoods often feature tree-lined streets; larger property lots; a wide array of architectural styles; easy access to mass transportation, restaurants, and local shops; and more established relationships among neighbors.

New developments are better known for wider streets and quiet cul-de-sacs; controlled development; fewer above ground utilities; more parks; and often newer public facilities (schools, libraries, pools, etc.).

Consider your daily work commute, too. While not always true, older neighborhoods tend to be closer to major employment centers, mass transportation, and multiple car routes (neighborhood arterials, highways, and freeways), and new construction homes are usually found on the outskirts of city limits where there’s more land available for the development. The main exception being new townhouses on lots in the middle of established neighborhoods.

Design and Layout

If you like Victorian, Craftsman, or Cape Cod style homes, it used to be that you would have to buy an older home from the appropriate era. But with new-home builders now offering modern takes on those classic designs, that’s no longer the case. There are even modern log homes available.

Have you given much thought to what type of floor plan you want? If you have your heart set on an open-concept layout with an entertainment kitchen, spacious primary suite, and walk-in closets, you’ll likely want to buy a newer home—or plan to do some heavy remodeling of an older home. Unless they’ve already been remodeled, most older homes feature more closed floor plans with structural separation between rooms.

If you have a specific home décor style in mind, you’ll want to take that into consideration, as well. Professional designers say it’s typically best if the style and era of your furnishings match the style and era of your house. But if you are willing to adapt, then the options are wide open.

Materials and Craftsmanship

Homes built before material and labor costs spiked in the late 1950s have a reputation for higher-grade lumber and old-world craftsmanship like hardwood floors, old-growth timber supports, ornate siding, artistic molding, etc.

However, newer homes have the benefit of modern materials and more advanced building codes, such as copper or polyurethane plumbing, better insulation, double-pane windows, modern electrical wiring, earthquake/ windstorm supports, and so on.

Current Condition

The condition of a home for sale is a top consideration for any buyer, whether you plan to do a little work or not. However, age is a factor here, as well. For example, if the exterior of a newer home needs repainting, it’s a relatively easy task to determine the cost.  But if it’s a home built before the 1970s, you have to also consider the fact that the underlying paint is most likely lead-based, and that the wood siding may have rot or other structural issues that need to be addressed before it can be re-coated.

On the flip side, the mechanicals in older homes (lights, heating systems, sump pump, etc.) tend to be better built and last longer.

Regardless of the age of the home or the apparent condition, it’s important to get a home inspection from a professional.

Outdoor Space

One of the great things about older homes is that they usually come with mature trees and bushes already in place. Buyers of new homes may have to wait years for ornamental trees, fruit trees, roses, ferns, and other long-term vegetation to fill in a yard, create shade, provide privacy, and develop into an inviting outdoor space. However, maybe you have the patience and interest in building the yard you want, or you’re one of the many homeowners who prefer the wide-open, low-maintenance benefits of a lightly planted yard.

Car Considerations

Like it or not, most of us are dependent on our cars for daily transportation. And here again, you’ll find a big difference between newer and older homes.

Newer homes in developments almost always feature ample off-street parking: usually a two-car garage and a wide driveway. Some new construction even includes electric vehicle charging stations as electric and hybrid cars become more mainstream. An older home, depending on just how old it is, may not offer a garage—and if it does, there’s often only enough space for one small or mid-sized car. For people who don’t want to leave their car on the street, this alone can be a determining factor.

Finalizing Your Decision

While the differences between older and newer homes are striking, there’s certainly no right or wrong answer. It is a matter of personal taste, and what is available in your desired area. To quickly determine which direction your taste trends, use the information above to make a list of your most desired features, then categorize those according to the type of house in which they’re most likely to be found. The results can often be telling.

If you have questions about newer versus older homes give me a call.

SOURCE: Windermere