Boise Real Estate Blog

10 Mistakes Buyers Make – Part I

There are many ways to buy a home in the Boise real estate market and some work better than others.

Here are my views about mistakes commonly made by home buyers.

I welcome your comments!

1.  Not Committing To One Agent

Playing the field and using several agents at the same time might seem like a good idea, but you must realize that all agents have the same MLS listing inventory to show you. Using several agents at the same time is usually a waste of your time.

2.  Not Signing A Buyer Representation Agreement

In Idaho, you are not considered a client until you enter into a written Buyer Representation Agreement with your agent. That means you are merely a “customer” and not entitled to client level representation. Most competent, successful agents will require that you enter into a Buyer Representation Agreement before devoting serious effort to finding the right property for you.

3.  Not Understanding Agency Relationships

Many buyers do not understand the consequences of buying a home from a listing agent. The listing agents’ first loyalty is to their seller.  When you buy a property from the listing agent, the best you can hope for is limited dual agency representation where the agent represents both the seller and the buyer with no advocacy for either party.  You should be sure that you clearly understand who your agent represents.  A buyer’s agent will represent you and only you, unless you authorize the agent to become a limited dual agent while purchasing a property listed by their broker.

4.  Using An Inexperienced Agent

There are about 2,750 Ada County real estate agents in our MLS, many of whom are brand-new or part-time.  Do you really want to entrust the purchase of your most valuable asset to an agent who is new and may have handled only a few transactions?

5.  Using An Agent Who’s A Friend Or Relative

Using an agent who is a friend or a relative opens you up to many potentially difficult situations, including possible discomfort over disclosing personal financial information and other sensitive aspects of the transaction.  It is usually not a good idea to mix family or friendship with business.

(continued tomorrow)

August 27th, 2009 Posted in Inside Real Estate |  Print This Post | No Comments »

How To Buy A Home In Boise ~ Part II

(continued from yesterday)

When your offer to purchase has been accepted by the seller, you will then go “into escrow”, during which time the following steps will be completed:

• You may elect to have a home inspection completed. In the Boise Area, the cost of this inspection is usually paid by the buyer. After the inspection is done, you will be given a copy of the home inspection report. At that point, if there are items needing repairs, you can ask the seller to make the needed repairs. The seller has the option of making the repairs or refusing to do so. If the seller refuses to make the repairs, you then have the option of not proceeding with the transaction. Note: There is specific language in the purchase and sale agreement that most Realtors^® use that explains these provisions in full detail.

• If you will be obtaining financing for your purchase, your lender will require that an appraisal be completed by a licensed real estate appraiser. The appraiser will be selected by the lender to avoid any third party influence. It is customary in the Boise Area that the cost of the appraisal is paid by the seller, and the cost is usually around $350 to $450 for an owner-occupied property. Appraisals for non-owner occupied properties cost more due to the additional economic analysis required by the lender.

• The title company will perform a title search to determine the legal status of the property and verify any existing liens, encumbrances, easements, etc. for the property. When they have completed their search, they will prepare a preliminary title report or “title commitment” and deliver it to the lender and the Realtors^® involved in the transaction. You should receive a copy of this document and review it carefully prior to closing.

• The title company will obtain payoff amount(s) for any existing loan(s) on the property, in order that the title company can pay those loan(s) off and insure clear title for you at closing.

• Your lender will prepare your loan documents and deliver them to the title company.

• The title company will incorporate the loan documents into its final escrow instructions for both you and seller, which will then need to be signed by both parties in order to prepare for the actual closing of the transaction.

• The sellers will sign their final closing papers.

• You will sign your final closing papers and submit cashier’s funds necessary to close to the title company.

• When both buyers and sellers have signed their respective closing papers, and all of your funds have been submitted to the title company, the title company will order your new loan funds from the lender. These funds are usually wired from the lender to the title company, a process which usually takes a few hours.

• Upon receipt of the new loan funds from the lender, the title company will deliver the Warranty Deed to the county recorder’s office and “record” the deed. This is the final act of “closing”, at which time title to the property transfers to the buyers.

August 25th, 2009 Posted in Inside Real Estate |  Print This Post | No Comments »

How To Buy A Home In Boise ~ Part I

There are many ways to approach buying a home.  As you might imagine, some have been proven over time to work better than others.

