Buyer Tips Archives - Page 20 of 25

Psychology and your Agent

November 10, 2016 By Tayson Rockefeller 1 Comment

As a preface to this article, I must say that I am a very straightforward real estate agent. If you are looking for someone to tell you that you can get a bargain on a piece of property that you likely cannot, I’m probably not your agent. I am also not going to tell someone they can obtain a certain price for their property in an effort to obtain a listing, or to appear optimistic. I provide values based on market statistics, and that’s usually the end of the story.

However, I will say that there are instances where real estate agents, including myself, will conform to the thought process of their customers. I’m not saying that real estate agents make special efforts to act differently in different scenarios like some of our politicians do, but in some regards, this is how people are. We try to relate to our customers to form a friendship, and gain trust.

When it comes to your attitude, or thought process when establishing a relationship with a real estate agent, it’s important to keep this in mind. For instance, if you are the type of person that uses brute sales tactic in order to make a clear indication that you only purchase bargain properties, and you make that clear to your agent right off the bat, your agent might bend his or her regular thought process or way of doing business in order to conform to your thought process and strategy. In markets where properties are selling quickly and prices are on the rise, it might be in your best interest to let your agent take the lead in terms of how to act in certain scenarios, especially if you’re looking at property you actually want to purchase, not just looking for the best bang for the buck or an investment property.

Recently I was working with a customer looking at luxury properties, which don’t seem to absorb into the marketplace nearly as quickly – as say a 3-bedroom 2-bathroom starter home. While viewing these properties, the quintessential salesman type listing agent we met at the property told us the home was receiving multiple showings per week, and they didn’t anticipate it would last very long. My customer kept saying over and over how much that particular agent reminded him of that typical sales person, and he “could see right through it”. Me, trying to establish a relationship, (and while trying be as transparent as possible), agreed with him. At the end of our day, I asked him to keep in mind what the agent said regardless of how we both felt about the situation. 2 months later, every property this particular person was looking at was later withdrawn from the market or sold, and it was my fault for not properly explaining how urgent the situation was. On a side note, it’s important to understand that waiting for the price to reduce doesn’t mean that is what is going to happen. People do remove properties from the market as situations change, which has the same affect. In some cases, some increase the price.

As always, this type of scenario can work both ways in different markets. If you are in a hurry to sell, remember that your listing agent has a fiduciary duty to keep that information confidential. If you don’t properly explain your situation to your listing agent, and tell that agent that you are a firm negotiator who only accepts top dollar, your agent is likely going to conform to what he or she thinks your needs are. If you tell your agent you will only look at homes with hardwood floors, guess what…

At the end of the day, transparency is best. The point of my article is to allow your relationship with your agent to grow naturally. Be yourself, and unless you are an expert in that local market, listen to what your agent has to say. If you don’t agree with your agent, or you don’t particularly like them based on the way they naturally introduce themselves to you, move on. There are plenty of fish in the sea – as they say.

What is Title Insurance?

October 1, 2016 By Tayson Rockefeller Leave a Comment

title-insurance ***Tayson is not a Title expert! Always consult with your Title Company, or attorney when reviewing an actual policy, or Commitment for Title Insurance.

Simplified, Title Insurance is basically a form of insurance which insures (a buyer) against Financial loss from defects in the chain of title for real property.

Usually we see two types. What is called an Owner’s Policy, and a Lender’s Policy or Mortgagee Policy.

Owner’s Policy
The Owner’s Policy is basically what is described above. It helps ensure the property gets properly vested with the purchaser, that it is free of liens and encumbrances, and usually covers losses and damages suffered in the event the title it is deemed unmarketable or there is no access, usually for the amount of the purchase price.

Lender’s Policy
The Lender’s Policy, sometimes referred to as the Mortgagee Policy is typically only issued to lenders. The policy benefits whomever holds the mortgage loan. These policies cover the lender for losses regarding some of the same issues set forth in the owners policy including access, but also the lien created by the mortgage to ensure that it remains enforceable. Your lender usually requires that you hold homeowners insurance to protect their interest in the event that home is damaged, and the same goes for title. They usually require that you have a lender’s policy to protect their interest with regards to the lien created by the mortgage and that the property continues to remain marketable.

Who Pays for these Policies?
In Teton County, it is fairly customary that the seller will pay for the Owner’s Policy, and that the buyer will pay for the Lender’s Policy if they are obtaining a loan. This is not always the case, buyers have been known to pay for the Owner’s Policy, and sellers have been known to pay all of the buyers closing costs which usually includes the cost of the Lender’s Policy. There are also extended policies available, I will go over and another post.

