Home Buyers Seminar 4/2/11

Eastern Connecticut Association of Eastern Connecticut Association of REALTORSREALTORS®®

Home Buyers Home Buyers SeminarSeminar

The Home Buying ProcessThe Home Buying Process2010 NAR Profile of Home Buyers2010 NAR Profile of Home Buyers

CHARACTERISTICS OF HOMEBUVERCHARACTERISTICS OF HOMEBUVERSS Fifty percent of recent home buyers were Fifty percent of recent home buyers were

first-time buyers.first-time buyers.

• The typical first-time home buyer was 30 The typical first-time home buyer was 30 years old, while the typical repeat buyer was years old, while the typical repeat buyer was 49 years old.49 years old.

• Twenty percent of recent home buyers were Twenty percent of recent home buyers were single females, and 12 percent were single single females, and 12 percent were single males.males.

The Home Buying ProcessThe Home Buying Process

CHARACTERISTICS OF HOMES PURCHASEDCHARACTERISTICS OF HOMES PURCHASED

• New home purchases were at the lowest level in nine New home purchases were at the lowest level in nine years—down to 15 percent of all recent home years—down to 15 percent of all recent home purchases.purchases.

• The typical home purchased was 1,780 square feet in The typical home purchased was 1,780 square feet in size,was built in 1990, and had 3 bedrooms and 2 baths.size,was built in 1990, and had 3 bedrooms and 2 baths.

• Seventy-seven percent of home buyers purchased a Seventy-seven percent of home buyers purchased a detached single family home.detached single family home.

• The median price of home purchased was $212,000 in The median price of home purchased was $212,000 in the Northeast.the Northeast.


THE HOME SEARCH PROCESSTHE HOME SEARCH PROCESS

• For more than one-third of home buyers, the For more than one-third of home buyers, the first step in the home-buying process was first step in the home-buying process was looking online for properties.looking online for properties.

• Nine in ten home buyers used the Internet to Nine in ten home buyers used the Internet to search for homes.search for homes.

• The typical home buyer searched for 12 The typical home buyer searched for 12 weeks and viewed 12 homes.weeks and viewed 12 homes.


HOME BUYING AND REAL ESTATE PROFESSIONALSHOME BUYING AND REAL ESTATE PROFESSIONALS

Eighty-three percent of buyers purchased their

home through a real estate agent or broker.

Ten percent of buyers purchased a home in foreclosure, 6 percent purchased a short sale.

Forty-four percent of buyers found their agent through a referral from a friend or family

member.


Choosing a REALTOR®Choosing a REALTOR®


Why Use a REALTOR®?Why Use a REALTOR®?

There are at least 8 reasons…There are at least 8 reasons…


1. Your REALTOR® can help you determine 1. Your REALTOR® can help you determine your buying power.your buying power.

2. Your REALTOR® has many resources to 2. Your REALTOR® has many resources to assist you in your home search. The MLS assist you in your home search. The MLS is only one. is only one.

3. Your REALTOR® can assist you in the 3. Your REALTOR® can assist you in the home selection process.home selection process.

The Home Buying ProcessThe Home Buying Process4. Your REALTOR® can help you negotiate. 4. Your REALTOR® can help you negotiate.

5. Your REALTOR® provides due diligence 5. Your REALTOR® provides due diligence during the evaluation of the property. during the evaluation of the property.

6. Your REALTOR® can help you in 6. Your REALTOR® can help you in understanding different financing options.understanding different financing options.


7. Your REALTOR® can guide you 7. Your REALTOR® can guide you through the closing process.through the closing process.

8. Your REALTOR® is required to 8. Your REALTOR® is required to adhere to a strict Code of Ethics.adhere to a strict Code of Ethics.


Which REALTOR®?Which REALTOR®?• Friends, neighbor or relative – 48%Friends, neighbor or relative – 48%

• Previously used agent – 9%Previously used agent – 9%

• Internet web site – 9%Internet web site – 9%

• Visited an open house – 7%Visited an open house – 7%

Make sure that the REALTOR® is familiar Make sure that the REALTOR® is familiar with the area that you are looking in.with the area that you are looking in.


