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One of the first questions I get when reviewing an Offer to Purchase or Real Estate contract with a Buyer is “ What is Title Insurance” and “Why do I need it?” These are great questions and ones every savvy (or even bewildered) home buyer should be asking.

Title insurance is normally purchased at the same time as you buy your home. Unlike other types of insurance, your title insurance policy, for a one-time premium paid at closing, provides protection to you and your heirs for as long as you own your house. Also unlike other types of insurance, title insurance protects you from events that happened in the past: a forgery, forgotten heir, hidden mortgage or tax liens or other claims by people or entities who may truly (but unbeknownst to you) have a right to your property.

If you get a mortgage as part of your purchase, chances are the lender will insist that you get title insurance, indeed a special form that specifically protects the lender. Technically, you don’t need title insurance any more than you need homeowner’s insurance to offer peace of mind against a fire loss. But this unique form of protection insures that you actually own your property, free and clear of impediments and, as a consequence, it is worthwhile.5

Many Buyers think that title insurance is something they can choose to fore go. After all, the title company did a search of the property already. Why not just review the commitment and forgo the policy? It is a common misconception that a title search will uncover every possible defect in title. Title searches only discover events and documents of public record, so anything done illegally or without proper documentation may not be known until some time in the future.

Remember, even the most thorough title search is prone to human error. And even if the title company or your closing attorney has done their job perfectly, there may have been an error in recording or at some other step in any previous transaction including the property.

Lenders do not consider title insurance optional. In fact, nearly all institutional lenders insist on having their own policy separate from the owner’s policy. If it’s important for their partial investment in the property, it is even more important for the homeowner to be protected for the full value of the home. The lender’s policy protects the lender for the amount of the loan, and for the validity and position of their lien. Only an

Owner’s policy fully protects the buyer against title problems that arise after the home is purchased.

There are potentially hundreds of ways title to your property can be compromised. Even if you don’t lose your property altogether, certain title defects can make it impossible for you to sell or even give away your property. Here are some, but no way all, of the possible title defects covered by title insurance:

• Forged deeds, releases, or wills.
• False impersonation of the true owner of a property.
• Documents executed under invalid or expired powers of attorney.
• Misinterpretations of wills, or discovery of a later will after the first will goes through probate.
• Mistakes in recording deeds
• Undisclosed divorce by someone who conveys title of a deceased former spouse.
• Claims resulting from the use of aliases or fictitious names by someone earlier in the chain of title.
• Liens for unpaid estate, inheritance, income, or gift taxes.
• Disputed or fraudulently obtained release of a mortgage document.
• A misapplied tax payment.
• Undisclosed heirs who surface years or decades later.

The party responsible for paying for the two policies — buyer’s and lender’s — varies from state to state and sometimes from county to county. In some locales, the buyer may pay for one; the seller, the other. If you’re buying the owner’s and lender’s policies from the same company, “in many cases, there’s a substantial discount.

If you pay for the title insurance, you have the right to select the company. If you’re not paying but want to choose the company, be prepared to share some of the costs.

Be wary if the seller is pushing his title company. A title search is meant to find errors before you buy. Use the same company that your seller did years earlier and odds are you’ll get the same results. Often, searchers aren’t using actual records but summaries or extracts of those records. A fresh set of eyes (and extracts) could unearth problems, allowing you to fix them before you buy. I always recommend that my Buyers retain their own real estate attorney to review Title and survey and state exceptions and clear any known defects.

If you’re getting advice from your seller, you’re a real estate agent that is not an Exclusive Buyer Agent and your mortgage lender, look to the lender. The lender’s interest dovetails with yours in getting these things done thoroughly and correctly. The lender is guaranteeing a large amount of money based on the assurance that the property you’re using as collateral is really yours.

If you want to verify that the underwriter issuing the insurance policy is currently sound, check its financial solvency with ratings companies like Fitch Ratings, Demotech Inc. or A.M. Best Co.

Once the closing takes place, the title company records the documents and issues the final title policy, which you should keep in a safe place with other legal documents.

Should a title problem arise at any future date, the title company will stand behind the policy holder, both monetarily and with legal defense if necessary, to pay claims and defend their title to the property.

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If you thought you were barred from buying a new house after a foreclosure or a short sale, the rules have changed. FHA has taken a big step toward acknowledging that the economy forced many responsible homeowners into default or bankruptcy.

Boomerang buyers are able to buy again a little sooner after FHA’s recent announcement of the Back to Work – Extenuating Circumstances exception. Homeowners that lost their homes due to a loss in employment or income, now have the ability to buy as soon as 12 months after a bankruptcy, foreclosure, short sale or a deed in lieu.

If you went through a foreclosure, you were put into a penalty box for 3 to 5 years in the past and couldn’t buy another FHA home during that period. Now under certain circumstances, you may be able to get an FHA loan again after just 12 months. The FHA went back and analyzed behaviors and found folks who lost their homes after extended unemployment or a massive drop in income don’t pose as much risk as previously thought.

If that’s your situation and you can show you’ve recovered financially and you agree to attend housing counseling you may have the normal wait of 3 to 5 years waived and you may be able to qualify again.

Meanwhile, with Fannie Mae loans, if you have a foreclosure, you are normally banned for 7 years from buying a new home. However, there was a different rule for short sales. If you cooperated with your lender, took care of your property, and got a short sale done, you were supposed to be banned only for 2 years.

However, here’s what happened. Fannie Mae discovered that the credit bureaus are so inaccurate with their data, that they were posting short sales as foreclosures on your credit report in error! They were putting you in a penalty box for 7 years and devastating your credit. So instead of facing the 2-year penalty…you were unjustly facing 7 years.

That’s why it’s so important that you go to review your credit reporting and see what’s on your reports with each of the credit bureaus.

Fannie Mae’s “fix” is that if you can provide documentation to prove you did a short sale (not a foreclosure), they’ll take you out of the penalty box after 24 months, not 84 months.

