Whether you buy or build, moving into the home of your dreams is an exciting prospect. But buyer beware; the process can turn into a nightmare quickly without preparation.
The quickest pathway to disaster for a buyer is a dose of overconfidence.
“Buyers [sometimes] contact us thinking they don’t need to be represented,” by an agent,” said Bob Wiley, team leader for the Wiley Group of Keller Williams Legacy Metropolitan. This leads to buyers letting “emotions get involved. The whole reason to hire an agent is that they are unemotional about the outcome.”
You might fall in love with a home from the moment you set foot in it, but negotiating the deal to buy it requires strategy.
Letting the seller know how much you love the house: bad strategy.
“We lose all of our leverage,” Wiley said.
On the seller’s side of things, dodging thousands of dollars in agent’s fees might sound appealing — until you miss a detail in the final contract, which can cost thousands.
Both sides benefit from using an agent.
Wiley recalled an instance in which a seller opted to represent themselves. When the agent, representing the buyer, started to reiterate the details of the contract at the closing, the seller was shocked to hear they were paying $40,000 for a seller’s contribution.
A seller’s contribution is the cost the seller pays as a way to help cover financing costs that usually burden the buyer, such as title insurance, appraisal fees and inspection fees.
Once a buyer has someone in their corner, it is time to get a broker involved.
When it comes to taking out loans, specifically jumbo loans, the key is personalization, experts say.
Jumbo loans are considered “non-conforming,” which allows lenders to be more creative in how they are financed.
Karen Hubble Bisbee is an associate broker with Long and Foster Real Estate/ Christie’s International Real Estate, and principal of the Hubble Bisbee group.
“Each [buyer’s] situation has to be evaluated on an [individual] basis,” Bisbee said.
One aspect of a loan that can be customized is the loan-to-value ratio: How much do you want to borrow relative to the purchase price of the property?
Interest-only loans are also a possibility but took a downturn after 2008, and now, Bisbee said, only exist for well-qualified buyers.
Another tool is an adjustable rate mortgage.
Bisbee finds “that [wealthier buyers] have a tendency to use intermediate-term adjustable-rate mortgages because those high-end buyers have a tendency to retire loans in five to 10 years,” she said.
The result: The buyer saves money compared to running the loan out for the traditional 30 years.
You bought it — time for the amenities.
Your home might look good, but “form follows function” is a cliché for a reason.
And for today’s buyers, automation is being integrated into everything, from the fridge and lights to the alarm systems. Gone are the days when you wonder if you closed the garage door. With today’s tech, you can easily check and close that door through your phone, no matter how far away you might be.
Wine cellars have also resurged with a purpose, Wiley said. But these are not the old cellars that were hidden away in a garage. These are temperature-controlled cellars that are, on occasion, built into parts of the house, such as in unwanted closet space.
Aside from helping you entertain guests, some buyers are now viewing wine as an investment.
“They buy a case of wine for $30 a bottle, and get five cases,” Wiley said. “In five years, when it matures, that same bottle is worth much more.”
Cheers to that. JN
This article originally appeared in Baltimore Style, a publication affiliated with Jewish News.