Blog.MyLIHOME.com - Long Island Real Estate WeBLOG

A Word About Home Buying...

J Tar — Sat, 28 Oct 2006 20:14:03 GMT

A home buyer's biggest challenge is to strike a smart balance between Great Location and Great Home. Oftentimes in our real estate practice, we see buyers making the mistake of focusing too much on interior and exterior home features that fulfill their vision of the perfect home - new kitchen, big windows, finished basement, etc. - rather than the location of the property.

By location, we mean the features and benefits of - the actual street, the lot, the neighborhood, the school district, proximity to water, hospitals, transportation, shopping, etc. - things that can really add a lot to the resale value of a property. But who's thinking about selling -- we're buying right? Well, in fact, a great thought process that we recommend to home-buyers is to think about reselling the home that they are today considering to buy. That is, when buying, think about selling!

Simply put, focusing too much on the home and not enough on the location can be a really big, long-term mistake. Always remember the popular rule that professional real estate investors use - "Location, Location, Location - You can always change a home, but you can never change the location". Obviously, this rule does not always apply. For instance, if a home needs additions and expansion to fit your requirements, but there is no room to do so, the location may be great, but it will never fit your needs. That aside, and especially, when available purchase money is the major governing factor -- which it almost always is -- we strongly recommend buying a bit less of a home and MORE (as much as possible) of a location.

Acquiring this sense of balance takes some getting use to, (and could even be painful - because it may seem like you are giving up something) but it can make a BIG difference in your life later! Often, a smaller, less finished home with great location features will appreciate much more in price, than a larger, more finished home in a location that is less appealing.

When we speak about a "Great Deal" in real estate, it means that the property has a great relationship in terms of price vs. potential value. (Think of potential value as a combination of location and home.) It means that, although the home features may be less than perfect (they may in fact be perfect for you by the way), the location is so excellent, that the current sale price PLUS any investment you make to change the home, will be 100% (or nearly 100%) recoverable when you resell.

Naturally, there are no guarantees of return on investment in real estate, but a smart purchase and good planning can really minimize your risks and maximize your gains.

Are you buying a home in Long Island, New York? Consider using us!

We welcome your comments.

Visit us at: www.MyLIHOME.com

Steps to Buying a Home - on Long Island

J Tar — Sat, 28 Oct 2006 20:16:01 GMT

You've shopped around and hopefully seen lots of homes and learned about the neighborhood, schools, community benefits, etc. etc. --- and if you have shopped with us, you know we have given you a lot of information about these things -- maybe too much. Now it's time to make a move. You found the perfect home. You already have a mortgage pre-approval. You make an offer.... So what's next?

Every home purchase can be slightly different and some of the steps are different by geographic region, but for the Long Island, New York area the following is a pretty good idea of what to expect.

These are estimated timeframes because in an active home sales market, step #6 can easily take another 15 days.

VERY IMPORTANT!!
A property remains on the market until a contract is signed. So you need to move quickly through steps 1 to 4, or risk losing the home to another buyer's offer!

The step numbers are color coded to
indicate transition from buying to owning.

The Steps to Buying a Home
(Assuming Mortgage Pre-Approval and Home Identified...)

Step	Event Description	Est. Time Lapsed	Buyer Things to do..
1	Make Offer	Day 1	Find Lawyer, Inspector
2	Offer Acceptance by Seller	Day 2-3	Schedule Inspection
3	Complete Inspection	Day 3-5	Review Inspection
4	Contract Process starts ..from Seller lawyer to Buyer lawyer	Day 4-6	Review/Modify Contract
5	Sign Contract	Day 5-10	Minimum 5% Cash Down payment Required

Home Taken off the Market (Under Contract) - no more showings

6	Secure Mortgage for Home ..bank will perform formal buyer qualification process, arrange home appraisal, title search, underwriting and finally funding	Day 11-45+	Deliver personal documentation for mortgage
7	Home Purchase Close Date ..transfer of ownership	Day 35-50+	Balance of Cash payment Required
8	Move in ....	Day 35-50+	ENJOY!!

We welcome your comments.

Visit us at: www.MyLIHOME.com

About Real Estate Deeds and Title

J Tar — Sat, 28 Oct 2006 20:17:52 GMT

Key Definitions

Deed
A deed is the document that transfers ownership of real estate. It contains the names of the old and new owners and a legal description of the property, and is signed by the person transferring the property.

Title
A legal document evidencing a person's right to or ownership of a property.