Some rebound buyers’ only credit impairment was the foreclosure. These buyers can repair their credit faster than would-be buyers whose credit history contains other issues. Either way, buyers must “get their credit house in order,” paying off or settling old accounts and bank judgments. Your first objective is that since you’re going to have to wait, make sure the rest of your credit is clean. A foreclosure remains on a credit report for seven years, though the negative impact will fade as time passes, according to myFICO.com, a website operated by the FICO credit-scoring company.

An established history of paying other bills on time can help. High current debt relative to income also can be a problem because lenders won’t approve a loan if the borrower’s debt-to-income ratio exceeds their guidelines.

The FHA requires a down payment of at least 3.5 percent of the purchase price. The minimum down payment for a conforming loan without mortgage insurance is 20 percent. The days of 100% loans are over. While you are repairing your credit you need to be saving for a down payment as well.

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When you initially set out to purchase a property, the real estate agent(s) and home seller will want to know you can actually afford to purchase the property. After all, if you can’t afford to buy it, you’ll be wasting everyone’s time. Aside from affordability concerns, you may find other issues that disqualify you from obtaining a mortgage. For these reasons, most real estate agents will require that you get pre-approved, at a minimum, before they even begin showing you prospective properties. Most agents have a mortgage contact they’ll likely refer to you to get the ball rolling. Once you are under contract you should shop around to find the best mortgage product that meets your needs.

What Is a Pre-Qualification?

If you choose to finance the home purchase with a mortgage, you’ll need to get pre-qualified first. A “pre-qualification” isn’t as robust as a pre-approval, but it’s a good first step to ensure you can purchase the home you desire. A pre-qualification is a pretty straightforward, simple check to see what you can afford based on your income/debt level, assets, down payment, employment history, perceived credit score, and so on. You can get pre-qualified very quickly and easily with a bank or mortgage broker.

A pre-qualification is simply supplying estimates without any verification of the information you provided and without a look at your credit score. That said, a pre-qualification, or pre-qual, is just a determination of what you’d likely qualify for if you made an offer and applied for a home loan. Most contracts will require that you get a loan approval within a designated time frame before the contract can be considered binding.

What Is a Pre-Approval?

A pre-approval, on the other hand, actually has legs. It’s a written, conditional commitment from a bank or mortgage lender that says you are pre-approved for the mortgage financing in question. It comes only after filling out a loan application, supplying verified income, asset, and employment documentation( if not retired), running credit, and underwriting the loan file. Acquiring a pre-approval shows the interested parties (sellers, agents) that you’re a committed buyer, increasing your chances of sealing the deal at the price you want. It will also show you how much house you can afford, not just an estimate. You need to be prepared to produce bank statements, pay stubs, tax returns and authorization to run a credit check as part of the pre-approval process. Once you provide all the required documentation and get the pre-approval letter from a bank or lender, it is typically valid for 60-90 days. Just note that things can change during that time, such as your credit score, so it’s not 100% guaranteed.

One of the key factors in either a pre-qualification or pre-approval is your “debit to income” ratio.

The “debt-to-income ratio“, or “DTI ratio” as it’s known in the industry, is the way a bank or lender determines what you can afford in the way of a mortgage payment. By dividing all of your monthly liabilities by your gross monthly income, they come up with a percentage. This figure is known as your DTI, and must fall under a certain percent in order to qualify for a mortgage.

The maximum debt-to-income ratio will vary by mortgage lender, loan program, and investor, but the number generally ranges between 40-50%.

A basic example of debt-to-income ratio:

$120,000 annual gross income as reported on your tax returns/pay stubs

Monthly liabilities: $3,500

Monthly income: $10,000

35% debt-to-income ratio

In this example, your debt-to-income ratio would be 35%. However, the debt-to-income ratio goes into greater detail and comes up with two separate percentages, one for all of your monthly liabilities versus income (back-end DTI ratio), and one for just your monthly housing payment (including taxes and insurance) versus income (front-end DTI ratio).

Front-End and Back-End Debt-to-Income Ratios

So in the above example, if your monthly housing payment makes up $2,000 of your $3,500 in monthly liabilities, your front-end DTI ratio would be 20%, and your back-end DTI ratio would be 35%. Many banks and lenders require both numbers to fall under a certain percentage, though the back-end DTI ratio is more important.You may see a debt-to-income requirement of say 30/45. Using the example from above, your front-end DTI ratio of 20% would be 10% below the 30% limit, and your back-end DTI ratio of 35% would also have 10% clearance, allowing you to qualify for the loan program, at least as far as income is concerned.

Max DTI Ratio for FHA and VA Loans

The max DTI for FHA loans that are manually underwritten is 31/43. However, for borrowers who qualify under the FHA’s Energy Efficient Homes (EEH), “stretch ratios” of 33/45 are used. These limits can be even higher if the borrower has compensating factors, such as a large down payment, accumulated savings, solid credit history, potential for increased earnings, and so on.

For VA loans, the maximum debt-to-income ratio is 41% (back-end). Again, as with FHA loans, if you have compensating factors and the lender allows it, you can exceed the 41% threshold.

How to Figure Out Your DTI Ratio

If you’d like to figure out your debt-to-income ratio, simply take your average gross annual income based on your last two tax returns and divide it by 12. Then add up all your monthly liabilities and divide that total by your monthly income and voila. Keep in mind that you’ll need a free credit report to accurately see what all your monthly payments are.

The credit report will show you what your minimum or monthly payment is for each trade line, which makes it simple to add them up. Some banks and lenders allow installment credit cards such as those issued by American Express to be excluded from the debt-to-income ratio as they often account for thousands of dollars a month, and likely get paid off in full monthly.

The debt-to-income ratio is a great way to find out how much house you can afford, as well as the maximum mortgage payment you qualify for. Simply add up all your liabilities and your proposed mortgage payment plus taxes and insurance to see what type of loan you can take out.

