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Homebuyer Tips

7 Real Estate Terms For Buyers & Sellers

As REALTORS®, we are often asked: What is a short sale? Should I buy a foreclosure? What is the MLS and why do I need to use it? So we put together a quick article to help you better understand some of these commonly-used real estate terms!

 

Check out the terms below for a quick definition and a few pros and cons:

1. SHORT SALE

A short sale is when the seller owes more on the mortgage than what the current market value is, or the sales price of the home when they are trying to sell. Short sales are sold for a price less than what is currently still owed on the mortgage by the previous owner. For sellers, a short sale is usually done to avoid a foreclosure.

Pros:

  • Sellers can avoid a foreclosure, while buyers can get a great deal on a home!
  • There is usually less competition with short sales than with foreclosures.

Cons:

  • Short sale purchases can be a lengthy process and involve more paperwork than a normal sale.
  • Special approval from lenders is required, adding to the lengthy process.
  • The property is most likely sold as-is, which may mean the house is not in great condition. 

 

2. FORECLOSURE

A foreclosure is a home that is that the previous owner defaulted on (stopped paying their mortgage) and the bank took possession of the property. Similar to how a car gets repossessed if someone stops making payments. These properties are often in a wide range of conditions and historically take more time to close on with banks, lenders, etc. While there are risks with purchasing a foreclosed home, there is also an opportunity to own a home for a very affordable price!

Pros:

  • Buyers can purchase below market value.
  • Banks often willing to give financing.
  • Higher return on your investment, as you re purchasing a home under market value
  • There may be an option to purchase in a "pre-foreclosure stage" - purchase from the seller at an affordable price, instead of the bank, before the bank reposesses the home. 

Cons:

  • Homes are sold As-Is, which can often mean the home has been neglected and not very well-maintained
  • Investors love foreclosures, so there can be a lot of competition for these types of properties in a desired area.
  • The process to purchase a foreclosure is usually a bit longer and requires more paperwork.

 

3. REVERSE MORTGAGE

A reverse mortgage is essentially a loan against the equity you've already built on your home. In other words, you can borrow from your home's equity. These types of mortgages are designated for the elderly who need cash, but do not want to, or cannot, sell their home. 

 

4. FOR SALE BY OWNER

7 Real Estate Terms For Buyers & Sellers

A for sale by owner is a property that is being sold by the owner, without a real estate agent. In this scenario, most people think they can save a lot of money by not using an agent. However, what sellers don't know is that there are a lot of costs associated with selling your home, and agents can actually save you a lot of money AND time. There are also a lot of risks for the seller and buyer as they take on liability and don't know the legalities involved.

Food for thought - would you show up to court to represent yourself after googling "how to practice law?"

 

5. A "COMP"

A comp is a home that is comparable to the specific property you're looking to buy.  Comps include recently sold homes that are in the surrounding area and are similar in size, layout, condition and features as the home you're trying to buy (or sell). Finding comps helps sellers price their home accurately, and it also gives buyers an idea of what a home for sale is worth. 

 

6. THE MLS

All REALTORS® use the MLS, or Multiple Listing Service, which is the database that provides information on properties for sale. Every property that is listed in the MLS is given its own identification number. When a listing has been uploaded into the MLS database, the MLS then shares its data (the listing) with EVERY real estate website that allows you to search its properties.

 

7. MLS NUMER

Ever wonder why almost every home that is listed by a REALTOR has an MLS number? Every property that is uploaded into the MLS is given its own identification number, or MLS number, to organize and identify properties. When a property/home is purchased/sold, that MLS number is then considered "used up".

 

So, what's the best website to use to search available properties?

This answer is easy, it’s www.Keelerfamily.com Keeler Family

In all seriousness, we are often asked what the best website is to search for available listings. In reality, all real estate websites use something called an IDX. Some IDX’s are better than others, but the IDX establishes a direct data connection between the MLS and the website using it. This allows you to search the MLS database on your website. It’s like using a search engine to help you sift through what you want to find on the Internet, but in this case, it's only properties.

Our IDX is ideal, and I like to consider keelerfamily.com the “GOOGLE” of real estate websites, but I could be bias!  

 

Paul Hrycuna

 

How to Own a Home for Cheap!

How to Own a Home for Cheap!

Affordable Housing

If you can not afford a home for hundreds of thousands of dollars, but you want to get out of your Mom’s basement, off your friend’s couch, or out of your stingy landlord’s apartment, you CAN!

Many people are scared away from purchasing a home because they are under the impression they are going to pay hundreds of thousands of dollars, when in reality they do not have to.

 

There are three main routes you can go to find affordable housing:

1) Location, Location, Location!

The first route one can go to find affordable housing is to look in locations where housing demand is low. In areas where there is a low demand for housing, the buyer often has leverage come negotiation, and can score a much better deal than in areas with high demand.

In low demand areas, homes are often priced for a lot less than in high demand areas. The Buyer can always ask for more money off the list price and negotiate a winning deal through their REALTOR®. To find these low demand areas you will need to rely on the knowledge and expertise of your REALTOR®. 