There is a lot of paperwork required in real estate and you eventually need to understand what all these papers mean. The most important piece of paper, however, is the deed. The deed, as defined by the Land Title Institute is "an instrument, of various forms, by which title (ownership) to real estate is conveyed from one party to another."

There are several ways you can hold title to a property. Just like the title on a car, you must also have a title to the land and home that you have purchased. To take title, you must declare the form of ownership in one of several ways. Each state governs how property can be held within its boundaries, so there may be other ways to hold title than just the three discussed here. The primary forms of title are:

Joint tenancy
Tenancy in common
Tenancy by the entirety

Which is best? Well, they each offer various advantages and disadvantages, depending on your particular circumstances and how you want the property to pass if you die, sell it or get a divorce (for married owners). After the transaction is completed, the settlement attorney records this transfer of the deed at the courthouse to prove to all that you are the rightful owner of the property. The American Land Title Association defines these forms of titles as follows:

JOINT TENANTS - "Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally sell or encumber his interest without the consent or joinder of all of the other joint tenants."

If you partner with two other people to purchase a house, this may be one method of title. If one dies, title remains in the surviving joint tenant without required further action. This means if you die, you cannot leave your share to your heirs. Joint tenants are not married, thus not treated as one legal entity. If an owner wants out of the title, he or she may petition the court to divide the property or order its sale. The property can also be divided if a judgment creditor petitions the court to collect the judgment from one of the owner's shares.

TENANTS IN COMMON - "Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his respective interest or dispose of it by will, and if he dies without leaving a will, his heirs inherit his undivided."

Some state laws presume tenants in common unless the deed specifies otherwise. In this case, if one owner dies that share does pass to his or her heirs, not necessarily the surviving owner. Unmarried property owners usually use tenants in common. A tenant in common may sell his interest without approval of the other owner and, unless specified otherwise, the law assumes you meant to have equal ownership.

ESTATE BY ENTIRETIES - "An estate or interest in real estate predicated upon the legal fiction that a husband and wife are one person. A conveyance or devise to them (unless contrary intent is expressed) vests title in them as one person. Upon the death of either husband or wife, full title passes to the survivor."

Tenancy by the entirety may only be possible when the joint owners are husband and wife. This type of title provides for a common law right of survivorship, which means property goes automatically to the surviving spouse. No will, probate or other legal action is necessary, thus one spouse can not use a will to leave an interest to someone else.

This form of title follows the ancient legal theory that a married couple is one entity. Conveyance of the property must be done together and the property cannot be divided without the other. If a divorce occurs, tenancy by the entirety automatically converts to tenants in common.

Hire an Expert!
Are you shopping or planning to sell real estate on Long Island? We have extensive experience and high level New York State certified training in the business of real estate. Our modern methods reach out to the world of buyers and sellers and get results. Hiring a real estate agent is like hiring a doctor or lawyer - Why wouldn't you use the best?

Give us a call to feel the difference! Visit our us at www.MyLIHOME.com or call (631) 742-1171

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We welcome your comments.

Home Staging for Real Estate Sales - Part 1: Preparation

Antoinette Conetta — Sat, 28 Oct 2006 20:21:58 GMT

It's about a lot more than just lighting candles...

by Antoinette Conetta

Selling Real Estate is a complex process that involves strong emotions for both seller and buyer. Sellers usually excessively love their home and want top dollar for every bit of it; and buyers want to find a home that they can love, while paying the very least for it.

Most home sellers do not have a marketing background and therefore are usually unable to view, prepare and present their home appropriately, to maximize the value and benefits that are meaningful to prospective buyers. Even where a seller has some marketing awareness, either from their own background or with the guidance of a realtor, they both may often lack a basic decorating sense. Moreover, sellers usually have an inability to sufficiently distance themselves from the emotions they have for the home that they own, love and have lived in (with all those wonderful memories). Add to this the fact that they may have already moved outside of the area - or to their new home - and you have the potential for an overwhelming and less than optimal sales situation. This can all result in selling the property for less (or not at all) simply because it does not show well.

So to summarize, sellers are usually unable to correctly visualize and present their home for the buyer who will pay the highest price. In turn, very capable buyers pass-up the property or become discouraged when they see it - unable to find the emotional linkage that is necessary for them to make an offer - and this is oftentimes simply because of basic things having to do with appearance. The final result is that sellers become frustrated with waiting, only to sell later for much less.