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Buying a home is probably the most important purchase you will ever make… these ten tips will help you better understand what you can expect from contract to closing.

1. Determine Your Needs

The process of purchasing a home can be especially daunting if you don’t take the time to determine your needs. A real estate professional will be able to best assist you if you are willing to answer a few important questions:

• What is your current lifestyle and how will that play into the neighborhood or community you choose? e.g. sports enthusiast that requires hiking trails within the neighborhood
• Size of home including bedrooms, bathrooms, and specialty rooms such as media or pool room.
• Style of home: Ranch vs. Two-Story and Tudor vs. Cape Cod
• Schools, Religious institutions, commute to work all influence the area you choose to focus on

2. Consider the Cost of Home ownership

There are various financial commitments to consider, most importantly how a new home will fit into your budget.

You need to ensure that you can afford the monthly mortgage payment, as well as any expenses including utilities, taxes, insurance, maintenance, and/or possible homeowner’s association fees.

3. Interview an Exclusive Buyer Agent

A Buyer’s Agent will share valuable and essential information with you, if known, such as:

• The seller’s reason for selling and timetable
• Length of time the home has been on the market
• Previous offers and counter offers for the property
• Strengths and weaknesses of the property
• Determining an offer price based on past comparable sales
• Locating suitable property not currently on the market

You owe it to yourself to be the most knowledgeable buyer you can be. You can ask a buyer’s agent for advice and assistance in setting your offering price and structuring the other terms of your offer. What’s more, you’ll have peace of mind knowing an advocate is working on your behalf to help you buy at the best possible terms.

Ask for references and listen to what other people have to say about their experiences with a particular agent. Ultimately, you want to find someone that knows your area, has a good grasp on current market conditions and that you feel comfortable with.

4. Decide if You Will Build or Buy Resale

Are you going to buy an existing home or build something new? There are pros and cons to both, with each a reflection of your lifestyle and needs.

This calls for thorough research to identify which of the above is beneficial to you as an aspiring homeowner.

5. Location, Location, Location

Location is one of the key factors to consider in any home purchase. Make sure that you buy a home in areas where the value of property is set to increase as opposed to those with low prices and high chances of stagnation.

6. Understand Mortgage Options

Speak with a mortgage professional about your options and make sure to share details about your current financial situation, including your monthly budget for a new home. They will be able to offer guidance on which loan program will work best for you.

7. The Benefits of a Home Inspection

A home inspector will inspect the home prior to purchase to examine for structural and safety issues. An inspection is not required, but a wise choice as it will determine if the home is structurally sound and wiring and pluming are up to code.

They will also check for safety hazards, including loose railings, rotted or damaged porch or entryway steps and broken windows.

8. Get Everything in Writing

The best way to protect yourself is to ensure that every part of your transaction is captured in writing. An example of this would be repairs the seller agrees to make prior to closing.

Your real estate professional is there to make certain those repairs are added to an addendum which becomes a part of the purchase agreement. You do not want to have a casual conversation with the seller that could be left to interpretation when it comes to the largest purchase you will probably ever make.

9. Finalize the Purchase

To avoid problems at the closing table, make sure you have a clear understanding of what to expect. Go through your loan details one last time so there are no surprises when it comes to interest rate, loan amount or mortgage term.

There will be a substantial amount of paperwork to sign so give yourself plenty of time to adequately review the details.

10. Home Improvements

Your home is a valuable asset. Once you close, continue to put aside money on a monthly basis for any necessary repairs or maintenance.

It’s also important to note that certain upgrades may contribute to lower insurance premiums. This makes it important for you to stay in touch with your real estate professional. They can provide guidance on value boosting renovations.

Filed under: 20 Blogs, Blog by Kim Bregman
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How to be the Most Attractive Homebuyer?

The spring season tends to flood the housing market with buyers, and in markets with low inventory levels, the competition is stiff.

As home prices continue to recover and interest rates remain at near-record lows, some houses are receiving multiple offers and to win the bid, buyers need to stand out from the crowd. According to the National Association of Realtors, houses sold in 71 days in January, down from 99 days a year ago.

Since markets are moving fast, experts recommend sellers have their loan pre-approved and down payment ready before starting their search. “The market is changing, says Cara Ameer, broker associate and Realtor at Coldwell Banker Vanguard Realty based in Ponte Vedra Beach, Fla. “Inventory is low and demand is high a buyer needs to know exactly what their parameters are.

Multiple bids are becoming the norm, so be ready to compete and do your homework to seal the deal. The longer the negotiations, the more chance you could lose out to someone else who made a better offer, says Ameer. Be reasonable without being difficult because until an offer is signed, sealed and delivered, other buyers can bid on the property.

While you have to compete in the current market, maintain your budget. “You don’t want to end up paying more for the house than it’s worth, says Daren Blomquist, vice president at RealtyTrac.

Experts warn against cutting corners like skipping the inspection or engaging in a bidding war. You don’t want to unduly stretch yourself just to get into a property, says Blomquist.

To help you become a homeowner in this competitive market, experts recommend the following tips for being the most attractive:

Plan Ahead

You have to plan four months before you’re going to buy, says Michael Corbett, Trulia’s real estate expert. Check your credit for accuracy and avoiding making any big purchases or taking on any big debt during this time.

[Debt] brings down your credit score and increases your debt-to-income [ratio] which are two critical things banks look at when qualifying and preapproving you for a loan,” says Corbett.

If your debt-to-income ratio is too high, experts recommend paying down as much debt as you can to lower this ratio.

Set Your Home Price

Don’t look at a $300,000 home if all you can afford is $250,000, says Ameer. Less supply on the market increases the likelihood for multiple offers, and you won’t be able to compete. If properties are selling at 95% of asking price, don’t think you’ll get a deal at 85% of asking price, she says.

If you do spot a great deal on a house, don’t wait days to make an offer, warns Corbett. Since time isn’t on your side, learn how to spot a great deal by researching an are’s home prices.

