Home Buyers Seminar 4/2/11


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Home Buyers Seminar 4/2/11

  1. 1. Eastern Connecticut Association of REALTORS ® Home Buyers Seminar
  2. 2. The Home Buying Process <ul><li>2010 NAR Profile of Home Buyers </li></ul><ul><li>CHARACTERISTICS OF HOMEBUVER S </li></ul><ul><li>Fifty percent of recent home buyers were first-time buyers. </li></ul><ul><li>The typical first-time home buyer was 30 years old, while the typical repeat buyer was 49 years old. </li></ul><ul><li>Twenty percent of recent home buyers were single females, and 12 percent were single males. </li></ul>
  3. 3. The Home Buying Process <ul><li>CHARACTERISTICS OF HOMES PURCHASED </li></ul><ul><li>New home purchases were at the lowest level in nine years—down to 15 percent of all recent home purchases. </li></ul><ul><li>The typical home purchased was 1,780 square feet in size,was built in 1990, and had 3 bedrooms and 2 baths. </li></ul><ul><li>Seventy-seven percent of home buyers purchased a detached single family home. </li></ul><ul><li>The median price of home purchased was $212,000 in the Northeast. </li></ul>
  4. 4. The Home Buying Process <ul><li>THE HOME SEARCH PROCESS </li></ul><ul><li>For more than one-third of home buyers, the first step in the home-buying process was looking online for properties. </li></ul><ul><li>Nine in ten home buyers used the Internet to search for homes. </li></ul><ul><li>The typical home buyer searched for 12 weeks and viewed 12 homes. </li></ul>
  5. 5. The Home Buying Process HOME BUYING AND REAL ESTATE PROFESSIONALS  Eighty-three percent of buyers purchased their home through a real estate agent or broker.  Ten percent of buyers purchased a home in foreclosure, 6 percent purchased a short sale.  Forty-four percent of buyers found their agent through a referral from a friend or family member.
  6. 6. The Home Buying Process <ul><li>Choosing a REALTOR® </li></ul>
  7. 7. The Home Buying Process <ul><li>Why Use a REALTOR®? </li></ul><ul><li>There are at least 8 reasons… </li></ul>
  8. 8. The Home Buying Process <ul><li>1. Your REALTOR® can help you determine your buying power. </li></ul><ul><li>2. Your REALTOR® has many resources to assist you in your home search. The MLS is only one. </li></ul><ul><li>3. Your REALTOR® can assist you in the home selection process. </li></ul>
  9. 9. The Home Buying Process <ul><li>4. Your REALTOR® can help you negotiate. </li></ul><ul><li>5. Your REALTOR® provides due diligence during the evaluation of the property. </li></ul><ul><li>6. Your REALTOR® can help you in understanding different financing options. </li></ul>
  10. 10. The Home Buying Process <ul><li>7. Your REALTOR® can guide you through the closing process. </li></ul><ul><li>8. Your REALTOR® is required to adhere to a strict Code of Ethics. </li></ul>
  11. 11. The Home Buying Process <ul><li>Which REALTOR®? </li></ul><ul><li>Friends, neighbor or relative – 48% </li></ul><ul><li>Previously used agent – 9% </li></ul><ul><li>Internet web site – 9% </li></ul><ul><li>Visited an open house – 7% </li></ul><ul><li>Make sure that the REALTOR® is familiar with the area that you are looking in. </li></ul>
  12. 12. The Home Buying Process <ul><li>The Paperwork </li></ul><ul><li>Right to Represent Buyer Agreement </li></ul><ul><li>Dual Agency Agreement </li></ul><ul><li>Designated Agency Agreement </li></ul><ul><li>Purchase & Sale Agreement </li></ul>
  13. 13. The Home Buying Process <ul><li>Resources Available to You </li></ul><ul><li>www.easternctrealtors.com </li></ul><ul><li>www.ctreal.com </li></ul><ul><li>REALTOR® web sites </li></ul><ul><li>Information for Home Buyers – </li></ul><ul><li>provided by the Connecticut Association of REALTORS® </li></ul><ul><li>ECAR Affiliate Services Directory </li></ul>
  14. 14. The Role of the Lender
  15. 15. <ul><li>The basics of understanding mortgage </li></ul><ul><li>financing are in these 4 questions: </li></ul><ul><li>How much house can you afford? </li></ul><ul><li>How much do you qualify for? </li></ul><ul><li>How do you choose the right mortgage? </li></ul><ul><li>How do you find the right lender? </li></ul>Understanding Mortgage Financing
  16. 16. Pre-Qualification, Pre-Approval or Loan Commitment? <ul><li>Most home buyers will hear these terms during their search for a home: </li></ul><ul><ul><ul><ul><ul><li>Pre-Qualification </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Pre-Approval </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Loan Commitment </li></ul></ul></ul></ul></ul><ul><li>Although related, the three terms each signify a different level of approval from a lender. </li></ul><ul><li>Ask your lender to explain all of the terms associated with their mortgage approval process. </li></ul>
  17. 17. 1. How much house can you afford? <ul><li>Traditionally, the amount that you can borrow -thus what you can afford to buy- </li></ul><ul><li>is based on how much you can afford to pay up front and on two qualifying ratios. </li></ul>
  18. 18. Specifically, most lenders will consider 5 key factors to determine your ability to qualify for a home loan: <ul><li>Income </li></ul>Employment Credit History and Monthly Debt Assets Property
  19. 19. <ul><li>When you're looking for mortgage financing, you might work with an officer at a bank, a mortgage banker, a mortgage broker or a credit union. All four types of lending institutions are different and each has strengths and weaknesses. </li></ul><ul><li>Ask for referrals from trusted professionals, but remember that there is no overall &quot;best&quot; solution, every buyer's loan needs are different. </li></ul><ul><li>Make your choice of a lender based on the best loan terms you can find, but ask important questions. </li></ul><ul><li>Quality within each branch or office can vary, depending on the loan officer, the support staff, and a variety of other factors.    </li></ul><ul><li>Very often, the loan officer is a more important choice than the institution.  </li></ul><ul><li>You want someone who has proven to be dependable and ethical in the past -- someone you feel will take good care of both you and your money. </li></ul>4. How do you find the right lender?