Staging a home is about presenting it optimally and optimistically for the eyes of a specific target buyer. It involves numerous techniques, including at the most basic level, cleaning and organizing cabinets and closets (de-cluttering) to rearranging furniture, creating effective lighting, dressing windows, eliminating odors and much more. The first step is to have some idea about the profile of your likely buyer and their needs, and then to understand that they can be distracted by just about anything - which will impact what if anything they are willing to pay for your home. The simple aim, during the sales process, is to minimize distractions and optimize benefits that are meaningful to the buyer. The house must speak for itself - room by room, obviously, collectively and subconsciously to the buyers wants and needs.

As one specialized part of my decorating business, found at www.Conetta.com, I offer a basic Home Staging service on Long Island to any home seller, where I will come into the home, perform a careful survey, with photographs and measurements, and return with a detailed write-up (about 15 pages long) called the Home Staging Report. In this report, I introduce concepts of home staging, from a marketing perspective (based upon both my real estate sales and decorating experience) and make specific recommendations, using task lists and professional floor plans to help describe and visualize what needs to be done. In that report, I outline the very basic steps to effectively prepare a home as follows:

Finishing
Cleaning & Organizing
Decorating

By no means are these the only steps involved with home staging, and the work involved with each step listed here is completely driven by assumptions about who the likely buyer is (the Buyer Profile). But these are the steps that usually involve the most physical labor, so I thought it would be helpful to share some of my basically thinking with you, in a general way that would be applicable to almost any home.

Finishing
Here we are talking about things like paint, molding, outlet covers, door knobs, etc. Oftentimes - and it happens in our home as well - the finishing touches are left for sometime in the future -- sometimes way in the future. That might be ok when you are living in a home, but not when you are selling it. Everything must be finished, otherwise buyers will charge you roughly 4 dollars for every dollar it would cost you to do the work yourself. So for example, if having the newly sheetrocked bedroom painted would cost you $100, buyers (if they are even willing to do so), will mentally charge you $400 for the same work. It could be very expensive not to finish the work. And I don't mean you need to go crazy with finishing. Lots of sellers think that buyers will appreciate the fancy new door knobs, imported from Australia. That is definitely not true. We simply need to get the home projects finished at a very basic level.

Cleaning & Organizing
One of the most important things, almost any realtor will tell you, is that the house must be clean. The bathrooms must be spotless and the windows must sparkle. No crumbs on the kitchen table and no dust balls on the hardwood floors. The toys must be put away and yes, we must at least be able to walk through the garage. In terms of organizing, I'm talking here about decluttering. Cabinets and closets must be 1/3 empty. A fully packed cabinet or closet - no matter how large it really is - will look small. Conversely, a small cabinet or closet that is 1/3 empty will look roomy.

Decorating
This one is a bit tricky, because it involves personal preferences and taste. Everyone has some decorating sense, but what we need when we are selling a home is nice traditional neutrality. No loud wild colors. No pink light bulbs. No huge tropical plants in already crowded rooms. And yes, that printed rug, with the huge tiger on it -- it's got to go. Pick up any popular decorating magazine, or better yet, visit a nice furniture store for some pointers. We want to create rooms that are not over crowded, that are as brightly lit as possible and somewhat impersonal. Most people have tons of photographs throughout their home. Again, sorry, but we need to put most of them away. You can leave one or two photographs out per room. There are reasons for this, that go beyond the scope of this article, so you will need to trust me on this.

In closing, try to remove yourself from the emotions you have for your home. You will always have your beautiful memories and nobody wants to take them away from you. The fact is, the sooner you start to think of your current home as simply a product that needs to be sold, the better you will do at making it look perfect for the buyer who wants to make it their home.

In future articles, I will continue to expand upon these Home Staging concepts.

I welcome your comments and questions.

Visit us at: www.MyLIHOME.com and www.Conetta.com

Bridge Loans & Financing Options for Homeowners

J Tar — Sat, 28 Oct 2006 20:26:03 GMT

Buying your Next Home before Selling...

What does a homeowner do when they want to close on a new home but their current home hasn't sold yet? Well, there are a number of financing arrangements that can help bridge the gap, but this is definitely an area where we feel the banking industry could do a better job of informing consumers and create more convenient options to make the transition from one home to another a lot easier.

The odds of such a situation occurring is higher when the real estate market cools (because homes take longer to sell).

The most common interim financing tool for buyers is a a short-term bridge loan, which is a short-term loan secured by the equity in an as-yet-unsold house, with the funds to be used for a down payment and/or closing costs on a new house. There is no payment of principal until the house is sold or until the end of the loan term, whichever comes first. Interest payments may or may not be deferred until the house is sold. While it provides lots of flexibility, this type of loan usually carries high interest rates. Most lenders won't give you a bridge loan for the entire amount of the equity in your home. The amount of the bridge loan plus the remaining balance on your mortgage usually can't exceed 80 percent of the value of your home. And if you already have a second mortgage on your home, you may have difficulty finding a lender who will give you a bridge loan.