Do a little due diligence and go to open houses do your homework, says Corbett. Being educated will help you negotiate and could prevent you from paying more for a house than it’s actually worth because you’re emotionally involved.

Know that Cash is King

The more cash you have, the more appealing you are as a buyer. Putting 20% or more down makes you look more financially stable and gives sellers comfort that you’ll qualify for a mortgage, says Corbett.

Cash can cover a multitude of problems when you make an offer, whether it’s difficulty with the mortgage process or a lower-than-expected appraisal. A buyer can contribute more cash to cover the different between the appraisal and offer price, says Blomquist.

If your appraisal is low, don’t expect the appraiser to come up in value, says Ameer. Appraisers are under scrutiny with the banks and they have to justify everything they do.” They’re required to follow Uniform Standards of Professional Appraisal Practice (USPAP) guidelines, as well as lender guidelines.

Appraisers use surrounding properties for comps, says Ameer, and if there are only foreclosures, that’s a bad hand to be dealt. You can always review the appraisal for discrepancies and suggest different comps but don’t expect the value to change.

Get Preapproved before Your Search

Getting prequalified for a mortgage gives a ballpark for what you can afford to buy and will streamline your search process.

If you’re financing your house with a mortgage, have a pre-approval letter with you and if you’re paying cash, have proof of funds that shows you’re good for it.

Getting preapproved will also help you to compete with an all cash buyer, says Walter Molony, spokesperson for the National Association of Realtors.

When you know what you can afford and are preapproved, you won’t be shopping outside of your price range, says Corbett. It makes you a much stronger buyer when you can turn in that preapproval letter with your offer.

Limit Your Contingencies

Experts suggest having as few contingencies as possible to be an alluring buyer. Don’t overcomplicated your offer to the seller, says Ameer. Certain contingencies based on your ability to get a mortgage, the appraisal and home inspection are standard, but piling on more could make the seller less inclined to work with your offer.

Experts advise making an offer based on a satisfactory home inspection. It gives you the opportunity to walk away if you find in an inspection that there are too many problems with the house, says Corbett.

Making your offer contingent on you selling your house first will make you a less appealing buyer. If you need to sell your house before buying a new one, then sell your home first and rent or move in with family or friends while you look for your new home, says Blomquist. As a seller, you’ll sell that home quickly. Then as a buyer, you’re much more appealing than a buyer contingent on a sale.

Add a Personal Touch

Corbett suggests sending a letter to explain why you want to buy that house. You become a person who really loves and appreciates the home instead of just a number, says Corbett. Sending a letter is just one extra little thing that will help level the playing field.

Be Flexible with Closing Dates

Let the seller know that you would be flexible on the closing timeline, says Corbett. Find out when the seller would ideally like to close on the house and see if you can match it.

Read more: http://www.foxbusiness.com/personal-finance/2013/03/21/how-to-be-most-attractive-homebuyer/#ixzz2Ra0Mnuif

Source: Foxbusiness.com

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Buying a house is the biggest investment you will make in your lifetime, and the complex process can be intimidating. Knowing the right questions to ask and receiving professional advice will help make a sound investment.

Whether you are buying for the first time or moving across country, navigating everything from jargon to home buying basics can be scary and overwhelming.

Before you begin the purchase process, make sure you have answers to these top home buyer questions. Each is a critical component to making an educated and informed decision.

Where do we want to live?

The first step is to help narrow down a location and define the home criteria that are most important to you. Understand that you will never get 100% of what you want unless you have unlimited resources. Define the criteria that are critical for your lifestyle and be prepared to compromise on the rest within your price range.

What factors are most important when it comes to choosing a neighborhood such as schools, commute to work, shopping, entertainment and how quiet or peaceful the neighborhood is versus a hustling and bustling urban area.

How much money do we need for a down payment, closing costs and still have some money in savings?

The mortgage product that you select will assist in determining down payment requirements. This is why it is so important that you pre-qualify with a licensed mortgage representative before getting in the car to shop for a home. By knowing your financial limitations you can focus on the properties that meet your affordability criteria.

There are additional costs associated with a purchase that you should plan for in addition to your mortgage payment, taxes, and insurance.

Make sure you have enough money set aside for closing costs

You will need to prepare for the cost of a property assessment, lender appraisal, and home inspection during the due diligence period.

Don’t forget moving costs including the transfer of all utilities and services such as heat, water, TV

How much you would like to spend monthly?

Unfortunately, many people bite off more than they can chew when purchasing a home because they look at the total purchase price instead of the monthly payments.

Keep in mind that what you qualify for isn’t always the same as what they can afford. A pre-approval letter is something you should get at the front-end to ensure you are looking within the right price range.

A licensed mortgage loan officer can provide a total monthly payment including principal and interest, property taxes, homeowners insurance and monthly mortgage insurance if applicable.

You should also factor into your budget:

• Heating/Gas/Oil
• Electric
• Water
• Homeowners Association Fees
• Landscaping
• Cable/TV
• Sewer
• Pool and yard maintenance
• Set aside money for on-going repairs and maintenance

Why should you work with an Exclusive Buyer’s Agent?

Choosing a real estate professional is one of the first decisions a buyer will make. It is also a very personal decision depending on the qualities most important you.

While traits such as honesty, integrity, knowledge, and experience are all very important; it is also vital that you choose an agent that represents you and only you. A buyer’s agent works as an advocate, providing guidance as well as open lines of communication. Explaining the purchase process and keeping the buyer informed along the way is a way to work together through the buying process.

Any agent that lists properties does not have an exclusive fiduciary responsibility to you as a Buyer. They have an inherent conflict of interest.