With the above said, it is important to remember that there are requirements that need to be met in order for these policies to be issued, and there are exceptions of which the title company does not insure. These are usually set forth in what is called a Title Commitment, which you have probably seen if you have purchased property in Teton Valley.

Title Commitment

A Title Commitment is basically the title company’s promise to issue a title insurance policy for the property after closing. The title commitment contains the same terms, conditions, and exclusions that will be in the actual insurance policy.

The Requirements section lists what things must be done before escrow can close and title insurance will be issued. If a requirement can not be met, close of escrow may be prevented or delayed. The Title Company will normally help make sure that these requirements are met prior to closing.

The Exceptions section discloses the exceptions that the Title Company will not cover against. It also generally includes certain standard exceptions such as mineral and water rights. The Title Insurance Policy will not insure against loss, nor will the title insurer pay costs, attorney fees, or expenses, resulting from title problems listed in this exceptions section, so it is important to review these in your Commitment for Title Insurance, before the actual policy is issued at close of escrow.

Heat Systems and what you need to know for Teton Valley’s climate

September 20, 2016 By Tayson Rockefeller Leave a Comment

Whenever I am showing property or listing homes for sale, (particularly this time of year) this tends to be a “hot” topic. How is the home heated? How efficient is the system? Is it comfortable and reliable? All good questions, but 1 system can’t check all the boxes in most cases.

Efficiency:

Since there are different types of heating systems that can be used with different fuel sources, let’s focus on fuel types first. Since we do not have Natural Gas infrastructure in Teton Valley, we will focus on the most common types, Propane and Electricity. As I type this, propane is at an absurdly low price per gallon, roughly $1 per gallon. Electricity is measured in kilowatt hours, and is roughly 7 cents per kilowatt. It’s important to know that propane can fluctuate, and can even be volatile at times. Electricity will rise over time, but has historically been very predictable. Further, our region (mainly Idaho) operates mostly on hydroelectric power. In fact, Idaho produces roughly 60% of it’s power needs by means of hydroelectricity, more than any other state in the west at this time.

Electricity:
7 cents/kilowatt (Fall River Electric Estimate, 2016)
BTU’s produced by 1 kilowatt = 3,413

Propane:
$??/gallon
BTU’s produced by 1 gallon of Propane = 91,500

Let’s do the math:

Using the above information, we can determine 1 gallon of propane = about 27 kilowatts. That said, at the current 7 cents per kilowatt, 1 gallon of propane would need to be $1.89 per gallon to be comparable. Since most forms of electric heat are 100% efficient (or more) and propane is usually 90% efficient (or less) let’s reduce that $1.89 an additional 10% to $1.70/gallon. Moral of the story? If propane is is less than $1.70 per gallon, your dollar is probably travelling a little further. If propane is over $1.70 per gallon, your electric forms of heat make more sense.

Types of heat, comfort, pros & cons:

This is a big one, what is the most comfortable form of heating (or cooling)?

In-Floor
In-floor heat systems can be propane fired or electrically heated, so you can choose whatever makes the most sense on the efficiency front. It creates a nice warm floor, great for cold feet during Teton Valley’s winters. The downsides? In-floor systems are known for taking a full day to warm up, and don’t regulate temperatures easily. Also, without an alternative source, these systems don’t provide a cooling solution.

Wall Heaters
These little electric heaters have a self contained fan and an electric coil. They are cheap to install, and usually have a thermostat for each room, so rooms that are not being used can be turned down, or turned off completely. These systems have been concern for fire hazard, and tend to be noisy, especially when they are not regularly cleaned and maintained.

Baseboard Heaters
Similar to the wall heaters, though these units radiate heat rather than force, or blow heat over electric coils. They rely on convection to circulate the heat throughout a room, which is why you oftentimes see them below a window. Heat rises, cold air (through the least insulated area in a room – ie a window) falls, and thus convection is created.

Forced-Air (traditional furnace)
This form of heat is a centrally located blower (called an air handler) with coils heated electrically or with propane. The air blows over the hot coils, heats the air, and circulates the warm air throughout the rooms. The ducts attached to the air handler can have dampers that shut off the ducts to certain rooms, creating a zoned system. However, without zoning capabilities, forced air systems tend to send too much heat to certain rooms, and not enough to others. On the bright side, the do heat up, or cool down very quickly.

The above about sums it up for the types of systems we typically see in this area, though I did not mention geothermal, heat pumps, or mini-splits. These systems transfer heat, rather than creating it. They work in conjunction with a refrigerant, a condenser, and a compressor. Without going into detail, these systems can work by transferring heat from the outside in, or from the inside out, depending on the season and system demands. With today’s technology, heat pumps can have a hard time creating heat efficiently in the areas extreme cold. However, some mini-splits (an outdoor compressor and an indoor fan) are now operating efficiently down to approximately -15 degrees F. In addition to having a heating an cooling solution in one package, these systems can be very efficient, sometimes as much as 200% (estimated) efficient in ideal conditions. That means propane would need to be 85 cents (or less) per gallon to meet these efficiency standards.

