Buyer Resources

Choosing between a smaller home in a prosperous neighborhood, an older, bigger house in a more working-class community or a brand-new home is not easy. If you’re in this situation, start by examining your priorities and asking the following questions:

• Is the surrounding neighborhood or the home itself the most important consideration?
• Is each of the neighborhoods safe?
• Is quality of the schools an issue?
• Do any of the areas seem to attract more families with children or adult residents? And where do you fit in?
• What is the home-price appreciation?

There are many benefits to owning a home. Home ownership offers tax benefits as well as the freedom to make decisions about your home. Unlike renters, homeowners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially. Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment.

An advantage of renting is not worrying about maintenance and other financial obligations associated with owning property. Owning a home might be a great investment, however, such returns depend on home-price appreciation.

Home inspections, seller disclosure requirements and the agent’s experience will help. Disclosure laws vary by state, but in some states, the law requires the seller to complete a real estate transfer disclosure statement. Here is a summary of the things you could expect to see in a disclosure form:

• In the kitchen — a range, oven, microwave, dishwasher, garbage disposal, trash compactor.
• Safety features such as burglar and fire alarms, smoke detectors, sprinklers, security gate, window screens and intercom.
• The presence of a TV antenna or satellite dish, carport or garage, automatic garage door opener, rain gutters, sump pump.
• Amenities such as a pool or spa, patio or deck, built-in barbeque and fireplaces.
• Type of heating, condition of electrical wiring, gas supply and presence of any external power source, such as solar panels.
• The type of water heater, water supply, sewer system or septic tank also should be disclosed.

Sellers also are required to indicate any significant defects or malfunctions existing in the home’s major systems along with environmental hazards. Also look for, or ask about, settling, sliding or soil problems, flooding or drainage problems and any major damage resulting from earthquakes, floods or landslides.

If you find yourself stumbling over weird acronyms in a real estate listing, don’t be alarmed. There is method to the madness of this shorthand (which is mostly adopted by sellers to save money in advertising charges). Here are some abbreviations and the meaning of each, taken from a recent newspaper classified section:

• assum. fin. — assumable financing
• dk — deck
• gar — garage (garden is usually abbreviated “gard”)
• expansion pot’l — may be extra space on the lot, or possibly vertical potential for a top floor or room addition.
• fab pentrm — fabulous pentroom, a room on top, underneath the roof, that sometimes has views
• FDR — formal dining room (not the former president)
• frplc, fplc, FP – fireplace
• grmet kit — gourmet kitchen
• HDW, HWF, Hdwd — hardwood floors
• hi ceils — high ceilings
• In-law potential — potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first.
• large E-2 plan — this is one of several floor plans available in a specific building
• lsd pkg. — leased parking area, may come with an additional cost
• lo dues — find out just how low these homeowner’s dues are, and in comparison to what?
• nr bst schls — near the best schools
• pvt – private
• pwdr rm — powder room, or half-bath
• upr- upper floor
• vw, vu, vws, vus — view(s)
• Wow! — better check this one out.

Studies show that the closing costs, which can average 2 to 3 percent of a total home purchase price, are often more costly than many buyers expect. But there are some ways to save:

• Negotiate with the seller to pay all or part of the closing costs. The lender must agree to this as well as the seller.
• Get a no-point loan. The trade-off is a higher interest rate on the loan and many of these loans have prepayment penalties. But buyers who are short on cash and can qualify for a higher interest rate may find a no-point loan will significantly cut their closing costs.
• Get a no-fee loan. Usually, though, these fees are wrapped into a higher interest rate though it will save you on the amount of cash you need upfront.
• Get seller financing. This kind of arrangement usually does not entail traditional loan fees or charges.
• Rent the property in which you are interested with an option to buy. That will give you more time to save for the upfront cash needed for the actual purchase.
• Shop around for the best loan deal. Each direct lender and each mortgage brokerage has their own fee structure. Call around before submitting your final loan application.

Closing costs are either paid by the home seller or home buyer. It often depends on local custom and what the buyer or seller negotiates.

Closing costs are the fees for services, taxes or special interest charges that surround the purchase of a home. They include upfront loan points, title insurance, escrow or closing day charges, document fees, prepaid interest and property taxes. Unless, these charges are rolled into the loan, they must be paid when the home is closed.

For more on closing costs, ask for the “Consumers Guide to Mortgage Settlement Costs,” Federal Reserve Bank of San Francisco, Public Information Department, P.O. Box 7702, San Francisco, CA 94120 or call (415) 974-2163.

As much as you as a buyer may want to believe that the home you have found is perfect, a clear title report ensures there are no liens placed against the prior owners or any documents that will restrict your use of the property. A preliminary title report provides you with an opportunity to review any impediment that would prevent clear title from passing to you. When reading a preliminary report, it is important to check the extent of your ownership rights or interest. The most common form of interest is “fee simple” or “fee,” which is the highest type of interest an owner can have in land. Liens, restrictions and interests of others excluded from title coverage will be listed numerically as exceptions in the report. You also may have to consider interests of any third parties, such as easements granted by prior owners that limit use of the property. Some buyers attempt to clear these unwanted items prior to purchase. A list of standard exceptions and exclusions not covered by the title insurance policy may be attached. This section includes items the buyer may want to investigate further, such as any laws governing building and zoning.

While your low offer in a normal market might be rejected immediately, in a buyer’s market a motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be accepted by the seller. But there are other considerations involved:

· Is the offer contingent upon anything, such as the sale of the buyer’s current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition.

· Is the offer made on the house as is, or does the buyer want the seller to make some repairs or lower the price instead?

· Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.