Exclusive Buyer’s Agents give buyers their undivided loyalty. Most real estate agents and buyer’s agents work in traditional brokerages that take listings. Because of that, they have an inventory that they must sell. In addition, if that brokerage brings both the buyer and the seller into the transaction, they get to keep the entire commission, making the transaction more profitable. These can be strong incentives to steer a buyer to one of their own listings. It also means that their buyer loses many of the benefits of hiring a real estate agent including negotiating on his behalf as well as the agent’s ability to point out reasons why the buyer might not want to purchase that particular property. Since Exclusive Buyer’s Agents must work in a brokerage that only works with buyers and never takes listings, a buyer can rest assured that the EBA will remain on their side throughout the entire transaction, getting the buyer the lowest price and the best terms possible.

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ANY open permits and or code violations need to be fully addressed and resolved by the potential home buyer, prior to closing. Failing to do so can be very costly for a homeowner.

Open permits remain with the property, despite any change in ownership. Failure to uncover any open permits prior to closing means that these permits become the responsibility of the new owner. Requirements to remedy an open permit can include fines, fees, and completion of pending work and removal of work that does not meet building requirements. Open permits can be quite costly and time consuming.

Q. What is an open or expired permit?

An open or expired permit is a permit which has been issued by a County or Municipal building department but has not been formally finalized in accordance with established guidelines, typically by means of a final inspection, within the time provided. Once the time has lapsed for the permit to be closed by the issuing department it is referred to as open or expired.

Q. Why do I need an open permit search?

One of the biggest obstacles for home sellers these days is the issue of open permits. Since many Counties have declared war on open permits, homeowners are finding themselves at the mercy of county inspectors when the time comes to close on the sale of their home. Attorneys and title companies may recommend that buyers not close if a permit search reveals open permits

Q. Will title insurance cover open or expired permits?

A good title company or real estate closing attorney will take care of this for you but you have to ask for it because it normally is not done. Title companies can close the sale on a property with an open permit on it, and most will never even conduct an open permit search; it’s not the same as a lien search. You should order an Open Permit Search at the same time you schedule your inspection.

This is a service that I provide for my Buyers. I usually go to the Building Code department of the town or municipality where the home is located and pull the record on all permitted activity on the home. If there is work that has been done that has not been permitted that is an issue that should be addressed by the home inspector.

Q. Will my closing agent check for open or expired permits?

Oftentimes the person selling the home or their listing agent has no idea about his or her own permit situation. They may have had some work done and their contractor told them everything was good to go and somewhere down the road they will find out that the permit is still open and if you are the new owner this is now your problem to deal with. Sometimes work was done before the current owner bought the home and they have no idea anything could still be open.

The best way to protect yourself is to do an open permit search. If you are selling your home it is a good idea to make sure your home has all of its permit issues in order because nothing can kill a deal faster than when a buyer finds out there are open permits. If you are the buyer, take care of it before you face a potential issue in the future.

Q. Who is responsible to close an open permit?

Open permits can be grounds for the title company to balk or the lender to renege on financing. Uncovering open permits and closing them typically falls on the shoulders of the SELLER. Every State of Counties standard contracts vary. Make sure you understand the terms and conditions involving permits in whatever contract you are using. It often can be grounds for terminating a contract.

Q. Is it really that important? What is the worst that can happen?

If open and/or expired permits exist and are not closed prior to closing, these permits become the responsibility of the new homeowner. The new owner will be responsible for paying all fees and/or fines and will be forced to complete the pending work. If the permit is not properly closed, the building department may be able to order the removal of the work on the property.

Q: Found an open permit. Now what?

If there are any open permits on your home the Building and Zoning Department can provide you with the name and contact information for whomever pulled the permits. You can then contact the contractor to get the permit closed.

Q: What if the contractor is no longer in business?

If your contractor is no longer in business, you have a couple of options:

You can close the permits yourself. This involves contacting the Building and Zoning Department; arranging for any missing inspections; following up with inspectors and the department to make sure that the permit is closed on the computer. Or, you can contact a local permit expeditor to close the open permits for you.

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2012 Real Estate Hurricane Preparedness Guide

History teaches that a lack of hurricane awareness and preparation are common threads among all major hurricane disasters. By knowing your vulnerability and what actions you should take, you can reduce the effects of a hurricane disaster.
Hurricane hazards come in many forms: storm surge, high winds, tornadoes, and flooding. This means it is important for your family to have a plan that includes all of these hazards. Look carefully at the safety actions associated with each type of hurricane hazard and prepare your family disaster plan accordingly. But remember this is only a guide. The first and most important thing anyone should do when facing a hurricane threat is to use common sense.

Know Hurricane Terms:

Hurricane Watch – A hurricane is possible within thirty-six hours. Stay tuned for additional information.
Hurricane Warning – A hurricane is expected within twenty-four hours. You may be advised to evacuate. If so, evacuate immediately.
Storm Surge – Storm surge is simply water that is pushed toward the shore by the force of the winds swirling around the storm. This advancing surge combines with the normal tides to create the hurricane storm tide, which can increase the mean water level 15 feet or more.

Ask your local emergency preparedness office about evacuation plans. Learn evacuation routes.

• Plan a place to meet your family in case you are separated from one another in the hurricane.
  Assemble a disaster supplies kit ( See information below)
• Board up windows. Permanent storm shutters offer the best protection. Also, you can use 5/8″ marine plywood. Tape does not prevent windows from breaking.
• Know how to shut off utilities.
• Make a record of your personal property( take digital photos or video tape the contents of your home and/or business and keep in a waterproof with you along with your homeowners insurance policy)
• Be sure trees and shrubs around your home are well trimmed.
• Clear loose and clogged rain gutters and downspouts.
• Determine how and where to secure your boat.
• Consider flood insurance and purchase it well in advance

30 Days To Hurricane Season: Time For Flood Insurance

The Atlantic hurricane season starts June 1 – 30 flood days from now. Since flood insurance takes 30 days to become effective after a homeowner applies, today marks your last chance to get flood insurance by the June 1 debut.

“Past hurricane seasons have shown that storms can form as early as the beginning of June, so property owners can’t afford to wait to buy flood insurance,” says Ed Connor, acting federal insurance administrator and acting assistant administrator, FEMA Mitigation Directorate.