The PaperworkThe Paperwork

• Right to Represent Buyer Right to Represent Buyer AgreementAgreement

• Dual Agency AgreementDual Agency Agreement

• Designated Agency AgreementDesignated Agency Agreement

• Purchase & Sale AgreementPurchase & Sale Agreement


Resources Available to YouResources Available to You

• www.easternctrealtors.com

• www.ctreal.com

• REALTOR® web sitesREALTOR® web sites

• Information for Home Buyers – Information for Home Buyers –

provided by the Connecticut Association of REALTORS®provided by the Connecticut Association of REALTORS®

• ECAR Affiliate Services ECAR Affiliate Services DirectoryDirectory

http://www.ecmls.com/

http://www.realtor.com/

The Role of the LenderThe Role of the Lender

The basics of understanding mortgagefinancing are in these 4 questions:

1. How much house can you afford?

2. How much do you qualify for?

3. How do you choose the right mortgage?

4. How do you find the right lender?

Understanding Mortgage Financing

Pre-Qualification,Pre-Approval or Loan

Commitment?Most home buyers will hear these terms during their search for

a home:

Pre-QualificationPre-ApprovalLoan Commitment

Although related, the three terms each signify a different level of approval from a lender.

Ask your lender to explain all of the terms associated with their mortgage approval process.

1. How much house can you afford?

Traditionally, the amount that you can borrow -thus what you can afford to buy-

is based on how much you can afford to pay up front and on two qualifying ratios.

Specifically, most lenders will consider 5 key factors to determine your ability to qualify

for a home loan: Income

Employment

Credit History and Monthly Debt

Assets

Property

4. How do you find the right lender?

When you're looking for mortgage financing, you might work with an officer at a bank, a mortgage banker, a mortgage broker or a credit union. All four types of lending institutions are different and each has strengths and weaknesses.

Ask for referrals from trusted professionals, but remember that there is no overall "best" solution, every buyer's loan needs are different.

Make your choice of a lender based on the best loan terms you can find, but ask important questions.

Quality within each branch or office can vary, depending on the loan officer, the support staff, and a variety of other factors.

Very often, the loan officer is a more important choice than the institution.

You want someone who has proven to be dependable and ethical in the past -- someone you feel will take good care of both you and

your money.

The Role of the AttorneyThe Role of the Attorney

The Role of the Attorney The Role of the Attorney

• Contract issuesContract issues

• Title SearchingTitle Searching

• Closing CoordinationClosing Coordination

• The ClosingThe Closing

Title SearchingTitle Searching

• Purpose of title searchingPurpose of title searching

• Conducting a title searchConducting a title search

• Title insuranceTitle insurance

• Title problemsTitle problems

Types of Title InsuranceTypes of Title Insurance

• Loan PolicyLoan Policy– Must haveMust have

• Owners’ PolicyOwners’ Policy– ““Must have”Must have”

• Enhanced Benefits PolicyEnhanced Benefits Policy– Should haveShould have

Closing CoordinationClosing Coordination(Contract to Closing)(Contract to Closing)• Client intakeClient intake

– Contract reviewContract review– Contract preparationContract preparation

•Attorney – minimal role in Eastern ConnecticutAttorney – minimal role in Eastern Connecticut

• Closing coordinationClosing coordination– Closing date / contract datesClosing date / contract dates

•Time is of the essenceTime is of the essence

•Reasonable time / extension of contract datesReasonable time / extension of contract dates

The ClosingThe Closing

• Multi-party representationMulti-party representation– Sellers’Sellers’

– Lender’sLender’s– TitleTitle– Buyers’Buyers’

Closing DocumentsClosing Documents

• Settlement statement (HUD)Settlement statement (HUD)

• Warranty deedWarranty deed

• NoteNote

• Mortgage deed(s)Mortgage deed(s)

• Truth in Lending (TIL)Truth in Lending (TIL)

The Role of the Home The Role of the Home InspectorInspector

Home InspectionHome Inspection

What it is?What it is?

