The RE/MAX Associates Louisville Real Estate Blog

Things to Consider in Making a Sweeter Offer

Never underestimate the power of writing an offer letter to a seller. If you finally find the home of your dreams the next step is to write an offer. Here are three tips to make your offer that much more enticing, but don’t hold your breath, they still have to accept it first.

Consider your approach

The listing price isn’t the place to start negotiations. You begin with sitting down with your real estate agent and looking at similar homes and their values in the area. The most accurate prices will be held within the past three months. Knowing the comparable home sales will give you a better idea of a realistic asking price, which helps you shape a more constructive offer based on amenities and location.

Once you know how much you want to offer, you have to decide how you will pay for this home. Will it be cash or financing? If you offer cash you can get it cheaper (sometimes) because traditional mortgages add a ton to the cost. If you are choosing to finance it, but offer to close in less than 30 days, it’s something to consider in your offer price. If you have a good agent, they can float a quick close to the seller and sweeten the deal.

Ask your agent if it’s worth your time to offer a lowball offer. They should know if this is a good or bad idea based on their knowledge of the market and perhaps even previous experience with the listing agent. Sometimes a lowball offer can begin a favorable negotiation, but often times it can derail your plan quite quickly. If you choose to lowball them, be prepared to hear a quick “no”.

Once you are ready to submit your offer, back it up with everything the seller needs to know. You want them to look twice, if not more at your offer. It will benefit you to include the completed paperwork with everything signed properly, and ask for seller concessions that are appropriate for the market.

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Think About the Exterior Before Buying

It isn’t difficult to become fixated on one particular house when house hunting. When you find the one you love you will be willing to do almost anything to get it. Before you set your heart on a particular home, take a second look of the outside before making an offer. Any home isn’t truly a great home unless it can pass an extensive exterior test. Below is what you should look for on the outside.

Trees a foliage

The first thing you want to look at are trees and foliage. Are the trees close to the foundation of the house? If they get too big their roots can cause problems. IF the tree was removed, the roots left behind will rot and create problems as well. Consider calling in a foundation expert during the inspection  

A lot of trees grow so large their limbs grow over the home, sometimes causing damage to the roof shingles. Critters, like squirrels, opossums, or other rodents can use these limbs to seek shelter in your home, and then you have a bigger problem.

If you know this is the house you want, you may want to ask the seller to trim foliage away from the home. This will eliminate the possibility of termites, or carpenter ants.

Foundation

Cracks in your foundation are a huge problem because it allows in moisture. This allows for leaks in your foundation and water destroys most household features. Moisture creates mold which is never good, and can erode the concrete in your foundation. Check this area very carefully, and if there is a problem, try to make sure it is fixed as part of the negotiation.

Pool

If a pool comes with the house there are a few “must ask” questions – how old is the liner? Has it been resurfaced? How old is the equipment?

Either way, have a pool company do a...

Snapchat and Real Estate

As a real estate agent it’s your job to advertise for yourself. Whether your platform is one of the various forms of social media, word-of-mouth, or if your reputation does all the work for you, you need to be the best at promoting your services.

Today’s agents are getting younger and they are using the many platforms of social media, Facebook, Instagram, Snapchat, Twitter, etc. These are proving to work, but not all of them have been utilized to their full potential.

One of the growing tools for agents is Snapchat. Many agents are hesitant because they don’t understand it. But here is what you need to know to become a Snapchat star.

Be hyper-local – this means showing your face, and showing the hottest spots in town. Drive around the neighborhoods showing the real estate through video or picture. If you swipe right, there’s bound to be a “filter” that says if you’re in “old Louisville”, or “Crescent Hill”, and that can be very helpful.

Be authentic - Be yourself, show your excitement for what you do. If you come off as polished, so what, say what you have to in order to entice and show the Snapchat world what’s going on in the market.

Be patient – Rome wasn’t built in a day, and neither will your snapchat follower base. Consider this more of a marathon than a sprint. It takes time to get your name out there and have people follow you. So keep doing what you do while staying cool, calm, and collected.

Download the Ghost Codes app – One snapchat guru is Carlos Gil. This app will tell you everything you need to know...

How Much are Closing Costs and What is in Them?