Many homeowners still wrongly believe that their property insurance policy will cover all damage from a hurricane.

“Homeowners insurance doesn’t cover flood damage and, without flood insurance, property owners may have to absorb the financial losses on their own,” says Connor. “Just a few inches of water can cost thousands of dollars in repairs and, in this economy, few can afford that potential drain on their savings.”

Flood insurance is available through about 85 insurance companies in approximately 20,600 participating communities nationwide. National flood insurance is available to renters, business owners and homeowners, even if it is not required by the terms of a mortgage. While the average flood insurance policy costs about $540 a year, homeowners can protect their properties in moderate-to low-risk areas with lower cost Preferred Risk Policies (PRPs) that start at just $119 a year.

Individuals can learn how to prepare for floods, how to purchase a flood insurance policy and the benefits of protecting their properties against flooding by visiting Floodsmart.gov (http://www.floodsmart.gov) or calling (800) 427-2419.

Have a Place To Go:
Develop a family hurricane preparedness plan before an actual storm threatens your area. If your family hurricane preparedness plan includes evacuation to a safer location for any of the reasons specified with in this web site, then it is important to consider the following points:

If ordered to evacuate, do not wait or delay your departure. If possible, leave before local officials issue an evacuation order for your area. Even a slight delay in starting your evacuation will result in significantly longer travel times as traffic congestion worsens.

Select an evacuation destination that is nearest to your home, preferably in the same county, or at least minimize the distance over which you must travel in order to reach your intended shelter location. In choosing your destination, keep in mind that the hotels and other sheltering options in most inland metropolitan areas are likely to be filled very quickly in a large, multi-county hurricane evacuation event.

If you decide to evacuate to another county or region, be prepared to wait in traffic. The large number of people in this state who must evacuate during a hurricane will probably cause massive delays and major congestion along most designated evacuation routes; the larger the storm, the greater the probability of traffic jams and extended travel times.

If possible, make arrangements to stay with the friend or relative who resides closest to your home and who will not have to evacuate. Discuss with your intended host the details of your family evacuation plan well before the beginning of the hurricane season.

If a hotel or motel is your final intended destination during an evacuation, make reservations before you leave. Most hotel and motels will fill quickly once evacuations begin. The longer you wait to make reservations, even if an official evacuation order has not been issued for your area or county, the less likely you are to find hotel/motel room vacancies, especially along interstate highways and in major metropolitan areas.

If you are unable to stay with friends or family and no hotels/motels rooms are available, then as a last resort go to a shelter. Remember, shelters are not designed for comfort and do not usually accept pets. Bring your disaster supply kit with you to the shelter. Find Pet-Friendly hotels and motels.

Make sure that you fill up your car with gas, before you leave.

Preparing Your Pets for Emergencies Makes Sense.Get Ready Now.

If you are like millions of animal owners nationwide, your pet is an important member of your household. The likelihood that you and your animals will survive an emergency such as a fire or flood, tornado or hurricane depends largely on emergency planning done today. Some of the things you can do to prepare for the unexpected, such as assembling an animal emergency supply kit and developing a pet care buddy system, are the same for any emergency. Whether you decide to stay put in an emergency or evacuate to a safer location, you will need to make plans in advance for your pets. Keep in mind that what’s best for you is typically what’s best for your animals.
If you must evacuate, take your pets with you if possible. However, if you are going to a public shelter, it is important to understand that animals may not be allowed inside. Plan in advance for shelter alternatives that will work for both you and your pets.
Make a back-up emergency plan in case you can’t care for your animals yourself. Develop a buddy system with neighbors, friends and relatives to make sure that someone is available to care for or evacuate your pets if you are unable to do so. Be prepared to improvise and use what you have on hand to make it on your own for at least three days, maybe longer.

Disaster Supply Kit:
I personally prepare a hurricane closet in May with all the needed supplies and materials so that there is never a last minute rush to the store when the shelves have been cleaned out.

Water :

• Plan on one gallon of water per person per day for at least 3 days, for drinking, washing, cooking, and sanitation. Extra water for pets
• Store as much as possible in plastic containers such as soft drink bottles.
• Avoid using breakable containers, such as glass bottles or mason jars.
• Fill bathtubs with water for bathing and washing dishes

Food :

• Store at least a three day supply of non perishable food.
• Choose foods that do not require refrigeration or cooking.
• Choose foods that are healthy and high nutrition type. (Canned meats fruits and vegetables,protein or fruit bars, dry cereal or granola, peanut butter, dried fruit, nuts, crackers, canned juices, non-perishable pasteurized milk, high energy foods, vitamins, food for infants and pets, comfort/stress foods)

Supplies and Equipment:

• A battery operated radio with extra batteries
• NOAA Weather Radio with tone alert and extra batteries
• A flashlight with extra batteries
• Blankets or sleeping bags ( store in trash bags to keep dry)
• Paper plates and utensils, including a non electric can opener
• Candles and matches in a waterproof container
• Plastic sheeting and duct tape to shelter-in-place
• Toothbrushes, toothpaste, soap, moist towelettes, and other personal grooming items
• Paper towels and toilet paper
• First aid kit and medicines ( ask your pharmacist or drug supply company for a one month hurricane supply and store in water proof container)
• Fire extinguisher
• Wrench or pliers to turn off utilities
• Cell phone and plug in battery operated charger
• Infant formula and diapers
• books, games and toys to keep kids occupied ( remember those batteries)
• Important family documents such as copies of insurance policies, identification and bank account records in a waterproof, portable container
• Complete change of clothing including long sleeved shirt, long pants and sturdy shoes
• Insect repellent and sun-screen
• Paper and pencil
• Local Maps

Business Preparedness:

* Have an emergency communication plan in place before the storm hits. How will co-workers stay in contact if the physical location of a business is damaged?
* Turn off all non-critical work devices before the storm hits.
* Alert a third party about business evacuation plans in case a storm makes it impossible to get to your place of business.
* Protect important business documents that you may need quickly, such as property insurance policies.
* Have cash on hand to pay employees or contractors after the storm.
* Know which employees are certified in CPR, EMT, etc.
* If possible, disconnect a building’s main electrical feeds.
* Have a plan to notify all employees, post-storm, about damage and how you’ll move forward.
* Review contracts that are date sensitive and have a backup plan in place to handle potential problems.
* Assess all functions that could be impacted by a lapse in business – cash flow, bills, budgets and any upcoming events.

