real estate tips Archives

May 7, 2021May 6, 2021

Purchasing Property in a Seller’s Market

Real Estate will always be around. I don’t care how many times the market “crashes,” people still have to have somewhere to live, and once a lot is purchased, it’s purchased.

Purchasing Property in a Seller's Market:
Two children sitting on steps to a home in the French Quarter, New Orleans. — Photograph taken by The Coleture Visual Art Studio: French Quarter, New Orleans, LA

Every business industry is about supply and demand. There must be a demand for your supply, otherwise, you have no business. The Real Estate Industry is no different. Real Estate happens to be one thing that can run out because there is only so much land. That makes the supply of land inherently limited. By definition, it would seem that a buyer is always in a seller’s market, but that is not the case. You must first understand a few basic things before you can truly grasp what it means to be purchasing property in a seller’s market.

Successfully purchasing property in a seller’s market requires that you understand what a seller’s market is.

Generally speaking, there are three types of real estate markets– a Buyer’s Market, a Seller’s Market, and a Balanced Market. A balanced market indicates that buyers and sellers are on equal playing field, while a buyer’s market tends to mean that there are more homes available for sale than there are buyers. If a seller wants to move a property, he has to make his listing (and pricing) the most attractive. Conversely, a market becomes known as a seller’s market when the supply of available homes is less than the number of active buyers.

You may be seeing that a seller’s market is the scenario for most of the country right now, but you must remember that Real Estate is very local. There can be national trends, but the New Orleans market is very different from the Atlanta market, and the Atlanta market is very different, than say, the Phoenix market. To compete in a seller’s market as a purchaser, you must first be ready, willing, and able to buy.

How did we get here?

For those who are curious as to how we arrived in our current seller’s market, there are several factors in play. Most reasons can be attributed to effects of the Coronavirus. There has been a decrease in production across all industries, including home building. The attractiveness of super low federal interest rates, and people deciding during the pandemic that they wish to live more comfortable lives have all played major roles. The latter can translate into buying a larger home or a second home to staycation for those with more resources.

Consult your trusted agent

A seller’s market can drive some buyers crazy. The first thing is, trust your agent throughout this process. If you cannot trust or don’t listen to your agent, find another one. I do not think I can stress enough how important this is. Your trusted agent should fight for your best interest. If your agent gives you some recommendations that you are not sure of, ask questions, but be okay with accepting that he or she is the expert in their field. However, if you really do not like what they are saying, I implore you to consider finding and securing another agent to assist with that transaction. Working with a trusted agent is crucial to your success. If you do choose to move on, be sure that you are not contractually obligated to remain with that particular agent.

Offer a heavier deposit

A seller wants to know that you are a serious buyer. If you have the ability to do so, place a larger deposit amount down with your offer. If you could submit your offer with a $5,000 deposit, it is a stronger offer than a $1000 deposit. The seller sees this as a person who really wants to purchase his property.

Skip the Closing Costs

Keep the contingencies to a minimum. Don’t ask for closing costs if you don’t need to. Think about it from this perspective: if a seller has multiple offers all at the same price and with similar terms, and you are the one person making an offer not asking for closing costs, that seller is likely going to choose your offer. There could be someone offering more money than you are, but by them asking for closing costs, the seller may net more profit by accepting your offer. If you can make the purchase without the assistance in closing costs, forgo them.

Purchasing a property with cash

Hands down, the absolute easiest way to buy property is when you’re purchasing a property with cash. You can close as soon as you can close. Two things I recommend are completing the title search and an inspection, just so you can see what all the property needs.

Back in the day, Cash was King. (Now, Credit is).

If you were a cash buyer, it was possible for you to make a lower offer and have it accepted because you were paying cash. In today’s world, that no longer works. The seller receives cash at the end of the sale regardless, so why would she cheat herself out of more money because you have liquid cash? The most appealing feature in an offer is the time in which you are able to close. A typical bank loan purchase will take between 30-45 days. If you are a cash buyer and you’re able to close in 15 days or less, that is an attractive offer.

There is no one size fits all approach in Real Estate.

There are other things that we do take into consideration as agents. Still, you want to make sure that you are ready to do what it takes to purchase your home. Buyer readiness is the most essential thing because you could be searching for years and never pull the trigger. When contacting an agent, be ready. And when you secure an agent you trust, be confident that you can and will purchase the property you desire in seller’s market.

Purchasing property in a seller's market: a photograph of a large home taken by The Coleture Visual Art Studio.

For questions or more information, click here.

March 9, 2021March 9, 2021

Congratulations! You’ve Closed On Your Home. Now What?