2. For the love of condos

The second route you can go to find affordable housing is by looking into condominiums. There are a plethora of condos that are under $200,000 and there are some under $100,000. When looking at condos in this price range, people often find that their mortgage payment is less or the same as their current rental payment.

Condos are also great for people that like the low maintenance requirements of a rental but want the benefits of homeownership. If you own a condo and you have a leaky faucet, you’re probably going to have to hire your own plumber to correct the issue, but your condo association often covers many other expenses. Depending on the condo, the association may maintain and upkeep the outside structure, the land, gardens, shrubberies, snow plowing, walkways, trash, common areas, pool, clubhouse, fitness center, and other amenities. Your REALTOR® will help identify what services and amenities the condo you are interested in comes with.

3) Manufactured Homes

The third and final route you can go to find affordable housing is to look into manufactured homes or what many people know as mobile homes. Manufactured homes come in many different shapes and sizes. People are often surprised by how nice many manufactured homes are and that many manufactured home parks come with many of the features of a condo.

In my practice of real estate, I have identified that most manufactured homes are located in a park where the home is owned but the land is leased. Like a condo, a manufactured home park may upkeep the park, the land, gardens, shrubberies, snow plowing, walkways, trash, common areas, pool, clubhouse, fitness center, and other amenities. Your REALTOR® can help you find wicked good deals on manufactured homes and can often do so for under $100,000.

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I love helping clients buy and sell real estate because in the transaction, one size does not fit all, making every transaction unique. Many buyers are challenged with finding affordable housing and are uninformed of their options because they are not working with a quality REALTOR®. There is a housing option for you, whether it is in an affordable area, in a condo, or in a manufactured home and it is our job to find it for you!

Warm Regards,

 

Don't Make These 3 All Too Common Home Buyer Mistakes!

You are super-duper excited because you and your family have made the decision to find a new place you can call home. Yay! But before you make your big purchase, make sure you do not make these 3, all too common, homebuyer mistakes.

Mistake #1: Searching for your dream home before applying for a mortgage pre-approval.

You just concluded the most successful showing of your life and you know that this home is the one for you. You tell me “David, I want to buy this home!” You’re envisioning sipping some margs on that beautiful stone patio with the girls and taking a dip into that heated in-ground pool after a long day at work.

However, your dreams come to a screeching halt as I inform you an offer can’t be made. “What? Why?” you ask nervously. “I need a pre-approval letter from your lender. Have you called them yet?” I ask, already knowing your depressing answer. Your shoulders slouch forward and you raise your hand smacking yourself in the head knowing that your agent has told you to get pre-approved at least a thousand times (And he’s been counting).

Because of your negligence, the dream home of a lifetime falls under contract with another Buyer that is pre-approved and you’re going to have to find another home. This is not a good position to be in and you’re going to let everyone down, especially yourself.

If you are not pre-approved by a reputable mortgage lender you are simply a window shopper and not a real Buyer. When it comes time to submit an offer you have no ammunition to pull the trigger on that deal. Even worse, many Sellers won’t even let you in their home unless you can furnish a pre-approval letter.

So please, before we go look at homes, call your mortgage lender and get pre-approved!

Mistake #2: Assuming you need a 20% down payment or that your credit is not good enough.

Homeownership is one of the most rewarding feelings someone can have, but all too often I see people get robbed of their own dreams by assuming they need 20% down or assuming their credit is not good enough. Never assume these things when purchasing a home because, well, we all know the expression when someone assumes.

To give you some encouragement, I often see people who highly doubt their abilities to purchase real estate pleasantly surprised after speaking with a lender. Make the call to a few reputable mortgage lenders and the worse you’re going to hear is “no.”

Mistake #3: Waiting for the Unicorn.

As a master dealmaker, I will be the first to tell you that no one, ever, gets 100% of what they want in a home or in life. Why? Because here on Earth nothing is perfect and by accepting that reality you’re going to make it a lot easier on yourself when looking for a home.

Unless you have deep pockets to build a custom-built new construction home, you are probably going to purchase a home that you made a compromise on. For example, you come across a beautiful ocean-front property that’s priced to move but the kitchen does not have the exact cabinetry that you want.

You don’t have to purchase this home, but you may say to yourself “Wow, I love this home, I’m really digging the price, but I don’t like that ugly yellow cabinetry in the kitchen. Because everything else is on point, let’s submit an offer David, and later down the road, I’ll replace those awful kitchen cabinets.”

Being able to accept that nothing is perfect allows your mind to open up and see what you can do after purchasing the home to make it fit you and your needs just right. This is called potential. By waiting for the Unicorn property you will most likely never find the home you are looking for, many good homes will pass you by, and you’re going to end up tiring out and settling.

I know that after you read this article you are going to be more prepared than most Buyers out there which is going to make YOU more competitive in the market place. Sit down with your REALTOR and have a conversation with them to find a reputable mortgage lender for pre-approval and express to them your needs and wants, and explicitly distinguish the two. Once you do this, you have built a rock-solid foundation to begin your home search and I can not wait to see what you find!

Warmest regards,

  

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