buyer agent Archives

Closing Costs Explained

May 14, 2020 By Rick

There are a lot of things that go into purchasing your new home. As a result, your expenses can add up very quickly (especially, closing costs). However, the worst feeling in the world can be when you get your closing package.

You will almost always find that there are many fees and debits you likely weren’t expect.

I am going to solve that problem for you today. Knowing what types of charges will be on your closing documents will help you plan better ahead of time. As a result, planning ahead should hopefully provide with you the peace of mind you deserve.

If you have a loan officer helping you get a mortgage, your closing disclosure will cover most of your expenses. Regardless, I’m going to break down all of the credits and debits on the settlement statement from the title company that you can expect when purchasing your next home.

Credits

Under normal circumstances there are only really two major credits.

Loan Amount – The loan amount is the amount the you as the buyer are borrowing from the bank to purchase the house.
Seller Concessions – The seller concessions are the amount the seller is crediting to you. As a result, these proceeds of the sale go towards your closing costs.

Debits

Closing Costs Prorations/Adjustments

The buyer is charged these amounts to pay back the seller for amounts already paid. So, consequently that’s why they are pro-rated from the date of the closing.

Association Dues – Any unused dues paid annually or monthly will be charged to the buyer and credited back to the seller.
City/Town Taxes – This is also know as “summer taxes” in Michigan. You pay your summer property taxes in advance. They are due July 1st. Any unused amount is charged to the buyer and credited back to the seller.
County Taxes – These are your “winter taxes” in Michigan. You pay your winter property taxes in advance. They are due December 1st.
Title Charges & Escrow / Settlement Charges – The buyer is charged these amounts for services provided for the closing, along with the lender’s insurance policy is also included in this.
Lender’s Title Policy – Your lender will require a Lender’s Title Policy or Loan Policy if you are getting a loan to purchase the home. This covers the lender from problems with the title.
Settlement or Closing Fee – The title company charges the buyer this fee for actually closing their side of the transaction.
Government Recording and Transfer Charges – These amounts are for the service of recording paperwork with the county. The title company is insuring the ownership of the property. Therefor, they also make sure that the ownership paperwork is recorded correctly.

Other Debits to Keep in Mind

Record Warranty Deed
Tax Certification
Record Mortgage

Don’t hesitate to reach out to me directly, if you would like to obtain more information about what you can expect when it comes to your closing costs.

How to Setup a Home Search

May 14, 2020 By Rick

If you are ready to begin your home search journey, then you’ve come to the right place! Let’s go through how to prepare and setup your home search to most effectively find that perfect home for you.

The first thing you need to do is come up with a list of all of your “needs” and “wants”.

The goal is to get everything you need and want, but knowing the difference between the two can help you make better decisions along the way. You also will start to realize what truly is a “need” vs a “want”.

Once you have your list established. We can prioritize the “wants”. When it comes to searches (especially in databases), the MORE specific you are, the LESS results you will get. I always recommend starting with a broader search criteria and work your way down as you see what is actually avaiable.

Somethings to consider when setting up your search:

Number of Bedrooms
Number of Full Bathrooms
Garage Size
Do you need a basement? finished or unfinished?
Square footage – this is typically a range like 2000-3000 sqft.
Do you want a ranch style home? 2 story colonial?
Do you want a first floor master suite? or do you want the whole family on the same floor?
What size lot do you want?
Are you only interested in new construction homes?
How important is the school district to you? School districts can have dramatic effects on resale value even if you don’t have children yourself.

Sign up here on RickDulai.com to create your search profile and begin your home search. If you prefer, you can also contact me directly and I can setup a search for you to automatically email listings as they come on the market live.

What to Consider When Writing an Offer

May 12, 2020 By Rick

There is a lot that goes into writing an offer when purchasing a home. Most people are just focused on the price and getting the best deal possible, however, there are many things to consider. Some of these effect the bottom-line number and others address other terms that are just as important.

