houseonmoney

Home Warranties

houseonmoneyWhen you purchase a resale home, you can purchase a home warranty (a.k.a., Residential Service Contract or RSV) that will protect you against most ordinary flaws and breakdowns for at least the first year of occupancy.  The warranty may be offered by either the Seller, as part of the overall package, or by the agent.  Even with a warranty, you should have the home carefully inspected before you purchase it.

A home warranty program will give you peace of mind, knowing that the major covered components in your home will be repaired if necessary.  Here are the major RSV providers:

 

NOTE
If you need help deciding, check out http://www.homewarrantyreviews.com/reviews but keep in mind that the bigger companies have more complaints because they have millions of customers and people are more likely to complain than express their satisfaction. “You can’t please all the people all of the time…”

I can say from personal experience that I no longer recommend First American Home Buyers Protection…they have terrible customer service these days and send terrible, low-quality vendors to perform the work.


 

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Prior Foundation Repairs

Will Prior Foundation Repairs Effect a Home’s Resale Value?

In Texas, there is a saying that all houses here either have foundation repairs or will need them in the future. That’s because the soil in most parts of Texas is an “expansive soil” that significantly expands and contracts based on the level of moisture in it. And since Texas is known for either droughts or floods…our soil tends to expand and contract a lot.

Here is a must read for Texas home buyers: Buyer’s Guide to Slab-On-Ground Foundations by R. Michael Gray, P.E. and Matthew T. Gray, EIT.

That is why it is very important for homeowners to keep the soil around their home evenly watered. Water in the soil provides pressure to support the home. During a drought, the lack of moisture may cause a foundation to sag. Simply watering the soil can often push a slightly sagging foundation back up…no kidding!

Does having a prior foundation repair on a home effect the resale value? That’s a controversial question with no “scientific” data to prove one opinion or another. Some say that as long as the repair is done by a reputable foundation company and has a transferable lifetime warranty…no problem. It may even be considered a positive feature of the home, since the cost of the repair has been covered by a prior owner.

NOTE: If you need some brick or mortar repair in the Sugar Land area, contact JQ Brick at 713-253-5092…they do excellent work at very reasonable prices.

brickrepair
These kinds of cracks do not necessarily mean there are foundation issues…bricks and mortar crack very easily.
They do need to be resealed, however, with mortar (not caulk) to prevent water penetration into the side walls.
Call JQ Brick at 713-253-5092.

Others know that inexperienced home buyers may be scared of purchasing a home with prior foundation repairs…and will not even give such a home a second glance. So, by reducing the number of prospective buyers for a home this way, it could have a negative impact on the price per square foot that home can command. That would suggest that a home buyer should not pay a neighborhood’s top price/square foot for a home with prior foundation repairs…unless there are other special features that significantly override the foundation issues.

Read other opinions:


 

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What Is a Real Estate “Closing”?

ContractA real estate “Closing” is where you and I meet with some or all of the following individuals: the Seller, the Seller’s agent, a representative from the lending institution and a representative from the title company, in order to transfer the property title to you. The purchase agreement or contract you signed describes the property, states the purchase price and terms, sets forth the method of payment, and usually names the date and place where the closing or actual transfer of the property title and keys will occur. 

If financing the property, your lender will require you to sign a document, usually a promissory note, as evidence that you are personally responsible for repaying the loan. You will also sign a mortgage or deed of trust on the property as security to the lender for the loan. The mortgage or deed of trust gives the lender the right to sell the property if you fail to make the payments. Before you exchange these papers, the property may be surveyed, appraised, or inspected, and the ownership of title will be checked in county and court records.

About a week in advance, I will schedule the real estate Closing with you and the title company. We will meet at the title company on the day of closing, sit in a conference room with an escrow officer (who is also a notary), and you will sign the legal documents to purchase the home.

You will need to bring your driver’s license with you to the real estate Closing. At closing, you will be required to pay all fees and closing costs in the form of “guaranteed funds” such as a cashier’s check.  Your agent or escrow officer will notify you of the exact amount at the day before Closing.

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Buyers: What To Bring to Your Closing Appointment

Here’s the minimum of what to bring to your “Closing”:

  • Photo ID
  • “Good funds” for your down payment and other costs: typically
    a cashier’s check—never cash

 


 

 

Texas Home Inspections for Buyers

distressed_house2Please know that a home inspection is one of the most important parts of buying a home. But it can be overwhelming trying to find a reputable inspector who you can trust. I provide all my buyer clients with a list of licensed home inspectors in the area to make this process easier for you.

The inspection should include information (including photos) on the condition of the following:

  • Appliances
  • Plumbing
  • Electrical
  • Air conditioning and heating
  • Ventilation
  • Roof and Attic
  • Foundation
  • General Structure

The inspection is designed to report on any potential defects or problems with the home that may require repair. Not everything they report will be considered an actual defect by you; you must decide on whether or not the items noted require repair or not for your peace of mind. For example, I have never seen a home inspection report where the inspector did not note that the dirt is too high around the foundation of the home. This seems to be something that they always note because it could potentially hide termite activity around the home…and inspectors have to protect themselves against potential lawsuits. But this is something that you can easily fix when you move into the home.