How it is done?How it is done?

Who should be there?Who should be there?

Attention Buyers!Attention Buyers!

• Be an informed buyer and don’t Be an informed buyer and don’t assume that the house is safe sound assume that the house is safe sound and secure. (Just because it looks ok and secure. (Just because it looks ok to you doesn’t mean that it is ok.)to you doesn’t mean that it is ok.)

• An inspection is your best An inspection is your best opportunity to identify potential opportunity to identify potential problems.problems.

Not all inspectors are Not all inspectors are created equal!created equal!

• Make sure that the Make sure that the inspector is Licensed inspector is Licensed in the State of CT.in the State of CT.

• Make sure that the Make sure that the inspector is covered inspector is covered by at least $500,000 by at least $500,000 worth of E&O worth of E&O insurance.insurance.

• Check references, Check references, ask around.ask around.

What is a Home Inspection?What is a Home Inspection?

• A visual examination A visual examination of the physical of the physical structure and structure and systems of systems of accessible areas of accessible areas of the home.the home.

• Diagnostic Diagnostic evaluation.evaluation.

• Optional tests are Optional tests are also available.also available.

Purpose: Make sure that the home is sound, safe and secure !

Who Attends the Who Attends the inspection?inspection?• THE BUYER’S THE BUYER’S

AGENTAGENT

• THE BUYER(S)THE BUYER(S)

• THE INSPECTORTHE INSPECTOR

Scope of InspectionScope of Inspection

• The inspection will The inspection will objectively analyze objectively analyze the structure and the structure and systems and present systems and present findings based on the findings based on the VISUAL EXAMINATION VISUAL EXAMINATION of accessible areas of of accessible areas of the property at the the property at the time of the time of the inspection.inspection.

Home inspectors can not do any destructive testing!!!

THE REPORTTHE REPORT

• The inspection should The inspection should result in a verbal and result in a verbal and written report.written report.

• The inspector will The inspector will summarize the summarize the findings with you and findings with you and your REALTOR®.your REALTOR®.

• Be sure to carefully Be sure to carefully review this report.review this report.

What inspectors don’t do.What inspectors don’t do.

• Inspectors will not Inspectors will not usually remove usually remove ceiling tiles, enter ceiling tiles, enter unsafe crawl spaces, unsafe crawl spaces, disturb insulation, disturb insulation, move personal move personal items, uplift carpets, items, uplift carpets, remove roof shingles remove roof shingles or perform similarly or perform similarly intrusive tasks.intrusive tasks.

What inspectors do look for.What inspectors do look for.• Wood destroying Wood destroying

insects.(Termites, insects.(Termites, carpenter ants, etc.)carpenter ants, etc.)

• This test may be This test may be required by some required by some banks and mortgage banks and mortgage companiescompanies

• Termite colonies Termite colonies nest in moist soil.nest in moist soil.

Items checked!Items checked!

• Inspectors will check:Inspectors will check:• Chimney, roof, gutters.Chimney, roof, gutters.• Windows, doors, floors, Windows, doors, floors,

walls ceilings and stairswalls ceilings and stairs• Plumbing, heating and Plumbing, heating and

cooling systems, hot cooling systems, hot water system, electrical water system, electrical systems, and kitchen systems, and kitchen appliances.appliances.

• GarageGarage

Other Tests AvailableOther Tests Available

• Water Quality, Water Quality, Quantity, radon in Quantity, radon in water and lead in water and lead in water.water.

• Radon in air.Radon in air.

• Lead PaintLead Paint

• AsbestosAsbestos

• Septic InspectionsSeptic Inspections

Home Inspection vs. Home Home Inspection vs. Home WarrantyWarranty• NOT THE SAME NOT THE SAME

THING !!!!!!!!!!!THING !!!!!!!!!!!

• Most Inspectors will Most Inspectors will give a warranty on give a warranty on their inspection only!their inspection only!

• Home Warranties are Home Warranties are different and offered different and offered through insurance through insurance companies.companies.