What’s Included and What’s Not

The first thing is to make sure you are clear what is and isn’t included with the purchase. Our typical purchase agreement already includes things like surface and mineral rights. The purchase also includes things like built-in appliances (dishwasher, water heater, furnace, etc), shelving, cabinets, lighting fixtures, window treatments, etc. If you are expecting the kitchen appliances to stay, then you must explicitly list those items. Although any attached items should be included, I would list out any attached speakers or home theater equipment is you want it to stay. You may also explicitly EXCLUDE items. This means you do not want it and the seller is responsible for removing it from the premises before the closing. The seller might want to exclude appliances they intend to take with them (like a washer & dryer).

Purchase Price & Financing

I’m including these together because they many sellers may take a lesser offer price if the financing is stronger. In general, a cash offer is the best financing option. Typically this means the buyer doesn’t have to jump through hoops with a lender and an appraisal is not necessary. If the buyer is getting a mortgage, then the more they are putting down, the better their offer.

Earnest Money Deposit (EMD)

This is a deposit on the offer. It will be credited towards the buyer’s purchase. The EMD is usually contingent on the home inspection and financing (specifically the appraisal in most cases). The higher the EMD, the more serious the buyer. That is because once all of the contingencies are removed, the buyer is less likely to abandon the deal knowing they will lose the EMD.

Closing Date

Believe it or not, this could be a bigger deal than people realize. On the seller’s side, they might need time to arrange their move. So a quick closing isn’t necessarily desirable for them. For the buyer, however, that closing date could be based on the end of their current lease, the sale of their own home, the start of a job or the beginning of the school year.

Possession

In some cases, after the closing date is negotiated, the seller might need to remain in the property for a week, a month or even more. Possession is when the seller (previous owner) will hand over the keys to the new owner. If this is not happening at closing, then there is a daily occupancy rate the seller must pay to the new home owner. This amount is typically based on the new home owner’s principal, interest, taxes and insurance payments. However, this is totally negotiable. The new owner might want to collect more than that or maybe will accept less just to make the deal work.

Sewage & Water

You can negotiate who pays the sewer and water bill during any potential possession period.

Home Warranty

The buyer can request the seller to provide a home warranty. Who pays for the home warranty is totally negotiable.

Offer Time Limit

In order to put some pressure on the seller to decide before entertaining other offers, the buyer can put a deadline on their offer. This works well in a buyer’s market where the seller is desperate to get offers. However, in a seller’s market, a seller could ignore any expiration date/time on the offer knowing that you might still be interested whether they respond in time or not. So don’t put too much weight on this unless you know it will have the impact you are expecting.

Inspection Contingency

The buyer can sometimes increase the “attractiveness” of their offer by waiving the home inspection. However, I always recommend getting a home inspection (even if you want to waive the contingency). How much time you have to do your due diligence is another negotiable item. A seller could favor an offer with a 3 day inspection period over one that is 10 days.

City Inspections

Some cities require an inspection or certification. Who pays of it, who pays for any required repairs, etc are all negotiable.

Seller Concessions

For buyers that might need help with closing costs, you can negotiate a credit from the seller towards the buyers’ closing costs. This is typically applied towards closing costs, pre-paid interest, tax pro-rations, etc up to an agreed amount and not as cash back to the buyer at the closing. Use it or lose it.

Final Walk-thru

Typically scheduled within 24 hours of the closing, the final walk-thru is the buyer’s chance to check the property and ensure that everything is as expected. In most cases the buyer last viewed the property at the home inspection. The final walk-thru is to make sure that the property condition has not changed. It is not to see if they change their mind or not. Any repairs or unexpected changes can be dealt with prior to closing.

Contact me directly or visit my YouTube Channel for tips and important information when comes to buying or selling your home.

Learn How a Buyer’s Agent Can Help You

May 12, 2020 By Rick

Buyers looking to purchase a home often start the process themselves. Then when they see a house they like online or while out on a drive, they call the listing agent for information. While there is nothing wrong with that, keep in mind that the listing agent is capturing your name, phone and/or email in order to follow-up with you and convert you to a buyer. The listing agent is charging a fee to the seller which includes BOTH the listing side and buying side commissions. So if the listing agent can “double-dip” the listing, they could potentially double their commission on that one deal.