Useful Links:

General Hurricane Information:
National Hurricane Center
NWS Hurricane Awareness site
NOAA Hurricanes site
Frequently Asked Questions
FEMA Hurricane Info
FEMA for kids
NCDC: Hurricanes

Hurricane Safety Information:
American Red Cross
FEMA
EPA – Drinking Water, Waste Water, and other Hurricane Hazards

Filed under: 20 Blogs, Blog by Kim Bregman
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Looking to squeeze the most from your home insurance dollar? Try these practical steps.

1. Shop around for home insurance quotes:

Check with several different home insurance companies to get rate quotes. An independent insurance agent can provide rate quotes from multiple companies. Ask around: Do your friends and family like their home insurance company?

2. Raise your home insurance deductible:

The deductible is the amount of money you have to pay toward a loss before your insurance kicks in. Typically, home insurance deductibles start at $250. The Insurance Information Institute (III) estimates that if you increase your deductible to either $500 or $1,000, you can realize double-digit decreases on your premiums. For example, an increase to $1,000 can save you up to 25 percent. However, make sure you can afford to pay the higher deductible out of pocket if something should happen.

3. Buy your home and auto insurance policies from the same insurance company:

Most companies will give a multiline discount if you buy both home insurance and auto coverage from them. It’s one of the more significant discounts you can garner.

4. Consider insurance when buying a home:

If you’re looking at buying a home, think about the cost of it. A newer home’s electrical, heating and plumbing systems and overall structure are likely to be in better condition than those of an older home. This can lead to lower premiums.

You’ll also want to consider the construction of the house and where you live. If you live on the Atlantic Coast, you’ll want the house to be able to stand up to wind damage, while on the Pacific Coast, you need to keep earthquakes in mind. Home insurance does not cover these perils; instead, you need to buy windstorm or earthquake coverage separately, adding to your insurance cost.

5. Insure your home, not the land:

While your home and its contents are at risk from fire, theft, windstorms, and other perils, the ground your home sits on is not. Don’t include the value of the land when deciding how much homeowner insurance you need to buy in order to rebuild your house. Your insurance agent can help you assess the right coverage level.

6. Improve security and safety:

Items such as dead bolt locks, burglar alarms and smoke detectors can usually bring discounts of 5 percent each, depending on the company. Your insurance company may also offer a significant discount of 15 or 20 percent if you install a sophisticated home-security system. If you’re thinking about buying such a system, check with your insurer to see which systems qualify for a discount.

7. Stop smoking:

Smoking accidents account for almost 23,000 residential fires every year, according to III. Some insurers offer to reduce premiums if no one in the home smokes.

8. Look for senior discounts:

Retired people stay at home more and spot fires sooner than working people. Older people also have more time for maintaining their homes. If you’re at least 55 years old and retired, you could qualify for as much as a 10 percent discount. However, it really depends on the insurer and some companies don’t offer the discount.

9. Look for group coverage:

Large employers and business associations often work out deals with an insurance company, which includes a discount for employees and members.

10. Stay with a home insurance company:

If you’ve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce your insurance rates by 5 percent after you stay with them for three to five years; and some companies will discount you as much as 10 percent after six years.

11. Check your coverage annually:

You want your policy to reflect the value of your home and belongings. If you review your policy every year, you will be able to make the necessary adjustments. If, for example, you just sold a valuable painting, you won’t need the same amount of personal property coverage. But if you’ve added a room to your home, you’ll need to increase your dwelling coverage.

12. Look for private home insurance first:

If you live in a high-risk area – one that is especially vulnerable to coastal storms, wildfires or crime – and think you’ll be forced to buy home coverage from your state’s high-risk insurance pool, check first with an independent insurance agent. You may find that you can still buy insurance at a lower price in the private insurance market than from your state’s insurer of last resort.

13. Make EFT payments:

Many companies now charge $5 or more for mail payments, so having your payments automatically deducted will help shave off excess cost. Often your payments can come automatically from your credit card.

14. Maintain a good credit history:

Many insurers now check your credit and can adjust your price based on your level of “risk” as judged by your credit history, where allowed by state law. Make sure your credit is in good shape when you apply for policies.

15. Consider actual cash value vs. replacement cost:

Actual cash value coverage reimburses you for the value of your property at the time of damage or loss, minus your deductible. If you buy this option, you need to account for depreciation of your property, which may result in a lower claim payment than you expect.

Replacement cost coverage reimburses the full value of the item lost – after you purchase the new item and submit your receipts. The up-front premium is higher, but you receive full compensation for your possessions

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Homebuyers and sellers looking to negotiate the best commission rate, obtain the highest level of service, and protect their legal rights in the event of a dispute can start off on the right foot by making sure they understand the form of representation their broker or agent is providing.

Consumers may assume that, like a lawyer, a real estate agent always represents their interests and their interests alone. But the rules governing the agency relationships between consumers, real estate brokers and their agents vary from state to state, and have been completely rewritten in the last 25 years.

Laws in most states allow real estate agents to “double dip,” representing both the buyer and seller in the same transaction without owing either party their undivided loyalty. Licensees in 25 states are now permitted to provide services to one or both parties as non-agency “facilitators” or “transaction brokers,” owing limited or no fiduciary duties to act in their clients’ best interests.

Depending on where they live, buyers and sellers may receive services from Realtors who are acting in an agency capacity as sub-agents, single agents, disclosed dual agents, or designated agents. Or they may have the option of working with non-agency transaction brokers, facilitators or intermediaries.