NOTES

  • Should serious foundation or structural problems be indicated, the inspector will recommend that a structural engineer or other professional inspect it as well.
  • The home cannot “pass or fail” an inspection, and your inspector will not tell you whether he/she thinks the home is worth the money you are offering.

The Seller may be willing to negotiate completion of repairs or a credit for completion of repairs, or you may decide that the home will take too much work and money.  A professional inspection will help you make a clear-headed decision. In addition to the overall inspection, you may wish to have separate tests conducted for termites or the presence of mold.

In choosing a home inspector, consider one that has been certified as a qualified and experienced member by a trade association.

I recommend being present at the inspection.  This is to your advantage because you will be able to clearly understand the inspection report and know exactly which areas need attention.  Plus, you can get answers to many questions, tips for maintenance, and a lot of general information that will help you once you move into your new home.  Most important, you will see the home through the eyes of an objective third-party. But always keep in mind that an inspector’s job is to report on all potential issues (like dirt around the foundation) and you need to be reasonable in your repair request negotiations with sellers.


⇒  For Home Sellers read Sixteen Must Do Items to Prepare Your Home for Inspections

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Why Rent When You Can Buy?

 

  • rentwhenown3Are you unsure about becoming a HOMEOWNER?

  • Thinking that you can’t afford to BUY a home?

  • Are you worried about whether home buying is a good INVESTMENT?

Buying a first home can be an intimidating process. But the first step is making those first decisions: I want to own my own home; I can afford to own my own home; owning my own home makes sense for me financially and emotionally. If you are still struggling with those first decisions, here are some facts that might help you make that first step towards becoming a homeowner.

You Can’t Afford NOT to Buy a Home!

Over the last ten years, the cost of rental housing in the U.S. has increased an average of 3 percent per year. That means that an apartment or home renting for $750 per month will cost more than $978 a month in ten years. If you rent the same home for ten years, the total amount you would pay for rent will equal $103,000! 

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Tax Advantages of Owning a Home Result in Savings

None of that $103,175 is returned to you, either through savings or as an investment. Homeownership, on the other hand, has tax advantages over renting a home, and those advantages can help you save money. Unlike your monthly rent, part of your monthly mortgage payment “comes back to you” in tax savings. Here’s an example:

You purchase a home that costs $110,000 (plus closing costs – expenses incurred to actually process the transaction). You finance the balance with a 30-year fixed rate mortgage at 6.5 percent interest. Your monthly payments (not including utilities, maintenance, insurance, etc.) are:

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You actually save $195 a month by owning your own home. On a yearly basis, the savings is even more dramatic: 

Homeownership is a Good Investment

For the majority of Americans, their home is their largest financial asset and a major player in their investment portfolio. It’s a good thing, too, since stock market value has declined since 1998, while home price appreciation has increased. The NATIONAL ASSOCIATION OF REALTORS® estimates that home value rises, on average, by 4.5 percent a year. That’s a steady return on investment; one’s own home is a much less volatile asset than stocks, bonds or mutual funds.

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As an example, let’s look again at that $110,000 home. Unlike your rental unit, your home should appreciate over time. Assuming a 4.5 percent appreciation rate, your home will be worth $114,950 in the second year of ownership, $120,123 in the third year of your owning it, etc. After ten years, your $110,000 home will be worth $163,470. Not only do you earn a rate of return on your original purchase price, but you also get a return on any subsequent appreciation.

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Homeownership Builds Wealth for Households

The Federal Tax Reserve Board estimates that homeowners have a net worth almost 36 times more than that of renters. In 2001, the median net worth for homeowners was $171,700 compared to $4,800 for renters. How do you build up your net worth? Through those “appreciating returns” on your home.

We’ve already seen how your $110,000 home is worth $163,470 in ten years. In addition, you are paying down the principal on your mortgage. Remember that $100,000 you borrowed at 6.5 percent over 30 years – that debt amount is decreasing every month and every year.

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After the first year, you now only owe $98,786 on a home that is worth $114,950. You have “netted” a $4,950 increase in the value of your home, plus $1,116 a year that previously you owed as part of your mortgage debt. As your debt decreases and the home value increases, you accumulate wealth from the value of your home. In addition, over this ten-year period, you will have a significantly lower after-tax payment for housing. Each year as your home appreciates and you continue to pay down your mortgage debt, you increase your own net worth.

Homeownership – It’s NOT Just About Money

The “numbers tell the story” should ease your mind about the financial aspects of becoming a homeowner. But there are other, less monetary, benefits to homeownership. Several research studies indicate homeownership adds to the value of communities, has positive effects on children, and even contributes to increased voter participation rates.


 

Courtesy of: NATIONAL ASSOCIATION OF REALTORS®

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Buying New vs. Resale Home

One question that I get a lot is, “What’s recommended: buying new vs resale home?” A new home is one that has never been lived in while an existing home has been lived in by a previous owner. There are Pros and Cons either way that you should consider. Here are my home buying tips for buying a new vs resale home.

PROs for Purchasing a New Home May Include:

  • Lower maintenance costs during the first years of owning the home.