Most companies have guarantees on their inspection reports

SummarySummary

• A home inspection is important.A home inspection is important.

• Objective review of the home’s Objective review of the home’s structure and mechanical/electrical structure and mechanical/electrical systems.systems.

• Review references and choose a Review references and choose a qualified home inspector.qualified home inspector.

The Role of the Insurance The Role of the Insurance AgentAgent

Insuring Your Largest Insuring Your Largest Investment – Your Investment – Your

HomeHome

Homeowners Insurance Homeowners Insurance PolicyPolicyDwelling – Coverage ADwelling – Coverage A• Determining value-based on age, square footage and additional Determining value-based on age, square footage and additional

featuresfeatures• Replacement cost on dwelling versus Actual Cash ValueReplacement cost on dwelling versus Actual Cash Value

Other Structures – Coverage BOther Structures – Coverage B• Anything not attached to dwelling-detached garage, shed, above Anything not attached to dwelling-detached garage, shed, above

ground-in ground poolground-in ground pool

Personal Property/Contents - Coverage CPersonal Property/Contents - Coverage C• 50-70% of Dwelling coverage50-70% of Dwelling coverage• Replacement cost versus actual cash valueReplacement cost versus actual cash value

Loss of Use – Coverage DLoss of Use – Coverage D• Additional Living Expense if you had a covered loss and the house Additional Living Expense if you had a covered loss and the house

was unfit for your family to live in due to claimwas unfit for your family to live in due to claim

Homeowners Insurance Homeowners Insurance PolicyPolicy

Personal Liability – Coverage EPersonal Liability – Coverage E• Protects your assets if you were ever sued Protects your assets if you were ever sued

due to negligencedue to negligence

Medical Payments – Coverage FMedical Payments – Coverage F• Provision in policy – optional limitProvision in policy – optional limit

Scheduled Personal PropertyScheduled Personal Property• JewelryJewelry• FursFurs• CollectiblesCollectibles

Homeowners Homeowners Insurance PolicyInsurance Policy

Policy Credits:Policy Credits:• Deductible SavingsDeductible Savings

• Security System-monitored 24hrsSecurity System-monitored 24hrs

• Account Credit-Packaging PoliciesAccount Credit-Packaging Policies

• Newer HomeNewer Home CreditCredit

• Non-smokersNon-smokers

Homeowners Homeowners Insurance PolicyInsurance PolicyUnderwriting Concerns:Underwriting Concerns:• Insurance ScoringInsurance Scoring• Coastal PropertiesCoastal Properties• Dogs – Ineligible Dog ListDogs – Ineligible Dog List• Underground Oil Tanks-Environmental HazardUnderground Oil Tanks-Environmental Hazard• Above Ground-In Ground Pools – slides, diving Above Ground-In Ground Pools – slides, diving

boardsboards• Fuses-Circuit Breakers requiredFuses-Circuit Breakers required• Age of Roof – 25 years or newAge of Roof – 25 years or new• Prior Claims and FrequencyPrior Claims and Frequency• TrampolinesTrampolines

The Homeowner ClosingThe Homeowner Closing

• Closing-Binder and Paid Receipt-Issued Prior Closing-Binder and Paid Receipt-Issued Prior to Closingto Closing

Additional Coverage's:Additional Coverage's:• Personal Umbrella PolicyPersonal Umbrella Policy• Flood Insurance PolicyFlood Insurance Policy• Life InsuranceLife Insurance – Provides for your family in – Provides for your family in

the event of your deaththe event of your death• Disability InsuranceDisability Insurance – 59% of homeowners – 59% of homeowners

will lose work over a 30 year period of time will lose work over a 30 year period of time and not get paid for their lost time. Can you and not get paid for their lost time. Can you afford to pay your bills without a paycheck?afford to pay your bills without a paycheck?

Enjoy benefits of using a REALTOR®

&

ECAR Affiliate Members

Home Buyers Seminar 4/2/11

Real Estate

Transcript of Home Buyers Seminar 4/2/11