  20. 20. The Role of the Attorney
  21. 21. The Role of the Attorney <ul><li>Contract issues </li></ul><ul><li>Title Searching </li></ul><ul><li>Closing Coordination </li></ul><ul><li>The Closing </li></ul>
  22. 22. Title Searching <ul><li>Purpose of title searching </li></ul><ul><li>Conducting a title search </li></ul><ul><li>Title insurance </li></ul><ul><li>Title problems </li></ul>
  23. 23. Types of Title Insurance <ul><li>Loan Policy </li></ul><ul><ul><li>Must have </li></ul></ul><ul><li>Owners’ Policy </li></ul><ul><ul><li>“ Must have” </li></ul></ul><ul><li>Enhanced Benefits Policy </li></ul><ul><ul><li>Should have </li></ul></ul>
  24. 24. Closing Coordination (Contract to Closing) <ul><li>Client intake </li></ul><ul><ul><li>Contract review </li></ul></ul><ul><ul><li>Contract preparation </li></ul></ul><ul><ul><ul><li>Attorney – minimal role in Eastern Connecticut </li></ul></ul></ul><ul><li>Closing coordination </li></ul><ul><ul><li>Closing date / contract dates </li></ul></ul><ul><ul><ul><li>Time is of the essence </li></ul></ul></ul><ul><ul><ul><li>Reasonable time / extension of contract dates </li></ul></ul></ul>
  25. 25. The Closing <ul><li>Multi-party representation </li></ul><ul><ul><li>Sellers’ </li></ul></ul><ul><ul><li>Lender’s </li></ul></ul><ul><ul><li>Title </li></ul></ul><ul><ul><li>Buyers’ </li></ul></ul>
  26. 26. Closing Documents <ul><li>Settlement statement (HUD) </li></ul><ul><li>Warranty deed </li></ul><ul><li>Note </li></ul><ul><li>Mortgage deed(s) </li></ul><ul><li>Truth in Lending (TIL) </li></ul>
  27. 27. The Role of the Home Inspector
  28. 28. Home Inspection What it is? How it is done? Who should be there?
  29. 29. Attention Buyers! <ul><li>Be an informed buyer and don’t assume that the house is safe sound and secure. (Just because it looks ok to you doesn’t mean that it is ok.) </li></ul><ul><li>An inspection is your best opportunity to identify potential problems. </li></ul>
  30. 30. Not all inspectors are created equal! <ul><li>Make sure that the inspector is Licensed in the State of CT. </li></ul><ul><li>Make sure that the inspector is covered by at least $500,000 worth of E&O insurance. </li></ul><ul><li>Check references, ask around. </li></ul>
  31. 31. What is a Home Inspection? <ul><li>A visual examination of the physical structure and systems of accessible areas of the home. </li></ul><ul><li>Diagnostic evaluation. </li></ul><ul><li>Optional tests are also available. </li></ul>Purpose: Make sure that the home is sound, safe and secure !
  32. 32. Who Attends the inspection? <ul><li>THE BUYER’S AGENT </li></ul><ul><li>THE BUYER(S) </li></ul><ul><li>THE INSPECTOR </li></ul>
  33. 33. Scope of Inspection <ul><li>The inspection will objectively analyze the structure and systems and present findings based on the VISUAL EXAMINATION of accessible areas of the property at the time of the inspection. </li></ul>Home inspectors can not do any destructive testing!!!