Are you worried about how much closing costs will run you? Well nobody really likes closing costs except for the third party they are paid to. Closing costs are exactly that, fees paid to the third party who make the sale of a property happen. Usually, they are anywhere from 2% to 7% of the price of the property. So if the home is worth $250,000, you could end up paying anywhere from $5,000 to $17,500.

You won’t be paying this alone, as the buyer’s shoulder most of the cost. Usually buyers are responsible for 3% to 4%, and the sellers are 1% to 2%. Some of the cost can be paid before the deal is closed, but most of it is paid at the end when the keys exchange hands.

How much are closing costs for buyers?

Homebuyers pay most of the closing costs since most of the fees are tied to the mortgage. If you pay cash for the property, there are fewer fees, but still some. Here are a few you should expect to pay.

  • Fee for running your credit report.
  • A loan origination fee, which is the fee for lenders processing your paper work.
  • Taxes, or stamp taxes, which is the tax on your borrowed money.
  • A home inspection fee, checking the home for flaws.
  • A fee for the title search looks for any liens.
  • A fee for the underwriter, who ends up qualifying, or disqualifying you for a mortgage.
  • A fee for the appraisal of the home, matching the home’s value to the mortgage you want.
  • A survey fee for a single-family home, or townhome (not condos).

How much are closing costs for sellers?

  • A closing fee, paid to the title company or lawyers office where everyone meets to close the deal.
  • Taxes on the home sale.
  • A fee for the lawyer of the seller.
  • A fee for transferring the title to the new owner.

This doesn’t...

New Rules for Self-Employed Borrowers

Being self-employed requires a different set of credentials than a salaried person if you are looking to get a mortgage. Recently, the rules have changed for the population of self-employed borrowers, so let’s take a look at how this will impact you.

Self-employed borrower basics

The first two things lenders look at when deciding if you qualify for a mortgage is income and assets. This determines how much you can afford to pay per month. The income is reported as sole proprietor or owners of entities like corporations, partnerships, or limited liability companies.

As a sole proprietor, you are expected to file your self-employed income on IRS schedule C, which tracks your income and expenses for the year.

Apart from salaried borrowers who get to use their gross income for loan qualifying, a sole proprietor must qualify using their net income from schedule C.  A 24 month average of your net income is calculated for sole proprietors as opposed to the 12-month for salaried borrowers. If your income is lower than the previous year, lenders will use the 12-month average of the most recent year.

If you are self-employed and have a corporation, partnership, or LLC, the IRS forces you to file separate tax returns; and if you owe more than 25% on your entity, you will need to provide lenders with these full business tax returns, along with your personal.

Exactly like the schedule C, lenders average your income for 24 months using two years of business (and personal) returns, and if the most recent year is lower, they average your 12 month income.

As for assets, self-employed businesses have a lot of money in their businesses and use the funds for their down payment. Sometimes this is allowed, and if so, your tax preparer must verify that the funds in your business is being used for a home purchase, and it won’t have an impact on your business.

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Questions to Ask When Buying New Construction Homes

If you are searching around the market for a brand new home, you are in luck; they are being built at an 18 percent increase from the previous year, which is about 840,000 new homes. The biggest downfall to buying a new home is the price tag attached. The average price of a newly built home in 2015 was $351,000.

The market is what it is, and there are still ways you can save when you purchase a new home. It’s a lot like car shopping and you need to have a strategy to get the best deal. Ask builders these questions in order to find the right home for you.

What financial incentives do you offer for using your preferred lender and Title Company?

Builders don’t often set a precedent for negotiation sales prices. This is because if a home is listed at $400,000 and sells for $390,000, the next buyer in the lot over will want to buy that home for $380,000. However, it is not uncommon for builders to offer incentives for those who use their preferred lender and title company.

They may even knock off a big chunk on the price tag. They have also been known to sweeten the deal by negotiating prices on finishes like adding hardwood floors instead of carpet.

It’s not a bad idea to keep shopping for a lender with different quotes in the meantime. Interest rates aren’t the only thing you are shopping for here; compare each loan estimate terms to make sure the deals match up.

What are standard finishes?

When you walk through the model home in the development, keep in mind this is the high-end version of the home you are considering. The models are spruced up and are there to entice the buyers. So you should which options are standard, which are upgrades, and what the cost is for those upgrades.

The best sway to cut your cost is to move into a home without the upgrades. Then you can either hire a contractor,...