Here’s how you can smoothly navigate your way through the home buying process:

• Meet with a lender and get pre-approved for your financing before you start looking at homes. Note that I said “pre-approved”; not “pre-qualified”. The difference lies in the fact that pre-approval means that your lender will actually underwrite your loan application and issue a letter indicating that you are fully approved for your loan vs. pre-qualification usually means that your lender has given only a cursory glance at your qualifications and provided only a tentative indication of your borrowing ability. It is vitally important that you be pre-approved so you can attach your loan commitment letter to your offer to purchase and thereby strengthen your negotiating position.

• Make two lists of features for your intended home: a list of the “must have” features, and a list of “features wanted”. Your must haves will be things like the number of bedrooms, baths, garage size, square footage, school district, etc. Your want list will be things like the color of carpet, fireplace, large patio, etc. – things you would like to have, but can live without.

• Find a Realtor^® you trust and respect, and hire them to represent you. Doing so will allow you to make the best use of your time, and will assure your Realtor^® that he/she has your written commitment of loyalty. Absent this written understanding, you are merely a “customer” instead of a “client” of the Realtor^®. Few experienced, successful Realtors^® will devote serious time and energy to you without that written agreement.

• Explain your circumstances, needs, and wants with your Realtor^® and work in partnership with your Realtor^® to find a workable solution to your real estate needs. Finding and buying the right house often takes a lot of work, and you will doubtless encounter some obstacles along the way. For this reason, it is vitally important that you be able to develop a good working relationship with your Realtor^® and that you can both be open and honest with each other.

• Narrow your property search to a few areas that will meet your needs and be realistic in your expectations. Few homes will have 100% of the elements you are hoping to find, and you will probably find it necessary to compromise to get most of what you want. Work with your Realtor^® and screen the properties that are initially of interest to you to narrow the field down to the final few best candidates.

• When you finally get down to the final 2-3 homes that appear to be your final possibilities, have your Realtor^® do a market analysis of the neighborhood to determine if the homes are properly priced for current market conditions. If possible, try to find out why the sellers are selling. Successful negotiations always include both buyer and seller getting enough of what they need from the transaction to make it work. If you can find out what the seller needs, you can often incorporate those needs into your offer and also get what you want.

(to be continued tomorrow)

August 24th, 2009 Posted in Inside Real Estate |  Print This Post | No Comments »

Higher Interest Rates Affect Home Values

Many sellers are unaware of the effect higher interest rates can have on the value of their home.

Here’s what happens when interest rates rise:

• Most buyers get a mortgage to buy a home.
• Those buyers focus primarily on the amount of their mortgage payment.
• If a buyer is borrowing $200,000 @ 5.25%, payable over 30 years, their principal/interest payment will be $1,104.41.
• If interest rates rise to 6%, the payment on that same $200,000 mortgage will be $1,199.10.
• That 8.7% increase in the payment can result in a price-sensitive buyer no longer being able to qualify for that mortgage.
• Viewed another way, the sellers would need to sell their home for 8.7% less in order for that same buyer to qualify to buy their home.

Higher interest rates inevitably lead to lower sales prices as the pool of buyers becomes smaller due to buyers no longer being able to qualify for financing.

We have grown accustomed to historically-low mortgage rates in the past couple of years.

They are unlikely to last, especially with our current record-high levels of federal deficit spending and skepticism in the bond market.

This is one of the best times ever to buy a home in the Boise real estate market with the twin benefits of lower home values and affordable interest rates.

August 24th, 2009 Posted in Inside Real Estate |  Print This Post | No Comments »

Boise Real Estate – Expanded Title Insurance

Some buyers learn too late about costly subcontractor liens when they buy a new home.

Visualize this scenario: A slowing real estate market, fewer sales, and a builder with lots of unsold homes and deteriorating cashflow who finds it difficult to pay his subcontractors.

In many states, including Idaho, subcontractors can file a lien for work they have done, even after the buyer has closed escrow.

The problem for the buyer is that those liens are secured by the property if the builder fails to pay the subcontractor.

Hmmmm  .  .  .  . wonder if there are any builders in your market who match that description these days?

The end result?

An innocent homebuyer can end up the proud owner of a brand-new home with liens filed against it and a contractor who is unable to pay the liens.

And, if those liens don’t get satisfied, the subcontractor can collect them from the homeowner.

The solution?

Simple ~ the buyer can purchase “expanded coverage” title insurance at minimal cost when purchasing a new home. That coverage insures the new owner against that risk and guarantee clear title for the homebuyer.

In the Boise area, such coverage costs less than $100.

Advice to Buyers: Spend the money and get expanded coverage ~ it’s a bargain!

August 22nd, 2009 Posted in About Boise, ID, Inside Real Estate |  Print This Post | No Comments »