Reliability:

Reliability can be a concern, particularly for those from areas prone to winter outages due to ice storms. That isn’t too common here, though the power will go out periodically – usually not for long. However, if it does, a small backup generator isn’t likely able to keep up with your home’s essentials such as the refrigerator, freezer, emergency lights, wifi (kidding) as well as an all electric heat system. However, a propane fired in-floor system, forced air, or wall mounted unit uses very little electricity. In most cases a reasonable generator won’t have any issue keeping up.

sources: National Hydro Power Association, hydro.org

Loan Tips – How to Prepare

August 13, 2016 By Tayson Rockefeller Leave a Comment

***Tayson is not a lender. confirm the below “good practices” with your lender.
As our local market becomes more and more competitive with multiple offers and properties moving quickly, it’s becoming ever-important to be prepared to provide a pre-qualification letter along with your offer, and to be prepared to close on time. We’re seeing a number of sellers continue to market their home for sale for backup offers during the contract process with the buyer. If the seller receives a backup offer they usually can’t terminate your contract (unless the contract specifically states they can) without the buyer failing to meet a deadline, or failing to close on time. In most cases the important deadlines are timely earnest money delivery, and proof of funds or loan approval subject to appraisal and underwriting on or before the dates specified in the contract. Work with your realtor to ensure all timelines are met, and work with your lender to ensure you close on time. Some tips, below;

How to Prepare:

The best practice if you are thinking of buying in the near future would be to begin preparing well in advance, though this isn’t always possible. Follow these steps to the best of your ability.

Save your pay stubs. If you foresee a new loan in your future, become extra diligent about keeping record of large purchases *<—avoid if possible* , keeping pay stubs, bonus check stubs, and keeping track of any expenses or income that is out of the ordinary.
Start collecting your tax returns for the last 2 years. If it’s 2016, you will need your complete 2014 and 2015 returns. Organize them, separate your w-2’s and any 1099’s. If you need to collect these items from your employer or accountant it could take valuable time during a contract – sometimes too much time.
Get in the habit of “digitizing” all of your records, or stop in to an office center periodically to scan, label and organize all of the documentation needed. In addition, keep the originals in a safe place that is easy to access until after closing.
If you are depositing money gifted from someone that is not immediate family (or traceable funds), in some cases it cannot be used unless the cash has been in your account longer than the lender will look back in your records. Always consult with your lender, but this tip could be helpful, and you would need to obviously deposit the funds well in advance.
In keeping with the above, if you do plan on using gifted funds, speak with your lender early on in the process about properly going about this. It is extremely important to follow the proper procedures and collect documentation that your lender requires such as proof of where the funds came from, or a gift letter. Also, remember to keep documentation of deposits. If you are selling a car to come up with a down payment, remember that you will need proof of ownership, bill of sale, etc. Consult with your lender if you are selling an item to increase cash for closing.
If you are selling a home to relocate, obtain a complete record from the title company or real estate professional that helped you. Your lender WILL need this.
Think about speaking with a lender early on – very early on in the process. In some events home buyers find they have an outstanding balance they were unaware of, or a fraud issue that is affecting their credit. This can take months to clear up, and it’s best to find out about this prior to finding your dream home that needs to close in 1 month.
Try not to close any investments accounts, or open new accounts based on credit, including obtaining new credit cards.
When saving $$ for your down payment, remember also to save for closing costs, which can be several thousand dollars. Don’t let this come as a surprise after writing your offer.
Continue life as normal. PAY ALL BILLS on time, including credit cards, auto payments, etc.
CONSULT WITH YOUR LENDER on all items! If you are considering a job change, a large purchase, anything, consult with your lender. Remember that your real estate agent and/or the seller are not lenders.

Just like with your Realtor, most lenders can help you with any property as long as they can work in your state. However, like your Realtor, it can pay off to work with a lender that understands the nuances of our local Teton market such as long appraisal times, or any specific loan requirements related to the location of the property, proximity to wetland, etc. I have been in several circumstances where an out-of-state lender will contact me after reviewing a settlement statement and say “Tayson! There is no reference to the transfer tax!” Yes, yes – that is because we do not have a transfer tax… In addition, most buyers will find that unless working with a “big box” brokerage, they probably won’t have to pay their real estate firm any fees related to the services, even if they do not buy a home. However, interest rates and closing costs can vary from lender to lender. It’s a good idea to shop for a lender that is not only a local market expert, but one that has good rates and reasonable close costs.

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