  • Lower energy costs because new homes are built with better energy saving materials and equipment than older homes.

  • More functional home designs and floorplans as well as up-to-date home fixtures.

  • Latest technology features such as pre-wired for a home computer network.

  • Possibly the ability to choose paint colors, floor types and colors, exterior colors, and other optional home features.

NOTE: There is typically a substantial markup on these items.

  • Builder incentives to lower the initial cost to purchase.

  • Easier to get to know neighbors because everyone is “new.”

 


 

READ:  KATY MODELS & NEW CONSTRUCTION HOMES

 


 

PROs for Purchasing an Existing (Resale) Home May Include:

  • Lower price per square foot than newly built homes.

  • Better locations and shorter commute times.

  • Mature landscaping in both the yard and throughout the neighborhood.

  • Proven track record of home values in the neighborhood.

  • Lower tax rates since more neighborhood features have already been paid for by home owners.

  • Sales contracts that are fair to both parties…not one-sided in favor of the builder.

  • Lower move-in costs (possibly) since home already has window coverings, landscaping, garage door openers, and other items that you will have to buy for a brand new home.

  • Easier for home inspector to find home defects because more time has passed since the home was constructed. NOTE: New homes may have hidden defects that are impossible for a home inspector to find.

  • More established school zone boundaries than for new neighborhoods.

  • Established community activities and events.

  • Quicker move-in date compared with building a home from scratch in a new neighborhood.

If you decide to buy a new home, make sure that you check out the builder first: http://houston.bbb.org/consumers/. Also make sure that you hire an inspector (read http://www.best2inspect.com/buyersguide.html for more information). And don’t forget to bring your Realtor along when you view new home models! Remember: A Realtor’s job is not “just” helping you find a house to buy…there are over 100 tasks that Realtors may perform for you during the home purchase process! Your Realtor should be on your side because she is your agent. The salesperson at the builder’s model home office is not on your side…as an employee of the builder, he or she is looking out for the builder’s best interest.

Before you decide to buy a new home, make sure you get up-to-speed on new home builder’s warranties at  http://www.fairarbitrationnow.org/content/home-court-advantage-how-building-industry-uses-forced-arbitration-evade-accountability (scroll to the bottom and then click “Read the Full Report.”

You will also find these articles interesting:

I don’t want to discourage you from buying a new home…Houston has some really great new home builders. But it’s my job to make sure that you have all the information that you need to make a wise buying decision. 

NOTE: The Following rankings are from JD Powers 2010. I’m not aware of a more current list.

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Checklist of Steps for Buying a Home

This list is not comprehensive. There are a lot of steps that your REALTOR® takes care of behind-the-scenes.

Call Sheila Cox for help at 832-779-2890

Action Item

Deadline

 

Unless you have cash to buy a home, contact three or four lenders to determine how much house you can afford and get rate quotes.

 

 

Determine how much money you will need to purchase a new home. Do you have enough? If not, create a budgetand start saving now.

 

 

Get approved for a loan. Don’t forget the approval letter! We will need to submit it with an offer to buy a house…Katy sellers will not typically accept an offer without a strong approval letter from a reputable (preferably a local lender).

 

 

Hire a Katy real estate expert to help you with your purchase. You need a professional looking out for your best interest!

 

 

Do you need to sell your current home? Your Katy real estate expert can help you with that too (and may offer a discount if you both buy and sell).

 

 

View homes that meet your specific needs.

 

 

Choose the right home for your needs.

 

 

Sign the legal paperwork and make an offer to buy the house that you chose. Be prepared to write two checks (which will be cashed): 1% earnest money to Title Company and $200-300 option fee to the Seller.

 

 

After the purchase offer is accepted, hire home and termite inspectors to check the home. This will cost $300 to $500.

 

 

Negotiate repairs to home as needed.

NOTE: If you are using an FHA loan, have all “conducive” termite conditions resolved to prevent loan problems.

 

 

Decide whether or not to exercise your Option. If you decide to continue with the purchase, the go to next step. Otherwise, return to viewing homes that meet your needs.

 

 

Tell lender to order the appraisal. Be prepared to pay an appraisal fee (approximately $400)…or it may be rolled into Closing costs.

 

 

Turn-in items for your loan application (W2s, tax returns, pay stubs, bank statements, etc) to lender as quickly as possible. Be prepared for a hassle! The lending process is very stringent these days.

 

 

Check your Title Commitment when you receive it…especially Schedule C. You typically have 5 days to “object in writing.”

 
 

Will both buyers be at the Closing? If not, order a Power of Attorney with your lender…it has to be approved by lender and title company ahead of time.

 
 

Obtain home owner’s hazard insurance. Make sure you get at least three quotes because rates can vary drastically. They will want the age of roof, your birthdates, current address, and more.

 

 

Make sure the survey is ordered in a timely manner, unless it is provided by the Seller. NOTE: Know the 10 Common Pitfalls to Closing on Your Home.

 

 

Make sure the HOA compliance inspection and resale certificate are ordered in a timely manner (if applicable).

 
 

Select your residential service contract (“home warranty”).

 

 

Make sure all negotiated repairs are made in a timely manner.

 
 

Plan your move and order your utilities to be turned on the day you Close.