  34. 34. THE REPORT <ul><li>The inspection should result in a verbal and written report. </li></ul><ul><li>The inspector will summarize the findings with you and your REALTOR®. </li></ul><ul><li>Be sure to carefully review this report. </li></ul>
  35. 35. What inspectors don’t do. <ul><li>Inspectors will not usually remove ceiling tiles, enter unsafe crawl spaces, disturb insulation, move personal items, uplift carpets, remove roof shingles or perform similarly intrusive tasks. </li></ul>
  36. 36. What inspectors do look for. <ul><li>Wood destroying insects.(Termites, carpenter ants, etc.) </li></ul><ul><li>This test may be required by some banks and mortgage companies </li></ul><ul><li>Termite colonies nest in moist soil. </li></ul>
  37. 37. Items checked! <ul><li>Inspectors will check: </li></ul><ul><li>Chimney, roof, gutters. </li></ul><ul><li>Windows, doors, floors, walls ceilings and stairs </li></ul><ul><li>Plumbing, heating and cooling systems, hot water system, electrical systems, and kitchen appliances. </li></ul><ul><li>Garage </li></ul>
  38. 38. Other Tests Available <ul><li>Water Quality, Quantity, radon in water and lead in water. </li></ul><ul><li>Radon in air. </li></ul><ul><li>Lead Paint </li></ul><ul><li>Asbestos </li></ul><ul><li>Septic Inspections </li></ul>
  39. 39. Home Inspection vs. Home Warranty <ul><li>NOT THE SAME THING !!!!!!!!!!! </li></ul><ul><li>Most Inspectors will give a warranty on their inspection only! </li></ul><ul><li>Home Warranties are different and offered through insurance companies. </li></ul>Most companies have guarantees on their inspection reports
  40. 40. Summary <ul><li>A home inspection is important. </li></ul><ul><li>Objective review of the home’s structure and mechanical/electrical systems. </li></ul><ul><li>Review references and choose a qualified home inspector. </li></ul>
  41. 41. The Role of the Insurance Agent
  42. 42. Insuring Your Largest Investment – Your Home
  43. 43. Homeowners Insurance Policy <ul><li>Dwelling – Coverage A </li></ul><ul><li>Determining value-based on age, square footage and additional features </li></ul><ul><li>Replacement cost on dwelling versus Actual Cash Value </li></ul><ul><li>Other Structures – Coverage B </li></ul><ul><li>Anything not attached to dwelling-detached garage, shed, above ground-in ground pool </li></ul><ul><li>Personal Property/Contents - Coverage C </li></ul><ul><li>50-70% of Dwelling coverage </li></ul><ul><li>Replacement cost versus actual cash value </li></ul><ul><li>Loss of Use – Coverage D </li></ul><ul><li>Additional Living Expense if you had a covered loss and the house was unfit for your family to live in due to claim </li></ul>
  44. 44. Homeowners Insurance Policy <ul><li>Personal Liability – Coverage E </li></ul><ul><li>Protects your assets if you were ever sued due to negligence </li></ul><ul><li>Medical Payments – Coverage F </li></ul><ul><li>Provision in policy – optional limit </li></ul><ul><li>Scheduled Personal Property </li></ul><ul><li>Jewelry </li></ul><ul><li>Furs </li></ul><ul><li>Collectibles </li></ul>
  45. 45. Homeowners Insurance Policy <ul><li>Policy Credits: </li></ul><ul><li>Deductible Savings </li></ul><ul><li>Security System-monitored 24hrs </li></ul><ul><li>Account Credit-Packaging Policies </li></ul><ul><li>Newer Home Credit </li></ul><ul><li>Non-smokers </li></ul>
  46. 46. Homeowners Insurance Policy <ul><li>Underwriting Concerns: </li></ul><ul><li>Insurance Scoring </li></ul><ul><li>Coastal Properties </li></ul><ul><li>Dogs – Ineligible Dog List </li></ul><ul><li>Underground Oil Tanks-Environmental Hazard </li></ul><ul><li>Above Ground-In Ground Pools – slides, diving boards </li></ul><ul><li>Fuses-Circuit Breakers required </li></ul><ul><li>Age of Roof – 25 years or new </li></ul><ul><li>Prior Claims and Frequency </li></ul><ul><li>Trampolines </li></ul>
  47. 47. The Homeowner Closing <ul><li>Closing-Binder and Paid Receipt-Issued Prior to Closing </li></ul><ul><li>Additional Coverage's: </li></ul><ul><li>Personal Umbrella Policy </li></ul><ul><li>Flood Insurance Policy </li></ul><ul><li>Life Insurance – Provides for your family in the event of your death </li></ul><ul><li>Disability Insurance – 59% of homeowners will lose work over a 30 year period of time and not get paid for their lost time. Can you afford to pay your bills without a paycheck? </li></ul>
  48. 48. Thank you for attending! Enjoy benefits of using a REALTOR® & ECAR Affiliate Members