Many states also allow brokers to provide limited services to unrepresented buyers as “customers” rather than clients. In theory, providing consumers with a range of options for working with real estate brokers and their agents gives buyers and sellers flexibility to choose the form of representation that works best for their situation.

Experienced buyers or sellers, for example, may be comfortable working with a transaction broker or a “dual agent” who doesn’t owe them loyalty — especially if that helps them negotiate a reduced commission rate.

But consumers who don’t understand their agency relationship with their broker or agent may be at a disadvantage when searching for properties, marketing their home, or negotiating a sale — and may be more likely to blame their agent if they’re not happy with outcome of a transaction.

Buyers and sellers should insist at “the first substantial contact” that brokers disclose whether they will represent their financial interests at all stages.

If not, the group advises, consumers should ask whether the broker will represent the financial interests of the other party, or simply serve as a facilitator or transaction broker.

In general, consumer advocates warn, buyers and sellers alike rely on their brokers and agents to put their clients’ interests first. When brokers or agents owe limited or no fiduciary duties to their clients, buyers and sellers may have little or no legal recourse if they get bad advice or are victims of incompetence. Transaction brokers, facilitators and intermediaries are largely immune to claims of professional negligence.

Today, most states — Florida being the notable exception — require real estate brokers and agents to disclose agency relationships, including who they are representing and what duties they owe their clients.

(In Florida, licensees are presumed to be operating as transaction brokers, and aren’t required to provide agency disclosures unless they intend to represent consumers as singe agents.) But it’s difficult to gauge the effectiveness of disclosures. Most states require that disclosures be presented in writing, but a few allow brokers to provide spoken explanations.

Most states require that agency disclosures be provided early in the process, before confidential information is shared. But some allow agency disclosures to be provided in purchase contracts, after most of the negotiating has already been concluded.

One in five homebuyers surveyed by the National Association of Realtors from 2001 through 2006 reported they had not received written agency disclosures, and 17.8 percent weren’t sure whether they had or not.

One study that analyzed MLS data from 1,334 Utah home sales in 1999 and 2000 found that the impact of agency representation varied by property size.

For small- to medium-sized homes, buyers represented by their own agents paid about 2 percent less then those who were represented by the listing agent, or who were unrepresented “customers” of the listing agent. But the study found that the benefit of working with a buyer’s agent could easily be canceled out by generous commission split offers.

For small- to medium-sized homes, a 1 percentage point increase in the buyer’s agent commission was associated with a 2.9 percent increase in the average sales price, or $3,819.

“Although buyers do not appear to be any worse off by employing a buyer’s agent from the same firm as the listing agent’s, the same argument does not hold for sellers,” researchers Joachim Zietz and Bobby Newsome concluded. While buyers never paid more if they worked with a buyer’s agent acting as a designated agent of the listing broker, the study found an interesting effect for sellers: Sellers of medium- to large-size properties agreed to larger price reductions, averaging 3.7 percent, when the buyer was represented by a designated agent. Â They theorized that listing agents might be more likely to pressure sellers to agree to a price reduction if an offer was coming from a buyer represented by another agent at their firm.

A study of Atlanta home sales from 1989-91 showed that compared to buyers who relied on sub-agents, buyers represented by their own agent paid 31 percent less in closing costs including real estate commission, loan origination fees, loan discount points, and other fees. Sellers’ closing costs in those instances increased by 10 percent.

That study found a significant effect on buyers’ closing costs for homes in the upper price bracket, but not for lower-price-bracket sales. In addition, the study found sellers’ closing costs were significantly higher for homes in the lower price bracket, but that there was only a moderate effect for more costly homes.

What A Buyer’s Agent Will Do For You:

Information & Counseling

• Explain the forms of agency available to you and explain how different relationships may affect the level and type of service a Buyer may receive from a real estate agent.
• Offer to enter into a written Agency Agreement with the Buyer. The agreement will include fee structure and payment method and the responsibilities of both parties.
• Pledge absolute confidentiality to a Buyer when representing him/her.
• Counsel the Buyer regarding his/her financial qualifications and assist the Buyer in finding and working with mortgage lenders.

Searching For A Property

• Discuss preferences in size, areas, styles, age, floor plans, and develop a property profile.
• Search the entire real estate market, including the Multiple Listing Service (MLS), properties for sale by owners, short sales, foreclosures, custom builders, and upcoming developments.
• Provide information and insight about communities
• Unbiased assessment of the pros and cons of each property

Contract Offer

• Inform the Buyer about any defects or problems he/she has observed or discovered regarding the property.
• Prepare a comparative market analysis, to determine the property’s fair market value.
• Explain the choices available in each section of an offer to purchase and explain the alternatives available to the Buyer.
• Advise the Buyer to seek legal counsel where appropriate.
• Prepare the offer to purchase in a manner which will protect the Buyers interest. Will provide proper disclosures regarding agency representation and any other matters as required by law.
• Develop negotiation strategies with the Buyer, including pre-set limits on key points of negotiation when the Buyer wishes to do so.
• Counsel the Buyer regarding the time requirements in the contract and encourage the Buyer to have professional inspectors inspect the property if the contract is accepted.

After The Offer To Purchase Is Accepted

• Will counsel the Buyer about home inspections, and provide the names of real estate inspectors. Will encourage the Buyer to be present during inspections.
• Will explain options available to the Buyer regarding items in the inspection report.
• Where appropriate, will notify the Seller or the Seller’s Agent in writing of inspectors’ findings and the Buyers choice of any options available to the Buyer.
• Assist in locating a mortgage and property insurance
• Maintain contact with the Title Company and Mortgage Company to insure that the Buyers interests are being protected.
• Will review the settlement statement with the Buyer at or before closing.
• Will attend the closing with the Buyer and be prepared to answer questions the Buyer may have.
  Assist with temporary housing alternatives and movers

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