 

 

Make sure your Closing is scheduled with the Title Company.

 
 

Do your final walk-through the day before/of Closing.

 

 

Go to the settlement Closing. Each person signing (husband and wife) will need a photo ID and a cashier’s check or wiring instructions.

 

 

Move into your new home and enjoy!

 

 

Check out these tips for decorating, remodeling, and updating your new home.

 

 

Make sure you receive a copy of your Deed (from the Title company) within a couple of weeks after Closing.

 

 

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Option Period and Fees in Texas Real Estate

In Texas, you can buy an “option period” (usually 10 days) from the seller for $200-$300 that gives you the irrevocable privilege to back out of the sales contract for any reason, and still receive your 1 percent earnest money back. (During this time, the Seller cannot back out of the contract…only the Buyer has that  right.)

This gives you time to have the home thoroughly inspected and find any defects that you cannot live with. It also allows time to negotiate repairs with the Seller. At the end of the Option Period (and the timing is very strict) you can do one of the following:

  • If you “exercise” your option (and decline purchasing the home), then you lose your option fee, but you get your earnest money back.

—Or—

  • If you do not exercise your option (and continue the purchasing process), then the option fee is usually applied toward your closing costs.

Make sure you hire a real estate agent who knows how to properly handle Option Periods and protect your money.

 

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Applying for a Home Loan

Items Needed To Apply for a Home Loan

10commandments_loanApplying for a home loan these days is not for the “weak at heart”! It is a pain-in-the-neck process no matter how much money you have.

NOTE: Read The Perfect Loan File on Forbes for details.

There is a lot of paperwork required in order to obtain a home loan. Plus, you will have to provide much of the paperwork multiple times throughout the loan process because of new lending standards. Lenders are now required to verify certain items several times through the process…so don’t get offended or frustrated when they ask you for something that you have already provided them.

Here’s what you will probably need:

  1. Proof of identity for borrowers including driver’s license and Social Security number.
  2. Address history for three years.
  3. Copy of tax returns for past 2 years.
  4. Banks names and numbers for all checking and savings accounts.
  5. Bank statements for the past 3 months.
  6. Documentation of all income including pay stubs for past 2 months.
  7. Proof of bonuses for 2 years if applicable.
  8. W-2 forms showing income for past 2 years.
  9. Job history for past 2 years.
  10. Net worth sheet with list of all assets and liabilities including account numbers.
  11. Most recent 401K statements and other retirement accounts.
  12. Copy of gift letter if applicable.
  13. If self-employed, copy of balance sheet.
  14. Divorce decrees if divorced in the past 2 years.
  15. Proof of residency, if applicable.
  16. College transcript if you were a student in the past 2 years.
  17. Bankruptcy discharge papers, if applicable.

 

Home Buyers: What Not To Do

 Maybe you’ve just gotten married. Maybe you got a raise … or maybe you’re just plain sick of renting. Whatever the case, you’ve decided that it’s time to buy a house. You’ll be given all kinds of advice and pointers about what you should do and how you should do it, but there are things you shouldn’t do that are equally important.

Don’t be deceptive or dishonest when you’re filling out your loan application. Even if you get away with fudging the numbers a little to secure a higher loan (which is loan fraud), what’s the payoff you’re looking for? A monthly payment that you can’t truly afford?

Avoid moving your money around. To eliminate potential fraud and provide a degree of quality control, a lender will review the source of funds for your down payment and closing costs. Most likely, you will be asked to provide recent statements for any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stocks, mutual funds, and even your 401K and retirement accounts. If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them, which could make it more difficult for the lender to document properly.

Once you’ve been approved for a certain amount, resist the temptation to make any big purchases that could affect your ability to service the loan. Examples might be a new car, a boat, or expensive furnishings.

Sure you may be able to afford the mortgage and a car payment, but what if an unexpected expense comes along that causes your monthly budget to become unbalanced—you’ve got a shiny new car, but you may have trouble affording that and gasoline, and the mortgage, and the utilities. You’re caught in a situation where you’ve over-extended yourself. Even if you’re able to make it work on a month-to-month basis, you may have trouble putting money to your savings account.

Sometimes, knowing what not to do is just as important as knowing what to do. Your Texas REALTOR® can help guide you through the home buying process.

 

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Texas Real Estate Commissions

Who Pays the Real Estate Commission in Texas?

One of the questions that I’m frequently asked is, “Who pays the sales commission in a real estate transaction?” That’s a good question! Here’s the answer…

commissions

NOTE: I give a rebate if you both buy and sell a home with me within a 6-month period.

Typically, real estate sales commissions are paid at the closing table. The title company disburses two checks out of the seller’s proceeds from the sale: one to the listing broker (such as a RE/MAX or Coldwell Banker) and one to the Buyer’s broker (in our case, Keller Williams Southwest). Then the Seller’s broker splits their sales commission with the Seller’s agent (also known as, the Listing Agent). And the Buyer’s broker splits their sales commission with the Buyer’s agent (Sheila Cox)–after deducting certain transaction costs, such as “Errors and Omissions Insurance.”