3 Simple Ways to go Green

In today’s world some phrases may intimidate people; a common one is “sustainable home”. Becoming green isn’t bad, and in fact if you knew a little more about it, you may even like it. To go green doesn’t mean you completely change your life style and get solar panels all over your roof, or buy all new electric cars.

You can have an ecofriendly home without building it from scratch. Simple tweaks here and there can turn your home from industrial to green.

Light bulbs and more

Using LED light bulbs is the simplest thing you can do in order to affect your electric bill. Another option is getting high-performance windows. They are usually triple-paned for maximum efficiency.

Thinking about your air ducts? There are air ducts out there that are actually ductless! They are mounted on your wall and are controllable by a remote.  It’s been reported that these systems are up to 300% more efficient than most of the systems out there. They also happen to fit and blend into most rooms.

Water conservation

Having the right fixtures can help save thousands of gallons of water per year. Stealth system toilets use less than a gallon per flush. The average American toilet uses about 3 gallons per flush; that’s anywhere from 6,000 – 9,000 gallons saved annually!

Having a tankless water heater is another option for saving water. These skip the wasteful process of reheating hot water in a tank. They heat on-demand and energy isn’t wasted keeping already hot water hot.

There’s also the good ol’ system of collecting rain water. Repurposed rainwater works excellent for gardens and landscaping. Put barrels or buckets under your downspout and install a rain chain, which drains water from your gutters and hang from the downspout.

The green thing about this practice...

Student Loans Preventing Your From Getting a Loan? Here's How to Beat it.

Student loans make buying a home much more of a hassle than it needs to be. Let’s figure out what the root problem is and how buyers can overcome it.

Problem number one is the student debt is often included in the buyer’s debt-to-income ratio (DTI). Your debt-to-income ratio is the percentage of your monthly income that is spent paying your debts. This would include your mortgage, student loans, auto loans, credit card payments, and child support. All these have a major impact on your DTI number.

Lenders use this factor pretty heavily in deciding if you are a good candidate for a mortgage. The preferred number among lenders is 36%, or below. Sometimes, 43% is allowed.

Before applying for your mortgage, make sure this number is quite healthy.

Your house payment is one of the most important factors in this ratio. Your DTI will be fluctuating since the house payment is affected by the property taxes, interest rate, and house price. IT doesn’t work in the way that everyone is qualified for a certain price. He bank just looks at the underwrite and what your monthly payment is.

Student loans aren’t always included on your DTI ratio, it just depends on what type of loan you he and if your payments are current.

If the buyer gets a conventional mortgage (VA loan – guaranteed by Veterans Affairs) the student loan will be included, even if payments have been deferred. If the buyer gets an FHA loan (insured by Federal Housing Administration) the ratio will be included unless the payments have been deferred for at least year. In this case, the payments can be excluded from the DTI.

The three ways to overcome DTI trouble is to reduce your debt, increase your income, and decrease your target mortgage payment.

Reducing your debt

If you have any loans that can be paid off within 10 payment periods, do it as fast as you can because lenders will remove this particular debt from the ratio. Paying off credit...

How to Have Your Own Garden in an Apartment

There are a ton of advantages to growing your own food, like knowing exactly where it’s coming from, you control the chemicals used, it’s cheap, and it’s healthy. Growing a ton of a food can be difficult without a ton of land, but it isn’t impossible. It’s actually a lot easier than you may think. Living on the 15th floor of a New York apartment can pose its problems, but first you must figure out which plants work best in your type of environment.

Try the herbs

Parsley, lemongrass, chives, oregano, and basil are super easy to grow indoors. If you can use a breathable pot, like the ones made of terra cotta, it’s easy to grow them indoors as long as you keep them near a window. All you have to do is not overwater them. The beauty of herbs is they only need to be watered once a week. You will know when to water them once the soil is completely dry, then you should make the soil completely wet.

The Greens

These plants like lettuce, spinach, arugula, and chard can handle low levels of light, so growing them indoors isn’t difficult. They have shallow roots so growing them in window boxes is ideal. Just be sure to give them a little light.

DIY an ideal growing environment

If your balcony or roof has too much sun, you can always get an awning to make some shade. Tomatoes need light but not too much. If you’ve got too little light, try painting a pallet white and put it against the wall the reflect what sunlight you do receive. If you live in warmer, drier climates, be sure to have your pots resting in drip trays that you keep filled with water. There are always self-watering planters too.