You might think, “well that’s ok, they are doing double the work!”. Not exactly, I am all for double-dipping. It’s one of the perks of listing the home and spending time and money on marketing. However, it isn’t exactly double the work. In fact, the listing agent (even if they work both sides) are ONLY REPRESENTING THE SELLER in most cases. They have a contract and fiduciary responsibility to get the most money and best deal for their client, the seller.

So here are all of the benefits of using a buyer’s agent when you purchase a home:

It’s FREE!

Buyer broker services generally are free to the buyer since we are paid by the listing office. If the listing office is collecting 5% or 6% or even 7% from the seller, they typically pay the buyer’s agent anywhere between 2.5% to 3.5%. You could argue that that fee is being included in the purchase price and the buyer could try to negotiate that saved commission for themselves, but most of the time that is not the case. The seller and the listing agent are also looking at those dollars as potential savings.

Experience

A buyer’s agent, who has been in the business for a while and has done many transactions, has seen a lot of different scenarios. That experience on how to deal with sellers, their agents, problematic home inspections, municipalities, etc will be incredibly useful to you. That experience totally removes the stress of how to handle unexpected situations.

Negotiations

This probably should be #1 because having a proxy that is legally required to represent your best interests is the best way to ensure that you get the best deal possible. It’s not always about price. Sometimes you need to negotiate terms like the closing date to match your plans. A good real estate agent will know how to handle occupancy rates (the amount a seller has to pay after the closing if they plan to live there for a set amount of town), seller concessions, appraisal issues and home inspection concerns.

Expectations

A good buyer’s agent will help establish the timeline to close and what to expect along the way. This is probably the most helpful in reducing the stress associated with purchasing a home. Many buyers just don’t know what to expect and therefore are skeptical of everything in the process. That type of thinking causes unnecessary stress and that’s when mistakes happen. Your buyer’s agent is there to show you through the process as well as explain details of the entire transaction

I hope this helps you understand the value of your buyer’s agent and why it makes sense to take advantage of this free service to you. If you have any questions or comments, please feel free to reach out to me directly or visit my YouTube Channel for more tips and information!

Pre-Qualification vs. Pre-Approval Explained

May 12, 2020 By Rick

One of the very first steps you should take as a home buyer is to speak with a lender to determine your buying power (what you can afford). Most people actually start searching online, sometimes months before they are ready to start the process. There’s nothing wrong with that. But, when it is time to get serious you need to know the difference between a “pre-qualification” and an actual “pre-approval”.

Pre-qualification

A statement from your potential lender stating that you can afford to purchase a home up to a specific amount is called a Pre-qualification Letter. The problem with this pre-qualification letter is that it is based on very minimal information (typically just your credit score and a few questions).

A pre-qualification letter is not an official approval. It typically states the conditions that are still required in order to actually pre-approve you for the amount stated. Typically these verification of income, debts and cash on hand (in your bank account).

Pre-approval

A pre-approval letter goes the extra few steps not covered above. The loan officer has done more than just check your credit. They have reviewed w-2’s, 1099’s or other income statements (like recent paychecks). They have also verified how much cash you have available for a down payment.

Keep in mind is that when you get a pre-approval, it is in the very beginning stages of your search. We have not identified a property, a purchase price or a timeline yet. As a result, we call this a PRE-approval.

Financing Approval

An actual approval comes once you have written an offer on a specific property with a target closing date. At that point, the loan underwriters will really dig into your debt and income. As a result, they’ll be able to determine if they will lend you the money for this purchase.

An approval is given after the property has appraised at value. This simply means that the appraisal came in at the purchase price or higher. There are other items like debt-to-income ratios. If everything checks out, the lender will approve your request for financing the loan.

My purchase agreement has a finance contingency in it. This allows you to cancel the purchase without penalty if the lender disapproves the financing request.

Sellers like to see offers accompanied with a pre-approval vs a pre-qualification. This is because they know a buyer that is pre-approved is more likely to get an actual approval once they go under contract. You want to set yourself apart from the crowd by making sure your offer comes with a pre-approval letter.

For more information and tips about purchasing your next home, please contact me directly or visit my YouTube Channel.