Please note that practically all real estate agents are independent contractors…not employees of the broker. In fact, real estate agents are usually required to pay certain fees to their broker for the privilege to work at that brokerage. Plus all expenses, including gas and mileage for taking you on home tours, refreshments on tours, paper and ink for contracts, phone fees, computer fees, etc. are paid by the individual agent and are not reimbursed.

So how do I earn the sales commission? I have a very detailed “To Do List for Buyer Clients” that has over 100 tasks that I may perform for you…and only one task is “Show properties until one is found.” So even if I show you 30 houses, that only represents one of the line items on my To Do list! Trust me when I say that there is a lot more to my job than “just showing houses.” I’m looking out for you every step of the way and keeping my eye on the Listing Agent, the Seller, the builder (if applicable), the lender, the inspector, the title company…I’m always watching out for you because I’m your agent.

Now you need to understand one more important thing:

»  How To Get Dedicated Buyer Representation in Texas?

 


 

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What To Look for In a Katy Real Estate Agent

What To Look for In a Katy Real Estate Agent

Want to know how to hire the best Katy real estate agent?  See below!

NOTE: Many of these items are specific to Texas agents.

___ Did your agent give you the “Information About Brokerage Services” notice that is legally required by the Texas Real Estate Commission before showing you houses? Can your agent effectively explain it?

___ Did your agent provide all the other necessary disclosures, notices, and the Buyer’s Representation Agreement to you before showing you houses? Be careful! You don’t want to find out after-the-fact that your agent actually represents the Seller.

___ Does your agent provide a detailed 18+ page house report on a home (see my sample), before you make the offer, to ensure that you know what you are buying before you make the purchase? This report should include information on the home’s price history, comparable sales numbers, school ratings, flood plain, tax info, environmental hazards (if any), near-by sex offenders (if any) at a minimum.

___ Can your agent effectively explain the HOA maintenance fees, MUD and LID taxes, compliance certificate requirements, amenities, property tax rates, school performance ratings, and other important information for the neighborhoods you are looking at?

___ Does your agent know how to provide you with an accurate CMA (price analysis) on a home before you make an offer? Is he or she committed to helping you get the right price or does the agent just want you to buy the highest priced home you can afford? (See “How to Price a Home Correctly“)

___ Does your agent point out possible defects of homes when you tour them or does your agent always seem to overlook the obvious problems of a home and try to convince you that they don’t matter? (Check my client satisfaction rating.)

___ Does your agent actually show you homes or does he or she expect you to drive the neighborhood on your own and then contact the listing agent directly to let you see the house? A dedicated agent wants to be with you every step of the way.

___ Has your agent set up a customized automatic home search for you that is pulled directly form the local MLS? Or are you still trying to find homes on your own using the limited online search Websites available in your area? These programs (such as Realtor.com, Zillow, Trulia, and Homes.com) can be outdated very quickly showing contract-pending homes as “active.”

___ Does your agent use an online paperwork system where you can e-sign documents instead of having to fax and scan them (which is sometimes challenging and time-consuming)? What if your spouse is still back home in another state or country? You need to be able to e-sign!

___ Does your agent work to negotiate a residential service contract (aka, home warranty) in the deal or provide one for you to protect you from too many future home repairs?

___ Does your agent have at least a 4.5 star client satisfaction rating with the local board of area Realtors? What’s your agent’s YELP rating, Homes.com endorsements, Angie’s List reviews, and so on?

___ Does your agent have 20 years experience? (Trick question.) IT DOESN’T NECESSARILY MATTER! There are  terrible agents with 30+ years of experience who even have a broker’s license. And there are outstanding agents with only a couple of years experience. Time does not equal quality in this business. Time cannot guarantee attitude, dedication, integrity, intelligence, or commitment to customer service. Check their satisfaction rating...this is a free service for all members of the Houston Association of Realtors (HAR). If your agent hasn’t signed up, maybe they have something to hide.

“If you’re not sure whether you need a real estate agent or not, please take a look at Do I Need a Real Estate Agent to help you decide.”

  

Next:

How To Buy a Home in Katy

–Or–

How To Sell Your Katy Home

 

Texas Home Buying Process

Preliminary Phase: Can You Afford a Home?

If you are buying a home in Texas, then you need to learn about the home buying process, which may be different than other states. One thing to consider is that before you even begin the process of searching for a home, you must:

  • Determine how much house you can afford. A lender is the best place to get that information…it is part of the pre-qualification process.

  • Determine if you will actually qualify for a loan. Some good people don’t, under today’s stricter lending guidelines. You will need a pre-approval letter from a lender to submit with an offer on a home in Katy….Seller’s almost always require one these days!

  • Determine how much it will cost to buy a home. Do you have enough money on hand for the earnest money, option fee, down payment, closing costs, inspections, fees, etc?

I like to break the home buying process down into seven phases.


Search Phase: Find the Home You Want

This is where my Automated Updates comes in handy. Never miss out on another great home! My customized home search will check all MLS listings (including distressed properties) daily and inform you when a house that meets your criteria hits the market. This is the most accurate and up-to-date house search available! And it’s great for out-of-town buyers who need to search for homes online.