Another way to create bridge financing is to structure the financing on the new home with a combination of a first mortgage and a second mortgage. You'll keep the first mortgage on the new home for the long-term. You can pay the second mortgage off when your old home sells. The beauty of this approach is that most second mortgages have a long term; many are due in 15 years. So this relieves the anxiety of having to pay the loan off before you're ready. You will need to have at least enough cash to make a 10 percent down payment. Also, make sure that the second mortgage doesn't have a prepayment penalty.

Another popular approach is where Buyers who have a line of credit secured against the home they're selling use that to provide down payment funds. Some lenders, however, have restrictions against this.

Finally, in a soft market, the seller may be willing to do bridge financing for you.

And another less appealing possibility involves 100 percent financing on the new home mortgage. With no down payment needed, the buyer can manage until his old home is sold. However, the buyer must be approved to hold two mortgages.

We welcome your comments.

Visit us at: www.MyLIHOME.com

What's Your FICO Score?

J Tar — Sat, 28 Oct 2006 20:30:14 GMT

Lenders use it to estimate risk

Along with the credit report, lenders can also buy a credit score based on the information in the report. That score is calculated by a mathematical equation that evaluates many types of information that are on your credit report at that agency. By comparing this information to the patterns in hundreds of thousands of past credit reports, the score identifies your level of future credit risk.

A majority of lenders use FICO scores as one method to estimate an applicant’s credit risk. People with high FICO scores are likely to repay loans and credit cards more consistently than people with low FICO scores. Although FICO scores are remarkably predictive, no one can predict with certainty whether or not an applicant will repay a credit account.

In order for a FICO® (Fair, Isaac and Company) score to be calculated on your credit report, the report must contain at least one account which has been open for six months or greater. In addition, the report must contain at least one account that has been updated in the past six months. This ensures that there is enough information -- and enough recent information -- in your report on which to base a score.

You can get your personal FICO report by visiting www.MyFICO.com.

About FICO scores
Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the US are produced from software developed by Fair, Isaac and Company (FICO). FICO scores are provided to lenders by the three major credit reporting agencies: Equifax, Experian and TransUnion.

FICO scores provide the best guide to future risk based solely on credit report data. The higher the score, the lower the risk. But no score says whether a specific individual will be a "good" or "bad" customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single "cutoff score" used by all lenders and there are many additional factors that lenders use to determine your actual interest rates.

More than one score
In general, when people talk about "your score," they're talking about your current FICO score. However, there is no one score used to make decisions about you. This is true because:

Credit bureau scores are not the only scores used.
Many lenders use their own scores, which often will include the FICO score as well as other information about you.
FICO scores are not the only credit bureau scores.
There are other credit bureau scores, although FICO scores are by far the most commonly used. Other credit bureau scores may evaluate your credit report differently than FICO scores, and in some cases a higher score may mean more risk, not less risk as with FICO scores.
Your score may be different at each of the three credit reporting agencies.
The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the three credit reporting agencies are different, it's probably because the information those agencies have on you differs.
Your FICO score changes over time.
As your data changes at the credit reporting agency, so will any new score based on your credit report. So your FICO score from a month ago is probably not the same score a lender would get from the credit reporting agency today.

Interpreting Your Score
When a lender receives your Fair, Isaac credit bureau risk score, up to four "score reason codes" are also delivered. These explain the top reasons why your score was not higher. If the lender rejects your request for credit, and your FICO® score was part of the reason, these score reasons can help the lender tell you why your score wasn't higher.

These score reasons are more useful than the score itself in helping you determine whether your credit report might contain errors, and how you might improve your score over time. However, if you already have a high score (for example, in the mid-700s or higher) some of the reasons may not be very helpful, as they may be marginal factors related to the last three categories described previously (length of credit history, new credit and types of credit in use).

Common score reasons
Here are the top 10 most frequently given score reasons. Note that the specific wording given by your lender may be different from this.

Serious delinquency.
Serious delinquency, and public record or collection filed.
Derogatory public record or collection filed.
Time since delinquency is too recent or unknown.
Level of delinquency on accounts.
Number of accounts with delinquency.
Amount owed on accounts.
Proportion of balances to credit limits on revolving accounts is too high.
Length of time accounts have been established.
Too many accounts with balances.

We welcome your comments

Visit us at: www.MyLIHOME.com