It has taken forever to get to this point. You have been so ready to move, you could taste it. Buying a home was a goal so far in the distance, but once on the path to attaining that goal, the execution seems almost instant. Last you knew, you were under contract, but an entire month has passed. All documents have been signed. You get your keys. You take your pictures for the ‘gram. Suddenly, you realize: You’ve closed on your home. Now What?

There are several important things you must do soon after closing, and depending on what type of seller you have just dealt with, you want to make sure you get a few of these things done right away.

"Congratulations! You've closed on your home. Now what?" -Jillian showing she is camera ready. — *Congratulations! You’ve closed on your home. Now what?* Get ready for that new ID pic.

Be Camera Ready

It is quite possible that you may feel slightly overwhelmed right now. There is just so much that you have to do, but you have to start somewhere. The very first thing on your to do list should be to head to the DMV! That’s right. You have to get your new driver’s license or state identification card with your new address. You will need proof of residency, so take your closing documents with you.

Connect your services

Yes. The electricity was on for you to look at the house several times; however, the now former owner, is not going to keep those lights on for you. Contact your local utility company over the phone, and ask them what their requirements are to have the utilities turned on in your name, or to transfer your existing account. This account setup or transfer may be able to be handled entirely over the phone or online.

Next up, contact your local sewerage and water company. Normally, if you are a resident of New Orleans, you would be required to go in-person with the declaration page of your homeowner’s insurance in tow. You would also be required to pay a $100 deposit. However, my suggestion would be to call ahead to confirm the requirements, especially with the existence of the pandemic.

After that, we must tackle one of the more annoying account setups. You know who it is. “We will be there on Tuesday between 8am and 8pm.” *insert eyeroll here* Internet is one of our core services these days. Call ahead to schedule the connection setup for your internet and/or cable services. If your home is new construction, be sure to let the company know that ahead of time. It is possible that the company may not be able to locate the address in their system, and may need to do some additional work for connectivity.

Get Your Homestead Exemption

Contact the Tax Assessor’s office to apply for your Homestead Exemption. A homestead exemption serves multiple purposes, but one of the most important features is the reduction of your property tax liability. The current requirements to apply in Orleans Parish are as follows: To claim a Homestead Exemption, all owners who occupy the property must appear in person at the Assessor’s Office and present the following:

Proof of ownership (Act of Sale or Warranty Deed)
A valid Louisiana Driver’s License or Louisiana State I.D. (address must correspond to property’s address on application)
A current unpaid Entergy bill for the property, with service location and mailing address being the same, showing standard residential usage; OR
A landline telephone bill or cable bill (Direct, Dish or Cox).

There are also other types of homestead exemptions, such as a disabled veterans or age freeze exemption that may have a different set of requirements. As an example, for those seeking age freeze exemptions in Orleans Parish, you must be 65 years old by December 31st the year prior to the exemption start. In addition to that, you must provide proof of income and you are still mandated to comply with all other requirements of a general homestead exemption.

A homestead exemption can be applied for at any time. In Orleans, you only need to apply once, and the exemption remains permanently, unless you move. Note: You can only have one homestead exemption, as you can only have one primary residence.

Termite Contract

If there is an existing termite contract that’s transferable, go ahead and put that down on your to do list. We want a lapse in nothing. Contact the termite company, provide them with your information, and that should be that (unless a payment is required. This information should have been disclosed prior to closing). Should you be responsible for obtaining your own termite contract, then you want to be sure to contact a few different places to compare quotes. If you have not figured this out by now, always get quotes from multiple sources and compare your options.

Change of Address with the USPS

Change your address with the post office. There will always be something or someone you forgot to give your new address to. You can now take care of this online for $1.05 charged to your debit or credit card.

A few tips that you didn’t know you needed

Still thinking you’ve closed on your home. Now what? Here are a few tips that can help ease the last of that anxiety.

Make sure you set aside a rainy day fund for home needs only. You can no longer “call the office” to solve your problems.
Pay a little extra on your mortgage each month, even if it’s $5. You want to pay off your mortgage sooner than later, and every little bit counts.
You can always review or change insurance companies if you are able to find a better deal. The rates you initially locked in at won’t likely remain the same after the first year. If the prices get too high, find shop around.
Greet your neighbors. Forming a real sense of community with your most immediate neighbors can foster lifelong friendships and unofficial “watch” systems of your property.

"Congratulations! You've closed on your home. Now what?" Timmy relaxing in the bed. — *Congratulations! You’ve closed on your home. Now what?* Timmy says: Make up your bed and relax in it all day!