Touring the Neighborhood With a Local Expert

When you are ready to take a look at houses, then let me know and I will set up the appointments with the sellers, create a map, print out the brochures, and drive you around to see those homes. As we go from house to house, I will point out special points of interest in Katy to get you familiar with the area. It’s very helpful to have a local expert show you around the area…especially if you are new to Katy or Fort Bend County.

But what if you or your spouse are located out of reach of a local tour? I am also able to video tape a walk-through of homes when need be.

Sometimes buyers have difficulty choosing between two or three houses. I have a fantastic Buyer Decision Analysis spreadsheet that helps you to score houses and compare them to make it easier for you to make a wise decision. (See sample below)

 buyerdecisionanalysis


Offer Phase: Analyze the Property and Make An Offer

When you find the house that you want to buy, then you move into the Offer Phase. But before you make an offer, you need to know what you’re buying before you buy. That’s part of my Unknown Hazards Protection. I will research your home of choice and create an 18+ page house report so you will know everything there is to know about a house before you make an offer. This report includes tax data, school details with demographics, possible environmental hazards, possible sex offenders on that street, flood data, and more! Where else can you get this level of service?!

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»  View Sample Report

Fair warning! There is a lot of paperwork involved in buying a home in Texas. Why hassle with fax machines and scanners? My brokerage, Keller Williams, has the most innovative online paperwork solution available. So you can eSign your paperwork easily online…and so can your seller! This is especially useful for all those buyers who live out of the area and are relocating here. Or, if you have a spouse that hasn’t moved here yet, this is the perfect way to make it easy for him or her to sign the necessary documents.


Option Phase: Thoroughly Inspect the Property and Negotiate Repairs

In Texas, you can buy an “option period” (usually 10 days) from the seller for $200-$300 that gives you the irrevocable privilege to back out of the sales contract for any reason, and still receive your 1 percent earnest money back. This gives you time to have the home thoroughly inspected and find any defects that you cannot live with. It also allows time to negotiate repairs with the Seller. At the end of the Option Period (and the timing is very strict) you can do one of the following:

  • If you “exercise” your option, you lose your option fee, but you get your earnest money back.
    –Or–

  • If you do not exercise your option, then the option fee is usually applied toward your closing costs.

Please know that a home inspection is one of the most important parts of buying a home. But it can be overwhelming trying to find a reputable inspector who you can trust. I provide all my buyer clients with a list of licensed home inspectors in the area to make this process easier for you. Plus, I will negotiate necessary repairs for you with the selling agent…before you close on the home.

In addition, we have many great homes in the Katy area, but some of them may need your personal touch. It’s difficult to estimate these costs ahead of time or to know who to hire. I can help by estimating costs and by recommending local contractors who provide good quality service at reasonable prices. Plus, since I have remodeled many homes myself, I can help answer questions that you may have and get you going in the right direction.


Pending Phase: Satisfy the Lender and Title Company Requirements

If you go past the Option Period and continue the buying process, then you move into the Pending Phase where the focus is on the lender and the title company. This is when you will need to diligently pursue getting your loan, providing all the documentation that the lender requires in a timely manner. This is not for the “weak at heart”! Not only is the loan process much more difficult than it was before 2008, there are also strict time guidelines in the purchase contract regarding the loan application process, and if you do not follow them, you can lose your 1 percent earnest money (and the house).

NOTE: In Texas, title companies are neutral, third-party companies who handle the closing and lending documents to purchase a home. We do not close in attorney offices.

During this phase you will also:

  • Select your home owner’s “hazard” insurance (get three quotes to get the best price).

  • Select your residential service contract company.

This is where my Repair Protection kicks in. Since I believe that all buyers need a residential service contract (a.k.a. home warranty) on a newly purchased home to help off-set future repair costs, I will either negotiate the Seller to pay for one, or else I will pay for it myself up to $500.


Closing Phase: Sign On The Dotted Line

As previously stated, in Texas, title companies are neutral, third-party companies who handle the closing and lending documents to purchase a home. We do not close in attorney offices.

About a week in advance, I will schedule the closing with you and the title company. We will meet at the title company on the day of closing, sit in a conference room with an escrow officer (who is also a notary), and you will sign the legal documents to purchase the home.

You will need to bring two forms of ID with you to the closing.


Follow-up Phase: Enjoying and Maintaining the Home

After you “Close and Fund” you will receive the keys to your new home!

»  Terms to Know: http://www.hud.gov/offices/hsg/sfh/buying/glossary.cfm#top


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Do I Need a Real Estate Agent? Maybe I Can Do This Myself

 “That’s what I used to think! In fact, before I became a licensed real estate agent, I did several FSBO (For Sale By Owner) sales and THOUGHT I knew what I was doing. But if I had known then what I know now…I never would have risked it. Here’s what I’ve learned…” –Sheila Cox

Yes…You Need a Partner During the Home Buying Process!

Your home is probably your largest single financial investment. Most homes in my area (Katy and Sugar Land TX) cost over $200,000. If you had a $200K legal problem would you try to handle it yourself or would you high a quality attorney to help you?