Be picky about where you buy your plants

Buying from a nursery rather than...

Keys to Buying A Flipped House

A lot of home buyers assume a flipped house is in perfect condition when they buy it, because well it is new. They are paying top dollar because everything in it is assumed to be new and ready to go. This doesn’t mean it won’t have its hassles.

DIY network makes flipping houses look like a piece of cake and that every one of them turns into a happy ending. What they don’t show you is several months, a year down the road about how the home is withstanding the daily wear and tear.

A good amount of the time property flippers try to minimize the time spent on homes so they can move on to the next one, and this often leads to cheap repairs. It’s totally common for them to find unexpected problems with one home that will put them over budget, and make their renovation subpar.

If you are buying a flipped home, or one that the seller purchased less than a year ago, taking into consideration these tips so you don’t find yourself in between a rock and a hard place.

Attention to detail

Don’t get enthralled in the new appliances, marble baths, and other bells and whistles. Look at the details closely to see what kind of work was actually completed. You will see shortly if it is quality or not. These little things will show you:

  • Light switch plates that aren’t flush with the walls.
  • Crown molding that isn’t perfectly matched at the corners.
  • Gaps between the countertops and walls.
  • Gaps in bathroom tile.
  • Doors and cabinets that don’t close completely.

These cosmetic faults are a strong indicator if there are larger issues that lay underneath. If the renovator was careless enough to not do the small things right, chances are they did the same work with the larger projects that would cost major bucks to repair.

Get an inspection

Because...

Mortgage Rates are Tanking, and Why It’s Important to You

Not since late in 2012 have mortgage rates been this low. The month of April saw rates plummet to 3.31 percent. This is great news for homebuyers and refinancers, but it’s showing the reflection of the global economy.

What’s going on?

The rates are this low today due to the Fed halting its purchases of mortgage-backed securities and treasuries. Prior 2012, the Fed was buying as many as they could get to force rates lower. Today they aren’t buying any and are primarily working on trying to undo the near-zero interest rate policies that were installed after the financial crisis. This is quite a different conundrum than the aftermath of the financial crisis.

  Because the Fed isn’t driving down rates with their buying power, it’s unlikely rates can, or will fall much lower. When they were on a buying roll in 2012 they were systematically able to raise prices, and lower yields. They may start buying again, which could make this historic low only temporary.

The 10-year treasury yield, a common omen for changes in mortgage rates, has held that the theory as rates moved lower. Twice in April the 10-year has seen its lows from 2012 and both times the market shot its yields up higher. IF the 210-year sank below its 2012 numbers then the mortgage rates would likely follow.

It’s not the Fed, so why are rates dropping

The Fed has little skin in the game at this point, so they’re not tipping the scales of supply and demand, so how could rates drop even more? It would take a global event to send rates even lower than they already are.

If such a chance there is a global event the markets would most likely price in the odds that central banks would increase the easy money policies due to the slowdown. The same rates towards the direction they went in 2012.

This event may look something like the...

How the Right Agent Will Save You Money In The Long Run

If you think every real estate agent is the same, you are sadly mistaken. There are good ones, mediocre ones, and bad ones. Like any tradesperson they come and go as the industry shifts. Only the truly good agents will stick around, because they have honed their craft to become experts. They know what each neighborhood offers and what it could use, and they know how to assist you in making the best decisions. Their connections in the city come in handy in a ton of ways, and most of the time it is to save you money.

Chances are you home is the biggest financial asset you have, and working with the right, or wrong, agent can affect your bank accounts in the long haul. Here are a few ways the right agent can benefit you for the long run.

Find the best home for your finances

Tackling the real estate monster requires having a sidekick, and that is always your agent. They help you through the process as your therapist and financial advisor, and sometimes lawyer. They are your partner when you are ready to buy or sell, guiding you on the best option available to you.

They will be working for you with your best interest in mind, not their commission check at the front of their brain. Finding the home that you can most reasonably afford is their objective, not finding the dream home you hope to live in in ten years.

Closing on a home means you have to pay that first month’s mortgage with the money you currently have, not the salary you hope to be making in the next decade. They shed light on what is realistic for you, and what’s simply fantasy. The last thing your agent wants to see is you becoming “house poor”, which is a state in which will cause you headaches for years.

Save some cash when you buy or sell your home

When using the best agent available to you, chances are you will save a little money on the purchase price....