Enjoy Your New Home

Finally, the real moment of relaxation and joy. You own this home! There should be no rush to get things done a certain way. Take your time and get to know your space a little bit. Sometimes, what you had envisioned could change once you get settled in. And if you feel like you just can’t wait, maybe look into an interior designer or decorator. Some of them may not be as expensive as you think.

Remember when I said do not make any large purchases or take on any large debt? Well, now is the time you can splurge. Buy that new car or go on that furniture shopping spree. The world is yours! Congratulations! You’ve closed on your home. Now what?

December 18, 2020December 18, 2020

5 Out of Pocket Expenses When Buying Real Estate

Little boy making a funny facial expression

Some people don’t realize there is more to purchasing property than just obtaining a loan and finding a house. You may not believe the number of people who don’t even think they need money down for a loan. Maybe you are one of those people. As a first-time home buyer, you simply don’t know what you don’t know. And if you haven’t purchased in a while, perhaps you don’t recall every step of the process. If you are interested in purchasing real estate, it is wise to speak to a licensed real estate professional in your area for more insight on what the home buying process entails. One of the most important things to note is that there are some expenses that you must pay directly. Here are 5 out of pocket expenses when buying real estate:

Pro Tip: It’s always a good idea to take a First Time Home Buyer’s Class. It will really help you understand the process more. Some lenders may even require it.

The first out of pocket cost is the deposit. The deposit, subtracted from the down payment, is any amount you choose to place with your accepted offer. Only after the deposit is paid, will the property to be taken off the active market. This lets the seller know you are committed or sincere about making the purchase. Whether you choose to put down $500 or $5000, that amount will be due within the next few days after your offer has been accepted.

Pro Tip: Although you can choose to remit as much or as little as you like, sellers tend to view an offer more seriously when they see that you have “skin” in the game.

The next out of pocket expense, which could be the largest, is the down payment. There are several different types of loan structures, but the most common types require some down payment. FHA loans, typically require 3.5% of the purchase price (the price you are paying for the property), while a conventional loan typically requires up to 20%. There are some loans that offer 100% financing, which means no money down (initially). Just keep in mind that there is no such thing as a free lunch. The down payment must be paid at closing, so be prepared.

Pro Tip: Regardless of your loan choice, you can always put more money down to lower your overall costs.

Probably the second out of pocket expense you will face is for the home inspection. If you are financing the purchase of a home, you will be required to have a home inspection. If you are paying cash for your home, be advised that you should definitely still get one. Once your offer has been accepted, your agent should schedule your home inspection as soon as possible. The price of a home inspection varies, and is contingent on the home’s size, but could be about $400+. The fees will be due either prior to the inspection, or immediately after the inspection is completed. That will depend on the inspector and/or inspection company.

Pro Tip: The home inspection doesn’t typically cover a video pipe inspection. The pipe inspection could be an additional $200 or more, again depending on other factors, such as location and length of pipes.

The next out of pocket expense due almost immediately after your offer is accepted is for the appraisal. The appraisers are chosen by your lending institution. If you are a cash buyer, or even a seller, it is still a good idea to obtain one. The appraisal can be helpful to a seller in determining your list price, or to a buyer determining purchase price. The appraisal can cost around $400.

Lastly, the final out of pocket cost we are discussing are the closing costs. Closing costs include the title attorney fees, document recordation with all appropriate parties, property taxes, insurances, etc. Both the buyer and seller are responsible for some closing costs. However, as the buyer, it is possible for you to show up to the closing table and have to pay nothing!

Pro Tip: Do your homework.

The outlined expenses may not be the only expenses you incur during a real estate transaction or process. This article should serve as a guide only, and not as all-inclusive. You will likely have other expenses, such as moving costs, and/or deposits that may be required for the opening up of utility accounts, and the like. Nevertheless, these 5 out of pocket expenses when buying real estate are very important to be aware of.

As we approach the new year, and new goals are set, many have purchasing property as a priority on their lists. If you don’t know any real estate agents personally, ask a friend or do a quick search online to find one. You can also contact me, and I can refer you to some agents in your respective areas. Reach out to a few, and move forward with who you feel most comfortable with. Let the agent know where you are in the homebuying process, and ask any questions you may have.

Pro Tip: There is no shame in not knowing, but it’s best to educate yourself as much as possible, even when you are working with an agent.

Realtor.com provides some good tips for first-time home buyers, as well. If you are looking to purchase property in Louisiana or Georgia, please feel free to send me a message here. I absolutely love assisting people with accomplishing their goals and building wealth in the process! Let me help you accomplish your goal in this new year. I’m ready when you are.

Tag: real estate tips