Of course, not all attorneys are equal in skills, knowledge, integrity, experience–and neither are all real estate agents. In fact, most people have had at least one bad experience with a low-quality real estate agent. I know I have! As in any industry, please consider that it is possible the 80-20 rule applies to real estate agents…maybe 20 percent are not very highly qualified, but that would leave another 80 percent who are! (Just like in your line of work…do all your peers provide the same quality of expertise?) Always keep in mind that having a bad experience with one agent, doesn’t mean that all real estate agents are bad. The trick is finding and hiring the right, high-quality agent. Here are some things to consider…


Real Estate Laws Vary From State to State

Not all states have the same real estate laws. In fact, Texas real estate laws and practices are highly unique in comparison to other states. Just because you have bought or sold a home in another state, does not necessarily make you qualified to do so in Texas. (I know, I know…we Texans think everything is bigger and better here!) But the fact is, Texas real estate is so complicated, that agents are required to have many more hours of education to get a license here than any other state…about three times more hours of education than average across other states!

 


Your Legal Exposure in a Real Estate Transaction Can Be Very High

Depositphotos_6842701_xsA very common type of real estate lawsuit involves Deceptive Trade Practices in which a home buyer accuses the home seller for not properly disclosing the actual condition of the property. In these cases,treble damages (three times the actual cost) can be awarded. This can really add up! And the cost for hiring a real estate attorney to defend yourself can cost well over $10,000! It doesn’t always matter that you did nothing wrong. Without a licensed real estate agent there to watch out for your interests and to make sure that you comply with all of the Texas real estate code and statutes, you can end up with a real nightmare on your hands.

Likewise, home owners can sue home buyers for non-performance or can keep large amounts of earnest money if a contract doesn’t Close. This is when you want a professional agent looking out for your best interest to (hopefully) prevent you from breaching a contract and losing your earnest money. And if a lawsuit is not prevented, isn’t it best to have a large, reputable real estate brokerage (and their legal team) behind you when you need it?

 


Real Estate Data Is Not a Matter of Public Record In Texas

do-i-n1Texas is one of 14 non-disclose or partially-disclose states in the U.S. That means that real estate sales prices are not a matter of public record in Texas. So Internet-based companies like Zillow and Trulia do not have the real data to accurately “Zestimate” what a house is worth in our state. Property tax records are what these companies use in order to estimate a home’s value. But everyone in Texas knows that tax appraisal values do not usually reflect the actual value of a home…they are typically lower than actual value. (Which helps to keep the costs of our already too-high property taxes down.)

The only people in Texas who have accurate sales records are members of the Multiple Listing Service (MLS) including real estate agents and home appraisers. So if you want an accurate sales price analysis on a home (so that you don’t pay too much for it) you will need to hire one of these professionals.

CAUTION: Not all real estate agents are equally good at sales price analysis. Hire an agent who knows how to put together a valid comparative market analysis (CMA).

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Source: https://www.zillow.com/zestimate/#acc

 


Do You Really Want (or Have the Time) To Learn Everything You Need To Know About Real Estate?

Yes, you can read up on real estate and I encourage you to do so. But no amount of book-learning is going to make up for the actual real-world experience a high-quality real estate agent offers. Real estate laws change yearly and vary from state-to-state. So most books are out-of-date by the time they go to print or are too generic to meet your specific state’s requirements.

And please don’t believe all the real estate advice that you can read on the Internet. I recently read an Internet article about how to sell a home without a real estate agent and most of the advice offered was not accurate according to Texas real estate laws…which could get you into some costly legal trouble. Even the advice from real estate agents on one of my favorite online resources, ActiveRain, is not always accurate for Texas.

Besides all this…aren’t you busy enough with just deciding on a home, getting your lender all the necessary paperwork, planning the move, changing utilities, registering at new schools, packing, training for the new job, and so forth?

 


It’s Complicated! Are You Qualified to Manage the Entire Transaction?

A high-quality real estate agent wears many hats: local area expert, state real estate rules expert, amateur remodeler, price analyzer and mathematician, home decorator/stager, professional photographer and videographer, marketing expert, chauffer and tour guide, psychologist, marriage counselor, sales negotiator, amateur home inspector, administrative assistant, project/transaction manager, communications expert, and tech writer. Very few professions require skills in so many different areas! I don’t think the average person realizes how much they expect their real estate agent to handle.

(Read a great article by non-agent: “How many hats does a Realtor wear?”) 

And then there are the home buyers who think real estate agents just help them find a home to buy and once the contract is accepted, their job is over; but that’s just the “end of the beginning” for an agent! Likewise, a great listing agent doesn’t just take a few photos, put a sign in the yard, and wait for the offers. A great real estate agent is looking out for you every step of the way and keeping their eye on the other agent, the other party (buyer, seller, builder), the lender, the inspector, and the title company.

Here are more examples of what a real estate agent does for you:

  • Helping you maneuver the Option Period, including getting the right inspections and, if necessary, repair estimates. Do you know how to “exercise your option” properly if needed? Do you know how to minimize the impact of the OP when marketing a home as a seller? How do you deal with lender-required repairs?
  • Negotiating necessary repairs with the Seller so you don’t get stuck with them after Closing. Can you get repair estimates in a timely manner? Do you know how to effectively overcome common repair objections? Do you have the knowledge needed to accurately estimate a remodeling project?
  • Helping you meet your contractual obligations (such as appraisals, surveys, deed restrictions, HOA compliance certificates, legally required disclosures, title commitments, hazard insurance, and more) in a timely manner so you don’t find yourself in breach of contract. How many days do you have to get the survey? If there is an existing survey, what other legal document is required? What do you do if encumbrances are found in the title search? What do you do if your financing falls through after the deadline in your contract?
  • Dealing with home inspectors, appraisers, lenders, and title companies to get them to do their jobs in a timely manner so you can move when you plan to. There are many moving parts in a real estate transaction! What do you do if the lender doesn’t get the paperwork to the title company on time? How do you know if the fees on the HUD1 are accurate? Did you remember to get hazard insurance and order the residential service contract? Did you negotiate a temporary lease so you can move out after Closing? What do you do if the Closing falls through?

 


Do You Know the Area As Well As You Need To?

Riverstone_Waterfront_Homes3If you are moving to a new area, there is no substitute for getting the opinions and advice of a local real estate expert. Even if you know someone who lives in the area that you are moving to…they only see that area from their individual, and probably limited, perspective. You really need a professional who has the BIG picture and the “inside information” that only a local real estate expert can provide. Someone who will listen to your specific needs and find the right neighborhood and right home for you.

And watch out for online companies offering you price reports and other types of statistics based on ZIP Codes. Katy consists of multiple ZIP Codes and let me assure you that a price analysis for a home in Sweetwater in 77479 is not going to accurately reflect the price of a home located in Woodstream which is in the same ZIP Code.

Home prices vary not only from neighborhood to neighborhood, but even within the same neighborhood. For example, a home in New Territory that has a water view is going to be valued higher than a home right down the street that does not have a water view. And a 2000-2600sf home probably has a different average sales price/sf than a 3500-4100sf home…even on the same street. AND those same values can change from month to month (depending on the actual figures for recently closed home sales). Do you have the real sales data and price analysis expertise to ensure that you don’t pay too much for a home or list it at an unrealistic price?

 


Sometimes You Need An Objective Partner When Choosing the Right Home

Let’s face it…even the most level-headed, objective, analytical engineer-type can get emotional (and become unobjective) about a home. Trust me on this observation! Everyone gets emotional on some level about the house they are going to live in for the next several years. And if you have raised four kids, two dogs, and three cats in a home for the past 23 years…forget about it. You may not see the worn-out carpet and outdated wallpaper for the good memories.

Sometimes it is just like “love at first sight” when buying a home. And that emotional response to a home may cause you to do something you will regret later. You need an unattached, neutral, third-party (such as a dedicated real estate agent) to help keep you focused on the facts and the big picture. I’m not saying all agents do this. I agree that some agents are just out to close the deal no matter what, and don’t really care if you are going to end up with a poor investment that you will regret when resale time comes along.

But I once talked a client out of a $650,000 home because, when I was researching the home and looked at the bird’s eye view, I found a hidden dump where you could see railroad cars deteriorating and rusting into the local water supply! You never would have seen this driving around the neighborhood because it was hidden behind fences and shrubbery. But when I showed my clients what they would be living next to, even though they were disappointed because they loved the house, they were thankful that I found the problem and objectively pointed it out to them before they purchased that potentially costly mistake. I ended up selling them a $525K home they loved and we are very good friends to this date because they know I am trustworthy and not just looking out for the highest sales commission I can get.

 


Summary

So let’s recap. Since…

…real estate laws vary from state to state and change every year,

…your legal exposure in a real estate transaction can be very high,

…real estate data is not a matter of public record in Texas, so you don’t really know what a specific house is really worth,

…you probably don’t have the time to learn everything you need to know about real estate

…it’s complicated and you may not be qualified to manage the entire transaction,

…you may not know the area as well as you need to know it, and

…you probably want an objective partner to help you choose the right home…

You should definitely hire a real estate agent to help you with your next real estate transaction! 


Next: Here is a checklist on What To Look for In a Texas Real Estate Agent with ideas that you may not have thought of before.

See also: How To Get an Award-Winning Real Estate Agent in Katy

 

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Benefits of Home Ownership

It’s the American dream…to own your own home. But have you considered the specific benefits of home ownership? Studies show the following benefits for home owners:

  1. Improved tax advantages…thereby lowering your overall tax burden.
  2. Forced savings program (in the amount of principal paid each month on the mortgage)…especially if the home is appreciating in value (which over the long run, they generally do).
  3. Stability in house payment each month (whereas rent payments increase over time).
  4. Freedom! (ability to do with the house what you will…no more landlord approval needed on changes to the interior).
  5. Improved academic success for children.
  6. Increased access to economic and educational opportunities.
  7. Improved quality and stability of the surrounding neighborhood.
  8. A higher overall quality of life including higher life satisfaction, higher self-esteem, and higher perceived control over their lives.
  9. Decreased likelihood to become a crime victim.
  10. Improved structural quality of housing (and high quality structures have been found to also raise mental health of occupants).
  11. Lower teenage pregnancy rates in children of homeowners.

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